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Private Student Loans and Public Service Loan Forgiveness (PSLF)

Balancing private student loans and qualifying for Public Service Loan Forgiveness (PSLF) isn’t easy.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

Private student loans are not eligible for Public Service Student Loan Forgiveness (PSLF).

Other than a couple of rare exceptions, private loans cannot be converted into eligible federal student loans.

While it might seem that eliminating private student loans and chasing after PSLF might be entirely different goals, they are not. Borrowers dealing with private loans and considering PSLF have opportunities to achieve both goals.

Debt Elimination and PSLF Uncertainty

Many student loan borrowers face the difficult choice of chasing PSLF or opting for an aggressive repayment strategy.

The decision is much easier for borrowers with private loans. If PSLF is a possibility, but private loans are an immediate concern, borrowers can take the following steps:

This approach accomplishes a couple of important goals. First, it keeps the door open on PSLF. Second, it makes eliminating the more risky private student loans a priority.

If borrowers reach a point where PSLF is off the table, a more aggressive repayment strategy can be considered.

Private Student Loans Forgiveness or Cancellation Odds

During the 2020 election, Democratic candidates Bernie Sanders and Elizabeth Warren proposed student loan plans that included forgiving private loans.

While the Democratic party trend has been towards some form of debt elimination, cancellation of any type remains unlikely in the near future. If even some federal forgiveness is a long shot, private loan cancellation is even more unlikely.

Allowing student debt to continue to accumulate interest because of a glimmer of hope could be expensive. For most borrowers, it is a risky bet.

Balancing Other Goals with Debt Elimination

Borrowers with only federal loans can build a retirement fund and maximize forgiveness at the same time. Such a move becomes more difficult for borrowers with private loans as well.

The math gets complicated quickly, but this article provides a general guide for balancing these priorities.

Buying a house is another significant goal worth considering. Pursuing PSLF blends nicely with the strategies to qualify for a home loan, but private loans are a bit more complicated. Borrowers should pay special attention to their debt-to-income ratio when deciding which private loan to attack.

Matching the Private Loan and PSLF Timeline

Some borrowers want a target debt for debt freedom. Having a defined date may not maximize efficiency but is an excellent option if it helps borrowers stick to their goals.

PSLF provides a pretty clear ten-year timeline. As usual, things are a bit more complicated with private loans.

Borrowers can use a loan calculator to determine the exact monthly payments necessary to eliminate the loans in ten years.

Another alternative would be to refinance the private loans on a ten-year term. Interest rates on a ten-year loan are higher than the rates on a five-year loan. However, the monthly payments will be lower, and the PSLF and private student loan schedules will line up.

At present, the best 10-year fixed-rate loans are with the following lenders:

RankLenderLowest RateSherpa Review
1Splash Financial5.81%*Splash Financial Review
2SoFiNASoFi Review
3ELFI6.09%ELFI Review
About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

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