Negotiating with a private student loan lender may sound intimidating, but the effort is worth it when your struggling just make minimum payments.
Offering a lower payment or payoff is not something private student loan companies like to do on a routine basis. Cracking their hard exterior shell is the first step in obtaining true relief. They are going to act as if you are overplaying your need for a restructured payment or payoff. Don't let this initial road block, or for that matter, any road block they put up stop you from pressing forward.
Remember, they want to get payment even if the payments aren't based on the originally agreed terms. Pushing you into default is counterproductive to them receiving payments. As you learn more about private student loan debt relief, you will see that for every card they play, you will have one to play as well.
To avoid pushing a borrower into default, a lender will oftentimes offer short term options. These options may give temporary relief, but this will just put you back to square one when the short term option is over. Also, what they consider affordable to you and what's really be affordable to you during this time may not jibe. What you may have to remind them over and over again throughout the process is that you understand your financial situation much more than they do.
As long as you don't cave and take a compromise that's not realistic to you, you will finally get the to agree to terms that give you the relief you truly need from your private student loans. This could be achieved in a variety of way depending on the severity of your need. It could be writing off a portion of your debt and adjusting your payment downward in more extreme situations to just giving you a longer term, lower interest rate or both in less severe situations.
Geting Relief From Private Loans
You don't want to devote the time it takes to get relief from your private student loans just to settle for a repayment plan that doesn't give you enough relief. Think of it like a chess game match - you must not throw in the towel until you put them in checkmate.
If you follow the steps below, you will eventually end up with a repayment plan that's affordable for you and allows you to pay down and eventually pay off your loans.
1. Prove You Need Relief
By providing your lender with an income report and cost-of-living worksheet, you will prove to them you're in need of having your debt lowered. They may ask for additional proof of income or expenses, but do so if needed so you can check off step 1.
2. Don't Compromise
Your lender may downplay, or not truly understand the severity of your situation. As a result, they may try to coerce you into a repayment plan that's not realistic for you. If you run into issues making your lender understand how much relief you truly need, ask if they have a hardship department or ask to speak to someone higher up the ladder.
3. Don't Get Taken by Fees
Letting your lender nickel and dime you with fee after fee isn't in your best interest when you're already in need of relief from your private student loans. They know this and they also know the fees are optional, not mandatory. Don't let them overcharge you in one area to save you in another.
4. Always Counter Their Offer
Remember one thing, if anything. Your lender doesn't want to push you into default. Once there, they know it's hard for you to resurface and they may get less than they will by working with you. Your lender is interested in getting as much of the principle amount of what you owe them back. If they push you into default and you don't resurface, they will then have to work with you on realistic terms or file a judgement against you if they want more than is feasible for you.
You will more than likely come to an agreement that is tough on you, but doable. The agreement will also more than likely be less than what your private student loan lender wanted to collect, but more than they would have by not working with you.
A person can only do what a person can do. We can sacrifice to make ends meet when we have to. most of us have to do that from time to time. But when the sacrifice means not paying basic living expenses to pay a non-essential expense, the sacrifice is too much. No one is going to choose paying a private student loan payment over a utility payment or groceries. The private student loan lenders know a sacrifice like that isn't realistic. You goal is to make sure they understand that the kind of options you're up against.
Private student loan debt relief won't happen overnight, but you will get there as long as you stick with it.
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