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Student Loan Refinance Companies with Job Loss Protection

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When Rebecca Estelle was laid off, she got creative with her student loan repayment. Estelle called up her lender, SoFi, and was delighted to learn that it’s among the top student loan refinance companies for job loss protection. The online company offered a three-month break from payments, plus career-services support.

“I was just trying to think of some ways to take the pressure off as I was searching for employment,” Estelle told LendingTree. “A lot of my friends weren’t aware that this program existed, but that’s not a bad thing to ask about when you’re searching around and looking for a refinancing source.”

Student loan refinancing with a shaky job status
4 student loan refinancing companies with job loss protection
Read the fine print before choosing a refinancing lender

Student loan refinancing with a shaky job status

If you’re looking for student loan refinance companies for job loss safeguards, you’re already ahead of the game. Many find that bad news has a way of coming out of nowhere. Estelle, for example, had worked for over a dozen years at Swedish technology company Ericsson when she found out in October 2017 that she was unemployed with student loans to repay.

Estelle admitted that she didn’t know about SoFi’s unemployment protection program when she chose the refinancing company to rework her parent PLUS loan. She was most concerned with savings (Estelle refinanced $16,537.45 that she had borrowed to send her daughter to the University of Texas at Austin, lowering her interest rate from 7.90% to 4.875%.)

But interest-rate savings and repayment-plan options are just a few of the many ways to evaluate lenders. If you’re considering refinancing your student loans, you’d be wise to ask lenders a simple question: Do you offer job loss protection if I suddenly lose my primary source of income?

4 student loan refinancing companies with job loss protection

Some lenders don’t offer many types of deferment or forbearance — the latter is the ability to press pause on your repayment because of economic hardship. You might think other lenders like SoFi go above and beyond your expectations.

Keep in that not all job loss protection policies are created equal, however. For each policy, you’ll want to review:

  • Eligibility requirements
  • The length of forbearance available
  • Whether it affects any plans to release a cosigner from your loan

Here are four lenders that could suit your refinancing needs:

Lender Months of protection Noteworthy
1. SoFi 12 Protection is specific to involuntary job loss, with career coaching included
2. Earnest 12 Change your payment due date or skip a payment if your job isn’t in complete jeopardy
3. CommonBond 24 Forbearance isn’t specific to job loss and is awarded on a case-by-case basis
4. Citizens Bank 12 Nine on-time payments are required before you can apply for this discretionary and general forbearance

1. Sofi

Estelle said SoFi’s career-coaching perks easily trumped the outplacement program offered by her ex-employer. Estelle met weekly with a personal career coach provided by the lender. They improved her application materials, drawing compliments about her newly-formatted resume from one of the hiring managers she met with.

There were big-picture benefits, too. Estelle saw SoFi’s program as allowing her to:

  • Maintain her credit: Although SoFi reports the loan’s forbearance status to the credit bureaus, her payment history didn’t end up with missed payments that could depress her credit score.
  • Focus on finding a job: With her loan payments temporarily out of the picture, she was less stressed about finances and had more energy for her job search.
  • Pay for household expenses: Not having to make her monthly payment to SoFi also gave Estelle some extra room in her budget for the bare necessities.

Estelle was especially happy with the results because she was so skeptical at the outset.

“When a company tells you that you don’t have to pay back your loan for a few months, you don’t know exactly what’s going to happen at the end,” said Estelle, who also received governmental unemployment assistance. “‘Was there some fine print I missed? Is this really going to sting me at the end?’ There were no surprises — the way they explained is the way everything turned out.”

Even SoFi, which launched its program in March 2017, has some fine print to read. It offers up to 12 months of forbearance, in three-month increments, over the life of borrowers’ repayment. And like Estelle, you must have lost your job “through no fault of your own.”

2. Earnest

As with SoFi, Earnest’s forbearance policy isn’t limited to an involuntary job loss. Earnest’s support also extends to borrowers in the following situations:

  • Your income has decreased, for example, due to a reduction in your work hours
  • Your family expenses have suddenly and significantly increased
  • You’re taking a leave from work to care for a child

Earnest also offers simpler flexibility options if your job situation isn’t tenuous enough to merit a full forbearance. For instance, you could move your payment date or skip one payment per year once you’ve made six consecutive, on-time payments.

3. CommonBond

CommonBond offers up to 24 months of forbearance over the life of your loan in cases where your income has decreased or disappeared.

There are a couple of eligibility requirements, however. For one, you must be less than 60 days delinquent on your repayment.

4. Citizens Bank

Citizens Bank, a more traditional lender (albeit with online operations), offers 12 months of forbearance. Its policy isn’t exclusive to job loss protection, catering to borrowers who experience other types of economic hardship, including trouble with medical bills.

You must make nine monthly, on-time payments before applying for forbearance. Electing forbearance also resets the clock on your path to cosigner release, if that’s a goal you have. You’d need to make three years’ worth of timely payments once you’re back from forbearance to remove a cosigner from your loan.

Read the fine print before choosing a refinancing lender

Be aware that lenders allow interest to accrue while you’re in forbearance. The interest capitalizes while you take a break from making payments, so don’t be surprised to find a larger outstanding balance upon your return. Unfortunately, that’s how student loan interest works.

You also have the option of making interest-only payments during your forbearance to keep the size of your loan from growing.

But although accruing interest is a drawback of forbearance, Estelle said the job loss protection she received paid significant dividends — specifically, it gave her time to get past her job loss so she could be prepared to continue her loan repayment. It also helped her find a new job within five months thanks, in part, to her SoFi-curated resume.

Student loan refinance companies with job loss protection could be a boon for you, too, but it’s wise to keep a healthy level of skepticism. Ask questions while you shop around, so you won’t be surprised by their answers when it matters most.

 

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