Payment relief is an option available for borrowers who are returning to school, unemployed, disabled or in military service. You will be required to complete an application and provide documentation to verify your situation. Approved borrowers will qualify for a Deferment, Forbearance, Graduated Payment Plan or the Income-Contingent Payment Plan. With a deferment, the lender suspends monthly payments for a short period. Under forbearance, the lender agrees to postpone or reduce the borrower’s payments for a set time. The graduated payment plan allows the borrower to make payments toward the interest for a set period. The income-contingent plan offers relief with payments calculated according to the borrower’s gross monthly income. All of these options are temporary. They are to help the borrower get through a difficult time and maintain a good credit rating.
According to Federal Student Aid, all loans received under programs authorized by Title IV of the Higher Education Act are eligible for cancellation for several circumstances. Some reasons for loan cancellation include total and permanent disability, false certification and a school closing. To qualify for a discharge for total and permanent disability, a physician must certify your permanent disability. You also must meet other requirements during a three-year conditional discharge period. Students who received loans because the school falsely certified that the student would be able to benefit from its training are eligible for a loan cancellation. You can also qualify for a loan discharge if the school you were attending closed while you were in attendance ot if it closed within 90 days after your withdrawal.
Under the College Cost Reduction and Access Act of 2007, students may be eligible for the new public service loan forgiveness program if the student made 120 monthly payments on or after October 1, 2007 on an eligible Federal Direct Loan. This program discharges any remaining debt after 10 years. The borrower is required to hold a full-time position in a public service job for each of the 120 monthly payments. The program outlines which jobs are public service positions and which specific loan programs qualify for loan forgiveness. Borrowers who fail to meet all of the program's guidelines will no longer be eligible for the loan forgiveness.