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College Students and Recent Grads

Seeking Private Student Loan Forgiveness? Here’s How to Get Help

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Student loans can feel like a financial burden that’s always weighing on you and will never go away. If you’ve felt that, you might find yourself daydreaming some way to snap your fingers and make your student debt disappear.

Getting student loan forgiveness isn’t quite that easy, however, and it can be even trickier for borrowers with private student loans. While student loan forgiveness can provide important relief to borrowers who qualify, private student loans are ineligible for some of the most common and popular options for student loan forgiveness.

The good news is that there are still some student loan assistance programs beyond the options reserved only for federal student loans. Find out if you can get funds to repay your private student loans or qualify for other forms of private student loan help.

How to get private student loan forgiveness and assistance

Even though many of the best-known forgiveness programs don’t include private student loans, you definitely do have some options.

For example, some state and local programs provide repayment assistance that can be used to repay private student loans. Some companies are also jumping in to help their employees pay off student debt.

Here are a few potential sources of private student loan help that are worth exploring.

Loan repayment assistance programs for private student loans

Many federal, state and local government agencies provide or participate in student loan repayment assistance programs (LRAPs) that offer funds to help pay off student debt. Some limit these funds to federal student loans, but others allow you to apply them to private student loans, too.

Check for LRAPs that are offered for residents of your state, members of your profession or alumni of the college you graduated from, and you could find an opportunity to get private student loan forgiveness. You can search for such options with this student LRAP tool from Student Loan Hero, which filters programs by location, occupation, award type and amount. (Note: Student Loan Hero, like MagnifyMoney, is a subsidiary LendingTree.)

As you seek out these programs, make sure you double-check that your private student loans are eligible to be repaid.

Here are some examples of a few such LRAPs that can offer help with private student loans:

  • The National Health Service Corps Loan Repayment Program offers repayment assistance to health professionals as nontaxable funds, which may be applied to either federal or private student loans. The program awards up to $50,000 for a two-year, full-time commitment ($25,000 for part-time) providing physical or mental health services in designated high-need areas.
  • The Teach Iowa Scholar Program provides $4,000 per year for up to five years (for a $20,000 total) to teachers working in Iowa’s designated shortage areas. These funds can either be applied to a federal student loan or paid out to the recipient, after which they could be used toward private student loan repayment.
  • The Alfond Leaders student debt reduction program helps science, technology, engineering and math (STEM) professionals in Maine. Qualifying STEM workers can apply to get up to half their student loans repaid, including private student loans, up to a total of $60,000.
  • The Teach NYC Loan Forgiveness Program offers to repay up to $24,000 over six years for teachers who work in one of New York’s assigned shortage areas. The program repays the lesser of $4,000 or one-sixth of the recipient’s total outstanding student loans, including private student loans, for each year of service.
  • The University of Colorado offers student loan assistance or forgiveness for graduates of these law schools who work in public service. Awards are calculated on an individual basis and can range from 15%-75% of your monthly student loan payments, for up to five years.

Employment benefits for student loans

These student LRAPs are not the only options to get help with your private student loans. Even if you don’t qualify for private student loan forgiveness, you might still be able to find extra funding to repay your college debt faster.

One way to do this is by working in an occupation that comes with its own LRAPs. A sizeable number of LRAPs are tied to specific types of employment, so if you’re in a field where participating in those is possible, explore that option.

But even if an LRAP isn’t a possibility, you can still seek out employers that offer benefits or compensation that will help you tackle your student debt.

Here are some key benefits to look for that can help you repay private student loans:

  • Student loan repayment plans are becoming a more common and popular benefit in employers’ compensation packages. These student loan benefits usually match student loan payments made by the worker, capped at a certain dollar amount each year or month. The matched funds might be paid directly to the lender, or provided to the employee as additional compensation.
  • Higher base pay will also help you repay student debt faster. If you’re bringing home more money each month, you might have extra funds available to repay your private student loans. That’s why it’s vital for job seekers with student debt to apply to high-paying positions and negotiate for a higher salary if they receive an offer. If you’re already employed, you can speak with your supervisor about how you can earn a pay raise in the next year.
  • Sign-on bonuses can also be a great source of funds to make an extra, lump-sum payment toward private student loans. Depending on the industry you work in and the demand for workers with your skills, you might be able to get a signing bonus when starting a new job. This is a common perk for doctors and lawyers, for example. But with 23% of employers offering sign-on bonuses in 2018, according to The Society for Human Resource Management, it’s worth considering negotiating such a bonus when you receive a job offer.

If you keep your private student loans in mind when evaluating your current job or a new job, you can target job growth opportunities that will get you benefits to help repay student debt.

Other ways to get private student loan assistance

Getting private student loan help from an employer or LRAP might not be an option for everyone. And if you’re struggling with payments on your private student loans, you may need help now — not when you satisfy an LRAP’s requirements or find a new job.

If you’re looking for more immediate help, there are some steps you can take to tackle your debt when private student loan forgiveness or LRAPs aren’t an option. Here are some other strategies to consider as you work to more effectively manage your private student loans.

1. Work with your private lender

Private lenders don’t have to offer the same protections and benefits that come with federal student loans — you won’t be able to get deferment under federal guidelines or enroll in an income-driven repayment plan, for instance.

However, many lenders will work with borrowers struggling with private student loans. Reach out to your lender to discuss your situation and see what your options are. You might be able to adjust your payment due date, for example. Skipping a payment or pausing payments might also be an option for borrowers who run into financial hardship, such as a job loss.

2. Use federal student loan benefits

If you have both private and federal student loans, make sure you don’t overlook the options available to help with the federal side of your student debt.

Federal student loans come with many benefits and protections designed to help borrowers keep their debt repayment on track — and out of default. You can switch to several different repayment plans, including income-driven repayment designed to be affordable based on your income, local costs and family size. You can also apply to forbear or defer federal student loans.

Lastly, don’t overlook student loan forgiveness programs that are offered specifically to repay federal debt. One can access federal student loan forgiveness through programs such as Public Service Loan Forgiveness (PSLF), the Teacher Loan Forgiveness program, and forgiveness granted through income-driven repayment plans.

3. Consider refinancing student loans

Borrowers don’t have to be stuck paying off a private student loan with unfavorable terms or from a lender they hate. You can refinance student loans with another private lender, instead, taking out a new loan to replace the previous private student loan.

Refinancing private student loans puts you back in control of your debt. You might be able to refinance to a lower student loan rate, which can cut interest costs and monthly payments. You can also choose a new loan term that better fits your needs, such as a longer repayment period that could help lower monthly payments.

Just keep in mind that you’ll need good-to-excellent credit — or a cosigner with excellent credit — to get approved to refinance student loans and receive favorable rates. It’s also wise to shop around and compare different student loan refinance offers, so you know your final pick offers the best deal.

4. Target private student loans first

Prepaying your student loans can be a smart move to get out of debt faster and save on interest charges. If you pay extra toward your student debt, beyond just the minimum, you’re likely better off targeting your private student loans first.

This is because private student loans offer fewer options and protections for borrowers than federal student loans do, making the former riskier to keep around. Plus, paying down private debt first could also produce bigger savings, since this type of student loan often (but not always) has higher interest rates than what you’d pay on federal student loans.

Take a look at your own collection of student loans and assess the costs and risks of each one. Then, you can make a plan to pay off those student loans one at a time, starting with your highest priority accounts, until you’re debt-free.

Whether you’re able to pay extra toward your debt or are struggling just to keep up with payments, take some time to investigate the many possible solutions and strategies for private student loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Elyssa Kirkham
Elyssa Kirkham |

Elyssa Kirkham is a writer at MagnifyMoney. You can email Elyssa here

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College Students and Recent Grads

What Is a Private Student Loan? Here’s the Must-Know Info You Need

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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College is more expensive than ever, and most students cover costs with a mix of savings, scholarships and federal student loans from the Department of Education. But what is a private student loan, and how does it fit into this picture?

Private student loans offer a way to cover a gap in funding if you don’t have enough after maxing out your available federal loans. But these private student loans differ from federal ones in major ways, so it’s crucial to understand what you’re getting into before signing on the dotted line.

Here’s what you and your family need to know.

What is a private student loan?

A private student loan is money you borrow from a private lender (such as a bank or credit union) to put toward your education. Most lenders require you to be enrolled at an eligible school to qualify for a loan.

Each lender sets its own criteria, which you’ll have to meet in order to get the loan. Some will let you borrow up to cost of attendance of your school, while others set annual borrowing limits.

If you qualify, many lenders will send the funds directly to your financial aid office to cover your tuition bill. Any remaining money will get sent back to you to use for living expenses or, if you don’t need it, to return to your lender. Note, however, that some lenders will send the funds directly to you instead, meaning it becomes your responsibility to use them for your tuition bill.

When you borrow, you’ll choose repayment terms, typically between five and 15 years. You’ll also likely get to choose between a fixed interest rate, which stays the same over the life of your loan, and a variable rate, which can start lower but might also increase over time.

Each lender could offer different rates and terms, so it’s important to shop around before a private loan to find the best one.

What’s the difference between a private and federal student loan?

As a college or graduate student, you can borrow private student loans from a banking institution, or you can take out federal student loans from the government. Here are the main ways in which private student loans differ from their federal counterparts:

  • Private student loans require a credit and income check. While anyone who qualifies for federal aid can borrow federal loans, private loans have stricter requirements. To qualify, you’ll need to meet certain criteria for credit and income — or apply with a cosigner who can.
  • You’ll probably need a cosigner. You can borrow federal student loans in your own name, but if you’re an undergraduate, you’ll probably need a cosigner (such as a parent or guardian) to take out a private student loan. Because their name is on your loan, the cosigner becomes just as responsible for repaying the debt as you are.
  • Private student loans have less flexible repayment plans. Federal student loans come with a variety of repayment plans, including income-driven repayment, graduated repayment, deferment and forbearance. Private lenders, on the other hand, usually offer plans between five and 20 years, which you select at the time of borrowing. Some lenders will let you postpone payments through forbearance if you lose your job or go back to school, but this isn’t guaranteed.
  • You might be considered in default after three missed payments. Federal loans come with a 270-day delinquency period before your loan is considered to be in default, but private lenders might put your loan into default status after just three months of missed bills.
  • Private student loans can have a fixed or variable rate. While federal Direct loans to undergraduates have a fixed rate of 5.05% for the 2018-19 school year, private loans can have either a fixed or variable rate — usually, the choice is yours. Rates typically range from around 4% to 13%, depending on your (or your cosigner’s) credit.
  • You won’t get your interest subsidized. Students with financial need can qualify for subsidized federal loans, which don’t accrue interest until you graduate and your six-month grace period ends. Private lenders don’t offer subsidized loans, so interest will start piling up as soon as you get the money.
  • Private student loans aren’t eligible for federal forgiveness programs. Programs such as Public Service Loan Forgiveness only work for federal loans, not private ones. That said, private loans may be eligible for some loan repayment assistance programs, which could be offered by your state or a private organization.

So if federal student loans have more flexible repayment plans and better interest rates, why borrow private student loans at all? The most common reason is because federal loans come with annual borrowing limits, so you might not have enough funding to pay tuition.

Unless yours is a rare case — for instance, if you’re a graduate student who could get better rates on a private loan and don’t need the federal protections — you’ll want to turn to federal loans first. Unfortunately, however, more than half of students borrow privately before exhausting their federal options.

What are the interest rates on private student loans?

The interest rates on private student loans vary from lender to lender. As of April 2019, some of the most competitive lenders offer fixed rates starting at 3.89% and variable rates starting at 3.00%.

Although this beats the current rate on federal loans, you or your cosigner would be unlikely to score these lowest interest rates unless you have excellent credit. On the other end of the spectrum, fixed rates can go up to 12.68%, and variable rates as high as 12.22% among our recommended lenders.

And don’t forget that these figures do change — in September 2018, rates ran as high as 14.24%. Interest this high could be a real burden for the 15% of graduates who carry private student loans.

As for deciding between fixed and variable rates, remember that the variable rate exposes you to the risk that rates (and possibly your monthly payment) could rise. If you’re confident you can pay your debt off quickly, a variable loan might be worth the risk, while if you’re planning a 10- or 15-year repayment, you might be safer with a fixed loan.

That said, you could always refinance your student loans for new rates and terms if you have the credit to qualify or have a cosigner who can do so.

What about repayment terms?

When you borrow a private student loan, you’ll get to choose your repayment terms. A 10-year plan is standard, but some lenders also let you opt for five, eight or 15 years.

You can use our loan calculator to estimate what your monthly payments would be on each plan. It might be tempting to choose a five-year plan and get out of debt more quickly, but it’s not worth it if you can’t keep up with the higher monthly payments. Meanwhile, on the flip side, a long term with lower monthly payments might appeal to you, but consider how much you’ll have to fork over in interest over the years. The calculator can reveal how much you could expect to pay over time — that said, you can typically prepay your loan without penalty if you suddenly come into some money.

Before you borrow, it’s also crucial to go over your repayment agreement. Some private lenders let you defer repayment while you’re a student and for six months after you graduate, while others require immediate payments or interest-only payments while you’re still in school.

Also make sure you know when your first payment is due so you don’t fall behind or go into default.

Learn what private student loans are before you borrow

Private student loans have both pros and cons for you as a borrower.

On one hand, they can be useful tools for paying for college and earning your degree. But on the other, as a downside, you’ll probably have to enlist a cosigner to qualify, and sharing debt doesn’t always go smoothly.

Plus, you might have relatively high interest rates, meaning you could end up paying back a lot more than you borrowed.

Whatever you decide, make sure you understand what private student loans are before you borrow any. That way, you can make an informed decision about borrowing before it’s too late.

And make sure to compare offers with multiple lenders so you can find one with the best benefits, rates, and terms for your private student loan.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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College Students and Recent Grads

How to Get Rid of Private Student Loans: Forgiveness and Other Options

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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After maxing out their eligibility for federal student loans, many students and families turn to private student loans to pay for college. While private loans can help fill the funding gap, they can also become burdensome if you borrow too much or get saddled with high interest rates. That’s where private student loan forgiveness and other types of assistance come in handy.

If you’re wondering how to get rid of private student loans — and do it quickly — know that you do have options. And although none of them will wipe away your debt overnight, they could help you regain control of your finances. Here are eight different possibilities to explore:

1. Qualify for private student loan forgiveness programs

Although private student loans aren’t eligible for Public Service Loan Forgiveness, you can find some student loan forgiveness programs for private loans. National, state and private organizations will wipe away a large portion of your debt, or sometimes all of it, depending on your profession or location.

For instance, the National Health Service Corps Loan Repayment Program offers up to $50,000 in student loan assistance to healthcare professionals who work in an underserved area for at least two years. Likewise, the Herbert S. Garten Loan Repayment Assistance Program has a similar reward for eligible lawyers.

Many states, as well as some universities, also offer student loan repayment assistance for qualifying professionals. Some of the common eligible occupations include doctor, nurse, dentist, pharmacist and teacher. Check with your state to find out if it offers student loan forgiveness for private loans.

2. Find an employer with a student loan assistance benefit

Even if you can’t qualify for private student loan forgiveness programs, you might get a student loan assistance benefit from your employer. Some companies will match a percentage of your student loan payments to help you pay off that debt faster — for example, Fidelity and Aetna each offer up to $10,000 in student loan assistance to their employees.

According to Forbes, student loan matching was the hottest benefit of 2018. And with the student debt crisis continuing to weigh on the U.S., more companies might follow suit and introduce this benefit in the future.

If you are looking for a job or open to changing your employer, consider companies with this perk. They might help you make a bigger dent in your student loan balance than you’d be able to on your own.

3. Postpone payments through forbearance

While the government offers a number of flexible repayment plans for federal student loans, including income-driven repayment, private lenders don’t often have equivalent programs. On the other hand, some do allow you to pause payments through deferment or forbearance if you lose your job, return to school or run into financial hardship.

If you’re going through a financial rough patch, reach out to your lender to find out if you can put your loans on pause for a few months. This break from payments might offer the relief you need until you can get back on your feet.

Just remember that interest typically continues to accrue during a period of forbearance, so you might end up facing a bigger balance once repayment resumes.

4. Request a temporary interest-only payment plan

Along with temporary forbearance, some private lenders offer the option of interest-only payments. With this approach, you could postpone full repayment while still making small payments on interest from month to month.

Although you won’t be chipping away at your principal, you will pay down interest before it accumulates. These reduced payments could give you some breathing room until you’re able to enter full repayment.

5. Negotiate lower payments with your lender

Private lenders typically don’t offer income-driven repayment plans, but some might be flexible if you’re really struggling — after all, they don’t want you to default on your loan completely. So if you can’t keep up with payments, call your lender and find out if they can adjust your bills.

6. Refinance your private student loans for better terms

By refinancing your student loans, you can restructure your debt with new terms — typically between five and 20 years — and adjusted monthly payments.

You could opt for a short term, which might increase your monthly payments but will get you out of debt faster and save you money on interest. Or, if your bills are too burdensome, you could choose a longer term to lower your monthly payments.

You might also snag a lower interest rate, resulting in major savings over the life of your loan.

But while student loan refinancing has a number of major benefits, it’s not accessible to everyone. You’ll need to meet certain requirements for credit and income to qualify — or apply with a cosigner who can. And if you decide to refinance, make sure to shop around among multiple lenders to get the best deal available to you.

7. Discharge your private student loans through bankruptcy

Student loans are notoriously difficult to discharge through bankruptcy, but this route isn’t impossible. If you qualify for Chapter 7 or Chapter 13 bankruptcy, you could wipe away your private student loans.

You will have to prove your student loans are causing undue hardship, and the entire process could destroy your credit and cost you thousands in legal fees. But if bankruptcy is your only option, know that it could lead to wiping away your private student loans.

8. Apply for permanent and total disability discharge

Finally, experiencing a permanent and total disability might remove your obligation to pay back your student loans. Some lenders will wipe away your debt in this circumstance. If you’re unable to work due to a disability, reach out to your lender to find out if you could qualify for private student loan forgiveness.

How to get rid of private student loans

While options such as forbearance and interest-only payments can decrease your bills, they won’t help you get rid of your private student loans any faster. If you’re set on shedding your debt ASAP, your best bet (outside of private student loan forgiveness) is throwing extra payments at your student loans.

If you can find ways to increase your income or decrease your spending — or both — you can use the extra money to make additional payments on your debt. This will save you money on interest and move up the timeline on repayment.

But if your budget is too tight right now, lowering payments might be the best temporary solution to help you manage your private student loans without going into default.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Rebecca Safier
Rebecca Safier |

Rebecca Safier is a writer at MagnifyMoney. You can email Rebecca here

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