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What Are My Relief Options For Private Student Loans?

Federal loans often come up short when funding some expensive schools, especially for out-of-state students. Borrowers short on state funds turn to private institutions to pay the rest. The Navient Corporation is the largest financier of these loans with over 12 million customers. Private student loans can also be used to refinance or consolidate existing loans if you’re struggling to make payments. A loan of this type makes sense in certain situations, especially if you can get a lower rate. But it’s important to know the rules of obligations when taking out private debt.

Private lenders don’t offer the same terms as the government and some companies have been accused of unethical behavior. Loan forgiveness usually isn’t an option and income-driven repayment is a tough sell (if it’s offered at all). In other words, borrowers are usually at the mercy of the lender. Debtors who owe to the government have a few options to reduce their burden, especially teachers and service members. But for the owners of private student debt, relief isn’t as readily available.

Cosigning: What It Means For Your Loans

Getting a private student loan requires one of two things – a great credit score or a cosigner. Since most prospective college students don’t have 700 FICO scores, cosigning is common when taking out private loans. A cosigner is basically a fall-back option in case the borrower can’t make payments. This person is usually a family member or friend with a good credit history and steady income. If you default on your private student loans, the burden falls to the cosigner to make payments. Using a cosigner has benefits like lower interest rates, but lenders can make it difficult to refinance or defer when a cosigner is attached.

Having a cosigner increases the chance of a loan being granted, but cosigners must understand all the risks of putting their name on someone else’s loan. Cosigning a loan can lower your credit score and make it difficult to borrow from other institutions. If you’re planning on cosigning a loan for a friend or relative, ask about a cosigner release policy.

Relief Options Are Scarce

If you’re struggling with private student debt, you’ll find lenders won’t be as generous as the federal government. Student loan forgiveness for teacher and public servants usually isn’t an option. Income-based repayment plans are rare, as are deferral or forbearance options. In some cases, you can’t even escape student loans in death! For private borrowers struggling with huge balances, here’s a few things to try:

  • Call your lender and try to negotiate – Lenders want to get their money back and when borrowers miss payments, no one wins. Private loans aren’t governed by the same prerequisites as federal loans. But since these institutions make their own rules, they might be more open to changes on a case-by-case basis. And don’t get frustrated if your first phone call goes nowhere, keep attempting to make a deal. Remember the most important rule of customer service – the squeaky wheel gets the grease!


  • Look for a new lender to refinance/consolidate – If your loan provider refuses to work with you, ditch them for one that will. Many lenders offer to refinance or consolidate private student loans into new ones with lower interest rates or monthly payments. If you have two $60,000 loans each requiring a $500 monthly payment, consolidation will give you one combined loan with a lower monthly obligation. Keep in mind that refinancing or consolidating will extend the life of your loan, meaning you’ll pay more overall interest to the lender.


  • Contact the Consumer Financial Protection Bureau – Consider contacting the Consumer Financial Protection Bureau if you’re running into roadblocks. They’re a government agency tasked with making sure lenders don’t take advantage of the public. They have letter template for uncooperative lenders and let you file complaints against any unscrupulous institutions. If you’ve exhausted all other options, contact them and see if they can help.


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