Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

If you’re unemployed, keeping up with your student loans might seem impossible. However, depending on what type of student loans you have, you might qualify for unemployment deferment. This will temporarily pause your student loan payments, giving you time to job hunt.

Here’s what you should know about unemployment deferment:

What is unemployment deferment?

Unemployment deferment is a way to temporarily pause your student loan payments if you’ve lost your job. Here’s how it works for federal and private student loans:

  • Federal student loans: You can apply for unemployment deferment for federal student loans for up to three years. You’ll need to show that you’re eligible to receive unemployment benefits and are unable to find full-time work.
  • Private student loans: Any type of deferment — including unemployment deferment — for private student loans is provided at the discretion of the lender. You’ll need to check with your lender to see what options are available to you.

Keep in mind that interest might stop accruing a deferment period, depending on the type of loan you have. This is different from forbearance, where interest typically continues to accrue while you’re not making payments.

Coronavirus and student loans: Because of the COVID-19 pandemic, student loan payments, interest, and collections have been paused by the CARES Act through Jan. 31, 2021.

While there might be new government action to extend these coronavirus-related benefits, you should plan to resume regular student loan payments later in 2021 unless you’ve been approved for further deferment or forbearance options.

Learn More: What Is Student Loan Deferment?

Applying for federal student loan unemployment deferment

If you have federal student loans, you can apply for unemployment deferment through your loan servicer. An application for unemployment deferment is also available from the Department of Education, but it’s a good idea to contact your servicer to see if any other forms are also required.

You’ll also need to submit documentation that shows your eligibility for unemployment benefits as well as your job search history.

Tip: Until you’ve received confirmation from your loan servicer that your deferment has started, continue making payments as scheduled so you don’t accidentally miss any payments and end up in student loan default.

Applying for private student loan unemployment deferment

If you have private student loans, you’ll need to check with your lender to see if they offer any deferment and forbearance options. If they do, your lender can also walk you through the steps to apply.

Keep in mind: Not all lenders offer deferment as an option if you’ve lost your job. Some might allow you to place your loans in forbearance, though.

For example, Sallie Mae doesn’t provide unemployment deferment, but you can request a temporary forbearance in cases of economic hardship by calling their customer service team.

  • Advantage: You can apply for forbearance by contacting the Kentucky Higher Education Student Loan Corporation (KHESLC) at 800-693-8220.
  • Ascent: You can request a temporary hardship forbearance through Launch Servicing by completing and signing an application. Contact Launch Servicing at 877-354-2629 for more information.
  • Brazos: Contact your loan servicer to find out about hardship forbearance options. Brazos works with several servicers. Find the website and phone number for yours here.
  • Citizens Bank: If you’re having trouble making payments on your Citizens Bank loan, contact Firstmark Services at 855-819-7137 to see if you qualify for deferment or forbearance.
  • College Ave: You can request forbearance by calling College Ave at 844-803-0736.
  • EDvestinU: Contact EDvestinU at 855-887-5430 to see if you qualify for deferment or forbearance.
  • INvestEd: Contact American Education Services (AES) at 800-233-0557 to discuss deferment or forbearance options.
  • MEFA: MEFA offers forbearance during economic hardship. Contact AES at 800-233-0557 to see what options are available to you.
  • PenFed: If you have PenFed loans, head to PenFed’s online financial hardship center to apply for a temporary or permanent hardship, depending on how long you expect the situation to last. PenFed offers both deferment and forbearance options.
  • RISLA: You can apply for forbearance on your RISLA loans by mail, fax, or uploading your documents online. You can find the application here.
  • Sallie Mae: You can temporarily pause your Sallie Mae payments through forbearance. Contact them at 800-472-5543 to get started.
  • SoFi: SoFi offers an Unemployment Protection Program that suspends payments for up to 12 months in three-month increments. Contact SoFi at 855-456-7634 for more information.

Check Out: Private Student Loan Consolidation

How long does deferment last?

If you’ve had your loans deferred, here’s a rough idea of how long your benefits might last:

  • Federal student loans: Deferment periods for federal student loans generally last six to 12 months, depending on the type of loans you have. You might be able to take advantage of unemployment deferment for federal student loans for up to a maximum of three years. You’ll need to show that you’re able to receive unemployment benefits and that you’re looking for full-time work to remain eligible.
  • Private student loans: With private student loans, the length of deferment is at the discretion of your lender. If you need more time, you’ll need to contact your lender to see if you’re eligible.

Alternatives to unemployment deferment

If you don’t qualify for unemployment deferment, there are other options available that could help you manage your student loans while you’re looking for work. Here are several alternatives for student loan repayment help to consider:

  • Income-driven repayment (IDR) plans: If you have federal student loans, you can sign up for an IDR plan. These plans base your payments on your income as well as extend your repayment period. Depending on the plan you choose, you could have any remaining balance forgiven after 20 to 25 years of on-time payments. There are four IDR plans to choose from: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR).
  • Apply for forbearance: Forbearance is another potential way to temporarily postpone your payments. You’ll need to contact your servicer or lender to see if it might be available for you. Keep in mind that interest might continue to accrue while your loans are in forbearance.
  • Contact your lender: Even if you don’t think you’ll qualify for unemployment deferment, it’s a good idea to contact your lender if you’re having trouble making payments. You might be surprised to find more options are available to you.
  • Try refinancing: Once you’ve found your next job, you might want to consider refinancing your student loans. Through refinancing, you could qualify for a lower interest rate and reduce your overall loan costs. Or you could extend your repayment term to get a lower monthly payment, which could help you catch up on your other bills. While you’ll generally need good to excellent credit to qualify for refinancing, some lenders also offer options for refinancing with bad credit.
Keep in mind: If you refinance federal student loans, you’ll lose your federal benefits and protections, including access to IDR plans and student loan forgiveness programs.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutes
  • Won’t impact credit score – Checking rates on Credible won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

See Your Refinancing Options
Credible is 100% free!

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a Credible expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

Read More

Source Google News