How do I pay student loans when unemployed?
Can I postpone them for good years?
It is hard to get out of bed without stressing over liabilities when unemployed. These thoughts consume most of the thought processing.
If you need a bad credit loans on guaranteed approval for unavoidable expenses, student loans may prove the greatest obstacle to the loan approval. There is no magic wand to get rid of them completely. Instead, one needs to find ways to deal with it when unemployed.
The blog is about finding ways to manage student loans repayments when unemployed.
Student Loans Pandemic Benefits
If you are reading it anywhere between March 2020 to May 2022, there are multiple options for you to pay for your student loans.
If you have federal direct loans-
You can issue a forbearance until August 31, 2022. There exist no due payments. Interest will remain at 0% until August 2022. It means the loan won’t grow.
Federal loans are the loans provided directly by the government. These loans generally have low-interest rates as compared to private student loans.
If you have a federal loan when unemployed, you do not need to worry about the loans but fetching a job.
You do not need to apply for forbearance. The servicer will automatically update the status. If he doesn’t, you can apply for the same.
What is Student Loans Deferment?
Student loan deferment is a process that allows one to defer the student loan payments temporarily. If you have federal loans, you can defer the student loans payments for up to 3 years. One can file for student loan deferment if one is unemployed or cannot find suitable job opportunities for up to 3 years.
How To Apply for Student Loan Deferment When Unemployed?
You can submit a student loan deferment application to the servicer. You need to follow the below steps to defer the loan.
Step 1 – Fill out the form and attach the benefits document
You need to fill out the application form accurately and attach the unemployment benefits proof. You can get the same from the Department of labor. The document includes important details like- Social Security Number, name and address.
Step 2 – Prove your efforts to get the job/employment
Prove your employment efforts to get the loan deferment approval. Using a temp agency for job applications or job searches online would not count here. Apart from that, you must also register with an unemployment agency. These are some pre-requisites to get approval on loan deferment.
Make sure to make repayments on the student loan until the provider approves the student loan deferment.
On the other hand, if you do not want to stop paying the student loan repayments altogether, apply for student loan forbearance.
What Does Student Loans Forbearance Imply?
Student loan forbearance allows you to reduce the loan amount you need to pay on student loans. Federal student loans offer student loans forbearance. You will need to check the same from the private student loan providers. There is a minor difference between student loan forbearance and deferment. Unlike student loan deferment, one has to accrue interest on the loan during the student loan forbearance.
Post-Pandemic, all federal loans have been placed in administrative forbearance with a temporary interest rate. As mentioned above in the article, the student loan forbearance is extended until August 31 2022.
Post this period, apply for a general forbearance on a federal loan due to a change in employment. General forbearance applies to direct loans for 12 months. Individuals may request another forbearance if unemployment trouble doesn’t end there.
To apply for forbearance on private student loans, talk with the student loan provider. Along with the deferment application, you will need to prove your eligibility for the same. Until the forbearance gets in place, an individual has to be regular with the payments.
If neither of these options work, you can try budgeting and prevent your debt from increasing
How To Prevent Rising Student Loan Debt?
It is important to keep your options clear when dealing with student loan debt. Here are some options that you can use to keep your debt from multiplying
1) Contact your Student Loan Provider
The first thing you need to do without the wait is to inform the student loan provider of your financial situation.
Explain to them your inability to pay off the remaining payments now. The provider will help you switch to an affordable payment mode by revising your payments. He may halt the payments for some time. This is an opportunity to look out for and grab a suitable employment opportunity.
2) Pay the Interest Amount
It will be great to pay off interest payments on your student loans. It is important when you are on a private student loan. In this, the interest rate continues to increase. If you can afford only a part of interest payments, direct your payments to high-interest loans.
Ensuring the loan doesn’t prove to be trouble later is imperative. Hence, you can use money from other saving options like- emergency funds, earning from dividends, or income from benefits for the unemployed to pay off the loan. It will help you reduce the trouble when you re-start paying off student loans post getting a job.
3) Start a Side gig
Waiting for a permanent job opportunity is great but meanwhile, search for part-time opportunities. It will help you meet minimal loan payments. Tap into various opportunities provided by employers online. Some of these are simply working from home opportunities. Check out these opportunities according to your area of expertise and knowledge. You may hit some good opportunities along the way. As a freelancer, you can write content, Copy write, take photographs, do SEO, design websites, develop websites, tutor, etc.
4) Check out for Student Loan Refinancing Opportunities
Student loan refinancing is best to refinance multiple loans into a single monthly payment. Check out for the lenders offering student refinancing opportunities at a low-interest rate. Some employers offer student loan refinancing opportunities.
Check out whether or not you had this provision in your previous employment. If you had, can you talk this out with your past employer? If not, seek job opportunities with employers offering student loan benefits or student loan refinancing options. Suppose there is, leverage the opportunity. Do not let it go!
5) Check out Income-Driven Plans
The government provides income-driven plans for student loans. In this, the plan aims at forgiving the student loan borrowers bound to a job to make repayments. You can halt the payment for 20-25 years. After that, you will no longer have to pay.
Can Student Loans be Cancelled?
If you enrolled to study after September 1, 2006, any outstanding balance would be cancelled post turning 65.
After 25 years, the remaining balance of a Plan 1 loan will be waived if you start studying on September 6.
Check out whether or not you qualify for any of the above situations and claim the same. Or, if not, browse through opportunities for loans with no guarantor to get urgent assistance.
Thus, unemployment is not the end of the world. Don’t ponder too much over student loan increasing debt. Instead, check out opportunities to waive it off or defer it for a certain time. Remember, job loss is temporary, but halting student loan payments for a long can have a long-term financial impact. Thus, get proactive in making student loan payments in whichever way you can. It will prevent you from defaulting on student loans.