Technically there is no such thing as private student loan forgiveness. It's highly searched because it's thought to be synonymous with federal student loan forgiveness, which does exist. What does exist for private student loans are debt help programs. We wrote this article using the word private to help clarify and point borrowers looking for to lower their private student loans in the right direction.
legitimate Student Loan Forgiveness Has Become More of a Need
The need for Legitimate student loan forgiveness has increased as the years pass. This is because tuition prices have risen at a pace much faster than inflation. With the rising price of education, students are having to take on more debt to pay for college. This means they exhaust all other college funding options short of taking out private loans faster. Add in a fairly stagnant economy and you now have a recipe for struggling young adults who are in serious need of help.
The best way to obtain help in desperate circumstances is through a program that provides that very service. These services have been around for many years and are becoming more and more in demand as average college debt rises. They are bu no means a cure all program for all situations, but for the right situations they can mean the difference seeing a light at the end of the tunnel, or the tunnel being so dark you can't see your hand in front of your face.
Private Student Loan Forgiveness Programs Are Here to Help
Getting your debts lowered on your own can be hard to do, but private student loan forgiveness programs can be very beneficial here. It can be very time consuming to get the results you need on your own. This is because getting your debts lowered revolves around a negotiation process. A company that specializes in this service can usually get you a negotiated payoff for about 50% to 60% of what you owe, which includes their fee. They are able to get better settlement offers because they use the power of leverage to your advantage. By settling in a bulk fashion, they are able to get lower settlements. This is because it cheaper and less time consuming for creditors and lenders to approve settlements in this manner.
Student Loan Debt Forgiveness - A Brief Overview
Once enrolled, the student loan debt forgiveness company will provide an income and expenditure sheet to your lender that shows that you are incapable of paying your loan at it's current balance and payment. They will then have your monthly payments go into a segregated debt settlement account that is similar to an escrow account. Once this account has the funds needed to pay the lender the settled amount, the funds will be wire transferred from your private student loan debt relief company to your lender. This is the way it works not only with private student loan forgiveness, but also with credit card relief and business debt relief. This is a very abstract overview of the process but at the bottom of this article is a step by step rundown of how the process works.
Pick a Good, Reputable Company
We can't stress this enough. When considering a company that provides these services, make sure they are reputable. Also, make sure they are easy to deal with. This is important because you will be dealing with them during the duration of the process. Now, with the internet being the vast wealth of information it is, you can check out a company's reputation fairly easy. There's no excuse to skip this step!.. Smiley face.
How Much Will School Loan Forgiveness Save Me?
The amount school loan forgiveness will save you will vary based on the amount of your loan, your financial status, your current interest rate, and the debt help company's leveraging power. There can't be a specific amount stated that you will save. It will usually be quite a bit less than what you would pay back based on minimum payments. A pretty safe estimate would be approximately 50%-60% of what you would pay back if paying back with minimum payments.
What Risks Are Involved With a Program Like This?
Gain Private Loan Forgiveness Through Other Methods
It's possible that you could gain some private loan forgiveness because you make a certain income or lower. According to a report by US News & World Report if you make less than $70,000 as an individual or less than $145,000 as a couple you could qualify.
One factor that will determine how much relief you get is how much of your loan was used for education purposes. The more you spent on education, the more the deduction you will get on your taxes. Only a portion of the interest (up to $2,500) is tax deductible, though. Not the greatest deduction considering you can pay more interest than that pretty easily in a year. This is especially true since most private loans have floating interest rates.
Student Loan Forgiveness 2017 Will Set Records
Some private loan interest rates have doubled, even tripled over the course of the loan. With that being the case, it's easy to see why help lowering them is a real need for so many people.
There are other factors that add to the need for borrowers to get help lowering their private loans that actually stem from the lenders them-self. Later in this article we will tell you of some federal lawsuits that have been filed against Navient and a state of Illinois lawsuit that was filed against Sallie Mae and Navient. The lawsuits were based on unethical servicing practices that were costing their borrowers. If you have a loan from Sallie Mae or Navient, the articles above are worth a read.
Debt Forgiveness for Student Loans Help Wipe The Slate Clean
Everybody at some point needs a clean slate in some way or another. One of the main ways is financial debt forgiveness for student loans. The need for a clean financial slate is not as uncommon as it may feel when you're the one in need of it. But... the truth is most people are in need of a clean financial slate at least once in their life. For many people, it can be multiple times.
Among those in need of a clean financial slate are those in need of getting relief from student loans. There are literally thousands of people asking themselves "How do I lower my private student loans?" Most young American's that carry this type of debt are out in the real world for the first time and they are carrying the burden of this massive debt with them. Yes, this massive debt is what will also, hopefully, land them the job of their dreams. But what do they do with this debt and how do they manage it in the meantime?
One thing a college student can be while still in college is overly optimistic about what will happen after college. This is not a bad thing, being optimistic. The curve ball here is that they may think they will be making six figures within the first year after graduation. With that kind of optimism massive student loan debt doesn't seem intimidating. It doesn't seem like it will be unmanageable in any way. The thought of not being able to afford their private student loans or having to enroll their debt into a private student loan relief program, just to get their debt under control, never crosses their mind.
The Need for Private Student Loan Forgiveness Becomes a Reality
It's not until they're in the real world with real bills that the need for private student loan forgiveness becomes a reality. They only saw a house, a job, a shiny new car and maybe a wedding in their near future. They didn't see insurance payments, medical bills, taxes, and all the expenses that come with complete independence. Then BAM!! Like a bolt of lightening hitting without warning their first payment comes due. "They expect me to make a payment that is more than a third of what I make monthly?" This might be similar to what one is thinking at the time. We don't have to explain the whole scenario to see where it's headed.
This is where companies that offer help services for lowering these types of debts comes in. They are in the business of making loans manageable for the thousand struggling to pay them. This may not be the solution for everyone, but it's a good starting place.
Set Your Payments on Auto-Draft
This may or may not get you a lower interest rate, but it's worth asking your lender about. More than likely this won't amount to a big interest savings, maybe .25%. Before setting up an auto-draft make sure you will always have enough to cover the payment. You don't want to save a little on interest to pay even more in insufficient fund charges.
Take Advantage of Forbearance
Short of seeking help, you can look into forbearance. Sallie Mae is one lender that offers a forbearance option. On the surface this can seem like a good option at the time. No payments at all for three months and you can use as much as twelve months of forbearance altogether (in the case of Sallie Mae). It could be a good option in the end, too. That will depend on how your finances improve during the forbearance period. The catch here is that you will end up paying more in the long run because the interest will still incur during the forbearance period. This can be a pretty large increase on the total payoff of the loan. It's especially true if a forbearance is used early on when your loan is larger.
A Good Rule of Thumb
One good rule of thumb is to not be overly optimistic about how much your finances will improve during the forbearance period. This could potentially save you a lot more later then you will save now.
One of the best things you can do while your loan's in forbearance is to pick up some part time work in your off time. Use the money strictly for the purpose of paying down your private student loans. This may not sound like the most appealing option but it can be an effective option to stay on top of your loans. It might even help you get ahead of them. By doing this you can usually eliminate the need for debt help altogether.
Refinance or Consolidate Your Student Loans
There is no guarantee that you will get approved to refinance or consolidate your private student loans. Much of the approval from the bank or institution you are applying with will be based on your employment status, income, credit score and whether or not you have a co-signer with equally good or better credit score, income, and employment status. The whole goal here is not to just refinance or consolidate your private student loans, but to do so at a better interest rate. Hopefully this will save you on the total payoff as well as the monthly payment. This won't, however, save you as much as going through a forgiveness program. Even so, it's a good option for anyone who can afford their payments. If you can afford your payment then a debt program isn't a suitable option for you anyway.
Use the Debt Snowball
This can be an option that can save quite a bit on your overall payoff without any help or assistance from your lender or another financial institution. The Debt Snowball method only applies to those who can afford their payments and ideally a little more. This method is simple, just follow the steps below.
- 1) Pay a little extra toward your lowest balance student loan
- 2) Once you have paid off your lowest balance student loan, apply what you were paying on that student loan to your next lowest balance student loan
- 3) Once that student loan is paid off, apply what you were paying toward the two previous student loans to the next lowest balance student loan
- 4) Repeat these steps until all of your private student loans are paid off
Do you have both private and federal student loans?
Since there are a lot more repayment options available for federal student loans, you can take advantage of that and free up more cash to pay off your private student loans quicker. One repayment option that may accomplish this is an income based repayment option. This will make your federal loans more easily manageable, freeing up more money for your private loans. This gives you an option besides private loan forgiveness.
By taking advantage of a lower repayment option for your federal loans you will not only free up cash that can be applied to to your private loans, it will also give you the ability to use a debt snowball or debt avalanche method. This idea is great if you can manage your private loans with a little relief on your federal ones. If they're still not manageable, you need to take more drastic steps to deal with them. This is when looking into using a debt help service may make sense.
Steps For Private Student Loan Forgiveness
On the Rebound
At this point your credit will be on the rebound and continue to improve for a while because your debt to income ratio has dropped and your delinquent debts are no longer outstanding, but paid. Your private student loan relief program has ended and you now have a clean financial slate. Pat yourself on the back and take a deep and relaxing breath. Celebrate even.
One Last Note
Just remember, credit or debt is not always a bad thing as long as it's used wisely and to your advantage. This can be done by never outliving your means and not using credit for non-mandatory purchases. If you want something non-essential bad enough, it's worth saving for. Then you can not only save the high interest on top of the price, you can also see just how much it really cost because you took the time to save the money before buying it.
- I Can’t Afford My Private Student Loans
- Sallie Mae Loan Forgiveness
- How to Lower My Private Student Loans
- 4 Steps To Getting Private Student Loan Debt Relief
- Private Student Loan Consolidation