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How to Get an Unemployment Deferment for Your Student Loans

To get an unemployment deferment, you must be collecting unemployment insurance or looking for a full-time job.

You can delay repayment of federal student loans for up to 36 months if you are unemployed. You must be collecting unemployment insurance or working part-time while looking for full-time jobs to be eligible.

You may not need to apply for a student loan deferment right away if the coronavirus pandemic has impacted your career. The federal government is deferring interest-free payments on federal student loans for nine months, until September 30, 2021. This break does not require an application or documentation; your servicer will apply it automatically.

If you plan to return to work shortly after the relief period ends, an unemployment deferment is typically the best choice. Otherwise, enrolling in an income-driven repayment plan that binds payments to your financial status is a better long-term option.

If you have private student loans

If you're unemployed or have a financial hardship, private lenders can allow you to defer payments. Over these periods of time, interest accumulates, rising the amount you owe. For further information on your lender's deferment and forbearance policies, contact them.

Applying for an unemployment deferment

To obtain this postponement, you must apply an unemployment deferment application to your student loan servicer. For acceptance, you must do one of the following with your form:
  • Make sure to provide evidence of unemployment insurance. You must have proof that you are still unemployed, such as a copy of your unemployment insurance from your state's Department of Labor. Your name, address, and Social Security number must all be included in this documentation.
  • Make sure you're looking for full-time jobs. In the last six months, you must have made at least six attempts to find full-time work. If there isn't one within 50 miles of your house, you must still be enrolled with an unemployment agency. It is not acceptable to use a temp agency or a job search website. 

If you're underemployed — working part-time but not full-time — you can even get an unemployment deferment. That means a career that lasts no more than three months and is less than 30 hours per week. You won't be eligible if you've turned down any recent full-time job offers, even if you're overqualified for the role. Your servicer cannot refuse your application if you fulfill the conditions for an unemployment deferment.

How long an unemployment deferment lasts

Unemployment benefits will last up to 36 months, but not all at once. Every six months, you must reapply for the postponement and meet the necessary requirements. The length of a deferment varies depending on the loan form. Your effective unemployment deferment is 24 months if you have a Federal Family Education Loan (FFEL) from before July 1, 1993. Borrowers with Perkins loans will get up to 36 months, but only in 12-month installments. All unemployment deferments come to an end after you've used up your eligibility or found work. You must notify your servicer as soon as you start working full-time.

Other options for reduced loan payments

If you've returned to work or otherwise don't qualify for an unemployment deferment, there are other payment-reduction options that will keep you out of default on your student loans. The best option for you will be determined by your financial situation:

If you are unable to make your existing payments. Monthly contributions are based on a proportion of your net income in income-driven repayment programs. These arrangements will stretch your repayment period to 20 or 25 years, eventually raising your repayment rate. Payments based on wages may be as low as $0, but the measurement is complicated by a variety of variables.

If you can't afford anything, even income-driven payments, you're out of luck. If you serve full-time and meet one or more of the following criteria: participating in the Peace Corps; receiving help from a program such as the Supplemental Nutrition Assistance Program (SNAP); or earning less than 150 percent of the poverty guideline for your family size and state of residence, you might be eligible for an economic distress deferment.

If you're trying to catch up on other financial obligations. You could have more urgent bills to cover once you start getting paid again, such as a high-interest credit card, than student loans. Student loan forbearance allows you to postpone payments at your lender's discretion. Since interest accrues on all loans, forbearance is not a good long-term choice — while the government is currently waiving interest for 60 days, retroactive to March 13 — but it may provide temporary relief.

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