How can I get my private student loans forgiven? I have heard this question over and over again, and still, the answer to it hasn’t changed. Do you want to know the truth? Well, the truth is, private student loans are rarely forgiven.
How Can I Get My Private Student Loans Forgiven
Private student loans cannot simply be canceled just because you work in the public service, made payments for 20 years or even more, or you got to attend a crooked-for-profit educational institution. All of those forgiveness opportunities are reserved only for federal student loan borrowers.
Of course, private student loan borrowers can get relief or even forgiven for their loans, but the only time this can happen is when they become disabled or die. And even in such situations, their cosigner may be left on the hook to pay the remaining balance left.
For some time now federal lawmakers have introduced several bills in trying to change this very perspective in regard to private student loan forgiveness, but none of their efforts have been successful so far. And with that being said, it means that private student loan borrowers are still without relief.
Even the mass student debt cancellation by the president is very much unlikely to change that. And none of the programs that have been set up by the president, for now, have benefits private student loan borrowers.
And just as I have said earlier on, forgiveness is really not an option for most people with private loans. That said, if you are struggling to make your mandatory monthly payments and your lender on the other hand refuses to help with your situation, there are other options such as settlement, bankruptcy, and student loan refinance for you to explore.
Why Are Private Student Loans Not Forgiven
Financial institutions at most times rarely forgive private student loans simply because there is no incentive for them to carry out such action. Their own mission is to make money and not to lose it. And this is the reason banks as well as credit unions check the credit reports of borrowers before they approve a loan. The companies in question assess the risks involved and then price it accordingly just by adjusting the interest.
The federal government on the other hand has a different objective. And not only does it need to make sure that people pay back the money that they have borrowed, but it also must be concerned with making sure that everyone that wishes to attend college can pay for it. That simply explains the reason the education department offers Pell Grants and also allows people to borrow student loans regardless of their credit scores.
The government also must encourage individuals that are talented to go to school, provide medical services in low-income areas, practice law in rural areas, and many more. the government does this by offering income-driven repayment plans and debt cancelation programs such as Public Service Loan Forgiveness and Teacher Loan Forgiveness.
Strategies to Ease Private Student Loan Burden
When it comes to private student loan cancelation, which is very unlikely. And even at that, there are still a couple of strategies that you can easily take to deal with the debt and they are listed below.
Pause Payments on Federal Student Loans
If it is that you have federal and private loans, the strategy of lowering or pausing the payments on federal loans and then redirecting that very money to pay off your private loans quickly makes a lot of sense for two reasons. The First reason is that private student loans typically carry higher interest rates than their federal counterparts. Secondly is that they have fewer options to access affordable repayment plans. Your total federal student loan debt will surely increase due to interest that is accruing during this time. But you however can take advantage of repayment plan forgiveness after making at least 240 qualifying payments during the period of your loan.
Refinancing For a Lower Interest Rate
You also could really consider refinancing your federal student loans, especially in the case that you have higher interest Parent PLUS Loans. You will be needing a good credit score as well as enough income in covering your living expenses and credit card debt just to qualify for the best interest rates. You should make use of a site like Credible to compare loan terms and repayment programs with several lenders.
Talk With Your Lender about Repayment Options
Private student loan servicers usually offer temporary interest-only repayment terms as well as deferment or forbearance options, which allow you to postpone payments. Deferment usually is an option in the event you return to school or are active-duty military. Forbearance on the other hand is typically an option for borrowers that are experiencing financial hardship due to job loss or medical issues.
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