Student debt is defined as money owned by any student, attending or withdrawn, from a given educational institution. Student debt can include student loans as well as other money borrowed while a student attends an institution. Upon completion of education, students are expected to pay back their debts, and if this does not occur after attempts by collection agencies, student debts can go into default.
Deferment
Deferring student loans gives a set grace period where no payment is required. In order to be eligible for deferment, one must be under specific circumstances that are causing them to not make payments. These circumstances include illness, economic hardship, unemployment or returning to school. In order to qualify, student loans cannot already be in default.
Forbearance
Forbearance is another option for student debt that has some similarities to a deferment. Forbearance, however, can be granted in some cases even if a student has defaulted on a loan. Forbearance allows a student to put off payment for up to a year, but interest rates continue to accrue despite not having to make monthly payments. To qualify for forbearance, according to NOLO.com's article "Student Loans: Cancellation, Deferment, and Forbearance," if student loans are at least 20 percent of the borrower's monthly income, they can qualify for forbearance. Other reasons include poor health conditions and unexpected personal issues.
Cancellation
In rare situations, student loans can be canceled. If this occurs, the government will reimburse students for payments already made. Those who qualify for student loan cancellation include those who are severely injured and cannot work, those who work with underprivileged populations, volunteers to needy populations, health professionals and law enforcement employees.
Income-Based Repayment (IBR) Program
Some can qualify for the new Income-Based Repayment (IBR) program that allows borrowers to pay as little as 15 percent of their income. Those who make $10,800 or less per year do not have to pay any of their student loan during this time according to USNews.com's article "Help for Paying Off Your Student Loans: A new program makes paying federal student loans more affordable for low-income borrowers."
Bankruptcy
Bankruptcy is not a good option for student loan debt. Student loans are not able to be discharged in bankruptcy unless you can prove an undue hardship to you or your family from paying student loans. It is not impossible, but it is also not an ideal option.
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