What To Do With Student Loans When You’re Unemployed

You still owe your student loan payment when you lose your job, but you don't have to keep paying the old amount. Federal borrowers can switch to an income-driven repayment plan based on current income, which for most people out of work means a payment of $0 or $10. That beats pausing the loans, because a $0 payment keeps you current and keeps the forgiveness clock running.

The first move, before the loans, is to apply for unemployment benefits in your state if you're eligible. Then take the steps below in order, and check our breakdown of the best student loan repayment plans if you're also deciding between plans for the long term.

Do You Have To Pay Student Loans If You're Unemployed?

Yes. Unemployment doesn't cancel or automatically pause federal or private student loan payments. Your servicer will keep billing the current amount until you change the plan, get a deferment or forbearance, or the loan goes into default.

Federal loans are reported delinquent to the credit bureaus once you're 90 days behind, and a late payment can stay on your credit report for seven years. Our explainer on how student loans affect your credit score walks through the damage.

At 270 days, the loan goes into default. The full balance becomes due, you lose access to deferment and income-driven plans, and the government can garnish wages and take tax refunds. For a closer look, read what happens if you don't pay your student loans.

Why Default Is A Bad Bet Even With Collections Paused

The Department of Education paused wage garnishment and Treasury offsets on January 16, 2026, and as of October 2026 it hasn't announced a restart. That pause can make skipping payments look free. It isn't. Default still wrecks your credit, the balance doesn't shrink, and the pause can end at any time. 9.3 million federal borrowers were in default as of June 30, 2026, and getting out takes months of rehabilitation payments.

If you're already behind, our student loan default walkthrough covers the fastest ways back to good standing. Watch for anyone who promises to make it all go away for a fee, since unemployed borrowers are a favorite target of student loan scams.

Can You Pause Student Loans If You're Unemployed?

Yes, federal borrowers can pause payments with an unemployment deferment or a forbearance, but a $0 income-driven payment is usually the better move. Here's the order to work through when you call your servicer or log in to StudentAid.gov:

1. Income-driven repayment (IBR or RAP), recalculated on your current income
2. Unemployment or economic hardship deferment
3. Forbearance

Servicers often offer forbearance first because it's fast. It's also the most expensive option. Interest builds on every loan, and the months don't count toward income-driven forgiveness. Know what you're asking for before you call so you can turn down the wrong offer.

How Do You Get A $0 Student Loan Payment While Unemployed?

Apply for an income-driven plan or ask for an early recalculation, and report your current income instead of last year's tax return. Federal rules let a borrower ask for a recalculation before the annual recertification after a change like a job loss, using alternative documentation of income. The new payment then lasts 12 months. If you find work in three months, the lower payment still runs for the rest of the year, and you can check your options on our RAP calculator before you apply.

Here's how to request the new payment, whether you're choosing a repayment plan for the first time or already on one:

1. Log in to StudentAid.gov and open the income-driven repayment application, or call your servicer and ask for the same thing.
2. Choose to report income yourself rather than pulling your last tax return from the IRS. Your 2025 return shows the salary you no longer have.
3. Report what you get now. Unemployment benefits are taxable income, so they count, the same way unemployment benefits count on the FAFSA. Upload your benefit statement or state that you have no income.
4. If you're already on an income-driven plan, say you're requesting an early recalculation because of a job loss so the servicer doesn't wait for your normal anniversary date.
5. Keep paying, or ask your servicer about a short processing forbearance, until the new amount shows on your account. Applications that need manual income review take longer, and the IDR application backlog has run into the millions this year.

IBR Vs. RAP When You're Out Of Work

IBR is the only federal plan that can still drop your payment to $0, and RAP has a $10 floor. IBR sets your payment at 10% or 15% of discretionary income, which is income above 150% of the federal poverty guideline. In 2026, 150% of the guideline is $23,940 for a single person in the 48 contiguous states and $49,500 for a family of four. Anyone below that line pays $0 on IBR.

RAP charges a percentage of income by bracket, minus $50 per dependent, with a $10 minimum payment. It has one advantage IBR doesn't: when a full, on-time payment doesn't cover the interest, the Department of Education waives the rest, so the balance can't grow. Compare the two side by side in our RAP vs. IBR breakdown.

For a single borrower with no dependents, the two plans compare like this, using IBR's poverty-line cutoff and the RAP income brackets:

The RAP figure is 2% of $23,400, divided by 12, which is the bracket for income between $20,001 and $30,000. The IBR figure is $0 because $23,400 is below $23,940. Run your own numbers in the RAP calculator.

Who can use which plan: if all of your federal loans were made before July 1, 2026, you can pick IBR or RAP. If any federal loan (including a consolidation loan) was made on or after July 1, 2026, your only options are RAP and the Tiered Standard Plan. Parent PLUS loans can't use RAP at all.

What To Know Before You Stay On An Income-Driven Plan

A $0 or $10 payment buys time, but it costs money if you'll eventually pay the loan off in full. Accrued interest keeps building on IBR while you pay $0, so a borrower who later earns enough to pay the balance in full pays more in total than on a 10-year plan. RAP's interest waiver solves that problem, which is a reason to compare the two even if IBR's payment is lower.

Income-driven plans also require yearly recertification. Put the date on your calendar, because a missed recertification resets the payment to a much higher amount, and that's a bad surprise when you're back at work and rebuilding savings. Our list of ways to get student loan forgiveness shows how income-driven forgiveness fits with the other programs.

Do $0 Payments Count Toward Forgiveness?

Yes, for income-driven forgiveness. A $0 IBR payment counts as a qualifying month toward IBR's 20- or 25-year forgiveness, and a $10 RAP payment counts toward RAP's 360 payments, as long as it's made in full and on time. Income-driven forgiveness is one of the lesser-known forgiveness programs many borrowers are already working toward without realizing it.

Public Service Loan Forgiveness is different. PSLF counts a month only when you're working full time for a qualifying employer, so months spent unemployed don't count for PSLF even with a $0 payment. They don't hurt either, and the count picks back up when you start a qualifying job.

Student Loan Unemployment Deferment

An unemployment deferment pauses federal payments for up to three years total, granted up to six months at a time. To qualify, you have to be seeking and unable to find full-time work, which the regulation defines as at least 30 hours a week. You can qualify by showing you're eligible for unemployment benefits, or by certifying that you're registered with an employment agency within 50 miles (if one exists) and, for extensions, that you made at least six diligent attempts to find full-time work in the prior six months. Our explainer on how student loan deferment works covers the application.

Interest is the catch. The government covers interest on subsidized loans during deferment, but unsubsidized and PLUS loans keep accruing, so most borrowers come out of a deferment owing more. If you'd rather not change your federal loans to a new plan, deferment is a reasonable second choice. It does the same thing as a $0 IDR payment, with more paperwork and no progress toward forgiveness.

An economic hardship deferment is the other option. It also runs up to three years, granted a year at a time, and it's aimed at borrowers with very low earnings or who receive public assistance. Ask your servicer which one fits, and see our deferment breakdown for the qualifying rules.

Unemployment Deferment Ends For New Loans On July 1, 2027

The One Big Beautiful Bill Act ends unemployment and economic hardship deferments for federal loans made on or after July 1, 2027, and the current regulation already says so. Loans made before that date keep both deferments. We covered the details when the law passed in our look at what's changing with deferment and forbearance.

The trap is consolidation. A Direct Consolidation Loan made on or after July 1, 2027 is a new loan, so it falls under the new rules even if every loan inside it is older. If you might need a deferment later, think twice before a student loan consolidation after that date.

Forbearance

Forbearance stops payments right away, and it should be your last resort. Interest accrues on every loan during student loan forbearance, including subsidized loans, and the months don't count toward income-driven forgiveness. It's useful when you need a payment stopped this week and have already used your deferments.

Forbearance is getting tighter too. Borrowers who take out or consolidate a loan after July 1, 2027 are limited to nine months of forbearance in any 24-month period, according to the EdTrust OBBBA summary. Existing borrowers can still take up to 12 months at a time, with a 36-month total. If your servicer offers forbearance first, ask about an income-driven plan instead.

Other Federal Repayment Plans

Extended and graduated plans lower the payment, but neither gets close to $0, so they're a poor fit while you have no income. The Extended Repayment Plan stretches the loan up to 25 years for borrowers with more than $30,000 in federal loans, which lowers the payment and raises total interest.

The Graduated Repayment Plan starts low and steps up about every two years. Borrowers with any loan made on or after July 1, 2026 can't use either plan and are limited to RAP or the Tiered Standard Plan. Both are worth a look once you're working again if the income-driven payment climbs faster than you'd like, and our list of legal ways to lower your student loan payment covers the rest.

Options For Private Student Loans

Private lenders don't offer income-driven plans or federal deferments. Most offer some form of hardship forbearance, usually in short blocks with a lifetime cap, and interest keeps building the whole time. Call before you miss a payment, since most lenders want the loan current when you apply. If a pause won't be enough, our options for when you can't afford your private student loans go further.

Here's what major lenders offer when you lose a job, based on each lender's current hardship policy and our private student loan lender reviews:

• SoFi: the Unemployment Protection Program pauses payments in three-month blocks, up to 12 months over the life of the loan, if you lost your job through no fault of your own. Unpaid interest is added to the balance, which you can avoid by making interest-only payments. More in our SoFi student loans review.
• Ascent: Ascent student loans offer up to 24 months of Temporary Hardship Forbearance in one- to three-month increments, plus up to three months of Natural Disaster/Declared Emergency forbearance.
• College Ave: College Ave may offer hardship forbearance, usually in three- or six-month increments, and may extend the grace period for borrowers who just left school.
• Discover: Discover stopped making student loans in 2024, and existing loans are now serviced by Firstmark Services. Call Firstmark to ask about hardship forbearance, and see what happened to Discover student loans.
• Earnest: Earnest lets borrowers skip one payment every 12 months with approval and offers forbearance for hardship.
• Citizens: borrowers in repayment can request a hardship forbearance by calling the lender, and our best private student loans list covers how Citizens compares.

Don't refinance federal loans into a private loan while you're unemployed. You likely won't qualify without income, and you'd give up IBR, RAP, and the deferments above. Student loan refinancing makes sense later, for some high earners with private loans, once you have a steady paycheck.

What To Do With Severance Or Savings While Your Payment Is $0

Keep it in cash. If your federal payment is $0 or $10, every dollar of severance or savings is worth more as an emergency fund than as an extra loan payment. Rent, groceries, and insurance can't be paused, and your student loans can.

Extra payments on RAP can also work against you. Money above the bill goes to interest first, which can cancel the interest waiver and the $50 principal match for that month, as we explain in how RAP works. Pay the required amount on time and park the rest where it earns interest.

Avoid pulling from a 401(k) or IRA to cover loan payments. Early withdrawals are taxed and usually hit with a 10% penalty, and federal loans give you a $0 option that a retirement account can't match. A budgeting app can help stretch unemployment benefits, and side hustles can bridge the gap without changing your loan payment much, since IBR and RAP are based on income.

This is one of the most common questions we see in our weekly live stream Q&As. It's important to realize that if you become unemployed, you need to take advantage of the $0 IBR option before you start draining your savings or other things. Being unemployed is tough enough. Don't let your student loans derail your long-term financial plans

Frequently Asked Questions

Can You Defer Student Loans If You're Unemployed?

Yes. Federal borrowers can get an unemployment deferment for up to three years total, six months at a time, on loans made before July 1, 2027. A $0 income-driven payment is usually better because it counts toward forgiveness, and our deferment explainer covers both routes.

Do I Have To Pay My Student Loans On Time If I'm Unemployed?

Yes. The bill doesn't stop until you change the plan or get a deferment or forbearance, and federal loans are reported delinquent at 90 days. Apply for an income-driven plan with your current income to drop the payment to $0 or $10.

Can I Get Student Loan Forgiveness If I'm Unemployed?

There's no forgiveness program for unemployment itself. Months on IBR or RAP while you're out of work still count toward income-driven forgiveness, even at a $0 or $10 payment. Our list of student loan forgiveness programs covers every path.

Can I Get A Student Loan If I'm Unemployed?

Federal Direct Loans for students don't require income or a credit check, so being unemployed doesn't block them. Private lenders usually want income or a cosigner. If you're going back to school after a layoff, see what to do if you can't get a student loan.

Do Unemployment Benefits Count As Income For My Student Loan Payment?

Yes. Unemployment benefits are taxable income, so report them when you apply for or recalculate an income-driven payment. They also count on the FAFSA, as we explain in how unemployment benefits are treated on the FAFSA.

How Do I Apply For An Income-Driven Repayment Plan?

Apply on StudentAid.gov or through your loan servicer. Choose to report your income yourself if it dropped since your last tax return, and ask for an immediate recalculation. The RAP calculator shows your payment before you apply.