You have a good career, pay your bills on time, and make your monthly student loan payments. Then the worst happens: You lose your job.
It’s a terrible scenario for anyone, but it’s especially scary when you have a mountain of student loan debt to tackle. Without that income, you might freak out. Don’t worry, though. You have many options to manage those loans while you’re out of work.
Here’s what you can do to keep your student loan debt in check until you find a new job.
How to pay student loans when you’re unemployed
It’s important to think with a clear head when you’re unemployed and dealing with student loans. The last thing you want to do is rack up credit card debt by making loan payments with one. Instead, try some other options that will keep you on track without adding to your debt.
1. Talk to your loan servicer
You never want to face delinquency or default on your student loans. The student loan delinquency rate is 11.2%. To avoid becoming part of that statistic when you lose your job, get on the phone with your servicer ASAP.
If you have federal loans, you can apply for deferment or forbearance. During a deferment, you might not be responsible for the interest that accrues on Direct Subsidized Loans, among other loan types. During a forbearance, however, you’ll be responsible for all interest that accrues, no matter the loan type.
You also could chat with your federal loan servicer about other payment options, such as income-driven repayment plans. These plans adjust your monthly payment to a percentage of your discretionary income. You might not even have to pay anything under one of these plans. However, interest will continue to accrue.
With private student loans, you might not have as many options for managing payments. But it’s still best to talk with your private student loan servicer. As with the government, some lenders have unemployment protections. You might even be able to put payments on hold for a few months.
2. Apply for unemployment
As soon as you’re out of a job, you need to file for unemployment. That’s a simple way to ensure some money is coming in to pay daily living expenses.
Each state sets its own guidelines for how much money you can collect on unemployment and for how long. In Mississippi, for example, you can only get up to $235 a week, whereas in Massachusetts you can claim up to $769. That might not seem like a lot, but it will certainly help keep you afloat.
Visit your state’s employment website to find out the process for applying. Even after qualifying for unemployment, make sure you understand what requirements you need to meet in order to continue receiving benefits.
3. Pay the loan interest
Even if you were able to get a forbearance or deferment on your student loans, you should try to cover any interest charges. You’ll pay less than your typical monthly payment while ensuring your balance doesn’t balloon while you’re out of work.
It might seem easier to avoid making payments, but you have to consider how doing so could affect how long you’re in debt.
4. Start a side hustle
Just because you lost your full-time job doesn’t mean you can’t start a side hustle. In between applying for jobs, tap into the benefits of the booming sharing economy. It doesn’t take much money, if any, to sign up for apps such as Uber, TaskRabbit, DoorDash, and more.
These gigs can earn you some extra cash while affording you the flexibility to go to job interviews and networking events to secure full-time work.
5. Tap into your emergency fund
Remember when your parents told you to have at least three months’ worth of expenses in savings? This is why.
Losing a job is the exact reason why you should always have an emergency savings fund. It should be able to tide you over while you’re looking for another job.
You might have to cut back on extraneous expenses, such as your daily Starbucks or the occasional night out, to build your savings. But even a few thousand dollars sitting in savings can tide you over in an emergency. Those savings could help you avoid taking out more debt in a time of need, too.
Once you’re back to work, replenish your emergency fund.
Unemployment isn’t the end of the world
You might feel awful about losing your job and worried sick about your future. But worrying about your student loan debt won’t make the situation better. Instead, take advantage of all the options you have to keep making payments or at least avoid delinquency.
Remember: Job loss is temporary, whereas adding to your debt can complicate matters down the road.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% 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 email@example.com, 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|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|