The coronavirus pandemic has had a huge impact on the US job market. According to the most recent figures from the Bureau of Labor Statistics, non-agricultural jobs have fallen by 9.9 million since February 2020, and about 6.3% of Americans are currently unemployed.
For students on the cusp of May or June graduation, it offers a grim future. They may be concerned about how they will find a job, pay the bills or, in many cases, pay their student loan bills as soon as they fall due.
When you’re in this boat – nearing graduation and with student loans in tow – you’re not without options. It is helpful to use an online resource such as Credible to determine which option best suits your individual circumstancesThere are a few ways you can weather the storm and stay on top of those student loan bills while you do that.
How to Manage Student Loans in a Harsh Job Market
If you have federal student loans, you have a little leeway before you have to start making payments. Thanks to a move by Biden’s administration earlier this year, borrowers of federal student loans won’t have to pay until after Sept. 30. Loans will also not accrue additional interest during this period.
That said, starting October 1, you still need a plan for those payments. Fortunately, federal loans come with a number of options, including deferral, various repayment plans, and income-based repayment where your monthly payment is based on your monthly earnings.
“This means that even after Sept. 30, if the borrower still cannot find work and has no income, his or her monthly payment obligation will likely be reduced to zero,” said Ross Riskin, associate professor of taxation at The American College of Financial Services. .
Another extra? If you find a job in a public service – such as teaching – you may be able to fully forgive your federal loans (under the Public Service Loan Forgiveness Program).
Is Refinancing a Good Option?
If you have private student loans, Refinancing may be something to considerWhile you can refinance a federal loan, it would mean losing all of the benefits that those loans bring – including the payment break until September 30 and the above-mentioned income-based public service repayment and forgiveness programs.
The administration is also considering forgiving anywhere from $ 10,000 to $ 50,000 in federal student loans – yet another reason to hold on to those federal loans if you have them.
However, with private loans, refinancing can bring some major benefits. First, it can lower your interest rate, significantly reducing the long-term cost of the loan. It can also significantly lower your monthly payment, especially if you opt for a longer term loan than the one you currently have.
Finally, refinancing can increase cash flow – something badly needed if you are unemployed or struggling financially.
“This might be a great time for both private private loan graduates and borrowers with existing private loans to consider considering refinancing to reduce the cost of their loans, increase cash flow and spend money on other financial goals ”said Riskin.
The downside to refinancing is that it comes with various costs and fees. You must also have good credit to be eligible. Fortunately, shopping around for your refinance can help. pricesThus, the terms and conditions and qualifying standards vary from one lender to another use a tool like Credible to compare your options can ensure you get the best deal for your needs.
Before continuing, you must also create a student loan refinancing calculator to get a sense of what your new monthly payments will be – and how much refinancing could save you monthly and over time.
it comes down to
If you’re concerned about getting a job and paying off your loan after graduation, you have options. If you have federal loans, take advantage of the payment break just extended to September and use this time to get ahead.
If you are a private borrower, think of refinancing, and don’t forget to shop around. Using a tool like Credible to compare lenders can make sure you’re getting the best interest and term possibleYou can also use Credible for get pre-qualified refinancing offers without hurting your credit score
Do you have a financial question, but you don’t know who to ask? Send an email to The Credible Money Expert at firstname.lastname@example.org and your question can be answered by Credible in our Money Expert column.
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