So many people have been asking this question if anyone can get private student loan forgiveness? The truth of the matter is that it is not possible to get private student loan forgiveness. Anyone can get private student loan forgiveness only through death or when you have a total or permanent disability. In most cases, there is no such thing as private student loan forgiveness. Some private lenders only forgive your loan balance only if any of the situations mentioned earlier happens.
On the other hand, if you operate federal student loans, you can get partial or full forgiveness through an income-driven repayment plan or federal student loan forgiveness programs. Although there are formal private student loan forgiveness programs that exist for beneficiaries of federal student loans, there are some things you can do to relieve you of the burden of your private student loan. You can talk to your lender about the alternative repayment options available, use forbearance, use student loan refinance or even consider deferment of your loan.
Options You Can Use To Get Private Student Loan Forgiveness
The following are the options you can use to get student loan forgiveness.
Talk To Your Lender About Your Options
If you are a student operating a private student loan and you are struggling to keep up with your repayments, you can talk to your lender about your options for reducing your monthly bills. Lenders have different programmes they use in helping borrowers to manage their payments.
You might be surprised that your lender may be willing to offer you flexible repayment options that are even above what you are asking for, so go ahead and ask. In case you don’t know how to present your request formally, you can use the sample letter format that the Consumer Financial Protection Bureau has created to help borrowers in asking private lenders to lower their payments. The private lenders are not by any means obligated to honour the request letter you presented, so they still have to look at it and take their best decisions.
If you are lucky, your lender may be willing to work with you to find a repayment plan or solution that will fit your needs and situations around your finances. If this is the case, your lender may want to find out why you are struggling with your repayments. This was said by Micheal VanErdewyk, founder of ReliaMax, a company that insures and services private student loans. If you are struggling with your loan payments because you have so many types of debt and you have like six (6) months of payments left to pay off your car loan, the lender might allow you to suspend repayment of your student loan until you finish with the car loan repayment.
Consider Deferment Or Forbearance
Most private lenders can offer deferment or forbearance which are the two options you can use to postpone your loan repayment on a temporal basis. Deferment of loan is an option you might likely use if you are going back to school or entering the military. Forbearance, on the other hand, is offered by lenders to borrowers who are struggling to make payments due to the loss of a job, sickness or because they are experiencing another financial challenge. From the above explanations, you will notice that deferment is a planned process while forbearance is used when unexpected circumstances arise.
So both deferment and forbearance for private student loans, the interest still accrues during the period they are not making any payments. As a student asking if anyone can get a private student loan forgiveness, you can only use this route if you need it. It should also be noted that the arrangements stated above are different from federal student loan deferment, in the federal student loan deferment, the interest doesn’t accrue for borrowers with subsidised loans.
Lower Your Interest Rate By Refinancing
You may be able to get a lower interest rate on your private student loans by refinancing if you have a good credit score. Refinancing involves the borrower choosing a new lender that can agree to offer you a lower rate. The lender will pay off your original lender for every outstanding you were owing. So many lenders may give you the option of choosing between a fixed interest rate, which will stay at the same rate throughout the life of the loan or a variable interest rate which will change as the economic market situation changes.
You Can Find Your Best Repayment Strategy
As a student, you can create a repayment strategy that can enable you to handle your private student loans. For instance, you can pay the minimum monthly repayment amount towards each of your loans, then put the extra cash you have into the other loans with higher interest rates. You can inform your lender to apply your extra cash payment to your loan balance instead of your monthly payment. This process is a way through which anyone can get private student loan forgiveness.