Due to COVID-19, federal student loan forbearance has been extended by the government through January 31, 2022. This pauses required payments and gives you added breathing room to get your financial house in order. However, the Department of Education has announced that this will be the last extension. It does not apply to those with private student loans. This means that, if you believe you still will be unable to make your student loan payments, you should prepare to find solutions that will help you in the coming years to avoid going into default. 

Those solutions can include:

• Income-driven repayment plans. These are offered by the federal government for federal student loans. They give you the option of lowering your monthly bills depending on your income and family size. They may reduce your payment to nothing if you are unemployed or if your earnings are less than a certain level.
• Public Service Loan Forgiveness. This federal program discharges your debt after making 10 years of payments in a service-related capacity, such as the military, firefighting, nursing, teaching, or in government.
• Forbearance programs through your lender. Once the current pause ends, you may seek standard forbearance relief that gives you up to 12 months of relief. However, interest accrues on your loan.
• Deferment programs. These can defer payment as long as you qualify, such as through unemployment.
• Refinancing. This option is available to those with both federal and private loans. Through a refinance, monthly payments may be reduced or balances paid off faster.

Student loans generally are not available to be included in a bankruptcy filing. However, under specified circumstances, you may have this option. In order to pursue the discharge of your student loan, you will need to file an “adversary proceeding” and demonstrate that paying off your student loan would cause undue hardship on both you and your dependents. No single factor has been established to define “undue hardship” in these cases. Rather the court will look at various factors. These may include the potential for being forced into a poverty standard of living which would continue for a long time. However, your success is not guaranteed and the court has the discretion to discharge only a portion of your debt or none at all.