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Originally published June 28, 2019.
I graduated with a bachelor’s degree in English and French Literature — and no job lined up after I walked across the stage. I was unemployed after graduation, and it took several months before I found a low-paying position in a bookstore that at least helped me repay student loan debt.
Five years later, with a fresh new Master’s of Education degree in my hand, I again found myself unemployed after graduation, with student loan payments looming. I was lucky to land a teaching job a few months later, but it was a stressful time.
Many people struggle being unemployed after college. It’s important to remember that unemployment won’t last forever and that there are steps you can take to improve your situation: Start by:
Unemployed after graduation? Reduce your expenses
Money is the biggest stressor if you’re involuntarily unemployed after college or graduate school.
There are two ways of dealing with it: Reduce expenses or increase income. Let’s start by addressing the former with four strategies:
1. Live at home
2. Create a budget
3. Research cheap cities to live
4. Put student loans on hold
1. Live at home
For recent grads, moving back into their childhood bedrooms can feel awkward (or even depressing), but it’s a savvy financial move. Mom and Dad may let you live rent-free or only charge you a minimal rent, and you will be able to save on the cost of food and utilities, among other costs.
The important thing to remember is that moving home after graduation is just a place to start. It’s better to be there by choice while you are working to launch your career than when finding yourself forced to move back home if you run out of money.
2. Create a budget
It’s much easier to stretch your money if you know what your priorities are and where your money is going — which is why it’s so important to create a budget.
Start by assessing how much money you have (including any income you might be bringing in) and whatever recurring expenses you have. From there, you can determine what costs you can cut to live within your means.
Being unemployed after graduation can make creating a fairly strict budget a necessity, but it can also be a blessing. Many people get used to the stricter unemployment budget and can continue to live on it once they land their first job. That can give you the opportunity to put your savings — or debt payoff — in overdrive because you are used to living on less.
3. Research cheap cities to live
The city you choose to live in can largely impact your finances. High price tags on necessities like rent, groceries and gas will leave you with less money to put toward paying off your student loans.
If you’re ready to make a move, carefully research the cost of living before deciding on a new city. Choosing an affordable place to live can set you up for financial success.
There are even places that will help pay off your student loans if you move there; they may even help you find regular work.
4. Put student loans on hold
There’s no shame in cutting yourself some slack on student loan repayment while you’re trying to deal with unemployment after graduation.
With income-driven repayment plans, for example, you could lower your federal loan monthly payments to a percentage of your disposable income. Your payment could be as low as $0.
Private student loans rarely have access to IDR-style repayment. Still, if you leave school with high-interest private loans, you could look to refinance them to a lower rate and/or lower monthly payment. Being unemployed after graduation might seem like a disqualification for student loan refinancing, but applying with a creditworthy cosigner could help you gain approval.
Aside from IDR and refinancing, consider these measures to avoid payments temporarily:
Grace periods
College grads generally enjoy a grace period for student loans after graduation, which is often enough time to find a job and get financially settled. Depending on which type of loan you have, you may be eligible for differing grace periods after graduation:
- Stafford loans offer a grace period of six months for borrowers.
- Perkins loans have a standard grace period of nine months for graduates who attended school at least half time.
- PLUS loans do not have grace periods for borrowers. The first payment is generally due right after the final loan disbursement is made.
- Private loans may or may not offer a grace period, although many do. These lenders may refer to the grace period by another term or simply give a date when the first payment is due.
Deferment
It can be particularly stressful to deal with student loans when you’re unemployed after college or grad school. If you are coming close to the end of your grace period (or your loan doesn’t offer one) and you still haven’t found a job, you may qualify for unemployment deferment.
If you qualify for unemployment deferment, you can postpone your monthly payments for a period up to three years. If your loans are subsidized, then you generally will not accrue interest on your loans during deferment.
If you have unsubsidized loans, interest will accrue during the deferment period. If you’re able, it’s advisable to pay the interest during your deferment period to avoid having it capitalized and added to your principal, though you are not required to do so.
You will have to apply for deferment through your student loan servicer. The process is never automatic. You may also be required to submit documentation to support your request.
Forbearance
Forbearance is an option available to borrowers who are not eligible for deferment. Standard reasons to seek a general forbearance include financial difficulties, medical expenses, changes in employment or another reason deemed acceptable by your loan servicer.
General forbearance is available for federal direct loans, FFEL program loans and Perkins loans. By going on forbearance, you pause student loan payments for up to 12 months at a time. However, interest will accrue on your loans, whether they are subsidized or unsubsidized. That accrued interest will be capitalized, unless you pay the interest during the forbearance period.
Just like deferment, you must apply for forbearance through your loan servicer, and you may be required to submit supporting documentation.
Still unemployed after college? Seek out nontraditional income
The other half of surviving the financial stress of being unemployed after graduation is finding a way to increase your income, even if you have not yet landed a permanent job.
Unlike trimming expenses, which will only get you so far, your income is theoretically limitless. That’s why it can make sense to spend more time focused on earnings, not costs.
If you find yourself unemployed after college or grad school, here are several ideas to keep some money coming in while looking for a job:
Broaden your horizons
An easy trap to fall into is keeping your job search narrow. You might assume that you need a job that fits your degree or location preferences, but that job might not exist, at least not yet.
Being open to adventurous job opportunities can lead to big things, since you never know who you’ll meet or what you’ll learn in a job that might not exactly fit your expectations.
After all, if you’re unemployed after graduation and have debt to fend off, you might not be in a position to be picky.
Try temping
Temp agencies offer workers short assignments in a variety of different industries. Not only does temping help you pay your bills, but temp positions can sometimes lead to full-time jobs. It’s also a great opportunity to broaden your network and skill set through your temporary assignments.
Short of a traditional temping opportunity, you could also look to sign up for a side hustle, or create your own. If you have stacks of old college textbooks, for example, you might start a book-selling business right out your front door.
Remember that part-time work is still work
You might pass up on an opportunity because it is only offering part-time hours (and pay). But working part-time in your industry can show future employers that you have a strong work ethic and you want to be self-sufficient, even if the job is less than ideal.
Also keep an eye out for employers seeking freelancers or contractors. If you impress in a stringing role, you might convince them to offer a full-time role.
Attitude is important if you’re unemployed after graduation
One of the hardest parts of dealing with student loans and being unemployed after graduation is staying positive. Having a negative outlook can affect your job search, and feeling down about your job situation is something that potential employers can pick up on.
Networking can be a great way to build your professional contacts, and you’ll feel like you’re going the extra mile to find work, which should keep your spirits up. Use LinkedIn, your college alumni association and professional associations in your industry to make new connections. Seek networking events and attend as many as possible, because you never know who you’ll meet in helping you find a job. You might even connect with a career coach.
Remember that unemployment will be temporary — even if you can’t see the light at the end of the tunnel from where you are — and that you should continue living your life. Making time for hobbies, spending time with friends or learning something new will help you keep your job search in perspective.
Andrew Pentis and Laura Woods contributed to this report.
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