Student loans tend to come with long repayment terms. You can expect to see 25 years as a standard term for both private and federal loans.

Over the course of two decades, a lot can happen, including a financial crisis, like losing your job for example. How can you handle the financial burden of student loans with job loss? Your initial reaction may be to panic, but there are a few options provided by federal student aid that may ease the financial burden and get you through the crisis.

If you’ve recently lost your job, remember this is most likely a temporary situation. It's a financial challenge, but one with options for a way out in the long term. Don’t be afraid to access any resources available to you, including making arrangements with any student loan servicers.

Start investigating all possible options on the table to assist you with the challenges of managing student loans with job loss.

Managing Student Loans With Job Loss

When you lose your job and think you’ll have trouble repaying your student loans, the first step is to find out the details about the federal student aid safety net and plan accordingly.

“The most important thing to remember is to contact your student loan servicer, ask them for payment options, and request more information related to income-driven repayment and available deferments,” Jeremy Wine, student loan supervisor with Take Charge America, said in a press release.

Federal student loans offer a few different programs to assist during times of financial hardship. These programs include:

Student Loan Forbearance

Student loan forbearance is a relief program during periods of financial hardship for federal student loans. It temporarily pauses repayments, although you are still required to cover interest. Not all loans qualify. You must continue to cover interest if you hold one of these loans:

  • Direct Unsubsidized Loans
  • Unsubsidized Federal Stafford Loans
  • Federal Family Education Loan (FFEL) PLUS Loans
  • The unsubsidized portion of Direct Consolidation Loans
  • The unsubsidized part of FFEL Consolidation Loans

In most cases, deferment is not automatic. Speak with your student loan servicer about what steps you need to make to apply for forbearance. Typically you’ll need to submit a form, and may need to provide documentation proving your eligibility

Student Loan Deferment

Unlike forbearance, a student loan deferment pauses payments until the crisis has passed, with no interest payments required. Not all loans qualify for the no-interest deferment option, but the following federal student loans do:

  • Direct Subsidized Loans
  • Subsidized Federal Stafford Loans
  • Federal Perkins Loans
  • The subsidized portion of Direct Consolidation Loans
  • The subsidized portion of FFEL Consolidation Loans

The process of applying is the same as with student loan forbearance, typically by filling out a form and submitting documentation through your student loan servicer. Both forbearance and deferment are excellent options for short-term periods of financial hardship.

Income-Based Repayment (IBR)

For students with long-term income challenges, income-based repayment plans are a good option. They are calculated as a proportion of your discretionary income instead of the predetermined amount laid out at the beginning of your loan. Discretionary income is your remaining income after you pay your necessary bills and utilities. Today, the IBR program requires payments of 15 percent of your monthly income. Federal student aid has a helpful online tool to help determine your repayment amount.

You can continue to use the IBR plan for up to 20 or 25 years depending on when you took out the loans. Although most loans are eligible for this plan, some are only eligible if consolidated, and others are not at all. Here are the loans which do not qualify for the IBR:

  • Direct PLUS Loans made to parents
  • Direct Consolidation Loans that repaid PLUS loans made to parents
  • FFEL PLUS Loans made to parents
  • Pay As You Earn (PAYE)
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The PAYE program differs slightly. Repayment is set at 10 percent of your discretionary income and family size but only if less than the 10-year Standard Repayment Plan amount. The program may be extended for more than 20 years if required. Again, not all loans qualify, and some only qualify if consolidated. Here are the plans that are not eligible for the PAYE program:

  • Direct PLUS Loans made to parents
  • Direct Consolidation Loans that repaid PLUS loans made to parents
  • FFEL PLUS Loans made to parents
  • Revised Pay As You Earn (REPAYE)

If you do not qualify for the PAYE plan, it's worth exploring the REPAYE plan. Under this arrangement, you are responsible for making payments of 10 percent of your discretionary income. These terms may continue for up to 20 years for undergraduate loans and 25 years for graduate loans. Importantly, there is no clause stating payments must be less than what you would pay under the Standard Repayment Plan.

As was the case for both the IBR and PAYE loans, some may require consolidation, while others will not qualify at all. Here are the federal student loans which do not qualify for this repayment plan:

  • Direct PLUS Loans made to parents
  • Direct Consolidation Loans that repaid PLUS loans made to parents
  • FFEL PLUS Loans made to parents

Income-Contingent Repayment (ICR)

All federal student loans are eligible for the ICR program, including loans held by parents. Payments are calculated as 20 percent of your discretionary income, or what you would pay on a repayment plan with a fixed payment over the course of 12 years, whatever is the lesser. Family size also plays a small role in determining the monthly premium. The term for this program is 25 years.

Are There Options for Private Student Loans With Job Loss?

Unfortunately, private student loans almost always come with fewer protections for the borrower than federally issued student loans. But, that isn’t to say that there are no options available, as some loans are better than others during a crisis. Following Wine’s financial advice, call your lender to determine if they have any protections available during periods of short-term financial crisis.

Other Ways to Cope With Student Loans After Job Loss

Many financial advisors recommend looking for side hustle opportunities during this period. Become an Uber Driver, sell your used textbooks on Amazon, or have a yard sale. Temp agencies are also an excellent resource for quick income. Every little bit helps during this time of need.

You should also speak with your friends and family about how they can help. If not financially, perhaps they can look after your children while you look for new work. Maybe they have gift cards they can give you to cover groceries and other necessities. Don’t be afraid to rely on those that care about you when you need it.

A Final Word on Student Loans with Job Loss

If you have lost your job and hold a federal student loan, the crucial point to remember is that there is a safety net in place for you. Many lenders offer ways to defer loan payments until you get back on your feet.

Speak directly with a non-profit student loan advisor for unbiased advice, and reach out to your student loan servicer. They can help determine which options make sense for your financial situation.