Most of the student loan forgiveness programs are not available for private students. But it does not mean that there are no other options for public student loan forgiveness. In fact, the majority of the student of public universities could not benefit from federal and private student loan forgiveness programs. As a result, lots of students stuck with such kind of problems, like paying off their student loans. But do not worry about student loans, as you can benefit from some of the little-known possibilities of private student loan forgiveness. Let’s evaluate these options and get rid of this problem.
What is the problem related to public student loan forgiveness?
As we mentioned above most people, especially students have a problem related to student debts. Thus, now the U.S has 1.48 trillion with a delinquency rate of 11.2% in the student loan debt. Moreover, some statistics, like the Institute for College Access and Success reported that in 2014-2015, the annual private student loan debt volume was about $7.8 billion.
As you see this debt volume shows just a private student loan.
There is a federal student loan as well. But is it not a big deal. The essential problem for the private student is that they could not benefit from most student loan repayment plans.
Moreover, private student loans have higher interest rates than federal student loans. So it is quite hard to do repayment of student loans for private students. However, there are some options to take over this problem. In this article, we will inform you about how you can avoid student debts if you have a private student loan.
What should you do if you have a private student loan?
If you have a problem related to your student loans or you are struggling with your private student loans you should contact your lender. As lenders differ from each other, it is compulsory to explore options with them. They could not provide private student loan forgiveness plan for you but might still be able to help you deal with this problem. For instance, many loan refinancing companies offer different programs.
These programs could be either deferment or forbearance.
These options give you a chance to temporarily postpone your payments. It is also an excellent opportunity to take action and avoid delinquency. As a private student, you can only be in deferment or forbearance for a limited amount of time. The given time for deferment or forbearance options might be various, and it depends on the lender.
Do not abandon your student loan payments, even if you are struggling with payments and looking for private student loan forgiveness. Contacting your lender is imperative. Otherwise, abandoning student loan payments will be a serious problem for your credits. As a consequence, you can face difficulties when you try to obtain new credit in the future.
You can also find lenders who offer death and disability discharges on private student loans.
These options are modeled after the similar discharge provisions available on federal education loans. In short, the lenders like Sallie Mae, Laurel Road, the New York Higher Education Services Corporation, Discover and Wells Fargo offer to forgive private student loans for disability. How to benefit from these options? It is simple. You should contact your lender and determine if your situation is available for these offers. Be aware that the recent changes in the tax law allow students to benefit from these options and to get rid of private student loans. So, the new tax law gives you a chance to avoid student loan repayment and the amount discharged is no longer taxable.
Moreover, most of the lenders review requests for financial relief on a case-by-case basis.
Another option is Refinancing
If you cannot handle the problem, then refinancing private student loans could be the solution to this situation. Refinancing helps you manage your monthly payments. You can consolidate all of your student debts with the help of student loan refinancing. There are some refinancing lenders who offer extra perks, like unemployment protection. One of these refinancing lenders is SoFi. What is unemployment protection?
First of all, this offer helps you temporarily suspend your payments. Secondly, if you accept to be involuntarily unemployed, then you could get access to career advisory services via SoFi.
As you know most of the people benefit from federal student loan forgiveness programs and pay off their student loan debts in exchange for working in a critical but hard-to-fill role for a couple or a few years. But unfortunately, the federal student loan forgiveness programs are not available for private student loans. The good news is that about 3% of employers offer their employees the same conditions, like pay down both federal and private student loans. We hope that this amount will be growing in the future. If you are looking for companies which offer this option, do not forget to ask about whether they cover private as well as federal student loans. So you could take advantage of this private student loan forgiveness option through your job.
You can optimize your student loans
If you could not benefit from private student loan forgiveness program and you have federal loans, then follow the structure shown below.
When it becomes hard to deal with student loans, Federal loans come with a variety of repayment options to help.
We offer you another payoff method which is called “debt avalanche.”
What makes this method unique and how it works?
This method targets high-interest rate debt first.
All extra payments should go to that debt, and by the same time, the lower interest rate debt gets minimum payments.
When your target account is paid off, apply for its payments on top of your next target account minimum.
It would be better if you do it repeatedly until your debt accounts are paid off.
Students who need public student loan forgiveness defaulted on their student loans
Due to the ineptness of loan holders, thousands of students might be eligible to benefit at least $5 billion in private student loans forgiven. National Collegiate is a company which holds 800,000 private student loans. In this case, the total amount is $12 billion and $5 billion of this debt is in default. This company has repeatedly been unable to show it owns loans. And these loans were made by banks which then sold to investors.
As a public student, you can request a verification of the debt. To do this, you can send a letter to the debt lender. The debt collector has to provide the necessary information, like the amount of debt, the name of the creditor whom you owed and other pieces of information. Also, if it is your debt, it is under your responsibility; otherwise, you need to dispute the validity of the debt immediately.
Be aware of frauds and get necessary info about your student loans
Private student loan forgiveness options offer few protections. As with other student loan forgiveness plans, there is a possibility of facing with Recourse for Negligence and Fraud for Private Student Loan Holders. To avoid a possible threat make sure that you read your contract carefully. What is the discharge option for private student loans? Most of the time, people think that private student loans cannot be discharged in bankruptcy, but it is possible. If you want to benefit from the discharge, you will have to prove to pay your student loans would subject you to “undue hardship.” In this case, you must file an action against your loan lender in an adversary proceeding as part of the bankruptcy process. The possibility is too low, but if your loans are significant, the lawsuit might well be worth it.