Which Student Loan Lenders Offer Economic Hardship Protections?

Written by Andrew Pentis

September 9, 2019September 9, 2020Student Loan RepaymentFeatured, Loans, Paying for College, Student Loans1129Andrew Pentis

Updated on September 9, 2019

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

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In an ideal world, you find a great job with a good career track. The steady income helps you make on-time student loan payments.

But Americans owe $1.56 trillion in student loan debt. And 11.5% of student loans are in default of 90 days or more, which is why employment protections such as economic hardship deferment are essential.

Consider that 38% of respondents for the National Association for Business Economics survey predict a recession in 2020. With painful memories of 2008, it is no wonder that many are nervous about their future job prospects. Having the ability to pause payments if you lose your job can give a borrower some breathing room.

Of course, if you leave the federal loan system, you’ll find that not all private lenders offer this level of protection. Let’s take a look at what’s out there, including…

Federal vs. private protections
Online lenders that offer deferment or forbearance
Banks that offer deferment or forbearance
A miscellaneous look at deferment and forbearance
Gauge your need for deferment or forbearance protections

Federal vs. private protections

Protections such as deferment and forbearance vary depending on whether your loans are from the federal government or a private lender.

With a federal loan, you can apply for relief to try to temporarily stop payments. A borrower could enter deferment for as long as three years or forbearance for 12 months at a time.

With certain federal loans, including direct subsidized loans, you typically won’t have to pay interest during deferment. This is not the case during forbearance. Private student loans will almost certainly continue to accrue interest during these periods.

Unlike federal loan servicers, private lenders aren’t held to a specific standard set of protections. The options available to you are dependent on the private lender with which you work. Terms may apply.

Online lenders that offer economic hardship deferment or forbearance

Some online refinancing lenders are more generous than others when it comes to student loan unemployment deferment and forbearance.

Among these lenders, you’ll find some creative solutions for serious problems. This is not a complete list of lenders that offer economic hardship deferment or forbearance, but it should give you an idea of your options.

SoFi

SoFi offers an unemployment protection program for out-of-work borrowers who weren’t fired for cause. This forbearance period, which is granted in three-month increments, can span 12 months.

SoFi’s forbearance option comes with job-placement assistance from the company’s career team. You can work with a career coach, get resume help and more.

It’s important to note that SoFi forbearance won’t extend your student loan repayment term, so your monthly payments — and principal balance if you don’t make interest-only payments — will increase.

Laurel Road

Laurel Road offers up to a year of full or partial forbearance in three-month increments.

It is only available at the lender’s discretion, so not every situation will qualify.

CommonBond

CommonBond allows its customers to pause loan payments. It offers up to 24 months of forbearance in the case of economic hardship, whether caused by job loss or something else.

You have to be less than 60 days delinquent on your loan to qualify. If you’re more than 30 days delinquent, CommonBond will try to process your request more quickly. After your request, you’ll schedule a phone call with a forbearance specialist to discuss the details.

Education Loan Finance

Education Loan Finance offers up to 12 months of forbearance due to financial hardships or medical difficulties.

The lender doesn’t provide more specifics on its website, so you’ll need to contact them for further information.

Earnest

Earnest offers up to 12 months of forbearance protection for borrowers who have lost income or experienced a significant increase in family costs.

The lender also offers other forms of repayment flexibility:

Push back a payment due date by seven days
Skip one payment a year after six months of on-time payments

Banks that offer deferment or forbearance

The pros and cons of taking out a student loan with a big bank aren’t always obvious, especially when it comes to protections such as economic hardship deferment and forbearance.

Unlike federal loan servicers, private lenders don’t have to grant you relief. However, a few banks do offer unemployment protections.

For example, Citizens Bank extends “economic hardship forbearance,” which can be granted in two-month periods for a maximum of 12 months. In this particular case, you would need to make nine payments before becoming eligible for forbearance, and you can’t qualify for more than two forbearances in a five-year period.

A miscellaneous look at deferment and forbearance

There are online marketplaces and banks that don’t necessarily fall into the categories we’ve mentioned. Here’s a look at a few other companies that do — and don’t — offer economic hardship deferment.

LendKey

LendKey offers up to six months of forbearance to its borrowers, but the “up to” is an important qualifier.

Because LendKey is an online marketplace, there’s a possibility of receiving a rate quote from a community bank that may have little to no economic hardship protections.

iHelp

iHelp, which connects customers with community banks, has a hardship forbearance option for borrowers who qualify, though its qualifications are not clear.

PenFed Credit Union

PenFed Credit Union does not advertise deferment, but it says it would step in to help if a borrower loses their job or has an extraordinary circumstance. These decisions would be made case by case.

First Republic Bank

First Republic Bank is upfront about its lack of protections.

Its website includes the qualifier: “… this loan does not contain special features such as rescission periods, forbearance periods or income-based repayment plans available for some student loans.”

Gauge your need for deferment or forbearance protections

Before moving forward with a loan deferment or forbearance, you should be aware of the pros and cons. Accruing interest, for example, can significantly increase the size of your loan when you stop making payments.

If you have stability in your personal life and career, you might prefer a lender that’s light on protections but offers great interest rates. In an ideal world, of course, you’ll find a lender or bank that offers both.

For borrowers in more tenuous situations, work with a lender that offers an array of economic hardship deferment and forbearance options. It could make all the difference.

Sarah Sharkey contributed to this report.

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Lender	Variable APR	Degrees That Qualify	More Info
	0.99% – 11.98%¹	Undergraduate Graduate	Visit College Ave
	1.13% – 11.23%²	Undergraduate Graduate	Visit SallieMae
	0.99% – 11.44%³	Undergraduate Graduate	Visit Earnest
	1.50% – 11.33%⁴	Undergraduate Graduate	Visit Ascent
	1.12% – 11.23%⁵	Undergraduate Graduate	Visit SoFi
	1.15% – 11.01%⁶	Undergraduate Graduate	VISIT CITIZENS
Learn more about private student loan lenders. Learn more about private student loan lenders.

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²Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

³Rate range above includes optional 0.25% Auto Pay discount.

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Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 1.15% – 11.01% (1.15% – 10.24 APR)Fixed interest rates range from 4.18% – 11.70% (4.18% – 10.83% APR).

Graduate Rate Disclosure: Variable interest rates range from 1.89% – 10.66% (1.89% – 10.41% APR). Fixed interest rates range from 4.64% – 11.23%% (4.64% – 10.95% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.89% – 9.22% (1.89% – 8.50% APR). Fixed interest rates range from 4.38% – 10.44% (4.38% – 9.72% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.89% – 8.02% (1.89% – 7.72% APR). Fixed interest rates range from 4.28% – 9.24% (4.28% – 8.94% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 1.97% – 7.06% (1.97% – 7.06% APR). Fixed interest rates range from 4.94% – 8.58% (4.94% – 8.58% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.44% – 9.58% (4.44% – 9.52% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.83% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.53% – 7.03% (3.53% – 6.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.98% – 10.09% APR).

Variable Rate Disclosure: Variable Rates are based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of June 1, 2021, the one-month LIBOR rate is 0.09%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or Prime Rate plus 9.00%.

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Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer. Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.

Which Student Loan Lenders Offer Economic Hardship Protections?

Private Student Loan rates starting at 0.99% APR

Federal vs. private protections

Online lenders that offer economic hardship deferment or forbearance