Many people hit by the layoffs are still paying off student loans.
But thanks to loan deferment or forbearance due to unemployment, paying off the tens of thousands you spent on your college degree can be one less worry while you’re looking for a job, as long as you’re willing to do a little legwork first.
With unemployment deferment or forbearance, you can temporarily reduce or postpone payments on your student loans. If you have subsidized loans, like a Perkins Loan, the government pays the interest that accrues during the deferment. If yours is an unsubsidized loan, you’ll either pay the interest as it accrues, or add it to your balance.
Although increasing the amount you owe may sound like a bad idea, deferring your student loans is not only a move to cut your expenses: It reduces your chances of defaulting on your loan, which would hurt your credit score.
“Deferments have no effect on a customer’s credit score, since he or she is considered in regular status during the deferment,” says Patricia Christel, a Sallie Mae spokeswoman (Stock Quote: SLM).
To be deemed eligible for deferment, you’ll have to be actively looking for, but unable to find, full-time work (considered at least 30 hours a week) “in any field or at any salary or responsibility level,” according to U.S. Department of Education guidelines.
Additionally, you have to be registered with an employment agency if there is one within 50 miles. School placement offices and temp agencies don’t count. And you can’t get unemployment deferment if you’ve already defaulted on your student loan.