Private Student Loan Relief
- Are there programs for private student loan forgiveness?
- What are your options if you fall behind?
- Is settlement an option?
- Where can you find private student loan refinancing?
- Are there private student loans for bad credit?
- Will congress just wipe out student loan debt?
One distinction about private student loans is that they are unsubsidized loans. That is, if you never pay them back, the government won’t come to the lender’s rescue and make them whole again by paying off your debt. Since they are taking an increased risk, they are more expensive and behave differently. There is a vast field of programs for federal student loan forgiveness to help their federal loan borrowers, such as income-based student loan repayment plans. But private student loan lenders and servicers do not make it easy for their borrowers to find help in times of hardship.
Private student loans are unsecured, so no collateral is attached to the note. In most cases, they require a co-signer, otherwise the money is loaned with the promise that a young person’s future earning power will pay it all back, on time, with interest. Interest rates on private student loans are almost always higher, and some come with variable rates with no caps, eek.
Relief Options for Your Private Student Loan
1) Write a Hardship Letter
The Consumer Financial Protection Bureau suggests writing a letter to your lender or servicer, whomever sends you a bill each month. In the letter, mention that you are facing a financial hardship and ask for an alternative repayment plan with a lower payment. Include a worksheet with your monthly expenses. Make clear to them that if they are not willing to reduce your payment, you will be at risk of going into default, and urge them to get back with you in 2 weeks or less. No data is available on the effectiveness of these letters, but a common complaint with private student loan lenders is their lack of response, and frustrating borrowers as they hand them off from one customer service person to another.
2) File Bankruptcy
Although student loans are rarely dischargeable under bankruptcy, there can still be benefits. The act of filing can be used to buy time and put you in a better position down the road. We’ve heard attorneys explain that filing chapter 7 will make it easier for you to afford your student loan payments, since your other unsecured debts will be wiped out. Alternatively, filing a chapter 13 will force all creditors to live with a 5-year pay plan devised by the trustee in hopes that you will land on your feet if they can call off the creditors for that time period. The time bought during the chapter 13 period may afford you of some future relief, especially if new laws come to pass offering some sort of private student loan forgiveness. To speak with an attorney about whether bankruptcy may be a wise option for your situation, contact a local attorney or call the Free Bankruptcy Advice Helpline at 888-234-2585.
3) Call the Private Student Loan Relief Helpline 888-669-1064
CareConnect USA waited two years to publish this helpline. First and foremost, we wanted to be sure that no callers would be harmed. We studied the special practices of certain law firms and settlement experts to see why they were having success reducing amounts owed, and what steps were involved. We asked the hard questions until we were confident that these service providers were competent and ethical, with sound strategies for success.
How Does the Helpline Reduce Your Student Loan Payment?
Can’t you seek a settlement yourself?
Technically yes. And if you enter that arena, take Dave Ramsey’s advice: “Back away from the emotion of the conversation and enjoy the swordfight. Try to convince them that you just don’t have the money, but that you can come up with a certain amount by a certain date, if they’ll accept it.”
But you can also fix your own roof, cut your own hair, represent yourself in court, and prepare your own taxes. The trouble with going the DIY route? Your risk is high, and the terrain is unfamiliar. You could make a mistake or share the wrong information, resulting in little or no reduction to your balance. And because you owe the money, perhaps you are not in the best negotiating position. After all, if you are behind on the loan, you’ve already shown that you don’t keep all your promises. The attorneys who service the Private Student Loan Relief Helpline deal with your lender every week, are on a first name basis with key people in the department and have history from prior cases where they have achieved meaningful reductions. Fees for the service may vary but will be discussed before they do any work. Initial conversations are free of charge and will not obligate you to hire anyone to work on your behalf. If they are successful in reducing your balance through settlement, you will likely get new reduced payment using a new lender who will pay off the reduced amount. To accomplish a meaningful reduction in your payment, a reduction in the interest rate alone is not enough. You really need a reduction in the principal balance. That’s what settlement can do for you.
What if your Private Student Loan is already in collections?
All is not lost. If your loan is in collections, there are additional tactics available to reduce the debt. Not only can the validity of the loan be challenged as mentioned before, but if the collection agency has acted in any way outside of the law, the enforcement of the loan can be challenged. The Fair Debt Collection Practices Act lays out strict guidelines for collection agencies about the ways they can and cannot interact with you. If they have misbehaved, you may be entitled to compensation, and it weakens their negotiating position when pursuing an affordable settlement. The legal team working with the Private Student Loan Helpline may ask you about how often the collectors have contacted you, what hours of the day they call, whether they call you at your workplace after you’ve asked them to stop and more.
Where would you get funds to settle?
What good would a settlement do, if it reduced your amount of debt by 50%, but they needed you to come up with $50,000 three weeks from Monday? The legal team will connect you with a new lender once your settlement agreement is close at hand. Rates and terms for an affordable new payment on the reduced new balance will be discussed while settlement talks are ongoing.
Who Provides the Service?
The Private Student Loan Helpline is serviced by law firms and settlement experts with strong reputation. They must meet our standards of service to be accepted into our network. This means they must be in the specific practice of private loan relief for over 5 years, have positive reviews, and are in good standing with their Better Business Bureau. As mentioned, we’ve already asked them the pointed questions about their procedures and fees, and in some cases, we’ve even walked their floors. But be a smart consumer and do your research. If you have anything other than a positive experience with our any of our service providers, please contact us.
On the other hand, most of the private student loan lenders have received scores of complaints reported to the Consumer Financial Protection Bureau:
- Sallie Mae/ Navient
- Key Bank
- Wells Fargo
- ACS Educational Services
- AES / PHEAA
- JP Morgan / Chase
Why Not Just Apply for Private Student Loan Refinancing?
The option to apply has always been there, but nothing seems rarer than a private student loan for bad credit. In 2018, CareConnect USA offered a route to refinance for callers with some of the most popular brands in refinancing student loans. We were a bit shocked that nearly 100% of our referrals were denied a new loan due to less than perfect credit. After several months, we stopped sending callers there to spare our callers false hope and frustration. Private student loans for bad credit seem too few and far between. A borrower seeking a private student loan without a cosigner is likely to face denial simply because the risk of loss is too high for these lenders.
– Common Bond
– College Ave
Should Congress Just Wipe Out Student Loan Debt?
Sounds nice, doesn’t it? The weight of student loan debt has forced an entire generation of young people to delay life decisions such as getting married, buying a home, and start a family. They still desire those experiences, but they just don’t have the means. In recent years, a robust economy has unemployment near record lows, but many graduates did not find viable work in their field of study. If the government passed radical legislation to relieve all of their student loan debt, it would act like a tax cut for the middle class with lasting benefits. However, this would be a deal made with the devil. Forgiving all student loan debt would create a “moral hazard,” risking a future where borrowers never expect that repayment will ever come due. Political candidates speak of eliminating student loan debt, as a lightning rod for attention. And although one could argue the fiscal benefit, who is going to foot the bill? We’re talking about $1.6 trillion. That’s $1 million dollars multiplied by 1.6 million. The debt amounts to $4863 for every man, woman, and child in the USA. Would it be fair? Seems like a debate for the kitchen table between student borrowers who moved back home with their parents, and those parents who might regret pushing their kids to attend college in the first place.
Update: Joe Biden has plans to eliminate portions of student loan debt. Some say the relief will be limited to $10,000 of your debt. Considering the consequences of large sweeping debt elimination, this seems more likely.