Must I pay student loans if I'm unemployed?

If you are unemployed, you may be able to get a temporary break from repaying student loans through a deferment or forbearance.

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Question

I attended a private university and I have a lot of student debt. I recently lost my job and am worried about not being able to keep up with the monthly payments. Do I have to pay my student loans while I’m unemployed?

Answer

No, probably not. If you have federal student loans and you meet the eligibility criteria, you can get a deferment of up to three years. During a deferment, you don’t have to make any loan payments.

How Student Loan Deferment Works

A deferment allows you to temporarily postpone making studnet loan payments for a set period of time. If your loans are subsidized (which includes Federal Perkins loans, Direct Subsidized loans, and Subsidized Federal Stafford loans), you are not charged interest during the deferment.

If your loans are unsubsidized, you’ll have to pay the interest that accrues during the deferment period. In most cases, this interest is capitalized (that is, added to the principal balance), though you can pay it during the deferment if you want. (To learn more about the different kinds of federal loans, see Nolo’s article Types of Federal Student Loans. You can find out specifically what type of loans you have at the National Student Loan Data System (NSLDS) website.)

Eligibility Criteria for Deferment

You can get a deferment on your federal student loans if you meet certain criteria, including if you're unemployed or unable to find full-time employment. (To learn about other situations that may make you eligible for a deferment of your federal student loans, read Nolo’s article What’s the Difference Between Student Loan Forbearance and Deferment?)

Deferment is not always available for private student loans. Deferments are available for federal student loans, but not always for private student loans. Some private lenders may allow you to temporarily postpone your payments, but they might charge interest during this time. The types of deferment options will depend on your lender and the specific loan product you took out. (Learn more about the difference between private and federal student loans.)

How to Obtain a Deferment

To apply for a deferment of your federal student loans, contact your loan servicer (the company you make your loan payments to). If you don’t know who your loan servicer is, visit the NSLDS website.

There is no fee to apply for a deferment of your federal student loans.

Other Options if You Can't Pay Your Student Loans

If you don’t qualify for deferment, you may be eligible for a forbearance. A forbearance is another way to temporarily postpone loan payments (or reduce the monthly payments). Unlike a deferment, interest will continue to be charged on all types of loans, including subsidized loans. (Learn more in Nolo’s article Student Loans: Cancellation, Deferment, and Forbearance.)

Another possibility is that you might be able to change your repayment plan to lower the monthly payment. (Learn more in Nolo’s article Student Loan Repayment Options.)

Keep Making Payments Until You Get the Deferment

You need to keep making the monthly payments on your student loans until you have been notified that you are approved for a deferment or another option. If you simply stop making payments (default) on your student loan, you will suffer negative consequences, such as a drop in your credit score, among other things. (Learn more in Nolo’s articles What Happens If You Default on Your Student Loans and Student Loans and Your Credit Score.)

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