Economic Justice: Student Loan Debt and Sexual Assault
Victims of sexual violence often incur a great amount of post-trauma debt and expenses. This additional economic hardship may make it challenging for the victim to stay current on her monthly bills, including her student loan payments.
If a victim is struggling to meet her current student loan obligations, she should contact her student loan provider immediately to obtain a temporary deferment or forbearance. This may allow the victim to temporarily postpone or reduce federal student loan payments. Failure to immediately contact the loan servicer to request a deferment or forbearance may result in additional fees, penalties, interest, and/or default on the loan.
A deferment is a period of time, generally up to 3 years, during which repayment of the principal and interest of the federal loan is temporarily delayed. During a deferment, the victim generally does not need to make payments. As an added bonus, depending on the type of loan, the federal government may pay the interest on the loan during the deferment period. If the federal government does not pay the interest on the loan during deferment (such as on unsubsidized loans or on any PLUS loans), the interest may be capitalized (added to the principal balance), and the amount the victim must pay in the future will be higher. Requests for deferment must be made to the agency where the victim makes her student loan payments.
The most common reasons that a deferment will be granted for a victim of sexual violence include:
If a victim cannot make scheduled loan payments, but does not qualify for a deferment, the loan servicer may be able to grant the victim a forbearance. With a forbearance, the victim may be able to stop making payments (or reduce monthly payments) for up to 12 months. Interest will continue to accrue on the loans. There are two types of forbearances: discretionary and mandatory:
For discretionary forbearance, the lender decides whether to grant forbearance (or not) for financial hardship or for illness.
For mandatory forbearance, the lender is required to grant the forbearance. The most common reason mandatory forbearance is granted to sexual assault victims is when the victim can prove that the total amount she owes each month for all student loans is 20 percent or more of her total monthly gross income. During forbearance, interest will continue to be charged on all loans. Victims can pay the interest during forbearance or allow the interest to accrue (accumulate). If the victim does not pay the interest on her loan during forbearance, it may be capitalized (added to her principal balance), and the amount she must pay in the future will be higher.
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*NICCSA is a project of the Southwest Center for Law and Policy (www.swclap.org) This project is supported by Grant No. 2017-SA-AX-K001, awarded by the Office on Violence Against Women, U.S. Department of Justice. The opinions, findings, conclusions, and recommendations expressed in this publication/program/exhibition are those of the author(s) and do not necessarily reflect the views of the Department of Justice, Office on Violence Against Women.