Is There Any Help for Private Student Loan Debt

Is there any help for private student loan debt? Well, it is true that private student loans are very hard to cancel.  Cancelations of private student loans are not required by law and private loan borrowers on the other hand do not have the same range of cancelation options as their federal counterparts.

Is There Any Help for Private Student Loan Debt

Is There Any Help for Private Student Loan Debt

Cancellations although being limited are required by the law of federal loans. Private student loans on the other hand are a different story altogether. And unless it is that the private lender has made promises about a cancellation program, private lenders may just cancel loans, but the truth is they really do not have to. You may however get to consider filing for bankruptcy relief. And while it may be really hard, it can be a way to cancel your private student loans.

You can as well ask your private lender for relief, but these lenders as you should know are not required by law to help you in any way.  Some private lenders at the moment are offering disability and death discharges.  Sallie Mae, for instance, announced a total and permanent disability program for Smart Option borrowers as well as forgiveness of unpaid balances in the event a primary borrower dies. The discharge form will very much likely look something like this, but you should however check with Sallie Mae just to make sure that you have the most current form.

How to Get Help for Private Student Loan Debt

You should always read your loan contract very carefully so as to learn about the particular terms, conditions, benefits, rates, fees, and penalties of your private loaner. Private lenders however do have to honor any promises that they make in regards to terms and benefits.  Some private lenders also offer a cancellation program for some loan products, but not others.  Some in question will offer to cancel only a portion of a loan in certain special circumstances.

You may also just be eligible for private loan relief from the recent state as well as federal enforcement actions. This very type of relief is mainly for students who borrowed loans that are made by for-profit schools, such as Corinthian school Genesis loans. The very relief in question is generally limited.


When it comes to private student loan settlements, they are quite difficult to get but are possible in many cases.  There are however no specific laws or regulations in place requiring private lenders to offer settlements.  The policies and programs as you should know vary considerably by lender.

Private lenders in question will offer settlements in some special cases.  The lenders however generally require very large lump sums in a bid to settle debts even from borrowers with low incomes.

Many private lenders will not even discuss settlement or modification with you until the loan is in default or written off.   And at this point, the main point of contact of the borrowers is usually a collection agency. The collection agencies that are interestingly working on behalf of the lenders will often settle for smaller amounts than the originating lenders.

Tax Issues

Just as with some federal loan settlements, there may be tax consequences in the event that you get a private student loan settlement.  It is generally a good idea to consult a tax professional for more information.

The Department of Treasury back in 2015, issued a ruling that discharges of federal student loan debts for Corinthian borrowers will not be considered taxable income And in July 2018, the Department of Treasury (I.R.S.) also issued a ruling that extended the 2015 relief for Corinthian federal student loan borrowers to Corinthian private student loan borrowers. (There are similar rulings for students who also attended schools that are owned by ACI).



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