Private student loan forgiveness is not an option. Student loan forgiveness options, including Public Student Loan Forgiveness (PSLF), Income-Based Repayment (IBR), and Federal Perkins loan cancellation, are only available to federal student loan borrowers.
Although private student loans are not eligible for forgiveness, private lenders may offer alternative options for financial relief. Refinancing private student loans is a common strategy that borrowers go for to help reduce payments. Here is a closer look at this and other options borrowers can utilize instead of student loan forgiveness.
Refinancing Private Student Loans
You can refinance your private student loans to help lower payments. Refinancing involves getting a new private loan to pay for your existing loans. You may qualify for a lower interest rate than when you first got your private loans because of your current credit score and financial situation.
You could also lower your monthly payments by getting an extended repayment term for your new private loan. Note that extending your repayment term may come with higher interest rates, leaving you with a higher total student loan balance. Interest rates accumulate since you will be paying off the private loan for much longer.
Once again, refinancing your private student loans may offer:
- Lower Interest Rate: Your current credit score and financial situation may be enough to qualify you for better rates than when you purchased your existing private student loans. You may also have a cosigner with a better credit standing this time around.
- Lower Monthly Payments: You can choose how long you need to repay your new private loan. Although you could end up paying a higher total cost, the minimal monthly payments may offer some financial relief by limiting the fees.
Financial Hardship Programs
Try contacting your private student loan lender to discuss your options if you are experiencing financial hardship. Such options usually include:
- Forbearance: Some private lenders may offer to pause your student loan payments in times of financial hardship. This payment freeze may provide some financial relief while you prioritize getting back on your feet and focus on paying high-priority bills.
- Loan Modification: Check if your private lender is willing to modify your loan. Modifying your private student loans may reduce your interest rate for a certain period. Another option could allow you to focus on paying off your interest.
- Private Student Loan Consolidation: See if your private lender offers consolidation programs if you purchased multiple private student loans from them or their subsidiaries. Consolidation is like refinancing by simplifying your multiple student loans into one policy to make single monthly payments.
Note that these options do not cancel your private student loans. As much as possible, avoid making late payments on your private student loans if you are experiencing financial difficulties.
You risk going into default if you miss payments. Defaulting on your private student loans will hurt your credit score. Likewise, your cosigners’ credit score will suffer when you miss payments.
So, Are Private Student Loans Eligible for Forgiveness?
Private student loan forgiveness is not available. However, you may alleviate some financial strain by speaking with your private lender for options to lower or pause your payments.
You may also refinance your private student loans to get a potentially lower interest rate than your current one. Be sure to compare different private lenders before settling with one refinancer. Some lenders may offer better rates suited to your unique financial situation than others.
