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Debt Relief For Private Student Loan

Posted By:  |  August 23, 2016  |  0 Comment(s)

Collectively, around 43 million Americans have student loan debt. In fact, Americans owe around $1.3 trillion in student loans debt.

For federal student loans, there are a variety of loan repayment, and debt relief plans—a lot more resources than with private student loans. However, people with private student loans can find debt relief with consolidation, refinancing, and forbearance or deferment.

Debt Relief Options for Private Student Loans


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It is important to really understand one’s private student loans, since lenders can be a bit harder to track down than with federal student loans. In general, private student loans cannot usually be consolidated with federal student loans. Additionally, lower interest rates that are available for federal student loans are not typically offered for private student loans.

To get relief, one can try and negotiate with their bank. Sometimes lenders are willing to work with borrowers who are having trouble making payments. However, because private student loans are considered dischargeable, this could be tough to work out.

Consolidation

While more companies offer debt relief programs for federal student loans, there are private student loan debt relief options out there. As opposed to debt settlement, debt consolidation is a lot more common when it comes to student debt relief. The following companies have reputable private student loan consolidation programs:

  • Cedar Education Lending Private Student Loan Consolidation
  • Citizens One Education Refinance Loan
  • Citizens Bank Education Refinance Loan
  • Credible
  • cuStudentloans.org cuGrad PrivateStudent Loan Consolidation
  • Darien Rowayton Bank
  • DEAL Consolidation Loan
  • Independent Community Bankers of America
  • NextStudent Private Loan
  • SoFi Student Loan Refinancing
  • Student Loan Network Private Loan Consolidation
  • Wells Fargo Private Consolidation Loan

Since these are private consolidation programs with interest rates from the lender (not the government), there may be additional fees.

Forbearance Or Deferment

Forbearance and deferment are options worth exploring. Interest will still accrue over the time period, but these could be helpful for people struggling financially.

Refinancing

One can also try refinancing to lower the interest rate. A good credit score, steady employment, and a decent debt-to-income ratio can make a beneficial difference when it comes to refinancing private student loans. With refinancing, one can choose a new lender with a new interest rate.

Private or Federal Student Loans?


When it comes down to it, federal student loans generally offer better borrower protection than private student loans. Most of the time with federal student loans, borrowers struggling to make payments can switch to an income-driven, or pay as you earn repayment plan. Federal loan borrowers can also apply for Public Service Loan Forgiveness. Federal loan types include direct subsidized loans, Perkins loans, direct unsubsidized loans, Grad PLUS plans, and Parent PLUS loans.

As of now, there are no private student loan forgiveness options.

Between the two, many recommend federal student loans over private student loans. Why? Because federal student loans are a lot more likely to have debt relief options, and better borrower protection.

 

Sources:
http://www.finaid.org/loans/privateconsolidation.phtml/
https://studentloanhero.com/student-loan-debt-statistics-2016/
https://www.nerdwallet.com/blog/loans/student-loans/private-student-loan-forgiveness/
https://studentloanhero.com/featured/looking-for-private-student-loan-forgiveness-heres-where-you-can-find-help/
https://www.nerdwallet.com/blog/loans/student-loans-federal-vs-private-loans/

 

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Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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