Note that the situation with student loans has changed due to the impact of the coronavirus outbreak. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.
* * *
As a new graduate, it can take a long time to find a job — and even after you do, there’s no guarantee of job security. If you find yourself unemployed with student loans, it’s normal to be freaked out about how to deal with your debt.
Fortunately, you do have options for managing your student loans while you’re out of work. Here are some ways you can keep your student loan debt in check until you land another job.
Unemployed with student loans? 6 steps you can take
It’s important to keep a clear head when you’re unemployed and juggling student loans. The last thing you want to do is rack up high-interest debt by using a credit card to cover expenses so you can make loan payments on time. Instead, take a look at some other options that could keep you on track without adding to your debt.
You never want to face delinquency or default on your student loans. The student loan delinquency rate is above 25% in some parts of the U.S. — to avoid becoming part of that statistic when you lose your job, get on the phone with your servicer as soon as possible.
If you have federal loans, you can apply for deferment or forbearance, which allow you to pause your repayment. During a deferment, you might not be responsible for the interest that accrues on direct subsidized loans (though you would under forbearance).
Even better, you 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 even end up with a payment of $0, although 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 protections for borrowers, and you might even be able to put payments on hold for a few months.
As soon as you’re out of a job, you need to file for unemployment if you’re eligible. That’s a simple way to ensure at least some money is coming in to pay your 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 get up to $235 a week, while over in Massachusetts you may be able to claim as much as $823. That might not seem like a lot, but it could 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.
Even if you were able to get a forbearance or deferment on your student loans, you should try to cover any interest charges. You could pay less than your typical monthly payment, but still ensure your balance doesn’t balloon while you’re out of work.
It might seem easier to avoid making any payments at all when you’re unemployed, but you should consider how much that will ultimately add to your debt load. You can estimate the cost of forbearance or deferment by using our deferment calculator.
As you apply for jobs, or just use the time to reflect, consider taking up a side hustle. Tap into the benefits of the booming sharing economy or pick up part-time work via Uber, TaskRabbit, DoorDash or other apps. There are even freelance gigs you can work from the comfort of your home.
These opportunities can earn you some extra cash while unemployed, while still allowing you to attend job interviews and networking events to secure your next full-time position.
Although you might feel desperate to start working full time again, consider the bigger picture before you accept the first position that comes up. For example, you might be offered a job you don’t really like — in this case, carefully weigh the pros and cons of such a trade-off.
Take the time to research salary rates, so you have the data to get what you deserve when it comes time to negotiate with your future employer.
Remember when your parents told you to have at least three months’ worth of expenses in savings? This is why.
You should always try to have an emergency savings fund — and if you do have one, tiding you over while you’re looking for another job is a perfect reason to use it. Then, once you’re back to work and your student loans are under control, make replenishing that emergency fund a top priority.
Unemployment isn’t the end of the world
You might feel awful about losing your job and worried about the future. But don’t kick yourself over your student loan debt — instead, take advantage of whatever options you have to keep making payments or otherwise avoid falling behind.
Remember: Job loss is temporary, but adding to your debt could further complicate matters down the road. Be proactive about pausing student loan payments to avoid going into delinquency or default.
Rebecca Safier and Larissa Runkle contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.99% – 5.64%4||Undergrad & Graduate|
|1.98% – 8.55%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|Check out the testimonials and our in-depth reviews! |
1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of October 1, 2020.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 2020, 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 7/31/2020. 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 protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 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.
5 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.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.