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Here’s How To Refinance A Mortgage (And Know If It’s Right For You)

Over the past decade, mortgage refinancing has grown in popularity. Not that big of a surprise, considering we’ve seen a sizable drop in mortgage rates during this time. At the height of the housing crisis in 2008, rates averaged about 6% for a 30-year fixed-rate mortgage for a 30-year fixed-rate mortgage.

Currently, the average rate for a 30-year fixed mortgage is about 3.26% , which gives some folks the opportunity to save some serious moola by lowering their interest payments. If you signed on for a higher rate years ago or your financial situation has improved, refinancing is worth considering.

While refinancing might not be right for every homeowner, but starting to look at rates and terms could be the first step to being able to save for other financial goals. Here’s everything you need to know about refinancing a mortgage from how to start the process, to figuring out if it’s right for you.

How much does it cost to refinance a mortgage?

Since you’re essentially applying for a new loan, there will most likely be fees if you choose to refinance. Because of this, it’s important to consider those costs compared to the potential savings. A good rule of thumb is to be certain you can recoup the cost of the refinance in two to three years—which means you shouldn’t have immediate plans to move.

Refinancing will generally cost from 3% to 6% of your loan’s principal value, though you should be sure to shop around to make sure you’re getting the best deal.

There are helpful online calculators for determining approximate costs for a mortgage refinance. Of course, this is only an estimate and all lenders are different. The lender will provide final closing cost information alongside a quote for your new mortgage rate.

When you refinance, you also have to consider closing costs. Some lenders may not have origination fees, but instead charge the borrower a higher interest rate.

If you have a great borrowing history and a strong financial position, there are some mortgage refinancing lenders, like SoFi, that reward such borrowers by offering competitive rates and no hidden fees.

Mortgage RefinancingMortgage Refinancing

What are the steps in the mortgage refinancing process?

The first (and arguably most important) step is to determine what you want to get out of your mortgage loan refinance. There are several mortgage loan types, but “rate and term” and “cash out” are the two most common.

Just as the name implies, a “rate and term” refinance updates the interest rate, the term (or duration) of the loan, or both. You can also switch from an adjustable rate to a fixed rate and vice versa.

It is important to understand that not every refinance will save you money on interest. For example, if you extend the loan terms, you may end up paying more money over the course of your loan.

With a “cash out” refinance, you are using increased equity in your home to take out additional money on your mortgage; This is usually done to fund home repairs or pay off other, higher-interest debt. This is an excellent tool if you use it wisely, but as with all loans, it’s rarely advisable to take out more than you absolutely need.

Once you determine your goal, your primary focus will be determining whether the fees are worth what you’ll gain by refinancing. Here are the steps you’ll need to take to refinance:

1. Check your credit score and credit history for errors. Your credit score is an important factor in determining whether you get a better rate. Make sure you take time to clear up anything that’s been reported erroneously, and if possible take steps to boost your credit score.1
2. Research your home’s approximate value. Check comparable sale prices—not just listing prices—in your neighborhood to get an idea of what your house is worth. If the value of your home has gone up significantly and improves your loan-to-value ratio (LTV), this will be helpful in securing the best refinancing rate.
3. Compare refinance rates online. Don’t forget to ask about all costs involved. Most financial institutions should be able to give you an estimate, but the accuracy can depend on how well you know your credit score and LTV ratio.
4. Get your paperwork together. The process will move faster if you have your pay stubs, bank statements, tax filings, and other pertinent financial information ready to go.
5. Have cash on hand. You may have to pay some up-front costs, like property taxes and insurance.
6. The lender will (mostly) take it from here. They will send an appraiser for a home inspection. After the loan documentation and appraisal are submitted, loan officers determine the interest rate and create the loan closing documents. The closing is then scheduled with the refinancing company, mortgage broker, and real estate attorney.

How long does a mortgage refinance take?

The process can take anywhere from 30 to 90 days, depending on your diligence, the complexity of the loan, and the efficiency of the lender or broker.

If you want the process to move fast, look for mortgage lenders who are looking to disrupt the traditional mortgage process by offering a more streamlined service and a better customer experience.

If you’re like most people, you’ve got a life to live and don’t want your mortgage refinance to drag on for months. Keep this in mind while looking for a lender to refinance with.

Ready to check out your mortgage refinance rates with a competitive lender that values your time? SoFi can give you a quote (that won’t affect your credit score! 2) in as little as two minutes.

1. Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.
2. To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.

SoFi Lending Corp. is licensed by the Department of Business Oversight under the California Financing Law, license number 6054612. NMLS #1121636.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages not available in all states. Products and terms may vary from those advertised on this site. See for details.


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Tips for Paying Off Outstanding Debt

A car loan, a mortgage, student loans, credit cards. It might feel like a dark debt cloud is looming over you sometimes. If you carry some debt on your personal balance sheet, you’re not alone.

The Federal Reserve’s most recent report shows that total household debt in the U.S. has reached more than $14 trillion . That includes everything from mortgages to credit cards to student loans. We’re a heavily indebted nation, and for some, it may take a psychological toll. If that’s you, here’s the comforting news: There are some tried-and-true strategies for paying back outstanding debt.

What is Considered Outstanding Debt?

What is outstanding debt? Outstanding debt refers to any balance on a debt that has yet to be paid in full. It is money that is owed to a bank or other creditor.

This balance may include both the loan’s principal and accrued interest.

On a credit card, outstanding debt may be referred to as a loan’s outstanding balance or revolving debt. A credit card is a kind of revolving debt. Generally, credit cards offer a line of credit that you can borrow against, up to a limit. If that balance is paid down, it is possible to reuse the credit limit.

On loans, like a student loan or mortgage loan, outstanding debt is sometimes called a loan’s balance. These are installment loans and are generally made as one lump sum, with the terms agreed to upfront.

Repayment happens in installments—usually, equal payments made each month.

When calculating your own personal debt that’s outstanding, add all debt balances together. This could include credit cards, student loans, mortgage loans, payday loans, personal loans, home equity lines of credit, auto loans, and so on. You should be able to find balance information on your statements.

Here are some ways to find outstanding debt, manage outstanding debt, and how to make a plan to pay it off.

How to Find Outstanding Debt

When tackling outstanding debt, you first might want to track it all down.

As you move throughout the debt payoff journey, you may find it helpful to start a file to keep your statements and correspondence. Also, you could create a list or input information into a spreadsheet. Organizing your information is necessary for building a debt payoff strategy.

Build a list of all debts with the most useful information, such as the outstanding balance, the interest rate, the monthly payment, the type of debt, and the creditor. This will come in handy later.

What if I Can’t Find All My Outstanding Debts?

If you feel as though you’ve lost track of some debts, you may want to start by requesting a credit report from at least one of the three major reporting agencies, Experian®, TransUnion®, or Equifax®. You are legally entitled to one free copy of your credit report from each of the three agencies per year. It’s easy to request a credit report from .

A credit report includes information about each account that has been reported to that particular agency, including the name on the account and the outstanding debt balance.

It is possible that some outstanding debts have been sold to a collection agency. The name of the original account may be included. If that is not the case, you may need to investigate further. Some debt may also be outside of the statute of limitations.

Now, this strategy might not be perfect: It is possible to have outstanding debts that don’t appear on a credit report. Creditors are not required to report to the agencies, but most major ones do. That said, a creditor could choose to report to none, one, two, or all three of the agencies. If you’re in information-collecting mode, you may want to consider requesting reports from more than one agency, or all three.

Should I Pay Down Outstanding Debt?

Barring extenuating circumstances, it’s a good idea to make regular, consistent payments on your debt. Whether or not you decide to pay the debt back on an expedited schedule is up to you.

Some may not feel the need to aggressively tackle their outstanding debt. They may be just fine to pay off a balance over a designated period. This may apply to people with manageable debt payments, those who have debts with lower interest rates, or those focusing on other financial goals.

For example, someone with a low interest rate mortgage loan may not feel the need to pay it down faster than the agreed-upon schedule. So they continue to make regular, scheduled payments that make up a manageable percentage of their monthly budget. Therefore, they are able to work on other financial goals in tandem, such as saving for retirement or starting a fund for a kid’s college.

Other scenarios may call for a more aggressive strategy to pay back debt. Some reasons to consider an expedited plan: Debt levels, and therefore monthly payments, feel unmanageable. Carrying debts with higher interest rates, like credit cards. Missed payments and added fees. It could also be as simple as this: Debt makes you feel crummy, and you’re over it.

Also, carrying a large debt load could negatively affect your FICO® Score. Credit scores may look at the ratio between the outstanding balance and your available credit on revolving debt, like a credit card. This is called a “utilization rate.” When a debt load is high, it could cause variable interest rates—like those on your credit card—to rise.

According to Experian , one of the credit scoring agencies, it is ideal for a debtholder to only be using 30% of their available credit. So, if a person has a $5,000 credit limit on a card, they use no more than $1,500 at any given time throughout the month. Using more could result in a ding on a credit score.

Carrying debt also means paying interest. While some interest may not be avoidable, it’s generally a financially sound strategy to pay as little in interest as possible.

Credit cards are some of the worst offenders, here—the average interest rate on a credit card is currently over 15%. Penalty rates can reach 30% or higher. With high rates, it’s worth seriously considering paring back debt balances.

It is possible to pay off a credit card by making only the minimum monthly payments, but it may be a painstakingly slow process, with a lot of interest paid along the way. Depending on the balance and the card’s methodology, this process could also take several years or more.

Outstanding Debt Management Strategies

The next step is to pick a debt reduction plan.

As you can probably guess, the importance of budgeting and understanding cash flow cannot be understated. A successful debt payoff plan is going to require discipline and a killer budget.

Two popular strategies for paying off debt are called the debt snowball and the debt avalanche. Both ask that you isolate one source of debt to work on first. Once you select a debt, it’s time to go hard to make it disappear.

Simply put, you’ll make extra payments or payments larger than the minimum monthly payment until the outstanding balance is eliminated.

Debt Snowball

A debt snowball payoff plan involves working on the source of debt with the smallest balance. For example, a person with three credit cards would pick the one with the lowest outstanding balance and work on paying it down.

The idea here is that there’s a psychological boost when a card is paid off, so it makes sense to go after the smallest first. That way, when a person works up to the card with the higher balance, they can focus singularly on it, without a bunch of annoying, smaller payments getting in the way of the ultimate goal.

It’s called a snowball because the strategy starts small, gaining momentum as it goes.

Debt Avalanche

Alternatively, the debt avalanche method starts with the debt with the highest interest rate. Because this source of debt costs the most to maintain, it is a natural place to focus.

The debt avalanche is the debt payoff strategy of choice for those who prefer to look at things from a purely mathematical standpoint. For example, if a person has one credit card with an 18% APR and another with 12%, they’d focus on that 18% card with any extra payments, no matter the balance.

Of course, it is also possible to modify these strategies to suit personal preferences and needs. For example, if one source of debt has a prepayment penalty, maybe it drops to the bottom of the list. If there’s a particular credit card you tend to overspend with, perhaps that’s a good one to focus on.

Now, you can rearrange your list of debts to reflect the order you’ll work on them.

Credit Card Consolidation With a Personal Loan

It may be possible to merge all credit cards together with a lower overall rate of interest and a straightforward repayment plan, using a personal or credit card consolidation loan.

In addition to one fixed monthly payment, a personal loan provides another benefit—the balance cannot easily be increased, as with a credit card. It’s far too easy to swipe a credit card for an additional purchase, potentially undoing the progress you’ve made on your debt repayment plan.

To consolidate with a personal loan, you might want to look around at different lenders to get a sense of what interest rates they might offer for you. Typically, lenders will provide a few options, including loans of different lengths.

You might want to spend some time analyzing the options. First, you could look to see if the are rates better than the one that you are currently getting on current sources of debt. Also, you might want to consider the length of the loan. It may be possible to get a longer loan with a lower monthly payment, but all else equal, you’ll pay more interest on a longer loan. And ideally, a personal loan would help speed up the loan pay-off process.

Consider the loan’s additional terms, as well. For example, investigate whether the loan has a prepayment penalty, where you’re charged extra if you want to pay off your loan faster.

Look to see if there are additional fees involved in the creation of the loan. Last, consider whether the lender has any other perks or member benefits such as hardship deferral.

The personal loan is then used to pay off credit cards and other high-interest debt.

The key here is to stay on top of the new loan, making all payments on time. You could consider supplementing this new strategy with a system of money tracking and budgeting.

Though a personal loan can offer some reprieve from high-interest rate debt, it doesn’t address the root cause of the debt.

If you decide to pursue this debt payoff strategy, an unsecured personal loan from SoFi may be an option for you. SoFi offers low-rate, no-fee, personal loans to help guide your financial journey.

Ready to kick-start your debt payoff strategy? A personal loan from SoFi can help you consolidate your debt into one easy-to-manage monthly payment.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.


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Can I Take Out a Personal Loan While Unemployed?

As more people face unemployment, it’s important to fully understand the many financial options available. From unemployment to stimulus checks, there are options out there when it comes to managing money during difficult times.

One option people may consider during unemployment is a personal loan. But one important question is: Can you get a loan without a job?

What Is a Personal Loan?

While many of us are familiar with mortgages or student loans, personal loans may be less well-known. Like a mortgage or student loan, a personal loan is, at its most simple, when a lending institution pays out a lump sum of money to a borrower, who then pays back the amount owed plus interest over a predetermined period of time.

Unlike a mortgage or student loan, however, a personal loan isn’t tied to a specific expense. In other words, someone might take out a personal loan to cover the cost of paying for a dream wedding, to remodel a kitchen to get rid of that hideous linoleum, or to cover living expenses during a time with low cash flow.

Personal loans can typically vary from $1,000 to $100,000, depending on the lender’s guidelines, the amount a borrower requests, and the borrower’s creditworthiness. While the lender pays out the amount of the loan in one lump fee to the borrower (minus any origination fee), the borrower pays the loan back over time in installments, often between 12 and 60 months.

The two most common types of personal loans are secured and unsecured. Secured personal loans are loans that use something owned by the borrower as collateral. For example, an auto loan uses the car as collateral for the loan. In other words, if the borrower defaults on their car loan, the lender can repossess that new hybrid in order to recoup the cost of the loan.

Personal loans, on the other hand, are unsecured. Unsecured loans do not use collateral. Instead, lenders may look at borrowers’ credit-worthiness to determine the risk in lending to them and determining an interest rate.

The interest rate for these loans might be different for different borrowers depending on their credit-worthiness, but interest rates might range from around 5% to more than 35%. Interest is paid back alongside the principal amount in monthly payments over the life of the loan.

Are There Downsides to Taking Out a Personal Loan While Unemployed?

Taking out a personal loan may seem appealing to someone who is temporarily out of work, because they might be relatively quick to secure and may come with lower interest rates than credit cards. But as with all financial decisions, it is important to understand the pros and cons of taking out a personal loan while unemployed before applying for one of these loans, including the possible downsides.

But can you get a personal loan without a job? It may be more difficult to qualify for this type of loan if you’re out of work.

Lenders might look at a wide variety of factors when determining whether to offer a borrower a loan. Generally, lenders look at things like income, debt-to-income ratio, credit history, and credit score. Lenders use this data to determine how likely it is that the borrower will pay back the loan, because unlike with a secured loan, unsecured personal loans don’t have collateral that the lender can repossess in the case that the borrower stops making payments.

Of course, if a borrower is unemployed, they won’t necessarily have income to show, and their debt-to-income ratio might be much lower than it would be with a stable income. Of course, different lenders have different criteria for lending, and the ultimate decision about who gets a loan is determined by that specific lender.

Additionally, some lenders may offer higher interest rates to unemployed personal loan borrowers because of the additional perceived risks of lending to someone who is unemployed.

And the risk may not just be for lenders. It is important to consider the ability to pay a higher interest rate or make monthly payments when deciding whether to apply for a personal loan during unemployment. For example, if a borrower is struggling to make ends meet, a loan payment could be impossible to pay on top of other expenses.

And defaulting on a personal loan can be even more expensive: Borrowers could face late fees for missed payments and fees if the loan is sent to collections, and they could take a hit to their credit score if they’re not able to make payments.

Because of these risks, it’s important for potential borrowers to carefully consider the risks of taking out a personal loan during unemployment.

Are There Benefits to Taking Out a Personal Loan While Unemployed?

There may be benefits for someone who is unemployed to take out a personal loan. First, they can be more flexible than other types of loans: Borrowers can use the money from a personal loan for almost anything. This might make it an appealing choice for borrowers who may not have their normal income coming in due to unemployment.

A personal loan also may come with lower rates than a credit card, which can be a major benefit when it comes to saving money. Additionally, the fixed term of a personal loan could help borrowers save money over the life of a loan, because unlike with a credit card, you pay a set amount monthly over a set term, which means payments don’t roll over and continue to accrue interest.

Another potential benefit of taking out a personal loan during unemployment could be consolidating other debts. It could help manage other expenses during unemployment. For example, one reason borrowers may choose a personal loan is to consolidate credit card debt. These types of loans are sometimes referred to as debt consolidation loans.

Debt consolidation loans might help save money if the borrower can secure a lower interest rate than they are currently paying on their credit cards. Using a personal loan to pay off credit card debt could save borrowers money during unemployment by simplifying multiple payments and reducing the amount of money they are paying on higher credit card interest every month.

Of course, continuing to use credit cards after obtaining a credit card consolidation loan might be detrimental, as debt would continue to pile up. Though canceling the cards outright can sometimes have a negative affect on credit scores.

Additionally, personal loans may be an option for borrowers who are facing unexpected expenses like medical bills or moving costs. If the current financial situation or a change in jobs has necessitated a move, a personal loan may be a way to pay for those unexpected costs without relying on credit cards.

Choosing a Personal Loan

Borrowers interested in a personal loan might want to consider all the pros and cons before taking one on during unemployment. If a borrower is ready to apply for a personal loan, it may be important to look for one that meets their specific needs. First, it is important to find a lender willing to work with unemployed borrowers. SoFi®️ personal loans, for example, consider applications from borrowers during unemployment.

If a personal loan sounds like it might be the right solution, borrowers may want to do a little bit of preparation beforehand. It’s never a bad idea for a borrower to figure out exactly much they want to borrow in advance. But remember—borrowers should only borrow the amount they need.

Taking a look at the affordability of monthly payments may also help a borrower determine how much to borrow. Additionally, borrowers may wish to pull up their financial documents and take a peek at their current credit score and overall financial health before applying for a personal loan.

With SoFi, the next step in applying is to get pre-qualified. Prequalification with SoFi doesn’t affect your credit score and lets you see what interest rate you may qualify for. While SoFi offers easy online prequalification, it is important to look around and determine which, if any, personal loan is the best for you.

With SoFi, you may qualify for a personal loan for between $5,000 and $100,000 with no origination fees or unexpected costs. Plus, if you take out an unsecured personal loan then lose your job, you may be eligible for forbearance on your payments and assistance finding a new job in the meantime.

Bottom line: Applying for a personal loan with SoFi is possible, but should be properly vetted for the associated risks.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


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Can You Get Unemployment Deferment for Student Loans?

Deferring student loan repayments may be available to qualifying unemployed individuals. The deferment and repayment options available (or not available) to individuals can depend on the type of loan held (federal student loans vs. privately held loans).

Many unemployed Americans struggle with figuring out how to make ends meet—from paying monthly bills to handling long-term debt. Some may need temporary financial relief from outstanding student loan debts, while seeking new employment.

Fortunately, there are programs available to eligible people who need assistance during a financial hardship, such as unemployment benefits.

For some unemployed individuals with federal student loans, one option is the Unemployment Deferment program offered by the US government.

Unemployment Deferment is a program run by the US Department of Education that allows eligible federal loan borrowers—who are out of work or cannot find full-time employment—to postpone payments on existing educational debts owed to the American government.

Below is an overview of the federal student loan Unemployment Deferment program—including, who qualifies for unemployment deferment on student loans, how the application process works, and how long repayment postponements can last.

Additionally, there’s an overview of alternatives to the federal Unemployment Deferment program (including how private student loans may be impacted by a change in employment status).

While this piece is in no way comprehensive, and everybody’s financial situation is different, hopefully there is enough information here to help start your research into the options that may be available to you.

What is Unemployment Deferment?

For anyone who has federal student loans, student loan deferment is a program offered by the federal government that allows eligible borrowers to put student loan payments on hold for a predetermined period.

In other words, the government is essentially pausing student loan payments for a set amount of time while the borrower finds a job.

Unemployment Deferment is awarded to those eligible federal student loan borrowers who are seeking unemployment benefits or who are unable to find full-time work.

Eligible applicants can pause payments on federal student loans for 36 consecutive months of deferment, assuming that they continue to meet all requirements.

It’s important to note that in most cases, interest will continue accruing during any deferment period. In practice, this means that the balance owed on outstanding loans would keep growing.

So, over the life of the loan, a short-term savings (aka deferring repayment) could mean owing more in the end. Generally, however, interest won’t accrue on federal subsidized loans.

If a federal student loan and borrower qualify for deferment and the loan will continue to accrue interest, the borrower can choose between two ways to pay back that interest.

First, they could make interest-only payments while that interest is accruing.

Or, they could opt to let the interest accumulate (without making payments) during the deferment period, adding whatever accrues to the total balance owed.

If a borrower decides to forgo interest-only payments and allow interest charges to rack up on an unsubsidized loan, that interest is added onto the total balance of the student loans, which is a process called “capitalization.” (Unpaid interest, however, is never capitalized on Perkins Loans).

In addition to having a larger loan amount due down the line, future interest is calculated on top of the new balance.

Therefore, borrowers paying interest on top of interest, potentially resulting in higher monthly payments than before the deferment..

What Types of Student Loans Are Eligible for Unemployment Deferment?

Federal student loan unemployment deferment is available to Direct Loan, FFEL Program loans, and Perkins Loan borrowers. Even though this is a federal program, not all federal loans may qualify. Here are a few examples of loans that may qualify.

• National Direct Student Loans (NDSL Loans)
• Federal Family Education Loans (FEEL Loans)
• Federal Stafford Loans
• Federal Perkins Loans
• Federal Supplemental Loans for Students (SLS Loans)
• Federal PLUS Loans
• Federal Consolidation Loans
• National Defense Student Loans

It’s important to note that if a borrower received federal student loans before July 1, 1993, they may qualify for other deferments.

Private loans from private lenders will not qualify for the federal Unemployment Deferment program. However, some lenders may provide economic hardship programs for borrowers.

Borrowers can contact their loan servicer for details on the hardship repayment or deferment programs they may offer.

Who is Eligible for Unemployment Deferment?

Deferring payments on federal student loans is not automatic—even if a borrower has already qualified for another federal program, like Pandemic Unemployment Assistance.

Borrowers first need to apply with supporting documentation to determine if they’ll be eligible for a student loan unemployment deferral.

Generally, an applicant can qualify either by providing proof of eligibility to receive employment benefits or by demonstrating that a diligent search for full-time employment is underway.

In the second case, certifying that one has registered with an employment agency (whether privately owned or state run) can help show that an active search for work is being carried out.

Applicants seeking unemployment deferment under the searching full-time employment category may receive a deferment period for only six months.

If the applicant needs to extend deferment past six months, a new application certifying that they’ve made at least six attempts to find full-time employment is required. It’s important to note, though, that the deferment period cannot exceed three years.

If the eligibility requirements get met, it’s likely an applicant could qualify for the federal student loan unemployment deferment program.

To pursue this deferral, applicants must first fill out the Unemployment Deferment Request form —answering questions about their job search, current unemployment benefits, and understanding of what loan deferment entails.

What About Private Student Loan Deferment?

Although private lenders aren’t legally required to offer unemployment deferment options, some do.

For instance, SoFi offers an Unemployment Protection Program, which lets eligible borrowers pause their payments for up to 12 months due to unemployment, as long as their loans are in good standing.

But, it’s worth keeping in mind that, similar to federal student loan Unemployment Deferment, private loans typically still accrue interest during the approved deferment period (even refinanced student loans with lenders who honor grace periods).

In other words, the total student loan balance would continue to grow even while payments are suspended.

Over the life of the loan, this could add to what the borrower owes overall. Some private lenders, including SoFi, allow borrowers to make interest-only payments during a forbearance to help avoid interest capitalization.

Even with the accrual of interest and limited options, deferment is typically preferable to defaulting on student loans.

Borrowers with private student loans may wish to contact their lender to learn if special deferment or repayment options are available to borrowers who find themselves unemployed

Advantages and Disadvantages of Unemployment Deferment

So, what are the potential pros and cons of pursuing an unemployment deferment on student loans?

Below is a discussion of some of the advantages and disadvantages that borrowers may want to think over:


For borrowers in need of financial relief, student loan unemployment deferment can help temporarily lower monthly expenses.

This can be especially helpful if an unemployed borrower would otherwise run the risk of student loan default.

Defaulting on loans can cause a negative ding to one’s credit history, complicating an individual’s ability to pursue mortgage or other loans in the future.

And, with student loans, simply not paying does not erase the amount owed or the interest that can keep accruing.

If a borrower has only subsidized student loans, then the unemployment deferment program will come at no additional cost.

Whether a borrower has been laid off due to an economic downturn or they have recently graduated and are struggling to find employment, unemployed deferment is one way to help ease the financial pressure of repaying student debt in the short term.

And, while it’s completely fine to apply for a deferral, borrowers are typically expected to use the approved deferment period to find a new job; some unemployment protection programs from private lenders even have stipulations to that effect.


In the case of having unsubsidized federal student loans, taking a deferment will increase the total amount owed on the loan. Even if a borrower decides to make interest-only payments, they’re not not chipping away at the principal amount.

If interest payments are not made, the total value of those unpaid interest payments would then be tacked on to the loan balance at the end of the deferment period.

So, in this case, the deferred interest would grow the total loan amount—how much money the borrower owes overall on their student debt.

Simply put, unemployed student loan borrowers may want to weigh whether the short-term savings tied to reduced or suspended loan payments are worth owing more money on those loans later on.

When a borrower does eventually find employment and the deferment ends, the future payments on their student loan payments may be higher each month—to cover the increase in interest.

For someone who is just adjusting to a new job, higher loan payments may come as a shock and could be hard to budget for.

Understanding the long-term implications of applying for student loan unemployment deferment can help individuals to decide whether this sort of program is the right for the current and future financial situations.

Alternatives to Unemployment Deferment

For federal student loan borrowers who don’t qualify for the Unemployment Deferment program, there may be some alternatives.

Forbearance and income-driven repayment plans are two potential options:


Similar to deferment, federal or private loan forbearance temporarily suspends or reduces loan payments.

However, while principal payments are postponed, interest will continue to accrue, no matter what type of loans. To see if you qualify, contact your loan servicer.

Because forbearance does not suspend the accrual of interest on a student loan, other options, such as income-driven repayment, could also be considered.

Income-Driven Repayment

Income-driven repayment plans calculate loan payments based on a borrower’s current income and family size. They also, typically, stretch the loan repayments over 20 or more years.

There are four different types of income-driven repayment plans run by the US government:

•   Revised Pay As You Earn Repayment Plan (REPAYE Plan)
•   Income-Based Repayment Plan (IBR Plan)
•   Pay As You Earn Repayment Plan (PAYE Plan)
•   Income-Contingent Repayment Plan (ICR Plan)

Although this type of plan may trim monthly loan payments once approved, it could cost borrowers more in interest over the life of the loan.

So, once a borrower’s financial or employment situation improves, they may want to switch to an alternative repayment plan.

Public Service Loan Forgiveness (PSLF) Program

Having been employed in certain public sector jobs may also qualify some borrowers for student loan forgiveness.

By definition, loan forgiveness means that the remaining amount owed is, well, forgiven—the borrower is no longer bound to pay it back.

Eligible federal student loan borrowers who’ve completed 10 years of employment with a qualifying job—such as, a public school teacher, some non-profit employees, Americorps recipient, or government worker—might be eligible for the PSLF program.

If you think you may qualify for the federal forgiveness program, and your goal is to lower your monthly payments, you may still want to switch to an income-driven repayment plan while the PSLF application is being reviewed in order to lower monthly payments.

Student Loan Refinancing

After exhausting federal program options, or if none are quite the right fit, borrowers with federal or private student loans may want to look into student loan refinancing.

Refinancing student loans could help well-qualified borrowers either get a lower monthly payment or help reduce the total interest paid over the life of the loan.

But, it’s important to note that by refinancing federal student loans with a private lender, borrowers forfeit all baked-in benefits and protections such as federal Unemployment Deferment, PSLF, and income-driven repayment.

It’s also worth mentioning that lenders that offer refinancing options usually look at applicants’ qualifying financial attributes—including employment status, credit history, and income. So, refinancing student loans is not necessarily available to all who apply.

The Takeaway

There are numerous student loan repayment options for borrowers who qualify—spanning deferment, income-driven repayment (federal loans), federal student loan forgiveness programs, and student loan refinancing. Some are specifically designed for unemployed people, while others are not.

One good place to start is by calling your loan provider to review all options that you may qualify for.

Curious about how refinancing could lower total interest paid or lower monthly student loan payments? SoFi offers an unemployment protection program for eligible student loan refinancing borrowers.

SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


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8 Tips for Asking a Professor for a Letter of Recommendation

While a college education can help prepare students for life, taking advantage of the professional network college offers can help launch your career. Whether trying to land a summer internship, get that first job out of college, or apply to graduate school, a letter of recommendation from a professor can be helpful.

Although requesting this is common practice, and it can feel nerve wracking to broach the subject, there are some helpful tips to receive a glowing letter of recommendation.

1. Asking a Professor Who Knows You and Your Work

There are several factors to consider when deciding who you’ll ask for a letter of recommendation. Taking stock of which professors actually know your interests and goals, not just your name, is something to consider right away.

A strong letter of recommendation can involve praising a student’s personal character and highlighting their goals and ambitions. For this reason, choosing a professor you’ve personally interacted with, whether through class discussions or during office hours, could be beneficial.

If you’ve taken several courses with a professor, they may be able to showcase how you’ve grown throughout your time in college.

Since a professor will also be attesting to your academic merit, it can be helpful to start by identifying who has seen samples of your strongest work throughout college. For example, a personal essay or in-person presentation that earned a strong grade might indicate that a professor valued your work.

2. Choosing a Professor Who Specializes in Your Field

Although a letter of recommendation is foremost about your own skills and attributes, also of benefit can be a professor’s own credentials within an industry or academic field you are targeting.

A letter of recommendation from an esteemed and notable professor could help you stand out in a competitive group of applicants.

Many professors have built up extensive networks from academic conferences and working with faculty at other universities and in the private sector.

Though they may not have contacts at the company, organization, or university you’re applying to, their advice and connections in a specific sector or academic discipline could prove valuable as you begin your job search. As academic professionals, they may have insight on the return on education for different graduate degrees and careers.

Often, jobs or graduate school applications require submitting more than one letter of recommendation. Choosing a combination of references who can highlight your strengths and character and carry respect in your desired field could further enhance your candidacy.

3. Asking in Person if Possible

Given the importance of the request, asking in person can show that you’re serious about your future and respectful of a professor’s time.

For students currently enrolled in school, finding time to ask a professor for a letter of recommendation may be as simple as making an appointment during their office hours.

If you’re studying abroad or have already graduated, reaching out via email may be your only feasible option for starting the conversation. To further demonstrate your commitment, you might ask to arrange a phone or video call.

4. Making a Personalized and Specific Request

The average college has a student to faculty ratio of 14-to-1, so it’s not uncommon for professors to have several students ask for letters of recommendation each year. Still, that doesn’t mean every request is guaranteed a response or agreement to receive a recommendation.

Out of consideration for a professor’s busy schedule, making a request that’s tailored to them and clearly outlines what you need may increase your chances of success.

To personalize the request, consider reminding them which of their courses you took, a key project or assignment, and how they influenced your academic and career goals. Next, providing a concise explanation of the position or program you’re applying for and what it means to you is an opportunity to convey your own professionalism and passion.

Since writing a letter of recommendation is a favor, sending a courteous request that allows a professor to opt out could help avoid a lukewarm reference. A well-crafted request makes it easy for the professor to quickly decide if they have enough knowledge about you and the position to write a letter of recommendation.

5. Providing Information to Write the Recommendation

Even if you have a strong relationship with a professor, the quality of the recommendation can benefit from supplemental information. For instance, providing a resume, college transcripts, personal statement, and a sample of work can help jog their memory and give them a blueprint of your experience and accomplishments to draw from.

It can be helpful to include a job description or, for a graduate program, admissions information. This could help a professor connect your academic knowledge and experience to the job or program’s desired qualifications and skills.

This is also the time to provide information and guidance for submitting a letter of recommendation. Some typical considerations to include are where to send the letter, any relevant deadlines, and to whom it should be addressed.

6. Giving Plenty of Notice

Asking your professor several weeks, if not months, before the recommendation is due can convey respect and appreciation for their time and effort and help ensure submission deadlines are met. Also, it can give you time to regroup and consider other options if a professor or two declines.

7. Keeping Them Updated Though the Process

Professors typically have busy schedules, so probably won’t keep thinking about your job search or grad school application after the letter of recommendation has been written and sent. Letting them know when you have interviews and other updates can help them be prepared should they receive a call from an employer or admissions office.

8. Saying Thanks and Staying in Touch

Besides creating good karma, thanking a professor is another opportunity to foster a good relationship with them. They might become a mentor to you, especially if you’re pursuing a job or education in the same field.

You might apply to another job or a graduate program in the not-so-distant future and want to ask for another recommendation from the same professor. The average American changes jobs nearly every four years according to a US Bureau of Labor Statistics survey.

Instead of starting from scratch each time you apply for a new job, you may want to periodically update academic and professional references along your career path and as your goals change.

Not only can this make for an easier request and stronger recommendation next time around, it may lead to more professional opportunities and meaningful relationships.

The Takeaway

Keeping up with former professors can be a pleasant way to reminisce about college years. Another not-so-pleasant reminder can be student loans.

Like many students, you may have taken out loans to pay for college and/or graduate school. Refinancing your student loans may be an option to help with repayment.

Keep in mind, however, refinancing federal student loans with a private loan means the borrower forfeits all federal loan benefits, such as income-driven repayment plans, loan forgiveness programs, access to deferment or forbearance, and other forms of federal student loan debt relief.

On the flip side, refinancing federal student loans might offer lower interest rates or a shorter term.

With SoFi, student loan refinancing could reduce the overall cost of your student loans and get you out of debt sooner when refinancing to a shorter term. Applying online is free and can be done in a matter of minutes.

Get pre-qualified for student loan refinancing at SoFi.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see

SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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