A private student loan can provide the help you need to complete your education. However, it also can be the most difficult to pay back, since many people are just starting out and establishing their finances.
In fact, student loans are the second-highest consumer debt in the United States. Student debt ranks higher than credit card debt. While federal student loans can sometimes be partially or fully forgiven, the same is not true for private student loan debt.
As a result, it can feel like you are spinning your wheels, trying to pay down your private student loans.
Even though there isn’t an official forgiveness program for private loans, you do have options. Some ways to reduce your private student loan debt include:
- Talking with your lender about potential options
- Reducing your interest rate by refinancing your private student loan
- Exploring possible repayment assistance programs
- Requesting a private student loan forbearance
As with any debt, you’ll want to pay on time and avoid falling into delinquency or defaulting on your loan. Once you’re behind on payments, it can be trickier to negotiate or find alternatives to help reduce your debt. Late payments can damage your credit score.
Student loan debt can be stressful, especially if you’re struggling to keep up with payments. The free Private Student Loan Relief Hotline at (888) 669-1064 will connect you with an expert. You can discuss your unique situation and explore potential options to reduce your private student loan debt that works for you.
Free Private Student Loan Relief Helpline
Are you struggling to pay your private student loans, or are your loans in collections? The free Private Student Loan Relief Helpline can connect you with an experienced counselor to discuss your options to help reduce or settle your private student loans.
5 Ways to Reduce Your Private Student Loan Debt
Even though private student loan forgiveness programs are not officially available, you often have options. Here are some strategies to help you reduce your private student loan debt.
1. Speak to Your Private Lender
You will want to contact your lender as soon as you realize you may have trouble keeping up with payments. Every private lender is different. It’s important to explore your options with them.
By contacting them before you start missing payments, you are showing that you’re trying to be reliable and proactive. You also may have more options available to you by acting before you get too far behind.
When you contact your lender, they may ask you questions about why you’re behind or may fall behind. This type of information may help them determine the kind of assistance they can give and for how long. The Consumer Financial Protection Bureau created an online tool that can help you prepare before you contact your private lender.
The type of assistance that a private lender will offer varies. It may also depend on your student loan terms, so reviewing your loan agreement before calling may also help.
2. Refinance Your Loan to Reduce Your Interest Rate
In some cases, refinancing your private student loan can save you money. When you refinance, a new company, like a bank or credit union, will pay off your original loan. Then, your new lender will issue you a new loan with a new interest rate.
When you refinance, you’re typically getting a better interest rate or changing from a variable rate loan to a fixed-rate loan.
Refinancing your private loan may be an option if you:
- Have a good credit score
- Find a new loan that offers a lower rate
- Have a consistent source of income or a cosigner with income
3. Request a Private Student Loan Forbearance
Some private lenders, like Sallie Mae, have a forbearance program for individuals having trouble making payments. Forbearance provides you more time by temporarily delaying your loan payments.
Forbearance is a short-term fix. You typically can only delay your loan payments for a short period, such as three months. Your lender may also have a limit of how many times you can use a forbearance.
It can help you if you need a little extra time to get the money or have had a temporary change in your financial situation. It can also help you avoid falling into delinquency or defaulting on your loan.
If you enter into forbearance, your lender may require one small payment. Forbearance typically does not remove any late fees on your report. Even though you don’t have to make payments, your loan will still be accruing interest. Before going into forbearance, you’ll also want to make sure this doesn’t cause you to lose any benefits or repayment incentives.
Forbearance can help with temporary situations, but this solution will not work for everyone.
4. Explore Repayment Assistance Programs for Private Student Loans
Depending on your career, there may be repayment programs that can help you repay your private student loans. Some states may have programs to help lawyers, teachers, doctors, nurses, veterinarians, dentists, and others repay loans.
Additionally, some companies will provide a student loan matching program to help you pay off student debt.
When exploring repayment assistance programs, you can:
- Contact the school you graduated from for any repayment programs they are aware of
- Look through your licensing board’s website for information on possible repayment programs
- Look for companies or states that offer assistance
Before agreeing to a repayment assistance program, go through the fine print to ensure the program fits your needs. You may have to move or dedicate a set amount of time working at a particular type of job to qualify. You want to be sure that is the right decision for you.
5. Special Circumstances That Vary by Lender
You should contact your private lender if you become permanently disabled and are unable to work. Some lenders will forgive the rest of your loan balance in these situations, although they are not required to do so. It depends on their policies and the terms of your loan.
Another special circumstance is if the primary borrower dies. Most private student loans have a cosigner. Technically, the cosigner should pay the rest of the loan. Some private lenders may discharge the rest of the loan.
Lastly, if you join the military, you may want to contact your private lender. Some lenders will provide some reduction in the loan or a deferment, even though they are not required to.
You May Be Able to Reduce Your Private Student Loan Debt with the Right Strategy
Repaying your student loan debt can be stressful. If you’re struggling to make payments, you’ll want to reach out to your lender to work together toward a solution.
It’s critical to explore potential solutions before you get behind. Private lenders may be more willing to work with you at that point. You also may have more options available to you.
With that said, even if you’ve fallen behind, it’s not too late. You still have options.
If you need help exploring the right options for reducing your private student loan debt, the free Private Student Loan Relief Hotline at (888) 669-1064 can help. You’ll be able to talk to an expert about your situation. They can work with you to determine options that may fit your needs.