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In 2012, 71 percent of college graduates left school with student loan debt, according to the Institute for College Access & Success (TICAS). Unfortunately, due to rising tuition costs, many students are forced to turn to private student loans.
But private student loans have high interest rates and lack the same protections and repayment programs of federal loans. This can make it difficult to know how to get rid of private student loans.
However, while you may not be eligible for Public Service Loan Forgiveness or income-driven repayment plans, you can still get help with private student loans.
The problem with private student loans
Private loans can be an essential tool in completing your education. If you’ve run out of federal loans, grants, and savings, taking out a private student loan can help fill the gap and keep you in school.
But private loans are typically more expensive than federal loans. While federal student loans can have interest rates as low as 4.45%, private lenders can charge more than 11% interest. Such a high rate can cause your balance to balloon over time, adding thousands to your loans.
In addition, if you have a variable-rate loan, your payments can fluctuate along with your interest charges. That can make it difficult to budget accordingly each month.
How to get rid of private student loans
If you’re struggling with your loans, there are options available to you to make your payments more manageable or to discharge your loans altogether. Here are seven ways to get private student loan debt relief:
1. Forgiveness programs
Only federal loans are eligible for the government’s Public Service Loan Forgiveness program. However, depending on your location and profession, you may be eligible for assistance from your state government or private organizations.
For example, if you are a licensed medical, dental, or mental health provider, you may be eligible for up to $50,000 to repay your student loans through the National Health Services Corps Loan Repayment Program. To qualify, you must commit to working full-time for two years in an underserved area.
Student Loan Hero has identified more than 120 repayment assistance or forgiveness programs. You can use the program search tool to look for programs in your area or profession.
2. Interest-only payments
If you cannot make your full minimum payment, some lenders will allow you to make interest-only payments on your loans. Instead of a payment that goes to the principal and interest, you’ll pay only the interest that accrues each month. LendKey is one of the lenders that allows borrowers to enter into an interest-only plan for up to two years.
This approach can significantly reduce how much you owe each month, but keep in mind that you’ll pay more on your loan over time.
To get on an interest-only plan, contact your lender’s customer service department. Your private loan lender may offer this payment option.
If you’re facing a financial hardship, such as unemployment or a medical emergency, some lenders, including College Ave, allow you to enter your loans into forbearance. That means you postpone making payments without going into default or delinquency.
However, interest will continue to accrue while your loans are in forbearance, so this should be a last resort when managing your loans. Make sure you understand all of the potential drawbacks of forbearance before applying.
4. Negotiating lower payments
Your lender wants you to keep making payments; they don’t want borrowers to default. So if you’re unable to make your payment each month, contact your lender and explain your situation.
If you’re going through a hardship, let your lender know. They may be willing to negotiate a lower payment for a limited time to help you get back on your feet. You can also try negotiating your interest rate. Some lenders offer interest rate deductions for setting up autopay, for example.
5. Disability Discharge
While federal loans are eligible for Total and Permanent Disability Discharge if you are severely injured and unable to work, private student loans do not qualify.
However, some private lenders will cancel a borrower’s debt in cases of permanent disability. There is not a set standard for this process, and it can vary from lender to lender. The best thing you can do is ask your lender if they offer disability discharge.
If you declare bankruptcy, you can cancel your debts, such as your credit card balance. In some cases, you may also be able to eliminate your student loan debt. However, getting private loans discharged through bankruptcy is much more difficult than with other forms of debt.
If you go this route, you must be able to prove an undue hardship, meaning you are incapable of paying back your loans while maintaining a basic standard of living.
Bankruptcy is a serious step that can have consequences that last for years, so it’s not something to enter into lightly. It also can cost you thousands in legal fees and court costs. Before filing for bankruptcy, make sure you have exhausted all of your other options.
If you need a lower monthly payment to make ends meet, another option is student loan refinancing. Through refinancing, you take out a new loan that covers the cost of some or all of your current loans. The new loan will have different repayment terms, such as length of repayment, interest rate, and monthly payment.
Some lenders offer repayment terms as long as 20 years. While you’ll pay back more in interest, extending your repayment period can make your monthly payment much more affordable.
Student Loan Refinancing Calculator
While private student loans have fewer repayment options and benefits than federal loans, there are still ways to make your payments more manageable. If you are struggling with how to get rid of private student loans, contact your lender and explain your situation. Opening the line of communication can help you identify a solution and take charge of your debt.
Need a student loan?Here are our top student loan lenders of 2018!
|1 Important Disclosures for CollegeAve.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
2 Important Disclosures for Discover.
3 Important Disclosures for Ascent.
Before taking out private student loans, you should explore and compare all financial aid alternatives, including grants, scholarships, and federal student loans and consider your future monthly payments and income. Applying with a cosigner may improve your chance of getting approved and could help you qualify for a lower interest rate. Ascent Student Loans may be funded by Richland State Bank (RSB) or Turnstile Capital Management, LLC (TCM), which are not affiliated entities. Certain restrictions and limitations may apply. Ascent Student Loan products are subject to credit qualification, completion of a loan application, verification of application information and certification of loan amount by a participating school. All loan products may not be available in certain jurisdictions. Other terms and conditions apply. Ascent is a federally registered trademark of TCM and may be used by RSB under limited license. Richland State Bank is a federally registered service mark of Richland State Bank.
* Application times vary depending on the applicants ability to supply the necessary information for submission.
* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
4 = Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
5 Important Disclosures for PNC.
PNC Bank is one of the nation’s largest education loan providers. For over 40 years, PNC has been committed to helping students and their families make possible the adventure of college.
6 Important Disclosures for SunTrust.
Before applying for a private student loan, SunTrust recommends comparing all financial aid alternatives including grants, scholarships, and both federal and private student loans. To view and compare the available features of SunTrust private student loans, visit https://www.suntrust.com/loans/student-loans/private.
Certain restrictions and limitations may apply. SunTrust Bank reserves the right to change or discontinue this loan program without notice. Availability of all loan programs is subject to approval under the SunTrust credit policy and other criteria and may not be available in certain jurisdictions.
SunTrust Bank, Member FDIC. ©2018 SunTrust Banks, Inc. SUNTRUST, the SunTrust logo and Custom Choice Loan are trademarks of SunTrust Banks, Inc. All rights reserved.
7 Important Disclosures for LendKey.
Additional terms and conditions apply. For more details see LendKey
8 Important Disclosures for CommonBond.
A government loan is made according to rules set by the U.S. Department of Education. Government loans have fixed interest rates, meaning that the interest rate on a government loan will never go up or down.
Government loans also permit borrowers in financial trouble to use certain options, such as income-based repayment, which may help some borrowers. Depending on the type of loan that you have, the government may discharge your loan if you die or become permanently disabled.
Depending on what type of government loan that you have, you may be eligible for loan forgiveness in exchange for performing certain types of public service. If you are an active-duty service member and you obtained your government loan before you were called to active duty, you are entitled to interest rate and repayment benefits for your loan.
A private student loan is not a government loan and is not regulated by the Department of Education. A private student loan is instead regulated like other consumer loans under both state and federal law and by the terms of the promissory note with your lender.
If your private student loan has a fixed interest rate, then that rate will never go up or down. If your private student loan has a variable interest rate, then that rate will vary depending on an index rate disclosed in your application. If the interest rate on the new private student loan is less than the interest rate on your government loans, your payments will be less if you refinance.
If you don’t pay a private student loan as agreed, the lender can refer your loan to a collection agency or sue you for the unpaid amount.
Remember also that like government loans, most private loans cannot be discharged if you file bankruptcy unless you can demonstrate that repayment of the loan would cause you an undue hardship. In most bankruptcy courts, proving undue hardship is very difficult for most borrowers.
9 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|3.69% – 10.94%1||Undergraduate, Graduate, and Parents||Visit CollegeAve|
|3.97% – 12.97%3||Undergraduate and Graduate||Visit Ascent|
|4.34% – 12.99%2||Undergraduate and Graduate||Visit Discover|
|4.12% – 10.98%*,4||Undergraduate and Graduate||Visit SallieMae|
|5.03% – 11.23%5||Undergraduate and Graduate||Visit PNC|
|4.00% – 13.00%6||Undergraduate and Graduate||Visit SunTrust|
|4.72% – 9.81%7||Undergraduate and Graduate||Visit LendKey|
|3.72% – 9.68%8||Undergraduate, Graduate, and Parents||Visit CommonBond|
|4.19% – 12.06%9||Undergraduate, Graduate, and Parents||Visit Citizens|