Connect with us

Bad Credit

Applying for Student Loan Unemployment Deferment

Published

on

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

If you’re unemployed, keeping up with your student loans might seem impossible. However, depending on what type of student loans you have, you might qualify for unemployment deferment. This will temporarily pause your student loan payments, giving you time to job hunt.

Here’s what you should know about unemployment deferment:

What is unemployment deferment?

Unemployment deferment is a way to temporarily pause your student loan payments if you’ve lost your job. Here’s how it works for federal and private student loans:

  • Federal student loans: You can apply for unemployment deferment for federal student loans for up to three years. You’ll need to show that you’re eligible to receive unemployment benefits and are unable to find full-time work.
  • Private student loans: Any type of deferment — including unemployment deferment — for private student loans is provided at the discretion of the lender. You’ll need to check with your lender to see what options are available to you.

Keep in mind that interest might stop accruing a deferment period, depending on the type of loan you have. This is different from forbearance, where interest typically continues to accrue while you’re not making payments.

Coronavirus and student loans: Because of the COVID-19 pandemic, student loan payments, interest, and collections have been paused by the CARES Act through Jan. 31, 2021.

While there might be new government action to extend these coronavirus-related benefits, you should plan to resume regular student loan payments later in 2021 unless you’ve been approved for further deferment or forbearance options.

Learn More: What Is Student Loan Deferment?

Applying for federal student loan unemployment deferment

If you have federal student loans, you can apply for unemployment deferment through your loan servicer. An application for unemployment deferment is also available from the Department of Education, but it’s a good idea to contact your servicer to see if any other forms are also required.

You’ll also need to submit documentation that shows your eligibility for unemployment benefits as well as your job search history.

Tip: Until you’ve received confirmation from your loan servicer that your deferment has started, continue making payments as scheduled so you don’t accidentally miss any payments and end up in student loan default.

Applying for private student loan unemployment deferment

If you have private student loans, you’ll need to check with your lender to see if they offer any deferment and forbearance options. If they do, your lender can also walk you through the steps to apply.

Keep in mind: Not all lenders offer deferment as an option if you’ve lost your job. Some might allow you to place your loans in forbearance, though.

For example, Sallie Mae doesn’t provide unemployment deferment, but you can request a temporary forbearance in cases of economic hardship by calling their customer service team.

  • Advantage: You can apply for forbearance by contacting the Kentucky Higher Education Student Loan Corporation (KHESLC) at 800-693-8220.
  • Ascent: You can request a temporary hardship forbearance through Launch Servicing by completing and signing an application. Contact Launch Servicing at 877-354-2629 for more information.
  • Brazos: Contact your loan servicer to find out about hardship forbearance options. Brazos works with several servicers. Find the website and phone number for yours here.
  • Citizens Bank: If you’re having trouble making payments on your Citizens Bank loan, contact Firstmark Services at 855-819-7137 to see if you qualify for deferment or forbearance.
  • College Ave: You can request forbearance by calling College Ave at 844-803-0736.
  • EDvestinU: Contact EDvestinU at 855-887-5430 to see if you qualify for deferment or forbearance.
  • INvestEd: Contact American Education Services (AES) at 800-233-0557 to discuss deferment or forbearance options.
  • MEFA: MEFA offers forbearance during economic hardship. Contact AES at 800-233-0557 to see what options are available to you.
  • PenFed: If you have PenFed loans, head to PenFed’s online financial hardship center to apply for a temporary or permanent hardship, depending on how long you expect the situation to last. PenFed offers both deferment and forbearance options.
  • RISLA: You can apply for forbearance on your RISLA loans by mail, fax, or uploading your documents online. You can find the application here.
  • Sallie Mae: You can temporarily pause your Sallie Mae payments through forbearance. Contact them at 800-472-5543 to get started.
  • SoFi: SoFi offers an Unemployment Protection Program that suspends payments for up to 12 months in three-month increments. Contact SoFi at 855-456-7634 for more information.

Check Out: Private Student Loan Consolidation

How long does deferment last?

If you’ve had your loans deferred, here’s a rough idea of how long your benefits might last:

  • Federal student loans: Deferment periods for federal student loans generally last six to 12 months, depending on the type of loans you have. You might be able to take advantage of unemployment deferment for federal student loans for up to a maximum of three years. You’ll need to show that you’re able to receive unemployment benefits and that you’re looking for full-time work to remain eligible.
  • Private student loans: With private student loans, the length of deferment is at the discretion of your lender. If you need more time, you’ll need to contact your lender to see if you’re eligible.

Alternatives to unemployment deferment

If you don’t qualify for unemployment deferment, there are other options available that could help you manage your student loans while you’re looking for work. Here are several alternatives for student loan repayment help to consider:

  • Income-driven repayment (IDR) plans: If you have federal student loans, you can sign up for an IDR plan. These plans base your payments on your income as well as extend your repayment period. Depending on the plan you choose, you could have any remaining balance forgiven after 20 to 25 years of on-time payments. There are four IDR plans to choose from: Income-Based Repayment (IBR), Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and Income-Contingent Repayment (ICR).
  • Apply for forbearance: Forbearance is another potential way to temporarily postpone your payments. You’ll need to contact your servicer or lender to see if it might be available for you. Keep in mind that interest might continue to accrue while your loans are in forbearance.
  • Contact your lender: Even if you don’t think you’ll qualify for unemployment deferment, it’s a good idea to contact your lender if you’re having trouble making payments. You might be surprised to find more options are available to you.
  • Try refinancing: Once you’ve found your next job, you might want to consider refinancing your student loans. Through refinancing, you could qualify for a lower interest rate and reduce your overall loan costs. Or you could extend your repayment term to get a lower monthly payment, which could help you catch up on your other bills. While you’ll generally need good to excellent credit to qualify for refinancing, some lenders also offer options for refinancing with bad credit.
Keep in mind: If you refinance federal student loans, you’ll lose your federal benefits and protections, including access to IDR plans and student loan forgiveness programs.

If you decide to refinance your student loans, be sure to consider as many lenders as possible to find the right loan for you. Credible makes this easy — you can compare your prequalified rates from multiple lenders in two minutes.

Find out if refinancing is right for you

  • Compare actual rates, not ballpark estimates – Unlock rates from multiple lenders in about 2 minutes
  • Won’t impact credit score – Checking rates on Credible won’t impact your credit score
  • Data privacy – We don’t sell your information, so you won’t get calls or emails from multiple lenders

See Your Refinancing Options
Credible is 100% free!

About the author

Eric Rosenberg

Eric Rosenberg

Eric Rosenberg is a Credible expert on personal finance. His work has been featured at Business Insider, Investopedia, The Balance, The Huffington Post, MSN Money, Yahoo Finance, Mint.com and more.

Read More

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Bad Credit

Debt consolidation programs: How they work

Published

on

If you’re trying to pay off debt, you’ve probably looked into the variety of options that could help. If so, you’ve likely come across debt consolidation programs — and may be wondering what they are.

Debt consolidation programs can help borrowers who may be overwhelmed by debt payments by combining multiple loans into a single payment. Typically, these programs are offered by credit counseling organizations. These organizations may offer guidance and financial planning in addition to helping consolidate debt.

A reputable credit counseling organization will likely incorporate guidance to help with managing debts, along with providing educational material, workshops and other ways to help borrowers work to develop a realistic budget.

A legitimate debt consolidation program should feature counselors who are certified and trained in offering advice on consumer finance issues in order to create a personalized plan, whether it’s to address credit card debt, bad credit or other needs.

Consolidating debt typically results in a refinanced loan, with a lower or more manageable interest rate and modified repayment terms. According to the Federal Trade Commission, it is recommended to find a local debt consolidation program offering credit counseling in person.

You may find these accredited, nonprofit programs are offered through channels like credit unions, universities, religious organizations, military bases and U.S. Cooperative Extension Service branches.

(It’s important to note that everyone’s debt payoff needs differ, so your mileage may vary.)

Related: Paying off debt—9 strategies to try

What Is a Debt Consolidation Program?

Debt consolidation programs can play two roles. For one, they help borrowers combine multiple loans into a single payment, which can make repayment less overwhelming. For another, they act as credit counselors.

With tools for loan repayment strategies and debt management, they can help lower or simplify monthly debt payments. These types of programs are usually managed by credit counseling companies.

It’s good to note the difference between debt consolidation programs and an actual loan opened to consolidate debt.

Qualifying consumers can use a debt consolidation loan (typically an unsecured personal loan) to combine multiple debts into a new single loan as well, possibly with a lower interest rate. But there is no counseling offered during the loan application process, and paying down the debt remains entirely the burden of the borrower.

The services outlined above can make a debt consolidation program different from other methods of consolidation or interest reduction, such as a balance transfer for a credit card, or a personal installment loan from a banking institution or lender.

Keep in mind that debt consolidation is also different from debt settlement, which is a process used to settle debts for less than what is owed.

When enrolled in a debt management program, which is one part of a debt consolidation program, a single monthly payment is sent to the credit counseling agency, which then distributes an agreed-upon amount to each credit card or loan company. The goal of the program is to act as an interlocutor for the debt between the borrower and creditor.

While most debt consolidation program companies are nonprofit organizations, nonprofit status does not guarantee services are free, or even affordable.

These organizations can, however, reach out to the lenders on behalf of the borrower to find an affordable repayment plan, which could take shape in the form of waived fees or penalties, lowering interest rates, in exchange for a specific timeline of usually three to five years for the debt to be repaid.

These programs are not loans, which would come from financial institutions. Perhaps most importantly, debt consolidation programs do not make any promises to reduce the amount of debt owed. Those are debt settlement programs, run by outside companies who negotiate payments with creditors, and can be for-profit, predatory or may not act in the best interest of the borrower.

A debt management program, on the other hand, could help set borrowers up for future success, when it comes to how to budget and manage money, educating consumers about cutting expenses or ways to increase income in order to gradually eliminate debt.

Pros and Cons of Debt Consolidation Programs

Debt consolidation is typically most beneficial to those struggling with high monthly debt payments. Paying just the minimum balance on debts every month means it could take a long time to pay off the debt, and interest costs could continue to add to the balance. Getting rid of high-interest debts can help make it easier to pay off the principal amount of the loan.

While having a lot of debt is certainly stressful, it’s worth weighing the pros and cons of any debt consolidation program before signing up. Here are some pros and cons to ponder:

Pros

  • Multiple payments are combined into one payment, likely making it easier to pay on time.
  • Credit counseling could help a borrower get back on track with tools like budgeting and other financial advice.
  •  Some programs can help negotiate lower interest rates, fees, possibly creating a more affordable payback plan.

Note: Because lowering interest rates may extend the number of time borrowers would pay their debt off, they may end up spending more on interest in the long run.

Cons

  • Debt consolidation programs do not reduce the principal amount of debt owed.
  • They can easily be confused for more predatory programs offered by some debt consolidation settlement companies.
  • Some programs might charge fees.

Many of the legitimate counseling companies tend to follow a similar setup process, which typically includes an interview with a counselor to go over things like income, expenses, and current bills and loans. The counselor might suggest areas where spending could be reduced and offer educational materials.

The program may also help set up a budget and will send the proposal out to creditors to agree to any new monthly payments, fees, payment schedules, interest rates or other factors, Reputable programs should only charge for set-up and a monthly fee.

It is generally recommended to take extra care with any for-profit organizations requiring a lot of upfront fees, memberships, or fees for each creditor they work with on negotiation. There is no magic pill to reduce debt, so spending less and budgeting more have been key pillars of a healthy financial foundation.

No company should promise a quick turnaround for becoming debt-free overnight. Historically, credit repair has been a market tainted by fraud, so it’s recommended to tread carefully and do the research before signing on to any program.

Selecting a Debt Consolidation Program

One common and simple way to sign up for this type of debt management program is to contact a reputable nonprofit credit counseling agency. The U.S. Department of Justice offers a list of approved credit counseling agencies by state.

Along with ensuring the agency you’re considering is on this list, you may want to consider doing further research by asking your state attorney general and checking local consumer protection agency websites.

Debt settlement companies often try to sell themselves as the same service, so be wary and check to be sure the organization is offering financial counseling and not making promises to reduce the amount of debt owed.

Based on the interview and assessment of current income and debt, the counselor could either recommend a debt management program, or another solution which could be a personal loan, bankruptcy, or some other form of settlement.

The company should not promise any sort of quick fix or short-term solutions.

The National Foundation for Credit Counseling is responsible for certifying many of these counselors, who must complete a comprehensive training program certifying them to help and educate consumers regarding their finances.

Because most nonprofits are certified, it helps to read consumer reviews of these programs as well, to see how the company operates.

The next step is to check what services are offered and what fees will be charged, such as an initial sign-up fee and recurring monthly fee. Understanding the costs upfront is important, and can help someone avoid a possibly predatory, for-profit business.

Something else you may think to look out for: A settlement company may charge more fees initially on the promise to arrange a reduced lump sum payment of debts.

These companies often instruct  consumers to stop making payments entirely on their debt, which could affect credit rating and even may cause the creditor to send the debt to a collection agency. A legitimate program should offer financial advice and counseling on ways to help reduce debt.

Learn more:

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

Source link

Continue Reading

Bad Credit

Village of New Paltz might expand eligibility for revolving loan fund | Local News

Published

on

NEW PALTZ, N.Y. — The village is considering expanding eligibility for a little-used revolving loan fund to include the needs of businesses being hit hard by the COVID-related economic slowdown.



Village of New Paltz trying to help residents get refunds from waste haulers

Village of New Paltz Mayor Tim Rogers




Mayor Tim Rogers said Tuesday that the $500,000 loan fund could be used to help businesses with more than just the purchase of personal protective equipment allowed under state and federal programs.

“We’re trying to piggyback off of the existing language for the revolving loan fund,” he said. “We just wanted to make it somewhat broad in terms of recognizing COVID impacts.”

One thing the village is considering is eliminating the rule that prohibits the use of the fund for emergency situations or business operations.

“Here we are flipping it and saying that you can,” Rogers said.

Guidelines for the loan program, which was established with funding from the U.S. Department of Housing and Urban Development, were last updated in 2013. The loan fund’s current interest rate is 3%.

Rogers said the fund has received only two loan applications over the past six years, and one of those was rejected.

“There’s only been one that we awarded and one that we straight up denied,” he said, noting that the rejection was because of the applicant’s bad credit history.

Rogers said the COVID-19 pandemic has created something of an economic irony in the village: decreased foot traffic in the business district but a significant increase in applications for building permits.

“[Village Safety Inspector] Cory Wirthmann believes our busy Building Department is partially a function of people traveling or vacationing less,” the mayor said. “ Money they would have spent is now going to home improvement wish list projects or just deferred maintenance, like finally choosing to replace the old roof.”

Comments about expanding the revolving loan fund should be emailed to  assistant@villageofnewpaltz.org. A loan application and information about the process can be found online at bit.ly/npaltz-loans.

For local coverage related to the coronavirus, go to bit.ly/DFCOVID19.

Source link

Continue Reading

Bad Credit

Will Missing One Car Payment Hurt My Credit Score?

Published

on

The short answer is yes: skipping one car payment can hurt your credit score, but not until it hits a certain mark. One missed payment doesn’t destroy your credit score forever, but it can stay on your credit reports for years.

Missed Payments and Your Credit Score

One or two missed payments may not be enough to completely ruin a good credit score, but they can lower your credit score quite a bit. How much your credit score can drop depends on many things, including how much credit history you have and how much time has passed since your missed payment.

How much a missed payment can impact your credit score is heavily influenced by how many missed payments you currently have reported, your current credit score, your credit utilization, how many accounts you have, and more. In other words: your drop in credit score due to one missed car payment is likely to be unique to you. The drop in points could be anywhere from 10 to 100 points, or more.

Will Skipping One Car Payment Hurt My Credit Score?If you have a thin credit file or little to no credit history, one missed car payment can be devastating to your credit score. And, in some cases, having a good credit score and then a reported 30-day missed payment could hurt your credit score more because you have more to lose.

The severity of the missed payment matters too. If you’re 30 days on the payment, it’s not as bad as being 90 days late. Most creditors report missed payments in these timeframes: 30 days; 60 days; 90 days; 120 days; 150 days; and then delinquent/charge-offs after that. The longer you let that missed payment go on being missed, the worse it is for your credit score.

To bounce back from a missed auto loan payment, be sure to make that payment as quickly as you can. The sooner you make up that payment, the better off you are.

How Long Are Missed Car Payments Reported?

Missed and late car payments can remain on your credit reports for up to seven years. How much they damage your credit score lessens each year, but it can still impact your overall credit score years afterward.

Your payment history is the most influential part of your credit score: a whopping 35%. In terms of credit repair, this means making all of your bill payments on time is important. If you have an auto loan that isn’t currently being reported – meaning your loan and on-time payments don’t show up on your credit report – the missed and late payments are likely to be reported anyway. Even auto lenders that don’t generally report their loans to the credit bureaus typically report missed/late payments.

If you think you’re about to miss a payment and you want to avoid hurting your credit, you have some options to explore.

Ask Your Lender for a Deferment

Lending institutions understand that times can get tough. If you think you’re about to miss a payment, contact your lender right away and ask what options are available to you. Keep your lender in the loop if you’re going through rough times – the sooner you get ahold of them the better.

This is especially true right now, given the current pandemic. Many borrowers left without work have been forced to find alternatives to making payments and needed assistance with their car loans and mortgages. There is a process that allows borrowers to take a breather and gather themselves, and it’s called a deferment.

A deferment, in a nutshell, pushes the pause button on your auto loan. Most times, lenders pause the car payments for up to three months and add those payments to the back of the loan term. If you qualify, you may be able to recenter yourself and get back on track. After the deferment is up, the car payments resume and you continue paying as normal.

The only downsides to this option are that your interest charges continue to accrue, and your loan term is extended. However, in the grand scheme of things, a few more months of a car payment and interest charges is better than default or multiple missed payments!

There is a common stumbling block to deferments though: most lenders don’t approve these plans unless your current on the loan. If you’ve already missed one payment or more, then the lender isn’t likely to approve it.

Is Refinancing Your Auto Loan an Option?

If you’re struggling to keep up with your current car loan, refinancing for a lower monthly payment could be the answer.

Refinancing involves replacing your current loan with another one, typically with a different lender. Most borrowers refinance to lower their monthly payments by either lowering their interest rate or extending their loan term (sometimes both).

To refinance, you also need to be current on your auto loan. Most lenders that offer refinancing don’t consider borrowers with multiple missed/late payments on their car loan. Additionally, you generally need to meet these requirements for refinancing:

  • Must have equity in the car or the loan balance must be equal to the vehicle’s value
  • The car is under 10 years old with fewer than 100,000 miles
  • Your credit score has improved since the start of the loan

You may need to meet other requirements, depending on the lender you choose. Refinancing doesn’t typically require a “perfect” credit score, but you may need a good one to qualify.

Ready to Get a More Affordable Car?

If you’re struggling to make ends meet and worried about skipping payments, then it may be time to sell your car and get something more affordable. If you’re concerned that a poor credit score could get in the way of your next auto loan, then consider a subprime lender through a special finance dealership.

Subprime lenders are indirect lenders that are signed up with certain dealers. They assist borrowers in all sorts of unique credit circumstances, and they could help you get into a more affordable vehicle if you qualify.

Finding a subprime lender can be as simple as completing our free auto loan request form. Here at Auto Credit Express, we work to match borrowers to dealerships with bad credit lending resources in their local area, at no cost and with no obligation. Get started today!

(function(d, s, id){ var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) {return;} js = d.createElement(s); js.id = id; js.src = "http://connect.facebook.net/en_US/sdk/debug.js"; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

Source link

Continue Reading

Trending