3 Ways to Handle Your Student Loans If You’re Homeless

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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.

ways to handle student loans when homeless

Financial hardships don’t discriminate; they can happen to anyone at any time. If you can’t make rent or pay your mortgage, you might find yourself homeless.

Being homeless can hurt you mentally, physically, and emotionally — and it also can crush you financially. Whether you work and can’t afford home payments or you’re unemployed, you still might be responsible for other bills, such as student loan payments. Understandably, that might not be your biggest worry right now.

If you’re homeless and can’t pay your student loans, here are three steps that could help you during these rough times.

1. Deferment and forbearance

When you don’t have a place to live, your focus tends to shift to finding one. Credit history, however, is a major part of qualifying for a mortgage or an apartment. If you have a history of not paying back your student loans, you could be indicating to lenders that you’re not able to make home payments.

Instead of ignoring your student loans, seek a pause in payments with deferment or forbearance. These actions allow you to stop paying your student loans temporarily due to financial hardship. Pausing your monthly payments in this way won’t impact your credit report negatively.

Under the deferment option, your federal debt repayment can be put off for up to three years and you might not have to pay interest on the loans, depending on the kind of loans you have. Forbearance pauses your repayments for up to a year, but the interest can add up. It’s understandable that accruing interest isn’t your biggest concern while you’re homeless. But when it comes time to repay your loans, your payments will be larger because of the added interest.

Your job or living situation could qualify you for deferment of your federal loans but check your eligibility first. Economic hardship is a qualifying reason for forbearance as well.

Both these options for federal loans are for a temporary period, so once your allotment is up for either one, you won’t be able to use it again.

Deferring private student loans is possible, but the opportunities vary by lender. Contact your servicer to see if you can set up student loan deferment due to economic hardship.

2. Income-driven repayment (IDR) plans

“Forbearance and deferment will ‘stop’ the loan payments, but I see this as a Band-Aid,” said Joshua Cohen, who runs a website called The Student Loan Lawyer. “The better option is to apply for IDR. It also looks better on credit, which may be important if the homeless person is attempting to get back on their feet and into housing.”

There are a few IDR plans available for federal student loans, and you could qualify for one depending on your financial situation. IDR plans can lower your monthly payments to as little as 10% of your discretionary income. If you don’t have any income, your payments might be as low as $0 per month.

One such option is the Income-Based Repayment (IBR) plan. It’s available if your prospective payments would be lower than your payments under the standard plan, and if you can show financial need. You can use our IBR calculator to see how much your potential payments could be.

Income-driven repayment plans are available only for federal loans. You can try to lower your private student loan payments by contacting your lender to see what it offers. Not all loan servicers provide repayment help, but it’s worth checking.

3. Forgiveness, cancellation, or discharge

There are other options when you’re homeless and struggling to pay your student loans as well. You could qualify for student loan forgiveness if you work as a teacher or are in public service. Under some circumstances, your loans could be canceled.

You also might be able to get your student loans discharged if you declare bankruptcy, but that possibility can be rare. Also, if you have a long-term or total disability, you can apply for a disability discharge.

You might be among the nearly 60% of homeless Americans who are working part time or full time, but many people are unemployed. If forgiveness or disability discharge aren’t options for you, look for local resources. There are some charitable resources, such as United Way 2-1-1 and Catholic Charities, which can help you during your time of need.

You have options if you’re homeless

Being homeless is so difficult that shouldn’t have to worry about anything else besides finding a place to live.

If you’re trying to take care of other financial obligations while struggling to find permanent housing, there are ways you can take care of your student loans so they don’t hurt you in the long run.

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1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Personal LoansFixed rates from 6.199% APR to 15.365% APR (with AutoPay). Variable rates from 6.145% APR to 14.685% APR (with AutoPay). SoFi rate ranges are current as of June 15, 2018 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your credit worthiness, years of professional experience, income and other factors. See APR examples and terms. Interest rates on variable rate loans are capped at 14.95%. Lowest variable rate of 6.145% APR assumes current 1-month LIBOR rate of 1.97% plus 4.175% margin minus 0.25% AutoPay discount. 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.
  2. 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)

2 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. 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.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has 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, student loans or other personal 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. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending 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.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan 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. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.

* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

  1. Personal Loan Rate DisclosureFixed interest rates from 6.49% – 19.49% (6.49% – 19.49% APR) based on applicable terms. Lowest rates range from 5.99%-18.99% (5.99%-18.99% APR), are for eligible applicants, require a 3-year repayment term, and include our Loyalty and Automatic Payment Discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. 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.
  2. Loyalty Discount: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower has a qualifying account in existence with us at the time the borrower has 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, student loans or other personal 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. This discount will be reflected in the interest rate and Annual Percentage Rate (APR) disclosed in the Truth-In-Lending 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.
  3. Automatic Payment Discount: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their Citizens Bank Personal Loan 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. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account two or more times within any 12-month period, the borrower will no longer be eligible for this discount.
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5.99% – 18.99%2$5,000 - $50,000Visit Citizens
15.49% – 34.49%$2,000 - $25,000Visit LendingPoint
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Our team at Student Loan Hero works hard to find and recommend products and services that we believe are of high quality and will make a positive impact in your life. We sometimes earn a sales commission or advertising fee when recommending various products and services to you. Similar to when you are being sold any product or service, be sure to read the fine print understand what you are buying, and consult a licensed professional if you have any concerns. Student Loan Hero is not a lender or investment advisor. We are not involved in the loan approval or investment process, nor do we make credit or investment related decisions. The rates and terms listed on our website are estimates and are subject to change at any time. Please do your homework and let us know if you have any questions or concerns.