Practical Tips For Handling Student Loan Hardship

Struggling with student loan hardships can feel overwhelming, but there are avenues for assistance available. Here, we’ll outline key tips to navigate financial challenges as a student loan borrower, including where to find help and what options may be available to you. There are many ways to look for help with student loans now, as millions of borrowers experience problems with student loan repayment.

Four Types of Student Loan Hardship Help

First of all, there are a number of options for dealing with student loan hardship. They differ in important ways, and each one has its own unique eligibility requirements.

Some of these opportunities are also fairly new additions under the Biden/Harris administration, which broadened options for student loan borrowers in economic distress. It’s important for borrowers to know about these options, too.

Students with student loan hardship can pursue these four options:

• Economic hardship deferment: Establishes delayed payment for borrowers facing financial hardship. Eligibility may include receiving certain types of food aid (such as TANF), serving in the Peace Corps, or demonstrating income below 150% of the poverty line.

• Specialized student loan hardship loans: Secondary loans tailored for borrowers experiencing financial difficulties.

• Emergency withdrawals from 401(k) or retirement accounts: In some cases, students or former students may access savings to address student loan debt, though this option may not be applicable for all loan types.

• Loan forgiveness under applicable programs: Various programs under the Biden administration’s new rules offer opportunities to reduce or eliminate student loan debt.

With all of these in mind, the most common economic deferment guideline is a borrower making less than 150% of poverty income for their family or household type. Here, the burden is to show insufficient income, to be able to modify or even erase a student loan.

Where to Look for Help

Generally speaking, student loan borrowers should start with their lender or loan servicer. That’s mainly to put the lender on notice that the borrower is seeking options.

For the actual assistance opportunities, a borrower can look at

• Studentaid.gov or
• go to the Department of Education website to look for news on what’s available in today’s economy.

New Student Loan Forgiveness Programs

In addition to the above kinds of aid, many student loan borrowers have new opportunities to lower or erase their student loan debt payments. You may remember that the Biden administration wanted a broader program, and was stopped by detractors, but the White House still carved out some pretty useful programs for many borrowers.

Many of those struggling with unfair student loan debts have already had their student loan debts completely forgiven. But millions of other borrowers have been able to use something called an income driven repayment program.

The IDR program is based on this idea – that the monthly payments are capped based on the person’s take-home pay. That means that payments can be modified to an affordable level, to mitigate various kinds of economic hardship.

In addition, you can look for resources from the Consumer Finance Protection Bureau (CFPB) that regulates lenders and loan servicers in this industry.

Stay tuned as we cover all available resources and opportunities for borrowers, shedding light on lender practices and government intervention. We’re here to support borrowers facing overwhelming student loan debt, offering hope and guidance.