College debt has reached an all-time high. The U.S. now has $1.44 trillion in student loan debt, with a delinquency rate of 11.2 percent.
We’re not just talking about federal student loans. As of 2015, total private student loan debt amounted to $7.8 billion.
The problem is, private student loans often have higher interest rates than federal student loans. And there are a lot fewer private student loan repayment plans – and no forgiveness programs.
Although private student loan forgiveness programs don’t exist, you have options. Here’s what you can do if you have private student loans and need to find some breathing room.
What to do if you need private student loan forgiveness
1. Talk to your lender
The first thing you need to do if you’re struggling with your private student loans is contact your lender. Every lender is different, so it is important to explore your options with yours.
Your lender likely doesn’t offer private student loan forgiveness. But they might still be able to help you.
For example, many top student loan refinancing companies offer either deferment or forbearance. These options enable you to temporarily postpone your payments, giving you some breathing room while also helping you avoid delinquency.
However, you can only be in deferment or forbearance for a limited amount of time, which will vary based on your lender.
If you’re struggling with repayment and looking for private student loan forgiveness, it’s crucial that you contact your lender and don’t just abandon your payments.
Abandoning your payments will seriously hurt your credit. And that can make it difficult for you to obtain new credit in the future.
2. Refinance your student loans
Refinancing private student loans can make it easier to manage your monthly payments.
Through student loan refinancing, you can consolidate all of your loans. If you qualify for a better interest rate than you have now, you can decrease your monthly payments.
Some refinancing lenders have other ways they can help borrowers. For example, some lenders – such as SoFi – offer extra perks such as unemployment protection. This program not only helps you temporarily suspend your payments if you become involuntarily unemployed, it also gives you access to career advisory services via SoFi.
If you’re interested in exploring refinancing as an option, you can find several refinancing lenders on our student loan consolidation and refinancing page.
3. Optimize your federal loans (if you have them)
While private student loan forgiveness programs aren’t a reality right now, that’s not to say you can’t get some help if you have both private and federal loans.
Federal loans come with a variety of repayment options to help when times are tough. You can utilize these options to ease the burden of your federal loan monthly payments and free up more cash. Hopefully, this will make it easier for you to pay down your private student loans.
Paying down more of your private student loans first also follows the “debt avalanche” payoff method. Here’s how it works:
- The debt avalanche method advises targeting high-interest rate debt first.
- All extra payments should go to that debt while the lower interest rate debt gets minimum payments.
- Once your target account is paid off, apply its payments on top of your next target account’s minimum.
- Do this repeatedly until all of your debt accounts are paid off.
This plan works because it reduces the debt that costs you the most money first. It also creates momentum – as one account is paid off, you roll over its payments to another account. Suddenly that next account will be paid off a lot faster, and so on.
Now, here’s how that applies to your student loans:
- If you’re either struggling to make all your payments or have nothing left to pay extra, you can use an income-driven repayment plan to reduce your federal loan monthly payments.
- Apply the difference that you were paying on your federal loans before the income-driven repayment plan to your private student loans.
- You’ll stay current on your federal loans by paying the minimum due per the income-driven repayment plan, while also eliminating your high-interest private student loans faster.
Since private student loans tend to come with a higher interest rate, targeting them first lines up with the debt avalanche method nicely.
4. Look for updates on private student loan forgiveness
Student loan debt is an ever-changing arena. The laws governing collections on student loans can change as quickly as administrations do. That’s why it’s important to stay on top of news as it comes out.
Right now there are no moves from the current administration to add any private student loan forgiveness programs. In fact, there are more proposals to reduce benefits for student loan borrowers than there are to add any.
That said, until a law is on the books, there’s still hope for positive change. And as a constituent, you have a right to contact your local representatives about laws that are up for a vote.
5. Find new ways to increase your income
This option has nothing to do with private student loan forgiveness – but it’s worth mentioning because of the sheer impact it can have on your student loan repayment.
If you know you’re not eligible for a raise or think you don’t have time to work more, consider looking into side hustles.
Let’s say you earn $400 extra per month for some freelance work and apply it directly to your student loan payments. Here’s how much of a difference that would make:
- If your loan balance is currently $35,000 and your interest rate is 5.00%, one extra $400 payment will save you $243 and take one month off the life of your loan.
- If you made that extra $400 payment from your side income each month for one year, you’ll save $2,657 on your debt overall and pay it off 19 months early.
Finding ways to increase your income can change the game on your finances. And that extra income could be the push you needed to make ends meet or get ahead.
Think about it this way: If you find the right side hustle, you can do more than earn extra money. You can also build your skills and network. And that can help increase your chances of success and income potential as you go.
Talking to your lender is your best bet
Knowing that federal student loans offer forgiveness options that private student loans don’t is frustrating, to say the least. But don’t let that frustration keep you from seeking help when you need it.
Of all the options listed above, talking to your lender can by far be one of the most effective. Financial attorney and author of “Life & Debt”, Leslie H. Tayne of Tayne Law Group P.C., explained this in more detail:
“First I would recommend speaking with your loan provider. While they won’t forgive your student loans just by asking, they may be willing to lower your monthly bill or work out a payment option that works for you.”
Choosing not to speak with your lender when you need to will only lead to more problems. Delinquencies and default will damage your credit for years to come. And bankruptcy won’t likely be a backup plan you can count on.
“Unfortunately, graduates believe bankruptcy is a viable option for throwing away their student loans,” said Tayne. “The truth is unless you have an extreme hardship, it’s going to be near impossible to discharge your student loans through bankruptcy.”
If you fear you won’t be able to sustain your monthly payments any longer, contact your lender. They’ll tell you what options might be available to you. That will be your best chance at taking charge of your private student loans before they take charge of you.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.46% – 6.97%1||Undergrad & Graduate|
|2.57% – 8.44%4||Undergrad & Graduate|
|3.05% – 6.47%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|