private student loans - Student Loan Resolved

Private Student Loans

In July, Senate Republicans announced their relief bill to help people during Coronavirus. While the bill is worth $1 trillion, it has a small portion dedicated to students with federal and private loans. The bill, called HEALS, aims to provide a one-time payment to individuals and prolong unemployment benefits. Previously, in CARES Act, the government extended to forbearance or stopped the collection period for federal student loans. Borrowers are not required to make payment until the end of September. The HEALS Act, unfortunately, did not extend this period.Initially, the HEALS Act does not bring many additional benefits to borrowers with federal or private student loans. In this case, consumer advocates raised a claim about providing extra help to debtors during economic difficulties that Coronavirus created. For example, the National Consumer Law Center demanded a relief program that facilitates borrowers with FFEL, HEAL, and Perkins loans. The non-profit organization also expressed its disappointment in the Act because it fails to aid millions of debtors.

Are there any Hopes about Additional Benefits?


While the HEALS Act did not meet the borrowers’ expectations, it does not mean that the Act will fail in the future, too. This bill is only the start of the negotiations between the House and the Senate. Previously, in May, the House provided very exceptional help through its HEROES Act. This bill brought a $10,000 cancellation and forgiveness opportunity to federal and private student loans.
Yet, the case for private student loans with bad credit is much more difficult. The CARES Act, which stopped payments until September, did not include private student loans. Plus, it is not clear whether the following bills will benefit private loans at all. Luckily, some private lenders already took some measures to help borrowers. For example, in May, organizations like Sallie Mae or Navient and Nelnet brought assistance to debtors to help them during Coronavirus.

In 2010 PBS launched a program called “College, Inc” about non-profit universities and Argosy University was among 15 universities that listed. The program accused the university of deceiving and committing questionable actions while reporting to applicants of the program. Later, the Government Accountability Office said that changes to the report undermine many allegations, but the overall message of the story and findings of the university are still the same. In 2011 Florida Attorney also investigated the Argosy University lawsuit because of student complaints.

Coronavirus affected the economy deeply. Even graduates with high skills and knowledge have a hard time finding a job because many companies stopped the recruitment process. Such financial troubles make it impossible for borrowers to pay back their debts. While federal student loan borrowers are relatively lucky to get access to forbearance, private borrowers have little opportunity. Unfortunately, private student loans are hard to deal with. Only a few options exist to eliminate or reduce the outstanding debt of the borrowers.
Waiting for a miracle or ignoring the responsibilities is not a solution to your private student loans. You need to take action to figure out a plan. Luckily, we are here to help you. Contact us and share your challenges so that our team of experts can lend a hand. We have years of experience in the industry, enabling us to find the solutions that are suitable to your needs and wants.

In March 2017 the university administration was intending to sell the schools to the company called Dream Center. The process of transaction closed in November, claiming that the Dream Company could continue working with the Argosy schools that have stopped accepting new students.

Perkins loan forgiveness

Some Good News

2020 can be a great year to get rid of your private student loans. The reason is that there exist some opportunities which make it relatively easy to get cancellation or reduction. In 2019, the federal government started a dispute with one of the largest private lenders, Navient. As a result, they created a student aid program for both federal and private loans. On the other hand, many schools closed, or investigations showed that these schools were mismanaged. Therefore, some of the students of these universities got a chance to eliminate their debts. Currently, the world is dealing with Coronavirus and its massive effect on the economy. This financial hardship is out of the control of borrowers. Hence, it is normal for them to demand some relief for their private student loans.

We have already discussed what is going on at COVID-19 acts, but many other programs exist. Keep reading further to find out which programs you are eligible for and how much you can save.

It is difficult to qualify for the discharge program, but differently, from other student loan forgiveness benefits, this program provides quick delivery to the students in other words. If you apply for the program, you will not need to wait for years for the Department of Education to review your case and report the result. You will immediately receive whether you are qualified for the discharge program or not. It is great because in that case, you will lose your time while waiting and hoping for the positive result from the Department of Education.  

For determining if you qualify for a student loan discharge program, let’s review the requirements of eligibility for Argosy university student loan forgiveness.

Contact Us

We gathered some material on this page to help people who struggle with private student loans with bad credit. After reading the article, you will have some idea about the solution you need to attempt. However, if you do not have much time and you are unfamiliar with financial terms, it is better to contact us to get expert help. We will listen to your problems and get as much information as possible to develop suitable solutions. Also, if you have a question at any stage, you can contact us for further guidance.

Private vs. Federal Loans

We have already mentioned that federal loan borrowers are luckier because they can access more debt relief opportunities. The root cause of this problem is that the government cannot interfere with private lenders’ decisions. Also, as there exist many private lenders, they each have different requirements. Therefore, creating a uniform private student loan assistance program is not straightforward. 

While the government imposes some regulations to monitor the private lenders, they still have much flexibility in their operations. Your lender can decide independently on loan terms, such as the interest rate, payment dates, and the application process. Yet, during the recent years, there have been some improvements to this problem. Borrowers now have more options to consider for better loan terms or getting help for their private student loans. 

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What Options Do You Have?

Borrowers have access to multiple programs for reducing or eliminating private student loans. However, not all of these programs will be achievable for debtors. Hence, you need to do some research to find out your eligibility for private loan assistance programs. Alternatively, you can contact a third-party expert, such as Student Loans Resolved, to receive guidance from debt-management specialists. We can help you develop an achievable plan that allows you to pay back your private loans as fast as possible. Plus, it’s free to have a consultation with our experts to assess your current financial challenges. 

In short, the below-mentioned opportunities exist for private borrowers. In the following sections, we will discuss each option in detail. Yet, if you have any questions or you do not know how to start, you can contact us immediately:

  1. Private Loan Consolidation
  2. Private Loan Negotiation
  3. Bankruptcy
  4. Default

Loan Consolidation Program

Unfortunately, there is not any forgiveness program for private student loans. However, consolidation programs are also useful options to reduce the burden of education debt. Consolidation joins all your loans into a single one. As a result, you will owe a debt to one lender. The benefit of this program is that it makes complex debt management easy. As debtors have one payment per month, they can better organize their finances. For example, there will be less chance of missing deadlines when being busy with daily chores. Sometimes, a consolidated loan requires lower interest payments that you paid for individual private student loans. 

Such an excellent program does not come without its drawbacks. Consolidation does not allow joining federal and private loans. Hence, debtors with only one private student loan cannot enjoy the benefits of this program. However, some borrowers can still be better off because there exist plenty of opportunities for federal loans. When they save some money from federal obligations, they will be able to deal with private debt effectively.

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How does It Work?

We have already mentioned that consolidation joins all your loans. In other words, you get a new loan with a higher amount and pay all other loans with the new one. This new loan can have better terms than others. If your credit was okay, then you can even receive private student loans without a cosigner. It is an accessible program because it does not require any up-front costs. Also, mostly, new loans have lower payment amounts. However, better requirements are not always possible. Sometimes, the new loan can have even worse obligations. For example, private loans with bad credit are risky, making them include undesirable requirements for the borrowers. In these cases, it is better to avoid consolidation to stop further debt accumulation.

What are the Advantages of Consolidating Loans?

There exist multiple benefits if you can find a lender with better terms. Therefore, you need to analyze all the requirements of the lender beforehand. If you are unfamiliar with financial terms, it is useful to get expert help to assess your hardship and give feedback about the use of consolidation programs.

Consolidating private student loans eliminates complexity. Some people have many different loans with various payment amounts and dates. If they are busy with work, they can mismanage the payments and not meet obligations on time. Consolidation reduces this complexity and creates a clear picture of the financial management the individual needs to take care of. 

Second, it can bring lower interest rates and monthly payments. There exist two cases. You might pay less because the payment period is more extended than before. For example, if previously, your loans were for five years, when you get a new one for ten years, the interest rate can decrease. Another case happens when you have a high credit score. The credit score shows your reliability. As you are not a risky borrower, you can get a lower interest. However, most of you are reading this text because you cannot manage your debt. It means there exist a large number of private student loans with bad credit. Hence, this cause might not apply to you. 

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Disadvantages of Consolidation

If you face any drawbacks of the consolidation, it shows that this program is not suitable for your private student loans. Therefore, it is better to look for other options.

The usefulness of the consolidation depends on many external factors. While it can decrease your current obligations, you might end up paying back more than you originally owed. As mentioned before, the payback period can also extend. Moreover, if you get a new loan with a variable interest rate, instead of fixed, it can be risky. If, in the future, the interest rates increase, you will be required to pay more.

Can I Consolidate the Federal and Private Loans?

You might find such an opportunity, though there is less chance. However, it is not advisable. If you consolidate them, you will not be eligible for other programs for your federal loans, such as forgiveness, repayment, or forbearance. These programs are fantastic opportunities for borrowers. So, giving up on them is not a wise decision.

Are There Any Forgiveness Programs for Private Loans?

We hate to inform you that there exist no forgiveness programs for private borrowers. If you have a federal loan, you can still benefit from forgiveness. In this case, you can allocate some money to deal with your private loans. Therefore, even if private loans do not qualify for forgiveness, if you have federal obligations, try to benefit from government assistance for those loans.

Private Loan Negotiations

Sometimes, it can be possible to negotiate with the private lender for better terms. Specifically, during the times of economic hardships, like the COVID-19 pandemic, these solutions can work for your private student loans. It is essential to prove to the lender that you do not have any other way except defaulting the loans if the lender does not help. In the best cases, borrowers can get benefits such as reduced interest rates. This solution will save some money from your monthly payments. Another advantage can be extending the loan period. Sure, in the long run, you will pay more than you originally owe. Yet, it can be useful for recovering your short-term finances. Lastly, you might get forgiveness partially or fully. However, such an opportunity is like a miracle. Lenders mostly would not agree to do a favor to you if they do not get anything in return. Therefore, reduced interest rates or more extended periods are more achievable if you negotiate correctly.

How to Negotiate with the Lenders?

Debtors should keep in their minds that they are dependent on the lenders. The lender has no obligation to provide better loan terms even if you are unable to meet your requirements. Hence, you need to be respectful and handle the negotiation process properly. It is also advisable to get help from a lawyer because the things you say during the negotiation can be against you later. Arguing with the lender is not helpful. Your tone should be on requesting a favor from a lender, rather than ordering them to take action. 

During the negotiation, you need to prove that your financial hardship does not allow you to make on-time, full payments. If you get even a small help from the lender, you will do your best to meet your obligations. Otherwise, you have to declare bankruptcy. Besides, if you got private student loans without a cosigner, there will be none else who can compensate lenders, in case you default. In this case, they can accept changing loan terms. 

As much as it is beneficial, negotiations with the lenders can bring many disputes, too. Hence, it can be better to leave the process to professionals. Reliable third-party experts usually have the necessary skills and networking capabilities to convince lenders

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Bankruptcy

Is the Chance for Bankruptcy High?

While no rule or regulation prohibits private student loans from bankruptcy, it is fairly challenging to benefit from this option. Sure, in recent years, Chapter 7 and Chapter 13 bankruptcy types created more opportunities and brought some relief to the borrowers. However, still, only a tiny portion of the debtors could benefit from declaring bankruptcy. 

The main reason for this difficulty is that people need to prove that they will not survive if they pay back the debt. Therefore, you need to be in the poverty line. Anything in financial value, such as using a phone, having a house, or getting a coffee outside, can restrict access to this program.

Before considering this option, borrowers need to ensure that they have already taken all other possible measures. In other words, declaring bankruptcy should be your last resort to reduce the burden of the debt. 

While bankruptcy might seem like an attractive choice, it is challenging. First, the process is time and money consuming. Second, it has a massive impact on your credit score. The effect of bankruptcy lasts as long as seven years in your credit history. Therefore, when you want to rent a house, get insurance, or request a new loan in the future, your declaration of bankruptcy will be a barrier. 

Is the Chance for Bankruptcy High?

While no rule or regulation prohibits private student loans from bankruptcy, it is fairly challenging to benefit from this option. Sure, in recent years, Chapter 7 and Chapter 13 bankruptcy types created more opportunities and brought some relief to the borrowers. However, still, only a tiny portion of the debtors could benefit from declaring bankruptcy. 

The main reason for this difficulty is that people need to prove that they will not survive if they pay back the debt. Therefore, you need to be in the poverty line. Anything in financial value, such as using a phone, having a house, or getting a coffee outside, can restrict access to this program.

Is it Worth Pursuing Bankruptcy?

While we share much information about bankruptcy, we do not strongly recommend you pursue this solution. There is a fairly low chance that you will be eligible for bankruptcy. Hence, instead of wasting time on these claims, it is better to value other opportunities. You can at least try to negotiate with your lender, instead of declaring bankruptcy. 

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What has Changed?

During recent years, the success rate of bankruptcy increased. It was almost impossible to get private student loans eliminated with bankruptcy; nowadays, the probability is higher. Some significant cases resulted in favor of the debtors. However, this good news does not mean that you will have a high chance of success with bankruptcy. Although there exist some people who could, they are still a tiny portion of all student-loan debtors. 

Yet, these small changes give us hope that the situation for the debtors can be better in the future. 

How does Bankruptcy Work?

If you have no other way, and you want to declare bankruptcy, you need to be ready for all the hassle of this process. The only important thing is to convince the court that you cannot even meet your living needs. If you pay back the debt, you will not be able to survive. In financial terms, this process is called proving your “undue hardship.” 

However, proving this hardship is extremely difficult. Besides your current low-income level, the school you studied, education type, total debt, and other factors have a considerable impact on the court decision. 

You need first to file a petition that requests a court judgment on your financial challenges. The court decides whether you should get full elimination of your private student loans or not. After the petition, you need to convince the court. The court usually utilizes different types of tests to decide if you face “undue hardship.” The type of test can depend on the court, the state, etc. 

Brunner Testing

One of the common tests of bankruptcy is the Brunner test. Three factors affect the court decision in this test. First, you need to prove that you are poor. In other words, meeting your debt obligations will leave you with no penny to survive. Second, you need to show that your situation will not change in a short time. It means, you will not be able to find another solution to repay your debt for most of the payback period. Lastly, debtors should convince the court that they have good faith. Good faith signals that the borrowers did everything for their private student loans. However, they have no chance of making their payments. 

Do not forget that if the court finds out that you make unnecessary expenses such as buying comics books, smartphones, or even drinking a cup of coffee outside, you will not get your loans canceled. The reason is that it shows you do not have a good faith, and you did not take all the measures to make debt payments. 

Johnson Testing

Another tool the courts use to assess your financial challenge is the Johnson test. In general, all tests serve the same purpose of finding out whether you can still afford the debt obligations or not. Yet, Johnson’s analysis is more detailed. It also considers many factors. First, the court will look at your employment opportunities. The test will compare your current income with the possible future income and the income level of people living in poverty. Next, the court will check if your education creates opportunities for you. For example, if you had a decent education, you might have a better job in the future and pay back your debt. In this sense, the health state of the debtor also has an impact. The borrowers with diseases might have a better chance of getting discharge for their private student loans. Besides, if you have dependents, your chance will increase because the debt burden affects more than one person. Lastly, good faith is still applicable, as in the case of the Brunner test. 

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Totality of Circumstances

Among all the tests for bankruptcy, this one seems to be the most reasonable and relatively most straightforward way. However, it is still difficult to pass this test and get rid of your private student loans. The test considers your income, expenses, previous attempts, and the duration of the problem. First, the court checks your past, current, and future income level to understand if you will be able to pay back the debt in the future. 

Plus, they calculate your expenses. If you have dependents, your expenses increase, which is in favor of you. The duration of the financial challenge also matters. If you are old or disabled, you might not meet your obligations during the average lifetime. Hence, you have a better chance of getting discharge for your private student loans. Lastly, the court checks if you did all you can to make debt payments. It includes your consideration of other solutions, such as consolidation or negotiation. 

Defaulting

The last option for dealing with private student loans can be defaulting. Again, we do not recommend this method, but it can be an option, too. When you decide to default, you need to consider its long-lasting adverse effects. Your credit score will get much lower, even worse than declaring bankruptcy. Therefore, you will not be able to get other loans or face challenges when you want to rent a house. The credit score shows how reliable you are. If you have a low score, other parties will not trust your promises. The second problem is that as defaulting is a breach of contract, the lender can take action against you. As a result, the lender can bring the case to the court. You might be required to have a lien on your property. Alternatively, the court can seize your wage to pay your private student loans back to lenders. 

Keep in mind that going to court is expensive. Hence, most of the lenders would not wish you to default. If you think that defaulting is the only option, try negotiating with the lender. They can provide better terms on your private loans. 

I Cannot Deal with the Debt Anymore… Help me Out!

We understand that you might not be too optimistic about your debt after reading this material. After all, private student loans provide fewer opportunities for cancellation or reduction compared to the federal debt. However, do not get disappointed. Either through consolidation or negotiation, you can still get some relief in your education debt. All you need to do is contact us so that our experts can find the best solution.