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Student Loans: Loan Relief


These are difficult financial times. You are not alone: so many of us have been hit hard by the coronavirus (COVID-19) pandemic. These are unprecedented times where unemployment rates are staggeringly high. If you need debt relief from a student loan, you have options. Here are some resources you can use if you are struggling to pay back a student loan and need help.


Often, the first thing to do is to ask for help directly from the lender that gave you the loan. You write a formal letter, called a loan restructuring request letter, and request a modification to the terms of your student loan. This letter is the place where you can express your financial troubles in more personal terms, and it gives you the chance to request and receive better terms (like a temporary deferment period when you would not make payments, a lower interest rate, lower payments, or a longer repayment period). 


It is important to reach out to the lender directly when you are facing hardship because your credit can be negatively impacted and you can face collections activities if you fall behind and do not have a restructuring agreement in place. It is also important to reach out proactively before you fall too far behind in your payments.


​The main reasons people need a student loan modification are job loss or reduced income due to the coronavirus (COVID-19) pandemic. If the reason you need assistance is because of financial difficulties related to the coronavirus (COVID-19) pandemic, it is important to say that, because there are student loan relief programs directed at helping during those impacted by this crisis. However, other reasons you may need a loan modification or deferment include a change in your family finances (death, divorce, child care or care for the elderly), military duty and relocation, or health problems. You do not need to get overly personal, just simply explain how your circumstances have changed in general terms, and ask the lender directly for the relief you want. 

​Most lenders are interested in working with you, and, if you have a loan through the federal government, there are standardized loan deferment, forgiveness, and restructuring programs available. You can automatically take a break from making payments for a set period of time if your student loan was made through the federal government, provided you apply through their deferment program. You can take a deferment of months or even years. It is very common to apply for a deferment when you are furloughed or unemployed, to take a break from payments until your income picks back up. This is happening all the time right now, with so many people being laid off due to the coronavirus (COVID-19) pandemic. Your lender should be able to help process any request for a deferment. 


Still, any lender will need to know they will be paid if they come to new terms with you. That is why when writing your letter, you should explain that due to your changed financial situation, you need help but are not trying to avoid paying the debt.


It’s also important to be clear with your lender about what relief you want. Rather than ask them what coronavirus (COVID-19) related relief programs of loan modification options might be available, state directly what you want your monthly payment to be reduced to, what interest rate you want if you are asking for a lowered rate, or, if you want to defer payments for a certain number of months, tell them when you expect you will be able to resume payments. For example, if you have been furloughed due to the coronavirus (COVID-19) pandemic but will resume work at a certain point in the future, tell them that, and give them the date on which you expect you will be able to resume making payments.


The main thing for you to know is that you have rights. You have rights to request relief and rights not to be harassed about repayment. 


Sometimes you need more help than simply writing a letter to request a loan modification will give you. There might be more opportunities to apply for loan forgiveness or to apply for a program that discharges or reduces your payments based on your income or the type of job you hold than you know about or know how to apply for. You might need someone to make a plan and negotiate on your behalf. Also, sometimes it’s helpful to talk to a professional about the long-term implications on your credit and finances from taking a deferment or getting a loan forbearance. If you find yourself in that situation, Court Buddy can help. 


We have experienced lawyers nationwide who can help you with your personal financial situation; they can talk with you to better understand your situation, help you understand your rights, provide you with advice and counsel, make a plan and negotiate for you and your family. There are many ways for you to get out of debt, secure a brighter financial future, and peace of mind.


Do I Pay My Student Loan?
Yes, pay your student loan on time if you can.
What Happens if I Do Not Pay My Student Loan Bill?
If you do not pay on time, your credit score can go down, you can incur late fees, and, if you are too far behind, your debt can be sent to collections, meaning you could face a lawsuit or wage garnishment. However, many lenders and banks have COVID-19 related debt relief programs. And you have the right not to be harassed by debt collectors.
How Do I Get Help?
The first thing to do is let your lender know. Many lenders and banks have COVID-19 related debt relief programs, and if part of your debt is with the federal government, you can easily apply for a deferment or income-related loan forgiveness. If you need to consult with a lawyer, Court Buddy can help.
Here you can find sample letters to request student loan relief:
Here are resources and contact information for the largest student loan providers:

Court Buddy Cares and is here to help! Please call us toll-free at (866) 653-3017 for assistance. 

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