Allied Financial/Sallie Mae

I have a student loan that I have been paying 285.00 for a year through Allied.I set up for another year,then a month later they call me back again telling me to reapply for the hardship loan.. I have been unemployed for about 3 years now,the CSB school of broadcasting went out of business right after I graduated here in Dallas.So I reapply for the hardship loan, now they tell my payments are higher.. Now I have to pay 350.00 or they will confiscate my assets,what little there is,to collect the debt. Does anyone know if this is legal..