Due to the COVID-19 pandemic, unemployment rates are on the rise. Luckily, many students benefit from the federal student loan payment suspension program, which defers their payments until September 30th, 2021.
However, should you lose your job when that benefit ends, you still have an opportunity to defer your federal student loan payments.
Here’s what you need to know about unemployment benefits and how they can help you pause your student loan payments.
Right now — you don’t need to apply
If you have a federal student loan, your payments are automatically on pause through January 31th, 2022. You do not need to apply for this student loan deferment. If you are still sent a bill during this time, contact your service provider for more information.
Unfortunately, the pause on payments does not transfer to private loans. To see if they offer any assistance for unemployment, please contact your lender directly.
If you find yourself unemployed after the pandemic assistance runs out, you still have some options.
If you are on unemployment
After the pandemic, there is still assistance for those on unemployment benefits to get help with their federal loan payments.
You’ll need to contact your servicer and ask them what their process is for unemployment deferment. Generally, they will have you fill out an application and submit a few different documents.
Documents you’ll likely have to submit include:
- Proof of unemployment status – This will include your benefits statement and needs to feature your personal information.
- Proof of your job search – You will need to showcase that you’ve made at least six attempts within six months to find employment. Whether these are application submission emails or interview invitations.
Once these documents are approved, your unemployment deferment will likely be as well.
The length of Unemployment
Typically, you can continuously receive a deferment on your payments for up to 36 months. However, you’ll need to continue to submit proof of your unemployment status and job search every six months and go through the approval process again.
The length of time you can receive unemployment benefits also depends on which federal loan you have. You need to reach out to your student loan servicer for more information on the services they provide you.
Additionally, once you are working full time, let your servicer know, and they will stop your unemployment deferment plan.
If you’re not unemployed but still need help
Say you end up finding a part-time job, but you’re not making enough money to make your loan payments. Luckily, there are still options available for you.
As you look into these programs, you should remember that even when your payments stop or are reduced, you’re still accumulating interest. The longer you go without paying your loans, the more you tack onto them in the end. The interest could add years to your payment plan.
Being unemployed or underpaid is challenging enough — without having to worry about hundreds of dollars in student loan payments a month. If you find yourself in a challenging financial situation, be sure to reach out to your loan service provider to get the help you need.