A job loss can rock your finances and leave you scrambling. It’s a scary experience — especially if you’re also trying to navigate student loan debt.
Here’s how you can make your student loan payments fit into your budget as you get back on your feet.
Evaluate your income and spending
Cutting extraneous spending is a good tip for people who have spending they can cut. But sometimes it can be more helpful to try to grow your income rather than cut back on an already tight budget.
Use this time to apply for new jobs with bigger paychecks, learn a new skill that will make you more attractive to employers or look into side hustles.
Increasing your income can give you a bigger leg up than cutting small expenses, but every little bit does help. Check your spending to see which nonessential expenses you can cut so you can free up some money. Maybe you could scale back on food delivery or impulse Instagram buys.
And consider recurring expenses that can quickly add up — cancel subscriptions you no longer use, negotiate with providers for lower TV and internet bills or switch to a cheaper cell phone plan.
Contact your servicer
After a layoff, reach out to your student loan servicer or lender within 30 days to let them know about your job situation and inquire about what assistance may be available to you.
Your student loan servicer can explain relief options and their implications, help you update your payment amounts if you’re on an income-driven repayment (IDR) plan and answer other questions you may have.
Here are some specific relief options that could be available to you.
If you have federal student loans
Sign up for an income-driven repayment plan or recertify your income
An income-driven repayment (IDR) plan is the best option for most borrowers who lose their jobs, because monthly bills are capped at a certain percentage of your discretionary income. This means if your income disappears, your payments should drop to $0 per month.
You can sign up for an IDR plan at any time, including after a layoff.
Even if you’re already on an IDR plan, you’ll need to update your income post-layoff. The online application will ask why you’re submitting it. Select the option that you are submitting early because you want your servicer to recalculate your payment due to a change in income and/or family size.
You only need to recertify your income for an IDR plan once a year. If you qualify for $0 payments, that’ll last until your next recertification deadline — even if you get a new job sooner. This can give you some extra breathing room as you catch up on other bills.
Unemployment deferment
Borrowers can pause payments for up to three years with a student loan unemployment deferment. (Loans taken out after July 1, 2027 will not be eligible for this benefit.) This route could be helpful for borrowers who are receiving unemployment benefits or actively job-hunting.
However, the implications of a deferment vary based on the type of federal loan you have.
If you have subsidized or Perkins loans: No interest will accrue during a deferment.
If you have unsubsidized or parent or grad PLUS loans: Interest will build on these types of loans during deferment.
If you don't pay the interest as it accrues, it will be capitalized after your deferment period ends — which means it will be added to your loan principal. This could increase the total amount you'll repay over the life of your loan, since you’ll be paying interest on a larger principal sum.
🤓Nerdy Tip
Note that these federal loan benefits will become much more limited starting in summer 2026, due to President Donald Trump’s “One Big, Beautiful Bill.” This bill has many impacts on federal student loans, including IDR plans, which will no longer offer deferments for unemployment and economic hardships.If you have private student loans
Private student loans offer fewer protections for unemployed borrowers than their federal counterparts. Your options will depend on your loan terms and lender.
For example, private student loan lenders Ascent and Funding U offer hardship forbearances, limited to 24 months over the life of your loan. It’s important to note that lenders that offer such forbearance often still charge interest during forbearance and may extend the repayment period to make up for the missed payments.
To see what help is available after a layoff, like a temporary deferment or forbearance, contact your private student loan lender directly.
