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When it comes to paying towards student loans, many students find themselves in a situation where they are unable to afford their minimum monthly payments. This can be frustrating; however, it is important to realize what a toll it can take on one’s overall creditworthiness. The problem might be that so many students take out multiple student loans, making these payments somewhat unreasonable (especially for students that have just recently graduated).
The good news is there are programs in place which help students who find themselves in a bind when it comes to their student loans. One of these programs is an economic hardship deferment. This article will discuss more about economic hardship deferment, who can qualify, and how to get started with the application for deferment.
What is Economic Hardship Deferment?
Economic hardship deferment is simply deferring the payments on your student loans when funds are tight. The program allows for student debtors to postpone payments on their account for a certain amount of time. Most deferments are for six to twelve months, but the programs usually allow for debtors to reapply if they are in need of even more time. This particular deferment is granted in one-year increments, for a maximum of three years. Economic hardship deferment is typically only available for borrowers who have federal student loans.
Not all students will be eligible for an economic hardship deferment. There are some eligibility requirements that each student needs to be aware of before applying. This can prevent any surprises down the road, such as denial of deferment. To be approved for an economic hardship deferment, one of four different conditions must be met:
Deferment Has Already Been Approved Under Another Federal Student Loan Program
If you have already received a deferment on one of your other student loans you may be granted an economic hardship deferment by default. In most cases, they require you to provide proof that you have a current deferment, so it is a good idea to go ahead and send it in so they are not requesting documentation down the road.
Recipient of Some Form of Public Assistance
Receiving public assistance from a federal or state program, such as SSI (Social Security Income), food stamps, or TANF (Temporary Assistance for Needy Families) can also be a reason that you would be approved for an economic hardship deferment. It is important to provide documentation of receiving this assistance at the time of application, otherwise it can slow the process down.
Peace Corps Volunteer
Peace Corps volunteers are eligible for economic hardship deferment by default as well. By attaching proof of service dates, this may even qualify someone for a longer deferment than three years.
Low income working families may also be approved for economic hardship deferment. They typically require that you work full time, which is a minimum of 30 hours per week. You must also fall under the 150 percent mark for the federal poverty guidelines based on where you live and family size. If you are unsure about meeting these criteria, click on the link provided and see what the guidelines are for your area.
Applying for Deferment
If you think you meet the eligibility requirements for an economic hardship deferment, then it may be time to apply and see if you can get approved. The sooner you do so, the better. This is especially true if you are already falling behind on your payments.
Applying is really not that difficult. Student debtors should first start by going to studentloans.gov and look for an Economic Hardship Deferment Request form. This is the form that must be completed and submitted in order to be considered for this type of deferment. After printing the form, it is important to fill it out completely and accurately. This can prevent any hiccups in the process, and hopefully ensure that the deferment is approved sooner rather than later.
Staying Ahead of the Game
With student loans, it is really important to stay ahead of the game. Sometimes students may know when they are going to be short on funds and unable to make their payments. The best thing students can do to ensure they keep their loans out of default status is call their lender and work out something with them. Whether it is economic hardship deferment or another program that will help to alleviate some of the financial stress, never jeopardize your creditworthiness by simply waiting until it is too late.
Author: Jeff Gitlen