The concept of private student loans forgiveness
College debt is currently at a level that has never been experienced before, and the number of students who need student loans is ever increasing. The United States today struggles with student loan debt amounting to $1.44 trillion, with delinquency rates reaching 11.2%. Note that this information does not only include federal loans. The total student loan debt as of 2015 stood at $7.8 billion.
The main issue with private student loans is that they have higher interests than federal loans. Furthermore, there exist few methods of repaying private student loans, and it is impossible to find a private loans forgiveness program. Even though there are no direct procedures on how to get Sallie Mae loans forgiven, there are options. Below are some steps to take to get help with private student loans debt.
Four tips on how to get help with private student loans
- Consult with your lender
The first action you should take if you’re the burden of private student loans seems heavy for you should be contacting your lender. Each lender is distinct, so it is critical that you explore the available options for you with theirs. Chances are your lender doesn’t offer loan forgiveness private student loans, but they may still have the capacity to assist you. For instance, most top companies that offer refinancing of student loans also offer either forbearance or refinancing. These options will help you postpone the payments temporarily, offering you some breathing space while protecting you from delinquency.
Forbearance or deferment, however, can be enjoyed for a limited period according to your lender. If that repayment is giving you a hard time and you’re looking for student loans forgiveness, it is essential that you talk to your lender. Don’t just ignore your payments, as it will significantly impact your payment. This will, in turn, complicate the process of obtaining new loans in future.
- Refinance the student loan
Choosing to refinance your student loan will make it easier for you to manage the steps of paying back private student loans. Through this method, you will be able to consolidate all your financial obligations. If you are eligible for better interest rates than your current one, you can opt to lower your payments every month. Refinance also helps you choose a new lender offering lower interests who will subsequently pay off your initial lender.
Notably, most lenders allow borrowers to choose either a fixed interest rate which remains the same all through the life of your loan or the variable interest rates which fluctuates with changes in economic markets. Some lenders have extra ways of helping borrowers. For instance, some of them offer additional perks like unemployment protection. The program doesn’t only assist you to suspend the payments temporarily but also allows you to access the career advisory.
- Optimize federal loans
While forgiveness programs for private student loans are not currently a reality, you can still get some assistance in case you have federal loans alongside the private loan. Federal loans have an array of options for repayment that are handy during tough financial times. You can use the available options to reduce the amount of monthly payments of the federal loan and free some additional cash. This, hopefully, help pay private student loans easier and faster.
Clearing your student loan first may also follow the payoff method known as ‘debt avalanche.’ It works in the following ways:
- The method recommends that you target high-interest loans first.
- All additional payments should be directed to the debt while the debts with lower interests get minimum payments.
- After paying off your target account, you will now apply the payments to the minimum of your next target account.
- Repeat the process until you pay off all your debt accounts.
- Find extra ways of increasing your earnings
This option does not lead to private student loan forgiveness but is worth mentioning since its one of the ideal repayment options for private student loans with a sheer impact on the loan repayment. You can consider looking out for side hustle opportunities if you are aware that you don’t qualify for a pay raise or feel you have not extra time for additional work.
Finding ways of creating extra income can be a game changer for your finances. In fact, that additional income can be the aid you required to get ahead. Think of it like this: You can do a little more than just earn additional income. You can develop your skills while also building a network. This can help improve the chances of income potential and financial success with time.
Why consulting your lender about loan forgiveness for private loans is the best option
It is frustrating to know that federal loans have forgiveness options which are not provided by private student loans. However, don’t allow the frustration to prevent you from reaching out whenever you need help finding relief for private student loans.
Among all the above options, contacting your lender may be by far the best option. While they can’t forgive your loan only by asking, the lender may agree to reduce your monthly bill. Alternatively, they can establish an option of payment which you can work with. Opting not to talk to the lender when you know you need their help will even lead to additional woes. Default and delinquencies will harm your credit score.
Unfortunately, most graduates believe that another viable option to get rid of private student loans is through bankruptcy. The truth is, it’s almost impossible to discharge your financial obligation using this method unless you prove to have extreme hardship. Contact your lender if you are worried about sustaining your payments in future. They will advise on the appropriate options which may be available for you. This may be your ideal shot that may ensure you take control of the private high school loans so that they don’t overpower you.