There have been comments on one of my email Listservs regarding the Department of Education Act, 2019 provision allowing federal student loans to be put into deferment during a borrower’s active cancer treatment. President trump signed this bill in September of 2018, and it was supposed to be effective “immediately.” Unfortunately, borrowers hoping to receive this relief have faced obstacles.

The primary problem is that the Department of Education still has not provided the application for borrowers to apply and to be given a deferment. If granted the forbearance, the student loans are on “hold” during active treatment, and then for an additional six months after treatment has ended. Instead, many borrowers have received “forbearance” from their servicers. The loan status of “deferment” is incredibly important (as opposed to forbearance) because in some instances the interest on the loans won’t continue to accrue on the balance. The Department of Ed has a webpage for the loan typeswithout interest accrual.

The most important thing, from my perch anyway, is that under many circumstances, an adjustment to an Income Driven Repayment Plan (IDR) may be a better long-term option for borrowers going through treatment. Putting loans in deferment, versus adjusting to a lower or “zero” payment, may be much more expensive in the long run, and the non-dischargeable status of these loans in bankruptcy has been confirmed over and over recently by the courts. For Parent Plus Loans, which do not receive an interest free deferment unless the parent also has other student loan where they are the student, placing them in Income Contingent Repayment(ICR) may be the better option for the future.

Of course, if you or a loved one are going through a cancer treatment plan, the LAST thing to worry about is student loan garnishment or tax intercept- so make sure you get them handled quickly. You can download my free eBook on Federal Student Loans, “Do You Have the Right Student Loan Payment” for step-by-step guidance on getting your options.

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