Private loans often come with higher interest rates for most borrowers, and they typically offer fewer repayment plans and hardship options compared to federal loans.
If you’re facing difficulties with your education debt, you might be wondering if private student loan forgiveness is a possibility. Unfortunately, private loans are not eligible for most forgiveness programs. However, there are other sources of assistance for private student loans that you can explore.
Can Private Student Loans Be Forgiven?
When it comes to student debt, you either have federal loans or private loans. Federal loans are issued by the U.S. Department of Education, while private student loans come from banks, credit unions, or online lenders. This distinction is precisely why private student loan forgiveness is so elusive.
While federal loans can be forgiven through programs like Public Service Loan Forgiveness (PSLF), private loans do not qualify. Since private student loans are issued by individual companies rather than the government, any blanket forgiveness measures would require congressional legislation. Additionally, any such measures would likely involve allocating funds to pay lenders on behalf of borrowers, making it unlikely that any forgiveness measures would pass.
The only instances in which private student loans can currently be forgiven are in cases of death or permanent disability. However, even in those situations, loan discharge typically depends on the policies of the lender.
5 Ways to Get Private Student Loan Assistance
While private student loan forgiveness may not be an option, there are other ways to receive help in paying off your debt. By following these five tips, you can make your loans more manageable.
1. Career-based Student Loan Repayment Programs
Although private loan borrowers are not eligible for federal forgiveness programs based on employment, you may qualify for career-based repayment assistance programs. These programs are often administered by state governments or professional associations and provide loan repayment assistance in exchange for a commitment to work in high-need areas.
Careers that commonly qualify for these programs include nurses, doctors, dentists, teachers, and lawyers. Here are a few examples:
- Nurse Corps Loan Repayment Program: This program repays up to 85% of loans for registered nurses, advanced practice registered nurses, or nurse faculty members who commit to working in designated critical shortage facilities.
- New York State Teacher Loan Forgiveness: Teachers in New York employed in primary or secondary schools may be eligible for up to $20,000 in student loan repayment assistance. Qualification requires teaching in a hard-to-staff area or a high-need subject.
- Florida Bar Loan Repayment Assistance: This program offers student loan assistance to staff attorneys employed by legal assistance organizations that receive grant funding. Eligible attorneys can receive up to $5,000 per year to repay their loans.
Contact your state education agency or professional association to determine if you qualify for student loan assistance programs.
2. Location-based Repayment Assistance
If you’re open to relocating, you may be able to receive assistance in repaying your private or federal loans. Certain states and counties offer incentives encouraging individuals to move to specific areas. Here are a few examples:
- Kansas Rural Opportunity Zones: Individuals who move to designated rural areas in Kansas can receive up to $15,000 in student loan repayment assistance from the state. Additionally, they may qualify for an income tax waiver, making the move more advantageous.
- Opportunity Maine: College graduates who attended a school in Maine and choose to live and work in the state can get reimbursed for their student loan payments through income tax credits, up to a specified annual maximum.
- Maryland SmartBuy: This program helps borrowers pay off their student debt and become homeowners. Eligible applicants can receive up to 15% of their home purchase price (up to a maximum of $30,000) to pay off student loan debt.
Contact your state department of commerce to inquire about similar programs in your area.
3. Find an Employer That Offers Student Loan Repayment
An increasing number of employers are providing assistance with their employees’ student loan payments. Major companies like Estée Lauder, SoFi, and Hulu offer to pay off a portion of employees’ student loans as an additional benefit, up to certain annual or lifetime limits. Check with your human resources department to see if your company has an employer student loan assistance program.
4. Contact Your Lender
If you’re struggling with your loan payments, reach out to your lender. While private student loans are not eligible for loan forgiveness or income-driven repayment plans, lenders often have their own programs in place to help borrowers avoid delinquency or default.
You might be able to temporarily postpone or reduce your payments. For example, lenders like College Ave offer up to 12 months of hardship forbearance for eligible borrowers, while Sallie Mae allows some borrowers to defer payments if they’re returning to school or participating in an internship or residency. Additionally, the Rhode Island Student Loan Authority (RISLA) is one of the few private lenders that provide an income-based repayment option.
5. Consider Refinancing
If you have private student loans with high-interest rates and want to repay them as quickly as possible, student loan refinancing can be a helpful strategy. Depending on your credit score and debt-to-income ratio, you may qualify for a loan with a lower interest rate than what you currently have. This can help you save money and pay off your student loans faster.
For example, let’s say you have $40,000 in student loans with a 6% interest rate and a 10-year repayment term. If you refinance your loans and qualify for a seven-year term at a 4% interest rate, you could save over $7,300 in interest charges and pay off your loans three years earlier than originally planned. Use a student loan refinancing calculator to estimate your potential savings.
To secure the best refinancing rate, compare quotes from multiple student loan refinancing lenders.
While private student loan forgiveness may not be available, there are various programs and options to help you repay your debt. You may also be eligible for alternative payment plans or student loan refinancing to expedite your debt repayment. If you’re facing difficulties with your payments or need assistance understanding your repayment plan, contact your lender to discuss your options.