How to get rid of a private student loan – it is not really an easy thing to do. If it is that you are struggling to pay back your private student loans, then you should know that you are not alone. And in this post, I will be sharing some vital tips on how to effectively get rid of a private student loan.
How to Get Rid Of a Private Student Loan
Student loan logistics reveal that in the third quarter of 2022 alone, 3.0% of private student loans were delinquent by 30 to 89 days, and also that 1.6% were delinquent by over 90 days. And during that very same period in 2021, these very figures stood at 2.2% and 0.9%. And whether the challenging economic landscape continues to cause an uptick in defaults and delinquency still remains to be seen.
With that being said, here are a couple of actions that you can take to get relief from your private student loans.
Contact Your Lender
When you are having a difficult time making your private student loan payments, the first thing that you should do is to contact your lender. Your lender very likely does not offer student loan forgiveness for private loans, but it may just offer help in many other ways. It just might be that you qualify for forbearance or deferment, which as you should know will help to postpone your payments temporarily.
One thing you should know about this option is that not all lenders offer forbearance or deferment, and also that those who offer it have different guidelines for just how long you can postpone your payments. Before you think of accepting and going through this route, you should know that while your payments are on hold, your interests will continue to accrue.
Whatever it is that you chose to do, don’t abandon or stop making your payments. defaulting on your student loan can negatively affect your credit score and in the process making it very difficult for you to borrow money in the future. And with that being said, it is very important to keep an open line of communication between you and your lender.
Get Yourself a Side Hustle
If on your current job, you are not eligible or qualify for a raise, then you should consider picking up a side hustle. Some side hustle as you should know is more lucrative than others, but when it comes to the matter of paying off your student loan, every single dollar is important.
Imagine your loan balance is $35,000 for instance with an interest rate of 5% if you have a 10-year loan term, then your monthly payment would be $371. Do you know that putting an extra $50 monthly towards this loan would get to take close to a year and half off its whole life span, thus saving you $1,500 in interest payments? Now, you see the importance of a side hustle in paying off your private student loan.
Refinance Your Private Student Loans
Refinancing of private student loans in many cases could really be a boon for your budget. You just might qualify for a lower interest rate than what you are paying at the moment but it all depends on your creditworthiness.
There are some student loans refinancing lenders who will offer additional benefits for their members. Borrowers who get to refinance through SoFi Bank, N.A for instance can qualify for career coaching and financial planning at no extra costs.
And just like all financial decisions, there is no one-size-fits-all approach to refinancing private student loans. Borrowers who have lower credit scores or those in question that did not complete their degree may just find out that they have fewer and even fewer ideal options than other borrowers.
Does It Cost Money to Refinance Student Loans
Well, there is probably good news for borrowers on this one. Most private student loan lenders in the business do not charge loan origination fees. Borrowers may however want to look out for other student loan fees like prepayment penalties as well as late payment fees. And if it is that you are considering refinancing your student loan, then you should know that it is important to first read the fine print, terms, and conditions to know just exactly what you are getting into just before signing the contract. You also cannot reverse a student loan refinance in the event that you get to change your mind.
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