Comparing the Unemployment Protections of Private Lenders

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.

That’s in an ideal world.

But we live in a world, or at least a country, with $1.44 trillion in combined student loan debt. Eleven percent of borrowers fall behind on payments, which is why employment protections like economic hardship deferment are so important.

Consider that 33,000-plus jobs were cut in May alone, according to Challenger, Gray & Christmas. Having the ability to pause payments in the event of job loss gives borrowers some breathing room.

Of course, once you leave the federal loan system, you find that not all private lenders offer this level of protection.

The difference between federal and private protections

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

With a federal loan, you may be able to temporarily stop payments by applying for either type of relief. A borrower could enter deferment for as long as three years or forbearance for as much as one year.

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 you work with.

Private lenders’ economic hardship deferment and forbearance options

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

Newer lenders and fintechs with student loan unemployment deferment and forbearance

Among these lenders, you’ll find some creative solutions for serious problems. Fintechs are known for their customer-focused initiatives, and some of those listed below are no exception.

While these protections still fall short of those offered by federal loans, it’s nice to know these refinancing lenders may have your back.

1. SoFi offers Unemployment Protection to aid out-of-work borrowers who weren’t fired for cause. This forbearance period can span 12 months and is awarded in three-month increments. A borrower with a cosigner who maintains employment isn’t eligible for relief.

The unique part of SoFi’s forbearance option is that it comes with job-placement assistance from the company’s Career Advisory Group. You can work with a career coach, get resume help, and more.

2. Laurel Road offers up to a year of forbearance. This option is only available at the bank’s discretion, so not every situation will qualify.

3. CommonBond touts its CommonBridge program, which allows its customers to pause loan payments. It offers up to 12 months of forbearance in the case of economic hardship, whether caused by job loss or something else.

4. Education Loan Finance has no company-wide policy on protections, but does claim to “work with everyone that has an issue or situation that arises.”

5. Earnest reserves its forbearance protection for borrowers who have lost some or all of their income. Customers with unforeseen expenses such as a hefty hospital bill can also qualify.

The lender also offers other forms of repayment flexibility:

• Get 36 months of deferment when you attend an accredited graduate school
• Push back (or move up) a payment due date by seven days
• Skip one payment per year after six straight months of on-time payments

Bigger banks with student loan unemployment deferment and 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 like economic hardship deferment and forbearance.

They may offer both forms of relief but are likely shy about advertising either.

Unlike federal loan servicers, your private lender doesn’t have to grant you relief. Via their websites, they do generally encourage you to phone their customer service support if you expect to miss a payment due date.

6. Citizens Bank offers both types of protection. It notes that a borrower must make 36 straight months of on-time payments after leaving deferment or forbearance in order to release a cosigner.

• Deferment: Citizens Bank offers return-to-school deferment, meaning that you could pause your loan payments if you return to campus.
• Forbearance: The bank also offers economic hardship forbearance. It can be awarded in two-month periods for a maximum of 12 months. You must make nine payments before becoming eligible for forbearance, and can’t qualify for more than two forbearances in one five-year period.

7. First Republic, for its part, is upfront about its lack of protections. Its website includes the qualifier: “…this product does not contain special features such as forbearance periods and income-based repayment plans…”

8. Wells Fargo offers deferment and forbearance. However, by enrolling you lose any discounts, such as a lower interest rate for automatic payments.

• Deferment: Available while in school, plus six months after graduation, depending on your school and loan type.
• Forbearance: Beyond in-school forbearance, Wells Fargo offers other options, including what it calls current extension. Customers experiencing financial hardship can receive forbearance for either two months or six months at a time for up to one year. Forbearance can be requested twice per year.

Community lenders with student loan unemployment deferment and forbearance

Like other community lenders, the three banks below are platforms that connect you with smaller banks and credit unions. They can’t necessarily promise what their partner lenders will offer.

Get to know a particular lender’s student loan unemployment deferment and forbearance options before signing on to refinance or consolidate.

9. LendKey offers up to 18 months of forbearance to its borrowers, but the “up to” is an important qualifier. Prepare for the possibility of receiving a quote from a community bank that may have little to no protections.

10. PenFed does not offer deferment, but its partnering lenders — Citizens Bank and Pentagon Federal Credit Union — do offer forbearance on a case-by-case basis.

11. iHELP says it has forbearance options for borrowers who qualify. It also promises the flexibility of a 24-month period during which you could make interest-only payments.

Additionally, it offers a federal government-like graduated repayment plan for borrowers looking to temporarily lower monthly payments.

Gauge your need for deferment protections

Before moving forward with any kind of loan deferment, you should be aware of the pros and cons of doing so. 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 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.

Our marketplace of refinancing lenders is a great place to start.

Interested in refinancing student loans?

Here are the top 6 lenders of 2018!

Lender	Variable APR	Eligible Degrees
Get real rates from up to 4 Lenders at once Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Laurel Road. Laurel Road Disclosures VARIABLE APR – APR is subject to increase after consummation. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. 2 Important Disclosures for SoFi. SoFi Disclosures Student Loan Refinance: Fixed rates from 3.999% APR to 7.804% APR (with AutoPay). Variable rates from 2.480% APR to 7.524% APR (with AutoPay). Interest rates on variable rate loans are capped at either 8.95% or 9.95% depending on term of loan. See APR examples and terms. Lowest variable rate of 2.480% APR assumes current 1 month LIBOR rate of 2.07% plus 0.91% margin minus 0.25% ACH discount. Not all borrowers receive the lowest rate. If approved for a loan, the fixed or variable interest rate offered will depend on your creditworthiness, and the term of the loan and other factors, and will be within the ranges of rates listed above. For the SoFi variable rate loan, the 1-month LIBOR index will adjust monthly and the loan payment will be re-amortized and may change monthly. APRs for variable rate loans may increase after origination if the LIBOR index increases. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. *To check the rates and terms you qualify for, SoFi conducts a soft credit inquiry. Unlike hard credit inquiries, soft credit inquiries (or soft credit pulls) do not impact your credit score. Soft credit inquiries allow SoFi to show you what rates and terms SoFi can offer you up front. After seeing your rates, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit inquiry. Hard credit inquiries (or hard credit pulls) are required for SoFi to be able to issue you a loan. In addition to requiring your explicit permission, these credit pulls may impact your credit score Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org) 3 Important Disclosures for CommonBond. CommonBond Disclosures Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). The following table displays the estimated monthly payment, total interest, and Annual Percentage Rates (APR) for a $10,000 loan. The Annual Percentage Rate (APR) shown for each in-school loan product reflects the accruing interest, the effect of one-time capitalization of interest at the end of a deferment period, a 2% origination fee, and the applicable Repayment Plan. All loans are eligible for a 0.25% reduction in interest rate by agreeing to automatic payment withdrawals once in repayment, which is reflected in the interest rates and APRs displayed. Variable rates may increase after consummation. All variable rates are based on a 1-month LIBOR assumption of 2.08% effective July 25, 2018. 4 Important Disclosures for Citizens Bank. Citizens Bank Disclosures Education Refinance Loan Rate Disclosure: Variable rate, 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 August 1, 2018, the one-month LIBOR rate is 2.07%. Variable interest rates range from 2.72%-8.17% (2.72%-8.17% APR) and will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a cosigner. Fixed interest rates range from 3.50%-8.69% (3.50% – 8.69% APR) based on applicable terms, level of degree earned and presence of a cosigner. Lowest rates shown require application with a cosigner, are for eligible, creditworthy applicants with a graduate level degree, require a 5-year repayment term and include our Loyalty discount and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty and Automatic Payment Discount disclosures. The maximum variable rate on the Education Refinance Loan is the greater of 21.00% or Prime Rate plus 9.00%. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of their loan. 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 with the Education Refinance Loan. Borrowers should carefully review their current benefits, especially if they work in public service, are in the military, 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 and replace those with the benefits of the Education Refinance Loan. 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 at http://www.citizensbank.com/EdRefinance, 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. Citizens Bank Education Refinance Loan Eligibility: Eligible applicants may not be currently enrolled, must be in repayment of their existing student loan(s) and must make the minimum number of payments after leaving school. Primary borrowers must be a U.S. citizen, permanent resident or resident alien with a valid U.S. Social Security Number residing in the United States. Resident aliens must apply with a co-signer who is a U.S. citizen or permanent resident. The co-signer (if applicable) must be a U.S. citizen or permanent resident with a valid U.S. Social Security Number residing in the United States. For applicants who have not attained the age of majority in their state of residence, a co-signer will be required. Citizens Bank reserves the right to modify eligibility criteria at anytime. Interest rate ranges subject to change. Education Refinance Loans are subject to credit qualification, completion of a loan application/consumer credit agreement, verification of application information, certification of borrower’s student loan amount(s) and highest degree earned. 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. Co-signer Release: Borrowers may apply for co-signer release after making 36 consecutive on-time payments of principal and interest. For the purpose of the application for co-signer release, on-time payments are defined as payments received within 15 days of the due date. Interest only payments do not qualify. The borrower must meet certain credit and eligibility guidelines when applying for the co-signer release. Borrowers must complete an application for release and provide income verification documents as part of the review. Borrowers who use deferment or forbearance will need to make 36 consecutive on-time payments after reentering repayment to qualify for release. The borrower applying for co-signer release must be a U.S. citizen or permanent resident. If an application for co-signer release is denied, the borrower may not reapply for co-signer release until at least one year from the date the application for co-signer release was received. Terms and conditions apply. Average savings based on 18,113 actual customers who refinanced their federal and private student loans through our Education Refinance Loan between January 1, 2017 and December 31, 2017. The calculation is derived by averaging the monthly savings of Education Refinance Loan customers whose payments decreased after refinancing, which is calculated by taking the monthly student loan payments prior to refinancing minus the monthly student loan payments after refinancing. The borrower’s savings might vary based on the interest rates, balances and remaining repayment term of the loans they are seeking to refinance. The borrower’s overall repayment amount may be higher than the loans they are refinancing even if their monthly payments are lower.
	2.57% – 5.87%	Undergrad & Graduate	Visit Earnest
	2.80% – 6.38%1	Undergrad & Graduate	Visit Laurel Road
	2.48% – 7.52%2	Undergrad & Graduate	Visit SoFi
	2.47% – 7.99%	Undergrad & Graduate	Visit Lendkey
	2.57% – 6.65%3	Undergrad & Graduate	Visit CommonBond
	2.72% – 8.17%4	Undergrad & Graduate	Visit Citizens