Student Loans During Unemployment

Losing your job is difficult, no matter how well-paid you are. However, having student loan payments due every month can make a tough situation feel almost unbearable. The squeeze of less income yet ongoing debts can hurt. What helps ease the financial pain when unemployed?

Selling off assets that aren’t totally necessary could also generate some cash to help meet basic needs. Maybe an extra car, jewellery, electronics, or other items could go and provide a few months of basic living funding in the transition. Hang in there and keep pushing ahead in the job hunt.

If you still struggle with debt payments after trying all options, search for bad credit loans with no guarantor needed. You can opt for no broker and choose a direct lender. Personal loan companies provide funds to jobless people or people with poor credit because they take full lending risk. Use only as a last resort, and get free debt counselling first if possible.

Seek Financial Assistance

If out of work and struggling with debt, look into nonprofits offering money help. Some give funds to pay down student loans for those in need directly. Others help with paperwork, budgeting, or free money advice. Many government loans can help, too!

Government Benefits

Benefit NameEligibility CriteriaPayment AmountApplication ProcessFrequency of Payment
Universal CreditUK resident, low/no income, age 18+£250 – £600/monthApply online via GOV.UKMonthly
Jobseeker’s Allowance (JSA)Unemployed, actively job searchingUp to £74.70/weekOnline or Jobcentre PlusEvery 2 weeks
Housing BenefitLow income, need help with rentDepends on rent/locationApply through the local councilMonthly
Employment and Support Allowance (ESA)Limited capacity to work, medical proof£74.35 – £113.55/weekApply via GOV.UKFortnightly
Council Tax ReductionLow income, unemployedVaries by the council, up to 100% offLocal council applicationMonthly or annually

Check Local Help

See what groups in your area provide emergency funds or jobless benefits that could allow more funding to be put towards loans. Places like churches or colleges may guide people who have lost income. Visit in person to learn about nearby options.

Student Loan Guidance

National nonprofits focused specifically on student debt repayment provide detailed assistance for those struggling. For federal loans, they inform ways to pause payments through deferment during tough stretches. Use their letter templates and lender contacts.

Losing your income does not mean losing all help. Groups nationwide and in local areas offer forms of loan and money guidance when work disappears. Seek out support rather than handing it alone.

Communicate with Your Lender

If you lose your job but still owe student loans, calling the lender quickly is important. Don’t wait to see if your situation gets better on its own. Contact them right away by phone or set up a meeting to talk face-to-face. The sooner you explain what happened, the more time you have to make plans.

Explain What Happened

Tell your lender clearly that you lost your income source, which allowed you to pay back loans. Give details about losing your job, how long you worked there, and your efforts to find a new job. Ask what programs or options they have to pause or lower payments for now since you face hardship.

Ask for Payment Breaks

Specifically, ask if they allow postponing payments for a time period, given your situation. Interest may continue growing but loans won’t default. Also, ask about temporarily stopping payments for 12 months. Inquire how to apply and qualify for these helpful options.

Explore Deferment Options

If you have federal student loans and lose your job, explore requesting a deferment. Deferring payments pauses the monthly bills, but interest may still increase.

For federal loans, an unemployment deferment lets you temporarily stop making payments for up to 3 years. This prevents the loans from defaulting while unemployed.

The downside is unpaid interest often gets added to the total loan balance owed – so the amount you pay back grows. Still, deferment beats missing payments that risk default. It provides an essential financial breather when you lose your income stream unexpectedly.

Budget Wisely

Losing your paycheck means carefully watching your spending. Keep paying for food, rent, power, and health needs first when money gets tight from losing your job. Make these basics the priority for funds.

Look closely at expenses and cut back on anything extra you don’t truly need right now. For example, downgrade your cable/internet plan, eat out less, and put your gym membership on hold for a while. Dropping nice extras will free up money to cover your main needs.

Pay Something on Student Loans

If possible, try to pay at least the minimum payment on student loans and other loans like loans for the unemployed that you have taken. Skipping payments risks defaulting or having debt collectors call, which results in more headaches. Paying even a little shows you are making an effort.

Losing a job stretches budgets thin. Stick to critical essentials only. Slash all other costs until hired again for new income. Doing so prevents student loans from falling way behind while job hunting. Making these tough money choices now helps get through till things improve.

Explore Refinancing Options

Looking into refinancing student loans to lower interest costs can help ease the financial strain of losing a job. Some private lenders work with borrowers who are having trouble.

Flexible Payment Plans Exist

Refinancing trades away federal loan benefits. However, some refinanced loans do offer payment plans based on what borrowers can afford if earnings drop between jobs.

Ask lenders about pausing payments for 6 to 12 months if you lose income. Read reviews and find lenders known for adjusting programs to help borrowers facing hardship from unemployment. Their options can assist between jobs.

Conclusion

Focus on cutting optional costs. If possible, move to a smaller, cheaper place to lower your housing burden. Call your internet and cable providers to downgrade services to basic affordable options. Use free entertainment like the library instead of paid services. Reduce expenses like frequent takeout and dining out meals by cooking more budget-friendly food at home.

Letting them know early about job loss can reveal many helpful options many don’t realise exist. They prefer setting up revised payment programs rather than seeing loans default. So start conversations right after losing your job – assistance exists!

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