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Student Loan Forgiveness for Private Loans

Federal student loan forgiveness gets all the attention, but there are a few options for private student loan forgiveness.

Written By: Michael P. Lux, Esq.

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The cries for student loan forgiveness or debt cancellation continue to grow louder. While there has been some movement on federal loan forgiveness, options for private loans have not gotten much discussion.

The reality of the situation is that private loan forgiveness is either a long way away or will never happen. However, there are a few tricks that borrowers can use to help their cause.

Private Debt Cancellation Probably Won’t Come From The Federal Government

At this point, it is safe to say that any forgiveness for all or debt cancellation program from the Biden White House will apply only to federal student loans.

Private student loan forgiveness would require legislation to get through Congress. Republicans would uniformly oppose such a measure, and many Democrats would also object.

However, there are other opportunities for forgiveness for private borrowers.

Converting Private Student Loans Into Federal Loans Eligible For Forgiveness

If federal loans have the best path to forgiveness, turning private loans into federal loans is an obvious fix.

Unfortunately, options for this sort of conversion are limited. No mechanism exists to consolidate private debt into federal debt.

However, creative borrowers can essentially convert their private loans into federal loans using a couple of clever strategies:

  • Borrowers still in school can use any income or savings to pay down their private debt. Most borrowers use their income from summer work to reduce what they borrow the following year. Instead, borrowers can use this income to pay down high-interest private loans. The next year, these borrowers target federal loans to pay for school. This process replaces private debt with federal debt. It can be especially effective for graduate students with high federal borrowing limits.
  • Borrowers in repayment can leverage federal repayment options to pay down private debt. If a borrower can get a lower payment on their federal loans, they can pay extra toward their federal loans. With a large variety of federal repayment plans available, many borrowers can find lower monthly payments. Making this switch means the private debt disappears quicker, and the federal debt lasts longer.

Borrowers interested in converting private debt into federal debt should check out this article.

Employer Loan Assistance Programs

Calling employer help a form of forgiveness or cancellation is a bit of a stretch.

However, it is a reasonable path to eliminate student debt without making payments. Some employers are far more generous than others, but many organizations are starting to offer this perk.

Borrowers should investigate this option with their current employer and ask about it when they are looking for a new job. The employer help can take a variety of formats, but it may provide a significant boost to borrowers.

Death and Disability Discharge

Some private student loans may include a provision that forgives the student debt if the borrower dies or becomes permanently disabled.

Obviously, these strategies are not reasonable options for borrowers looking for loan forgiveness or cancellation. However, it is worth mentioning because borrowers should pay close attention to the death and disability provisions of their student loans. Many loan contracts do not include this important consumer protection. If something happens to the borrower, lenders may pursue money from the borrower’s cosigner or estate.

If your lender does not cancel debt for dead borrowers, there are ways to protect your cosigner. First, there are many options to get the cosigner release from the loan. Second, an insurance policy can help make sure a tragedy doesn’t become a financial catastrophe for the cosigner.

Giving Up on Private Student Loan Forgiveness or Cancellation

Sadly, the options for private loan help are quite limited. The vast majority of borrowers will be stuck repaying their loan balance in full.

At the point where cancellation is off the table, the next best option is to get a lower interest rate by refinancing your loans. Finding a better interest rate can significantly reduce the total cost of repayment. The downside to refinancing is that it is only available to borrowers who have a decent credit history and employment. Those who truly need the help will have a hard time qualifying.

The best interest rates currently available are with the following lenders:

RankLenderLowest RateSherpa Review
T-1ELFI5.28%ELFI Review
T-1Splash Financial5.28%*Splash Financial Review
3Laurel Road5.49%Laurel Road 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.

4 thoughts on “Student Loan Forgiveness for Private Loans”

  1. The Federal Student Loans such as Stafford Loans which were guaranteed by the Federal department of education, but due to consolidation some deemed to be owned by private banks/ agencies yet guaranteed by Federal Family Education Loan programs until 2010. The Department of Education is outrageously and unfairly discriminating against the so-called such private loans and denying the Cares Act benefits of 2021-2023 as well as the future cancellation benefits. These loans were Federal Loans. Therefore, all Student Loans are eligible for the Loan Cancellations and Covid 19 Care’s Act Benefits.

  2. This is so unfair. My grandson just graduated wih a BS and has tens of thousands to repay a private loan. With the wages for just graduating students being so low, they will be paying on this debt forever, How are they supposed to support a family with the current inflation. Both have student loans.


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