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Q: "I just got out of college and I can only find part-time work. Will this affect whether or not I can defer payments on my student loans? Would I be in a better situation by not taking the part-time job so I can keep deferring and wait for a full-time gig instead?" - Martin, Alabama

A: The eligibility criteria for the economic hardship deferment are complicated, but generally if you are earning less than 150% of the poverty line you will qualify. You can check whether you will qualify by using the Economic Hardship Deferment Calculator on the FinAid website.

Using a deferment or forbearance, however, will dig your debt into a deeper hole, making it more difficult to repay. During a deferment the government pays the interest on subsidized loans, but the interest on unsubsidized loans is capitalized, adding it to the loan balance. During a forbearance the interest on both subsidized and unsubsidized loans is capitalized if unpaid by the borrower.

You should know that just four years of non-payment will double the cost of the loan.

Deferment and forbearance options are also limited. There’s a three-year cap on deferments and a five-year cap on forbearances, and you have to reapply every year. It is best to save deferments and forbearances for true emergencies, such as medical or maternity leave or complete unemployment.

A better approach to your financial difficulty is to use an alternate repayment plan to reduce your monthly payments to affordable levels. The ncome-based repayment plan calculates the monthly payments based on a percentage of your discretionary income, as opposed to the amount you owe.

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If you don’t qualify for income-based repayment, extended repayment will yield the lowest monthly payments. Use the Income-Based Repayment Calculator on the FinAid website to calculate your monthly payments under income-based repayment.

Given that unemployment rates remain high and will not fully recover for about four years, take the jobs you can get. A part-time job will help you pay the bills. A part-time job can also turn into a full-time job or make it easier to get full-time employment later. Another idea is to find a second part-time job to supplement your income. Two part-time jobs won’t equal a single full-time job, given the lack of benefits, but it is better than nothing.

If you have the time, volunteering can also provide highly transferrable skills that can make up for a lack of experience. Moreover, you can earn an education award of several thousand dollars by volunteering through the AmeriCorps program. These education awards can be used to repay your federal student loans.

If all else fails, you could escape from the slow job market altogether by going back to college to get a graduate or professional degree. Your undergraduate loans will be in an in-school deferment while you are enrolled in graduate school. Piling on more debt for a graduate degree isn’t necessarily an ideal solution, but earning an additional credential might help you get a better job when the job market has recovered.

But be sure to minimize your debt, so that at graduation your debt is less than your expected starting salary.

—Mark Kantrowitz is president of MK Consulting Inc. and publisher of and He has testified before Congress about student aid on several occasions and is on the editorial board of the Council on Law in Higher Education.

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