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What happens to my federal student loans if my income drops?

If you are facing a loss of income, even temporarily, there are options to bring your federal student loan payments down to $0 for a year, without accruing additional interest.

Income-driven repayment plans can reduce your payments to as little as $0 per month . These plans are based on how much you currently earn rather than how much you owe.

For example, if you have no income, your payment will be $0 on these plans, even if your lower income is because of a layoff, strike, furlough, or other temporary change. This is also true for workers who have irregular employment, who may also recertify their IDR payment when they experience income loss. Some income driven repayment plans will also prevent your balance from increasing by waiving interest, and will provide credit toward loan cancellation.

How to lower payments during a loss of income:

  1. Make sure you’re enrolled in an income-driven repayment plan. If you’re not currently enrolled, a loss of income is a common time that people choose to enroll, and
  2. Recertify your income.

You can self-certify your income over the phone with your servicer or through an online application by submitting a document that states your income. A self-drafted document will work if that’s what you have. Most people can complete the online application in 10 minutes or less.

You can ask to recertify your income at any time, and you do not have to do so again for 12 months.

What do I do if I have private loans?

Typically, private student loans do not have the same flexible repayment terms or the full range of borrower protections as federal student loans. However, some private student loans may have an option to postpone payments, and the rules vary among lenders. Contact your loan servicer as early as possible if you want to explore your options.