Can You Postpone Student Loan Payments After a Car Accident?

The financial side of someone’s life is often one of the most complicated. If you find yourself injured and unable to return to work after a car accident, managing your bills and liabilities can get that much harder — not to mention the pressure of other expenses, like student loan payments, that aren’t on the forefront of your mind.

Although they might seem like the lesser of all your expenses, mishandling your student loan repayment has numerous financial implications for your future. Mainly, it can damage your credit score.

A lower credit score can stand as a roadblock between you and an auto loan, mortgage, or another credit facility. Fortunately, there are a number of ways you can pause your student loan payments after a car accident injury.

Income-Driven Repayment (IDR) Plans

Income-driven repayment plans tailor your monthly payment to a percentage of your income. It can even be reduced to $0 in some qualifying situations.

IDRs are broken into four categories:

• Income-based repayment
• Income-contingent repayment
• Pay as you earn
• Revised pay as you earn

They each carry small intricacies that differentiate them from one another, but the general premise remains the same. If you qualify, the organization that provided your student loan extends your repayment plan and reduces your monthly payment to an amount that’s tolerable based on your income at that time.

Federal student loans often come with IDR programs, while the availability of the program within private student loans will vary from lender to lender. If you’re looking to learn more about whether your situation qualifies for an income-driven repayment plan, reach out to your lender for more information. You should be able to find their contact information on the contract outlining your agreement or on any bills/statements you have available.

Deferment & Forbearance Options

Student loan deferment pauses your student loan repayment and the interest accumulation (on some loan types). It’s essentially a “hard stop” of your repayment, where qualifying individuals can pause their payments for up to three years.

Forbearance operates similarly but with one major caveat — interest still accumulates. You may be responsible for interest-only payments during the forbearance period or a lump sum amount to pay at the end of the timeline.

Both these options are granted based on specific criteria and are not guaranteed. As stated above, some private student loans don’t carry deferment or forbearance options at all. For federal student loans, you’ll need to visit the FSA and apply for one of these programs. Anyone with private student loans will need to speak with the organization behind their loan(s) for more information on repayment assistance programs.

How Do I Qualify for Deferment?

According to the FSA, you may qualify for a deferment if you’re:

• undergoing cancer treatment
• experiencing economic hardship
• in a graduate fellowship program
• enrolled in school at least half-time
• performing qualifying military service
• a post-active duty service member
• a Parent PLUS borrower with a student enrolled in school
• enrolled in a rehabilitation training program
• unemployed

How Do I Qualify for Forbearance? 

You may qualify for forbearance if you’re:

• experiencing financial difficulties, such as medical expenses or changes in income
• serving in AmeriCorps
• performing service that would qualify you for partial loan forgiveness through the U.S. Department of Defense
• working in a medical or dental internship or residency
• serving in the National Guard
• have student loan payments that are high in relation to your income
• working as a teacher to qualify for Teacher Loan Forgiveness

Total Disability Discharge Program

Those who are permanently disabled by their car accident and have federal student loans may qualify for Total Disability Discharge, a program that discharges “your federal student loans or TEACH Grant service obligation.” entirely. To qualify, you’ll need to be given a formal diagnosis by a medical professional outlining your confirmed disabled status and your inability to return to work.

Then, you must apply for the program and be approved. Although you’re still liable for taxes on the forgiven amount, it’s a thoughtful program that can help mitigate some of the stress surrounding your accident.

A Successful Claim Makes Getting Back On Track Much, Much Easier

Falling behind on any type of credit repayment can quickly snowball into something much more expensive and long-term. Thankfully, the FSA’s many repayment assistance programs offer a much-needed break for those suffering from injuries after a car accident or other complicated life circumstances. 

If your accident was the result of third-party negligence, Morgan & Morgan can help you advocate for the legal rights that protect you. With a successful claim, you’re provided with the compensation you need to support your student loan payments and post-accident life. Complete our free, no-obligation case evaluation to learn more about your legal options with our team at no upfront cost.