Unemployment and Student Loan Deferment

Applying for a student loan deferment is much easier than it was in the past. The federal government recognizes that the economy is in great trouble and individuals may experience a loss of income due to unemployment. For this reason, it offers students the opportunity to have their loans deferred for a maximum period of 36 months, until the student can find work.

Contacting the Loan Servicing Center

The first thing you will need to do is contact the loan servicing center to notify them of your change of status. If you have missed any payments, or are unable to make your next payment, ask the representative if you qualify for a forbearance. Although it's not a deferment, it will suspend your payments for up to 60 days while your application for the deferment is being processed. Not only will this give you a little breathing room, but it was also prevent from any further negative action being taken against you or being reported to the credit agencies.

Completing the Application

Applications for deferment can be received in a couple of ways. You can have the representative mail one to you or you can simply visit the government website and download the unemployment deferment application form. Prior to completing the form, it's important to make sure that you meet the qualifications for the deferment. Two of the main requirements are:

  • The applicants must attest to the fact that they have been seeking employment in any field and at any compensation level.
  • The applicant must also be register with an employment agency within 50 miles of their address.

Students who are not required to provide additional documentation can submit their application electronically through the government's website. Those who qualify for unemployment must provide documentation of their eligibility for benefits during the requested deferment period. The documentation submitted must have the applicant's name, address and social security number clearly listed on it. Then, the application and the supporting documents must be returned through the mail.

Awaiting Approval

Most applicants who qualify for an unemployment deferment usually receive it, however it is your responsibility to make sure it was granted. It may take a few weeks before any correspondence is received from the loan servicing center. The best way to quickly update your account is to check online. You can also call to check the status of your application.

Things to Consider

A deferment is not a way out of the loan. Is is designed to help the borrower get back on his or her feet. Although the deferment is granted the borrower is still responsible for any interest that accrues on the unsubsidized portion of their loan during their deferment period. The maximum eligibility period for an unemployment deferment is 36 months, however applicants must reapply every 6 months. You are also required to notify the loan servicing center immediately after you have obtained full-time employment.

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