Difficulty Making My Payments?

If a borrower with a student loan(s) is having difficulty making the monthly payments, it is CRITICAL that a borrower contact the lender or servicer immediately! Remember, the school, lender, loan servicer and/or guarantor are the borrower's partners! They are ready and willing to assist any student loan borrower in meeting their obligations and reaching their career goals.


** Again, if a student loan borrower cannot make a payment on a loan(s) when it is due, contact the holder of the student loan(s) immediately! **


To locate the holder of a student loan(s), a borrower can access online the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. If additional help is needed, a borrower can also contact Baker College Financial Aid Office, or e-mail a Baker College System Student Loan Representative at loans@baker.edu.

There are several different options that can be used when the ability to make a monthly payment causes borrower problems. Some of the following options are shown below.

If a borrower....

Then...

has problems making payments when they're due:

Change the due date. This can ensure a borrower has money in the bank when it's time to pay the loan bill. Contact the holder of the loan(s) to request this.

can make smaller monthly payments:

Consider other repayment plans. This can help reduce the monthly payments or allow a borrower to make interest-only payments.

can't make any payments:

See if a deferment or forbearance is an option. Postponing the monthly payments may be the right choice to prevent the loan(s) from entering default.

missed payments:

Take action today to prevent loan default. Find ways to keep the loan(s) from entering default and to protect the borrower's ability to obtain credit in the future.

 

Be wise...don't risk defaulting on a student loan(s). For further information on the consequences of default, see Delinquency and Default.

 The following are some alternatives or options that are available to help borrowers avoid delinquency and default actions by a borrower's lender or servicer.

DEFERMENTS
A deferment allows a borrower to temporarily stop making payments on a loan(s). There are several different types of deferments available if a borrower meets the requirements for the specific deferment. In addition, a borrower may also be eligible for a deferment based on qualifying active duty service in the U.S. Armed Forces or National Guard. To request any of the following deferment options, a borrower needs to contact the holder of the loan(s). Some requests can now be done online while others must have a completed form signed by the borrower and mailed or faxed back to the loan holder. On all Stafford subsidized loans, when a deferment has been approved, there is no additional interest charged during the deferment period.

If a loan borrower has different loan holders, a form must be completed and approved by each one. Check with the lender/servicer for further details.

A list of some available deferment options appears below.

Deferment Name

Description

In School at Least Half-Time Deferment

Borrower must be enrolled at an eligible school on at least a half-time basis.

Armed Forces Deferment

Borrower must be on active duty in the Armed Forces in the United States and must have agreed to serve for at least one year.

Economic Hardship Deferment

Borrower must receive federal or state public assistance, earn less than a federal minimum wage or exceed a federally defined debt-to-income ratio to receive this deferment.

Plus Loan borrowers are eligible for this option.

Unemployment Deferment

Borrower must be seeking, but unable to find, full-time employment (more than 30 hours per week) that is expected to last at least three months.

Plus Loan borrowers are eligible for this option.

Military Deferment

Borrower is serving on active duty in the U.S. Military during a war, other military operation, national emergency or performing qualifying National Guard duty during a war, other military operation or national emergency.

Plus Loan borrowers are eligible for this option.

Rehabilitation Training Deferment

Borrower must be engaged in a full-time rehabilitation training program and must meet other criteria.

Teacher Shortage Area Deferment

Borrower must be teaching full-time in a public or nonprofit private elementary or secondary school in a region, grade level or discipline/subject matter defined as a shortage area by the U.S. Department of Education and other conditions must be met.

Parent PLUS Loan In-School Deferment

The parent (borrower of the PLUS Loan) must be enrolled at an eligible school on at least a half-time basis.

Parent PLUS Loan In-School Deferment (disbursed on or after 7/1/2008)

Borrower's dependent student, for whom the parent PLUS Loan(s) is made, must be enrolled at an eligible school on at least a half-time basis during the period of the deferment and the PLUS Loan(s) must have been disbursed on or after July 1, 2008.

Parent PLUS Loan Student in Rehabilitation Deferment

The student for a PLUS Loan(s) must be engaged in a licensed, certified or otherwise approved rehabilitation training program requiring a commitment, so that the student cannot work 30 or more hours a week for at least three consecutive months. Other conditions must also be met.

 

A complete deferment listing with blank forms can be found on online at any lender or servicer web site.

To locate information on possible lenders or servicers, please see Loan Contact Information. Also, another way to locate a borrower's loan holder(s) online is to visit the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. If additional assistance is needed in locating a loan holder(s), a borrower can contact Baker College Financial Aid Office, or e-mail a Baker College System Student Loan Representative at loans@baker.edu.


FORBEARANCE

Forbearance is an arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specific period during which interest is charged. If a borrower indicates a temporary inability, but willingness to pay the loan(s), he/she may ask for or be offered a forbearance. For all federal Stafford loans, interest that accrues during forbearance is the responsibility of the borrower. When a borrower re-enters repayment at the end of the forbearance period, any unpaid interest capitalizes (is added to the principal balance). There are several types of forbearances. A borrower must apply and qualify for forbearance and the holder of the loan(s) must approve the request in order for forbearance to be in effect. If a borrower is not eligible for forbearance, he/she may still be eligible for a deferment. See the above Deferments section.

Forbearance Name

Description

General Forbearance

This forbearance allows a borrower to postpone or reduce the amount of the monthly payment for a limited and specific period of time.

Plus Loan borrowers are eligible for this option.

Loan Debt Burden Forbearance

This forbearance allows a borrower to postpone or reduce the amount of the monthly payment for a limited and specific period of time if the borrower provides acceptable documentation showing that the monthly payment(s) for the eligible education loan(s) exceeds 20% of their total monthly gross income. Before using this type of forbearance, a borrower should check to see if they may qualify for a different repayment plan like income-based repayment (See Loan Repayment Options).

Plus Loan borrowers are eligible for this option.

Internship/Residency Forbearance

This forbearance allows a borrower to postpone or reduce the amount of the monthly payment for a limited and specific period of time if a borrower has been accepted into an internship/residency program.

Teacher Loan Forgiveness Forbearance

This forbearance allows a borrower to postpone the monthly payment for a limited and specific period of time while he/she performs qualifying teaching service in an eligible elementary, secondary school or educational service agency.

 

See Loan Contact Information for various loan holders and how to contact them. Also, another way to locate a borrower's loan holder(s) online is to visit the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. If additional assistance is needed, a borrower can contact Baker College Financial Aid Office, or e-mail a System Student Loan Representative at loans@baker.edu.


STUDENT LOAN REPAYMENT PLANS

There are several different types of student loan repayment plans that are based on income and family size. A different type of repayment plan may allow a borrower to reduce the required monthly payment (Some income repayment plans, if he/she qualifies, may have a borrower paying as little as zero dollars a month.). See Loan Repayment Options.


LOAN CONSOLIDATION

If a borrower finds that they are making monthly payments to multiple lenders or servicers, they may want to check into the loan consolidation program. This program will allow a borrower to combine all of their federal loans into one loan and may help to reduce the monthly payment requirement. See Loan Consolidation Information.


LOAN DISCHARGE/CANCELLATION/FORGIVENESS

It is possible to have a borrower's student loan debt discharged (canceled) or reduced, but only under certain specific circumstances. Some of these are mentioned below.

Program

Who Is It For

What Does It Do

Teacher Loan Forgiveness

www.StudentLoans.gov

A borrower may qualify if they teach:

  • full-time at a low-income elementary or secondary school.

Forgives part or all of the educational loan debt, provided the borrower fulfills certain work-related requirements.

Public Service Loan Forgiveness

(For Direct Loans Only)

www.StudentLoans.gov

 

www.studentaid.ed.gov

A borrower may qualify if they:

  • are employed full-time (in any position) by a public service organizationPDF and make 120 separate qualifying monthly payments when submitting their application for forgiveness.
  • make 120 separate qualifying monthly payments on their Direct Loan(s) after October 1, 2007. Each payment must be on-time and each payment must satisfy the required monthly payment amount.

Note: In general, only borrowers who are repaying under the ICR plan or the IBR plan will have a remaining loan balance after making 120 separate qualifying monthly payments.

Forgives part of the educational loan debt, provided the borrower fulfills certain work-related requirements.

Total and Permanent Disability

www.disabilitydischarge.com

Parent PLUS Loans are eligible for this option.

A borrower may qualify if they:

  • can't work for pay when the work involves significant physical or mental activities.
  • are a veteran who has been determined to be unemployed due to a service-connected condition.

Cancels the loan obligation to repay the balance of the student loan(s) owed.

 

Loan Discharge

www.StudentLoans.gov

Parent PLUS Loans are eligible for this option.

 

 

A borrower may qualify if their school:

  • closed.
  • falsely certified the ability to benefit from education.
  • signed the borrower's name without authorization.
  • failed to pay a tuition refund.

A borrower may also qualify if:

  • the loan(s) was falsely certified as a result of a crime of identity theft.
  • the borrower is a spouse or parent of victims of the 9/11/01 terrorist attacks.

 

Dismisses the monthly loan payments and refunds payments that the borrower may have already made.

 Death

(Contact Loan Holder)

Parent PLUS Loans are eligible for this option.

The borrower or, in the case of PLUS Loans, the death of the student for whom the parent borrowed.

Dismisses all student loan debt.


See Loan Contact Information for various loan holders and how to contact them. Also, another way to locate a borrower's loan holder(s) online is to visit the National Student Loan Data System (NSLDS) at www.nslds.ed.gov. If additional assistance is needed, a borrower can contact a Baker College Financial Aid Office, or e-mail a Baker College System Student Loan Representative at loans@baker.edu


  • The FSA Ombudsman works with federal student loan borrowers to resolve loan disputes or problems from an impartial, independent viewpoint. If a borrower has a problem with a federal student loan, they should contact the holder of the loan and try to resolve the problem. If the problem can't be resolved with the loan holder, contact FSA Ombudsman at 1-877-557-2575 or visit their web site at http://www.studentaid.ed.gov.  If visiting the StudentAid ed gov website to contact Ombudsman office online, the "Contact the Ombudsman" link is found under the Repay Your Loans column at the bottom as shown below.

The Baker College System
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