Unemployed And Can’t Pay Student Loans

Q: I am unemployed and can’t pay student loans back at this time. I need help figuring out how to suspend these student loan payments or avoid having to make these student loan payments while I am unemployed?

A: For those who are unemployed and can’t pay student loans back at this time, you do have some options, which will depend on the current status of your student loans and what type of student loans you have.

First, know that most federal and private student loans offer a six month grace period after graduation or the date you quit school. During the grace period, borrowers will not have to make any student loan payments, unless they choose to do so.

Second, with student loans that have entered into repayment (meaning you have already surpassed the grace period on the student loans), you most likely have a forbearance or deferment option on the loans. Both federal student loans and (most) private student loans offer what is known as forbearance or deferment. Though the exact terms/rules for deferment and forbearance can vary, essentially choosing to utilize the deferment or forbearance option on your student loans will suspend the student loan payments for up to six months (typically). Forbearance and/or deferment can help prevent your student loans from going into default while you are unemployed, however the interest on your student loans can capitalize during forbearance or deferment, depending on what type of student loans you have (for private student loans the interest will almost always capitalize).

Lastly, for those who are unemployed and have exhausted their grace period and forbearance and/or deferment, realistically, these borrowers have very few options. Borrowers who fall into this category can try to consolidate their student loans (federal and private student loans must be consolidated separately), to see if they could take advantage of the deferment option associated with the new consolidation loan, however be aware that when consolidating your student loans, you will likely pay more over the lifetime of the loan, and a consolidation loan for private student loans can be very difficult to secure. Beyond these options, borrowers will need to contact the loan lender(s) directly, and see what (if any) options they have for those who are unemployed and cant make their student loan payments.