How to Manage Student Loan Payments During Unemployment

When student loan payments are due, it is very important to get them paid. For those who use their newly earned college degrees to get an entry level job in the field, paying the loans usually isn't a problem. However, not everyone is able to find a job in the field, and for those who cannot find a job at all, managing student loan payments can be difficult. Despite the obstacle of unemployment, there are things that can be done to help ensure credit stays intact and loans stay out of collections.

Talk to the Lenders

The most important thing to do is to talk to the lenders. Keeping them apprised of the situation at hand will provide better results than avoiding them. Most of the time the lenders can work with you to place the loans in forbearance until a deferment application can be processed. Forbearance will keep the student loans current for credit reporting purposes but will not stop interest from accruing. If possible, interest payments can be made during forbearance. Another option to consider is making partial payments, because the little payments made now will help keep the principle balance low and stop the interest from killing you.

Apply for Deferred Payment

A deferment will excuse monthly payments for 12 months. This will provide ample time to secure employment with means to make monthly payments on time. There are several different deferment programs and applications, so it is best to choose the economic hardship option. This option will require proof of income before being approved. The deferment should be approved within a few weeks of receipt. When the application has been processed, a decision letter will be mailed. It is important to remember that only federal loans can be placed in deferment. Because private loans cannot be placed in deferment, arrangements will need to be made with each private lender directly to avoid collection activity and credit damage. Each lender will have different programs and policies available to help in times of need.

Continue Looking for Work

Don't give up the job search. There are plenty of other things to worry about besides student loans, such as housing and food. It is important to continue looking for work so as to have the means to sustain yourself. Those who are qualified should consider applying for unemployment and other benefits to assist them until another job can be secured.

Go Back to School

You may consider returning to school for a higher degree or a degree in another field. Though the debt will be higher, it will put the loans in deferment until 6 months after graduation, giving you more time and more qualifications for employment.

While making student loan payments should be higher on the priority list than something such as a new dress, it is important to ensure housing, food, and vehicle expenses are taken care of first. Don't neglect student loan payments in favor of something that is unnecessary, but don't risk your livelihood to make the payments.

 


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