If you feel like you can’t advance because of the private student loans you owe for your Bachelor’s or Master’s degree, you may be looking for student loan forgiveness programs.
Unfortunately, borrowers of private student loans do not have access to the same advantages and repayment schedule choices as borrowers of federal student loans.
Loans from Sallie Mae, Discover, and other private lenders cannot be forgiven Actually, no private student loan provider has any official programs for forgiving student loans.
The Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness programs allow borrowers of federal student loans to eliminate their debt. Alternately, they may qualify for student loan forgiveness with federal loans through income-driven repayment (IDR) plans, which will also lower the cost of their student loan repayment.
Although the Biden Administration has talked about waiving up to $10,000 in student loan debt for all borrowers, it is almost certain that this would only apply to federal student loans.
However, before you give up or become hopelessly depressed over your loan amount, continue reading for some other options.
Defer your student loans
After paying for college and after your grace period has passed, it’s likely that you’re having trouble making your loan payments if you’re looking for private student loan forgiveness.
Private lenders do not provide income-driven repayment plans to make your student loan payments more manageable and affordable, in contrast to federal student loan providers. But you may be able to apply for deferment.
Let’s say you’re looking for Sallie Mae student loan forgiveness. While Sallie Mae loan forgiveness is not an option, they do provide student loan borrowers with a deferment option. Deferring student loan payments enables you to temporarily lower or pause payments.
If you’re a graduate or undergraduate student, Sallie Mae offers deferment and will shorten your payments by up to 48 months. You won’t be required to make payments while enrolled in a residency program or internship, and you can request a deferment for up to 48 to 60 months, depending on the type of loans you have, by applying for deferments of 12 months at a time.
Discover Student Loans also has a deferment program with options available. They also offer a reduced monthly payment option that can reduce your interest rate and more during hardships.
Be aware of growing interest
It’s important to keep in mind that your interest will continue to accrue for both of these choices. Be aware of how this might affect how much your loan will cost overall. Therefore, even though your payments may be reduced or suspended, interest will still accrue. This may cause your student loan balance to increase dramatically.
Sallie Mae and Discover are two of the top private student loan lenders on our list, but each lender has different deferment options. If you have private loans with another lender, get in touch with them right away to find out if there are any deferment options available.
Speak with your lender about the procedure if you want to pursue deferment. Make sure to compute the potential increase in your loan’s cost.
Apply for forbearance
If you fall into this category and are looking for private student loan forgiveness or other types of assistance but are not a student or a participant in an internship or residency, you can apply for forbearance with your lender.
Sallie Mae used to advertise a forbearance program for borrowers who are facing difficulties making payments but that has changed. If Sallie Mae is your lender for undergraduate loans or graduate loans and you’re looking for a forbearance, get in touch with them. Keep making on-time payments until anything is approved.
Additionally, Discover Student Loans offers a 12-month forbearance period. Unfortunately, those 12 months can’t be consecutive.
Where to start when applying for forbearance
Contact your lender if you want to request forbearance. Check out the options and the application procedure. Knowing about deadlines or good faith payments is crucial, especially when working with Sallie Mae.
Additionally, it’s likely that interest will continue to accrue while your payments are suspended. This will add even more to your student loan balance.
Consider the interest costs and the total of any good faith payments before selecting this option. Be aware that the number of months you have to postpone payments is limited. So, you want to make sure you really need it. If you do, forbearance can certainly help.
Look into refinancing
Student loan refinancing is a choice you should seriously consider if your interest rate is too high, if you want to alter your monthly payment, your loan repayment options, or your overall loan terms.
Companies that specialize in refinancing provide federal and private student loan debt with loans with lower interest rates. Additionally, you have a choice regarding the loan’s term, which may affect the cost of your monthly payments.
Pros and cons of refinancing
Depending on your situation, this option may or may not work. If you’re really having trouble making your payments, it might not be the best fit for you because you might not be eligible. Companies that offer refinancing need assurance that you can make your payments. Because of this, you’ll probably need to have good credit or a cosigner in order to be approved.
Refinancing can help you save thousands of dollars in interest if you have good credit and an income that can cover the loan. Savings can then be applied to the principal balance of your student loans.
Check out our cash-back bonus student loan refinancing options. Since a hard credit check is typically not performed until you submit an application, you can typically check your potential rate without it having an adverse effect on your credit score. If you go this route, compare repayment terms, variable rates, and fixed rates. In addition, keep an eye out for origination fees or other fees.
If your private student loans are making your life extremely difficult and you’re barely able to survive and potentially living off of a credit card, you may be a candidate for bankruptcy. There’s a myth out there that you can’t get your student loans discharged in bankruptcy. But that’s not true-– it’s not impossible to get student loans discharged, but it’s very difficult.
To get a bankruptcy discharge, you must demonstrate “undue hardship,” provide evidence, and retain legal counsel. Unreasonable hardship typically indicates that you are bankrupt and that paying back your student loans is having a significant negative impact on your life.
Additionally, you must demonstrate that you have made a sincere effort to repay the loan and provide evidence that this burden will last a long time.
When you declare bankruptcy, there are expenses and long-term effects on your credit.
After bankruptcy, your credit goes way down. It will be challenging to obtain any credit in the following months or years. Chapter 7 bankruptcy can last for 10 years, while Chapter 13 bankruptcy can remain on your record for seven years.
This choice should only be used as a last resort after careful consideration. It’s not a get-out-of-jail-free card without consequence. However, this may be an option if you’re extremely depressed or suicidal as a result of your private student debt or the pandemic has negatively impacted your employment options and personal finances.
Total and permanent disability and death discharge programs
Programs for total and permanent disability discharge also permit loan cancellation or discharge. If you become totally disabled and are unable to work, this is an option. You might be entitled to a forgiveness of the outstanding balance in accordance with the conditions of your loan and your servicer.
Additionally, private student loans are discharged in the event that the primary borrower passes away. The loan servicer may grant you a permanent discharge if you were a cosigner on a loan when the borrower passed away.
Private student loan discharge and forgiveness due to death or total and permanent disability varies by lender, in contrast to federal student loans with the Department of Education.
Private student loan forgiveness
Although there aren’t any traditional private student loan forgiveness programs, there are still resources available for private student loan borrowers in certain situations. If you’re having trouble, the key is to speak with your lender to learn about your options and to move quickly.
You don’t want to become delinquent or put on deferment because that could damage your credit. Take action now if you’re having trouble making your student loan payments.
Caitlin See contributed to this article.
Have you ever used any of these private school loan forgiveness alternatives?
Can Fannie Mae student loans be forgiven?
Unfortunately, borrowers of private student loans do not have access to the same advantages and repayment schedule choices as borrowers of federal student loans. Loans from Sallie Mae, Discover, and other private lenders cannot be forgiven
How does Fannie Mae treat student loans?
Your debt to income ratio is calculated in accordance with Fannie Mae 2022 regulations for student loan payments. Fannie Mae: The lender must calculate the borrower’s recurring monthly debt obligation to include a monthly payment using one of the methods listed below: 1% of the outstanding balance.
Does Fannie Mae provide student loans?
No, Fannie Mae only deals with mortgage loans; it does not deal with student loans.
Do I qualify for the student loan forgiveness?
Who is eligible for student loan forgiveness? You must have federal student loans and make less than $125,000 per year (or $250,000 per household) to be eligible. Borrowers who fit that description may be eligible for a $10,000 debt cancellation.