Know what financial hardship for student loans is, how to handle the process, and ways of deferring payments.
Student loans. Without a doubt, they are one of the most complicated and fraught issues facing college-bound Americans today. But once you’re out of school? Then what? We all know that finding those just-out-of-college jobs that pay enough to cover loan payments is a challenge. What can you do? For one thing, you need to know about financial hardship for student loans.
There is no ideal time to have financial difficulties. Still, if you’re going to have them, you need to find a way to relieve the strain that these difficulties can create. Few things create a level of stress comparable to that of financial challenges. It affects every part of our lives and can slowly erode our health.
Of course, knowing where to find that help is important. We don’t always control the circumstances that fall upon us, but we can control what we do about it, especially with financial hardship for student loans. Remaining ignorant of potential solutions is our own fault by failing to educate ourselves on the options.
There are options if you find yourself with hardships in paying off student loans.
Know what financial hardship for student loans means
When getting out of school, or any time you’re looking for work, the climate in the marketplace where you look for employment will play a role in your success. Even if you’re a great candidate, you might struggle to find an opening for your skills, leaving you in a difficult spot.
Applying for partial financial hardship for student loans could help ease the burden while you dive deeper into your job search. Demonstrating your financial hardship through an application is a requirement to qualify for an Income-Based Repayment (IBR) plan or a Pay As You Earn (PAYE) repayment plan.
Eligibility is determined by whether the amount due on loans exceeds more than a certain percentage of your adjusted gross income minus 150% of your state’s poverty line. The actual percentage it must exceed depends upon the program you are looking to qualify for.
Partial relief for student loans
The equation for qualification is not the simplest to understand, but it essentially amounts to this; if your required payments take up too much of your income, the government can help you by reducing your required payments or eliminating them for some time.
This does not mean the government makes payments for you, and you should be aware that interest will accrue during your deferment. Different programs work their own way in this regard, and it’s essential to understand if you are increasing the total of what you are paying back in the long run by deferring now. Even if you are, it could still be worth it for temporary relief from the pressure you’re under.
The most important thing in understanding financial hardship for student loans is in understanding whether you need it and, if so, how much. Many people depend on the government or others to make these decisions for them, but they don’t understand you, your ambitions, and your future prospects as well as you do. Building a plan around your financial hardship is the best way to make it go away.
What are you struggling with now, and how do you think a financial hardship application could help? How long will you need it, and what will you do to get out?
Nancy Zambell, Chief Analyst of the Financial Freedom Federation, has spent more than 30 years helping investors navigate the minefields of the financial industry. Nancy's book, Make Money Buying & Selling Stocks is an introduction for new investors and a reminder for experienced investors on how to profit in the stock market.Learn More