After maxing out their eligibility for federal student loans, many students and families turn to private student loans to pay for college. While private loans can help fill the funding gap, they can also become burdensome if you borrow too much or get saddled with high interest rates. Thatâ€™s where private student loan forgiveness and other types of assistance come in handy.
If youâ€™re wondering how to get rid of private student loans â€” and do it quickly â€” know that you do have options. And although none of them will wipe away your debt overnight, they could help you regain control of your finances. Here are eight different possibilities to explore:
Although private student loans arenâ€™t eligible for Public Service Loan Forgiveness, you can find some student loan forgiveness programs for private loans. National, state and private organizations will wipe away a large portion of your debt, or sometimes all of it, depending on your profession or location.
For instance, the National Health Service Corps Loan Repayment Program offers up to $50,000 in student loan assistance to healthcare professionals who work in an underserved area for at least two years. Likewise, the Herbert S. Garten Loan Repayment Assistance Program has a similar reward for eligible lawyers.
Many states, as well as some universities, also offer student loan repayment assistance for qualifying professionals. Some of the common eligible occupations include doctor, nurse, dentist, pharmacist and teacher. Check with your state to find out if it offers student loan forgiveness for private loans.
Even if you canâ€™t qualify for private student loan forgiveness programs, you might get a student loan assistance benefit from your employer. Some companies will match a percentage of your student loan payments to help you pay off that debt faster â€” for example, Fidelity and Aetna each offer up to $10,000 in student loan assistance to their employees.
According to Forbes, student loan matching was the hottest benefit of 2018. And with the student debt crisis continuing to weigh on the U.S., more companies might follow suit and introduce this benefit in the future.
If you are looking for a job or open to changing your employer, consider companies with this perk. They might help you make a bigger dent in your student loan balance than youâ€™d be able to on your own.
While the government offers a number of flexible repayment plans for federal student loans, including income-driven repayment, private lenders donâ€™t often have equivalent programs. On the other hand, some do allow you to pause payments through deferment or forbearance if you lose your job, return to school or run into financial hardship.
If youâ€™re going through a financial rough patch, reach out to your lender to find out if you can put your loans on pause for a few months. This break from payments might offer the relief you need until you can get back on your feet.
Just remember that interest typically continues to accrue during a period of forbearance, so you might end up facing a bigger balance once repayment resumes.
Along with temporary forbearance, some private lenders offer the option of interest-only payments. With this approach, you could postpone full repayment while still making small payments on interest from month to month.
Although you wonâ€™t be chipping away at your principal, you will pay down interest before it accumulates. These reduced payments could give you some breathing room until youâ€™re able to enter full repayment.
Private lenders typically donâ€™t offer income-driven repayment plans, but some might be flexible if youâ€™re really struggling â€” after all, they donâ€™t want you to default on your loan completely. So if you canâ€™t keep up with payments, call your lender and find out if they can adjust your bills.
By refinancing your student loans, you can restructure your debt with new terms â€” typically between five and 20 years â€” and adjusted monthly payments.
You could opt for a short term, which might increase your monthly payments but will get you out of debt faster and save you money on interest. Or, if your bills are too burdensome, you could choose a longer term to lower your monthly payments.
You might also snag a lower interest rate, resulting in major savings over the life of your loan.
But while student loan refinancing has a number of major benefits, itâ€™s not accessible to everyone. Youâ€™ll need to meet certain requirements for credit and income to qualify â€” or apply with a cosigner who can. And if you decide to refinance, make sure to shop around among multiple lenders to get the best deal available to you.
Student loans are notoriously difficult to discharge through bankruptcy, but this route isnâ€™t impossible. If you qualify for Chapter 7 or Chapter 13 bankruptcy, you could wipe away your private student loans.
You will have to prove your student loans are causing undue hardship, and the entire process could destroy your credit and cost you thousands in legal fees. But if bankruptcy is your only option, know that it could lead to wiping away your private student loans.
Finally, experiencing a permanent and total disability might remove your obligation to pay back your student loans. Some lenders will wipe away your debt in this circumstance. If youâ€™re unable to work due to a disability, reach out to your lender to find out if you could qualify for private student loan forgiveness.
While options such as forbearance and interest-only payments can decrease your bills, they wonâ€™t help you get rid of your private student loans any faster. If youâ€™re set on shedding your debt ASAP, your best bet (outside of private student loan forgiveness) is throwing extra payments at your student loans.
If you can find ways to increase your income or decrease your spending â€” or both â€” you can use the extra money to make additional payments on your debt. This will save you money on interest and move up the timeline on repayment.
But if your budget is too tight right now, lowering payments might be the best temporary solution to help you manage your private student loans without going into default.