College Student Loans: What to do When You Have No Job

College Student Loans: What to do When You Have No Job

You've finished your two, or four, or more years of college and you have a substantial amount of loan debt to repay. There's only one problem. You don't have a job and it's not looking like you'll have one soon. What's a college graduate to do?

First of all, keep in mind that if you have a federal Stafford loan, that you have a six month grace period after you graduate. If you have a federal perkins loan that grace period is for nine months. But then what?

There's an economic hardship deferral that allows students who have a hard time finding a job, or finding a job that pays enough for them to pay back their federal loans, to postpone payment on their loan for three years. Graduates who are unemployed, are on public assistance, or have joined the Peace Corps, may choose this option.

Graduates who have federal loans have the right to a deferment for a variety of reasons. These include being enrolled as a student, participating in a graduate fellowship program, and other reasons.

If you can't get a loan deferral you may be eligible for loan forbearance. This means that you will pay limited payments, or no payments at all, for up to five years.

Both deferral and forbearance must be applied for every year. There's also a new payment option for federal student loans that calculates your payment on your income. If your income is less than 150 percent of the poverty line, you will not need to make a payment.

When loans are deferred, the government will pay the interest on subsidized loans. If your loan is unsubsidized, you will still be responsible for the interest on the payments. This can cost you a lot of money as the interest becomes part of the loan and you end up paying interest on the interest. In forbearance, borrowers owe interest on both subsidized and unsubsidized loans.

Private loans only offer forbearances of up to a year. You may also be charged a fee if you need to put a private loan in forbearance.

Remember, as tempting as it may be to put your loan in deferral or forbearance, in the long run these college student loans are going to end up costing you a lot of money. It's better to take any job and pay your student college loans than it is to get yourself in way over your head in the future.

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