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Private Student Loan Forgiveness: Myth or Reality?

private student loan forgiveness

You have probably seen frequent news headlines with ‘student loan forgiveness by the government. The Biden Administration is currently dealing actively with the student debt issue as it grows six times faster than the whole economy. While the government provides affordable repayment plans and forgiveness possibilities to help debtors, these options are not available to private borrowers. Sure, the volume of private student debt is considerably lower compared to federal student loans. However, the reality is that 2 million private borrowers still struggle with their student debts. We understand that the options for private loan borrowers are less, but with this guide, we aim to set realistic expectations on private student loan forgiveness possibilities. 

Private Student Loan Forgiveness Possibility and Alternatives

The government might not be effective in providing private student loan forgiveness. Private student loans are distributed by private companies/lenders. The government does not have the right to order these companies to forgive your debt. 

In some cases, private lenders can offer forgiveness options. For example, total and permanent disability discharge or death discharge can be possible. However, qualifying for these private student loan forgiveness programs is not desirable. Besides, not all lenders provide such options. 

So, if you have private student loans, we cannot promise you many direct debt forgiveness programs that can erase your debt. Yet, there exist several strategies to reduce your debt obligations:

  • Health Professional Loan Repayment
  • Debt Deferment/Forbearance
  • Refinancing
  • Settlement
  • Bankruptcy

But Before… Get Expert Help

This guide aims to help private borrowers to develop sound debt management/resolution strategies. Understandably, not all borrowers have the financial background to assess and choose the best possible private student loan forgiveness option. 

Each program has its own eligibility conditions, which can involve technical terms, and over time, these conditions can be updated. Hence, it is in your best interest to get expert help to avoid any mistakes. 

Debt specialists, like those in Student Loans Resolved, have helped thousands of borrowers sharing the same concerns as you do. Our experts have years of experience, which helps them identify the most profitable debt resolution strategy after careful analysis of your finances. 

Contact us now with a free consultation opportunity. Let us show you the way out of private debt. 

Health Professional Loan Repayment

private student loan forgiveness

Federal loan forgiveness programs might not be accessible for private borrowers. However, there exist different organizations or states which offer loan repayment programs for private debtors. One of such programs is NHSC loan repayment available to health professionals. 

Loan repayment programs can involve student loans from private lending institutions, but not all will qualify. Refinancing and consolidation loans are also eligible if they only cover the educational debt. 


This program aims to increase the accessibility to health care services in underserved areas. When the professional agrees to serve in such an area, he/she receives additional funds to repay a student debt. 

If you agree with the terms and provide 2-year service full-time, you can get up to $50,000 private student loan forgiveness. Part-time employees will qualify for a $25,000 repayment. You can also extend your contract to get additional benefits. However, there is no guarantee that the officials will agree to extend the contract. 

Who Qualifies for Loan Repayment?

You need to have citizenship to qualify for this program. Only licensed and trained health professionals working in NHSC-approved facilities can become eligible for loan repayment. If you serve in primary care, dental care, behavioral or mental health, you have a high chance to get rid of up to $50,000 student debt. 

Application Process

It is possible to apply online for this private student loan forgiveness opportunity. The online application involves general personal information, employment, and loan details. You might be required to provide supporting documents such as proof of your citizenship or disbursement report. 

Debt Deferment and Forbearance

Many borrowers confuse deferment with loan forbearance. These two options are similar because both allow borrowers not to make monthly loan payments for some time. Hence, debtors in temporary financial struggles can choose the benefit from these possibilities. If you believe that you will have better finances in several months, you can request forbearance or deferment on your loans. However, there exist several pre-conditions.

First, not all lenders are favorable in terms of non-repayment possibilities. It might take hard work and time to convince the private lender that you desperately need this opportunity. Second, even if you get rid of debt repayment responsibility, your interest payments continue accruing. 

Once the forbearance period ends, your interest can be capitalized- added to the original debt balance. Hence, outstanding debt amount increases, and you might end up with higher interest payments than you had before forbearance. 

What is the Difference between Deferment and Forbearance?

The process is quite similar, but the cause leading to these benefits can be different. For example, loan deferment is mostly possible when the borrowers are still enrolled in university. So, it can be possible to defer loan payments for up to 4 years till graduation. Lenders like College Ave provide such a possibility to stop payments till graduation. It is understandable that students might lack enough financial resources to start repayment immediately. You can even find lenders that allow deferment during the internship. 

On the other hand, forbearance is usually granted because the borrower faces financial struggles or is on active duty. Besides, you might not repay the debt during a natural disaster and pandemic like COVID-19. Private student loan lenders like Ascent allow borrowers to stop payments during natural disasters. 

Which One is Better?

Most borrowers do not have a right to choose which option they want. In most cases, the possibilities are noted in loan terms. You might qualify for deferment, while forbearance can be inaccessible or vice versa. First, you need to check your loan agreement. 

Second, each option is granted under specific rules. For example, if you have already graduated, it can be hard to get a deferment. 

Besides, both options have advantages and disadvantages. On the bright side, you do not repay the debt for a few months and focus on your finances. During this time, you can think of a way out of the debt struggles. In this sense, deferment can be more desirable as it can last for four years. 

On the other hand, during the period you do not repay the debt, loan interest payments will continue accumulating. Hence, you might end up paying more for your student loans in the long term. We understand that these options do not reduce your debt obligations like private student loan forgiveness should do, but they are worth trying as you do not have many opportunities. 

Refinancing Student Loan

private student loan forgiveness

Refinancing is one of the best options for private student loan borrowers with its high benefits and low risk. It does not grant private student loan forgiveness, but it sure can decrease your debt costs. In more detail, you can save money in the long run if you decide to refinance your loan. 

Refinancing is simple to understand. First, you check how much outstanding debt you have. Let’s say your student debt is $10,000 with a 5% interest rate. Then, you find a private lender who can lend you around $10,000 with a lower interest rate, such as 4%. If you get a loan from a second lender and use the money to cover your existing debt, you will save money. 

However, refinancing can bring other benefits, which we will discuss in subsequent sections. Additionally, student loan refinancing should be utilized at the right time to get the most benefit. 

Why Apply for Refinancing?

You might wonder what makes refinancing so much desirable for private borrowers. There exist several conditions that make refinancing attractive.

  1. Refinancing is highly accessible to many private borrowers.
  2. It is possible to consolidate loans through refinancing, which means you will deal with one lender at a time. 
  3. You can refinance your student loans in a short time. Hence, it is a fast debt resolution strategy.
  4. If you get lower interest, you might even save money in the long run from monthly payments. 
  5. If you have variable-rate interest, you can change it to a fixed rate or vice versa.
  6. You can get rid of your angry and impatient lender by refinancing with another lender. 

Sure, there are also some drawbacks to this alternative to private student loan forgiveness.

  1. This program does not erase your debt.
  2. Refinancing should be done under the right conditions. Otherwise, it will not be highly beneficial.
  3. If you refinance your federal student loans, you can lose eligibility to federal student aid programs. 
  4. You need to have a high credit score, stable income, and a cosigner to get the refinancing loan you wish. Many students can lack these qualities. 

What are the Eligibility Conditions for Refinancing?

Compared to federal loan forgiveness programs, refinancing has fewer eligibility requirements. However, these conditions can still be hard for a student to qualify. In most cases, private lenders ask for stable income and a high credit score to ensure that the borrower will be able to repay the debt. 

But what to do if you do not work or do not have a good credit score? In such cases, some lenders allow borrowers to involve a cosigner. A cosigner can be your family member or a friend with great finances. That person should guarantee that if you do not pay the debt, he/she will. 

Keep in mind that credit history is usually not required for federal forgiveness programs. However, for this alternative to private student loan forgiveness, you need to have preferably 600 or more credit scores. The higher your score is, the less interest rate you get. 

When Refinancing is a Good/Bad Idea?

The general condition to evaluate this debt resolution strategy is checking if the new loan has better loan terms. For example, it can have a lower interest rate, shorter payback period, or at least a supportive lender. 

If the new loan satisfies all these requirements, you should check if you can qualify for the refinancing loan. Please, remember that you will lose eligibility to federal aid programs if you refinance federal student loans. It means you lose access to all federal student loan forgiveness programs and other federal opportunities. 

Besides, it might be a case that you have a variable-rate loan, and you are fed up with fluctuating interest rates. In this case, you might consider refinancing your existing loan with a fixed-interest student loan. 

Additionally, if you notice that market interest rates are declining, it can be a good time to refinance your loan. 

To sum, there exist many conditions which identify if your student loan refinancing will be successful. If you lack the skills to analyze the conditions, do not forget to get expert help. 

Can I Refinance for Multiple Times?

Yes, definitely. You can refinance your student loans as many times as you wish. However, make sure that you pass the eligibility test. Usually, the lenders have a pre-qualification test on their official websites. In this way, you can at least have some idea about your chances.

It is not desirable to apply multiple times and get rejections. Such misfortune consequences can decrease your credit score

Additionally, you might face more detailed and more hard monitoring/checking on your credit performance if you refinance multiple times. 

Debt Settlement

Debt settlement can be an option when borrowers do not have access to student loan forgiveness. However, this strategy should be your last resort. After exhausting all other options, you can start thinking about the settlement.

Settlement is usually achieved with the help of a debt settlement company. This company has a great network with lenders, loan servicers, and debt specialists. They talk to the lender to understand if the lender can agree to settle for a lower amount of cash.

The general idea is that if the borrower offers a one-time lump-sum amount of cash less than the original debt balance, the lender might agree. Lenders can accept such an option if they know that rejecting the option will decrease their profits even further. 

You might wonder, where will I find that high amount of cash? This concern is another issue where debt settlement companies help. They work out a saving plan with you. In this way, you stop repaying debt and save money to collect the lump-sum amount needed. 

Risks of Debt Settlement

Debt settlement can be an alternative to private student loan forgiveness as it eliminates the debt. However, its risks are immense. When you stop monthly repayment, the lender might get angry and even sue you. Additionally, there is no guarantee that the lender will even agree to get a lower amount of money than what you owe originally. 

Hence, it is better to get help from debt settlement experts before you act on this strategy. Debt experts have communication and negotiation skills which increase your chance of convincing the lender. Besides, they can develop sound saving plans based on your finances. 



Another risky option is bankruptcy for private loan borrowers. But, again, it can be an alternative to private student loan forgiveness because it can erase your debt problems. 

However, it is almost impossible to get bankruptcy status on your loans. Moreover, even if you succeed, the negative effects of loan bankruptcy last for years, sometimes up to 10 years. 

Therefore, bankruptcy can only be considered if there is no other way for you to deal with the debt. In addition, you need to ensure that you did all that you could to repay the debt before deciding to declare bankruptcy.

What are the Negative Consequences of Bankruptcy?

Bankruptcy impacts credit performance negatively. Even worse, its negative consequences stay on credit performance for 7-10 years. It will be hard to rent an apartment, get insurance, find a job, and request a new credit line during this period. 

Besides, bankruptcy does not always bring private student loan forgiveness. The judge can decide to reorganize your debt rather than canceling. In such a case, you will still be required to repay the debt but with more favorable conditions. Additionally, bankruptcy can involve liquidation, which means you can lose all your assets, including your houses. 

Final Words

Private student loan borrowers do not have many forgiveness options as federal debtors do. However, several strategies exist to reduce debt obligations – reduce some portion of the debt, decrease interest, etc. 

Before choosing any of these alternatives to private student loan forgiveness, it is advisable to get expert help. Strategies like bankruptcy or debt settlement can have many negative consequences if not handled properly. Hence, to maximize your chance of reducing debt struggles, contact us for a FREE consultation now.