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 refinancing and consolidating your student loans.
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|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. 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. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.05% – 6.47%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|