Losing your job can be a major financial setback, especially if you have student loans to repay. However, there are a number of options available to help you manage your student loans if you’ve been laid off.
1. Forbearance
Forbearance is a temporary postponement of your student loan payments. You can request forbearance from your loan servicer if you’re experiencing financial hardship. There are two types of forbearance:
- General forbearance: You can request general forbearance for up to 12 months at a time. You can request general forbearance for any reason, including job loss.
- Economic hardship forbearance: You can request economic hardship forbearance for up to 36 months at a time. You must provide documentation of your financial hardship, such as a layoff notice or a termination letter.
2. Deferment
Deferment is another option for temporarily postponing your student loan payments. However, deferment is only available for certain types of loans, such as federal student loans for graduate students or parents of undergraduate students. You can also request deferment if you’re unemployed and actively looking for work.
3. Income-driven repayment plans
Income-driven repayment plans are designed to make your student loan payments more affordable by basing them on your income and family size. There are four income-driven repayment plans available:
- Revised Pay As You Earn Repayment Plan (REPAYE): Your payments are capped at 10% of your discretionary income.
- Pay As You Earn Repayment Plan (PAYE): Your payments are capped at 10% of your discretionary income, but you may be eligible for forgiveness after 20 years of payments.
- Income-Based Repayment Plan (IBR): Your payments are capped at 15% of your discretionary income.
- Income-Contingent Repayment Plan (ICR): Your payments are capped at 20% of your discretionary income, but you may be eligible for forgiveness after 25 years of payments.
4. Student loan forgiveness
If you’ve been laid off and you’re struggling to repay your student loans, you may be eligible for student loan forgiveness. There are a number of different student loan forgiveness programs available, including:
- Public Service Loan Forgiveness (PSLF): You can qualify for PSLF if you work full-time for a government or nonprofit organization for 10 years and make 120 qualifying payments on your student loans.
- Teacher Loan Forgiveness: You can qualify for Teacher Loan Forgiveness if you teach full-time for five consecutive years at a low-income school or educational service agency.
- Other student loan forgiveness programs: There are a number of other student loan forgiveness programs available, such as the Perkins Loan Cancellation Program and the Stafford Loan Forgiveness Program.
If you’ve been laid off and you’re concerned about your student loans, it’s important to contact your loan servicer as soon as possible. Your loan servicer can help you explore your options and find a solution that works for you.
What is the difference between forbearance and deferment?
Forbearance is a temporary postponement of your student loan payments. Deferment is a postponement of your student loan payments for a specific period of time, such as if you’re enrolled in school or serving in the military.
How do I apply for forbearance or deferment?
You can apply for forbearance or deferment by contacting your loan servicer. You will need to provide documentation to support your request, such as a layoff notice or a termination letter.
How long can I stay in forbearance or deferment?
You can stay in general forbearance for up to 12 months at a time. You can stay in economic hardship forbearance for up to 36 months at a time.
What happens when my forbearance or deferment period ends?
When your forbearance or deferment period ends, your student loan payments will resume. You may be able to request another forbearance or deferment period, or you may need to switch to an income-driven repayment plan.
Can I get student loan forgiveness if I’ve been laid off?
Yes, you may be eligible for student loan forgiveness if you’ve been laid off and you’re struggling to repay your loans. There are a number of different student loan forgiveness programs available, including PSLF, Teacher Loan Forgiveness, and other programs.
Losing your job can be a difficult experience, but it’s important to know that there are options available to help you manage your student loans. If you’ve been laid off, contact your loan servicer as soon as possible to discuss your options.