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Updated on Thursday, March 26, 2015
Have you hit a temporary rough patch with your finances? Are you worried you won’t be able to afford to make your student loan payment this month?
Instead of putting yourself at risk for being late, it might be worth it to look into skipping a student loan payment.
Yes, you read that right – this is a legitimate option that some private lenders provide, but there are a few things you need to consider. Skipping a payment still comes with consequences, though they’re not as bad as being late and falling behind on a payment.
Here are the circumstances under which it makes sense to skip a student loan payment, and the various programs lenders have.
When Should You Skip a Student Loan Payment?
The first thing to know: most of these “skips” are one or two time deals for the year. You shouldn’t considering skipping a student loan payment if you don’t think your financial situation will improve within the next month. Instead, you should contact your lender and ask them if there are other payment options available to you.
Skipping a student loan payment is for those who are temporarily unable to afford the payment. Perhaps your car needed a major repair, and you don’t have enough money in your bank to cover your payment until later in the month. Or maybe you’re in-between pay periods if you just started a new job.
Whatever the case may be, you don’t want to make a habit out of this. You can’t take advantage of these programs, so it’s important not to become dependent on the option.
Skipping a payment isn’t completely free, either. Some lenders require you to pay a fee to do it. The fee is much less than what your student loan payment is (most are around $25), but it’s still something to be aware of.
Additionally, some lenders have strict requirements. In most cases, if you’re not in good standing (or if you’ve been late on payments before), you’re not going to be eligible for this option. Some lenders require that a number of payments have been made previously, so if you just started paying your loan back, this option might not work.
Skipping a payment is mainly for those who have had their payments under control and are experiencing a temporary financial setback.
Are There Consequences to Skipping a Student Loan Payment?
If you’re wondering whether or not your credit will be affected, you should call your lender and find out. Some applications let you know that your credit won’t be affected, and others don’t mention it. The main thing they’re looking for is being current and in good standing on your loan.
Keep in mind interest will continue to accrue on your loan during this time. You should calculate whether it’s worth the fee + the interest that will accrue. If the difference between your payment and that calculation isn’t much, try to come up with the money any way you can.
In addition, some of the following lenders try to entice borrowers to skip a payment because they have “better things to do with their money,” such as spend it on gifts or a vacation. That’s not financially sound. You should be responsible for your student loan payments. If you have the money, use it toward your loans, not something outside of your budget. It’s not worth the interest that will accrue.
Lenders Who Let You Skip a Payment
Not all lenders have this option available, but we’re highlighting a few that do. In most cases, credit unions are leading the way by providing this option to their customers, but this isn’t an exhaustive list by any means.
Earnest*: You’re eligible to skip a student loan payment with Earnest if you’ve made 6 months of on-time payments. You can only skip one payment every 12 months. They do warn that the principal and interest from the payment you skip will be spread out across your remaining payments, and will result in increased monthly payments. They don’t mention any fees associated with skipping a payment.
Maryland Credit Union: There is a $25 processing fee if you apply to skip a payment. You must have made 3 consecutive months of payments to be eligible, and your loan must be in good standing, with payments current. Ultimately, the credit union must approve you, so you’re not guaranteed to be able to skip. You can only skip one payment per calendar year.
Education Credit Union: There’s a $25 participation fee when you skip a payment, and you must have made one full payment on your loan to be eligible. You have to plan ahead here, as you need to send in the form 10 days before your payment is due. They note that the skip request is not guaranteed as the underwriting department has to review it. They do allow 2 payments to be skipped per year, but not in consecutive months.
Eastman Credit Union: A $25 processing fee is charged to skip a payment. For student loans in particular, you must be making principal and interest payments, not just interest-only payments. Your loan must also be current and in good standing, and must also have been current in the past 6 months. You can only skip one payment per year. They warn that interest will continue to accrue, which will extend the term of the loan.
As you can see, all of these lenders have different guidelines and eligibility requirements. It’s a good reminder to always read the fine print on any forms you’re signing. Don’t assume anything is guaranteed, and have a contingency plan in place in case your request is denied.
What If I Have a Different Lender?
The option to skip a payment is very popular with credit unions and other types of loans, so more lenders may start offering it in the future.
It’s always worth giving your lender a call and asking if this is something they can do for you. Many lenders know how much of a burden student loan debt is, and they’re willing to work with borrowers under the right circumstances.
Always be honest and polite when calling, and explain your situation. If you’ve had a good record with them thus far, that will work in your favor. At the very least, your lender may be able to change your due date, or offer you another course of action.
After Skipping a Payment
Once you get your financial footing back, we strongly recommend paying extra on your student loans, if you can. You want to make up for the interest that accrued. In many cases, the term of your loan may have been extended. You should do what you can to reverse the impact skipping a payment had on your loans.
If it wasn’t clear before – this is a one-time deal, and your payments will resume the following month. Be prepared!
Proceed With Caution
The option to skip one student loan payment is a good one to use in an emergency situation. Remember, this option is only available to you, at most, for 2 months out of the year. Make sure you really need to use it before paying a fee or having your loan term extended. This should be considered a last resort if you truly don’t have the money to pay, not because you have the money and want to use it on something else.
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