How to Stop Making Student Loan Payments

Managing student loan payments can be a significant financial challenge, but various legitimate options exist to help borrowers navigate these obligations. These solutions range from temporarily pausing payments to significantly reducing them, and in some cases, even eliminating the debt entirely.

Temporary Payment Pauses

Federal student loan borrowers facing financial difficulties can consider two primary temporary options for pausing payments: deferment and forbearance. Deferment allows a borrower to temporarily stop making payments and, for certain subsidized loans, prevents interest from accruing during the pause. Documentation like proof of enrollment, unemployment verification, or medical statements is typically required.

• Being enrolled in school at least half-time
• Unemployment
• Economic hardship
• Cancer treatment
• Military service

Forbearance also allows a temporary pause or reduction in monthly payments, generally for up to 12 months at a time. However, a key difference from deferment is that interest accrues on all loan types during forbearance, which can increase the total amount repaid over time. There are general forbearances, which are discretionary and granted at the loan servicer’s discretion, and mandatory forbearances, which must be granted if specific eligibility criteria are met, such as having student loan payments that exceed 20% of one’s gross monthly income.

• General financial difficulties
• Medical expenses
• Changes in employment
• Serving in AmeriCorps

Applying for Temporary Payment Relief

Most federal student loan deferments are not automatic, requiring a direct request. Application forms for specific deferment types can typically be found on the Federal Student Aid website or the loan servicer’s website. For forbearance, there is often one standard form, though forms for mandatory forbearances may differ based on the circumstance.

Borrowers can submit their completed forms and supporting documents online, by mail, or by email. In some cases, requests for general forbearance can even be made over the phone, though official documentation may still be required. It is important to continue making payments until confirmation of approval is received to avoid delinquency. After approval, borrowers should confirm the end date of the payment pause and understand any impact on their loan balance, as interest can accrue and potentially capitalize, especially with forbearance.

Reducing Payments with Income-Driven Plans

Income-Driven Repayment (IDR) plans offer a significant way to reduce monthly federal student loan payments, potentially to as low as $0, by basing the payment amount on a borrower’s income and family size.

• Saving on a Valuable Education (SAVE, formerly REPAYE)
• Pay As You Earn (PAYE)
• Income-Based Repayment (IBR)
• Income-Contingent Repayment (ICR)

Payments under IDR plans are typically a percentage of a borrower’s discretionary income, which is generally defined as the difference between their adjusted gross income (AGI) and a multiple of the federal poverty guidelines for their family size. For instance, PAYE and IBR define discretionary income as AGI less 150% of the poverty level, while the SAVE Plan uses 225% of the poverty level, and ICR uses 100%. To apply for an IDR plan, borrowers usually need to provide their federal tax returns or alternative documentation of income, such as pay stubs or W-2s, along with family size details.

Managing Income-Driven Plans

The online application often allows for faster processing, especially if the borrower consents to retrieve their federal tax information directly from the IRS. This streamlines the process by eliminating the need to manually upload income documentation. Once enrolled, borrowers must annually recertify their income and family size to remain on the plan.

Annual recertification typically occurs around 12 months after the initial enrollment or last recertification. Loan servicers usually send reminders 60 to 90 days before the deadline. Failure to recertify on time can lead to consequences such as monthly payments no longer being based on income, potentially increasing to the amount under a 10-year Standard Repayment Plan. Borrowers can also opt for automatic recertification if they provide consent for the Department of Education to access their tax information.

Permanent Loan Forgiveness and Discharge

Permanent loan forgiveness or discharge provides the ultimate resolution to student loan obligations. Public Service Loan Forgiveness (PSLF) offers forgiveness for Direct Loans after 120 qualifying monthly payments while working full-time for an eligible government or non-profit organization. Borrowers pursuing PSLF must certify their employment annually using the PSLF Employment Certification Form.

Total and Permanent Disability (TPD) discharge is available to borrowers who are unable to engage in any substantial gainful activity due to a physical or mental impairment that is expected to last for a continuous period of at least 60 months or result in death. Documentation from a physician, the Social Security Administration, or the Department of Veterans Affairs is required to prove eligibility.

Borrower Defense to Repayment allows for loan discharge if a school engaged in misconduct, such as misrepresenting its services or employment prospects. Students must provide evidence of the school’s actions and how they were affected. Closed School Discharge applies when a borrower was unable to complete their program because their school closed while they were enrolled or shortly after they withdrew. Documentation of enrollment dates and the school’s closure is necessary.

Student loans can sometimes be discharged through bankruptcy. This usually requires proving that repayment would impose an “undue hardship” on the borrower and their dependents, a standard that is stringently interpreted by courts. The process involves filing a separate action within the bankruptcy case, and meeting the criteria for undue hardship is challenging.