If a borrower is having problems repaying a loan, he should contact the company servicing the loan or the school he attended. There are a number of reasons for not being able to make your monthly payments, including unemployment, insanity, bankruptcy or even some medical complications. So what should you do when you realise that my student loans are gone? Can I cancel my student loan debt?

hgasgsahgsa5There are many names for the process of reducing a portion or all of your student loan debt due to some extenuating circumstances: cancellation, deferment, dischargement, forbearance or forgiveness. There are subtle differences in the details of the processes – Deferment and Forbearance are temporary postponements of your repayment schedule; Cancellation, Dischargement and Forgiveness remove your entire debt permanently.

If you are having problems repaying your loan, then contact the organisation servicing the loan before late fees are assessed. You might qualify for deferment or forbearance.


This is a temporary suspension of loan payments due to specific reasons, like re-enrollment, unemployment, bankruptcy or economic hardship. Deferment can be made up to three years. If you have a subsidised loan, you don’t need to pay interest during deferment. If you have an unsubsidized student loan, you have to pay interests during deferment; any unpaid interest will be “capitalised” that is it will be added to the principal balance.


This temporary postponement or reduction of payments due to a financial difficulty is a possibility for those who don’t qualify for a deferment. Applications should be made to the loan servicer. Interest continue to build-up on the unpaid principal. The student must repay the full balance. Forbearance is permitted for up to one year with a maximum of 3 years.

What If I Default?

saghsahgsa5If you’re having problems in reservicing your student loan, contact the company servicing your loan. The process of falling behind in payments is gradual. Usually after graduation, the student has a grace period of six to nine months to initiate repayment. If you default, the maturity date of each promissory note is accelerated – payment in full is immediately due. This makes a bad situation worse.

Penalties for Default

A loan default can negatively impact you for a long time. Credit bureaus will be notified; your credit rating will suffer. You will no longer qualify for other government loans and state benefits associated. So once you realise that my student loans are gone, make an effort to start repaying it back to avoid negative consequences of defaulting.