Private Student Loan Forgiveness When You Can’t Refinance

private student loan forgiveness helps student lower debt
In this day and age, private student loan forgiveness is a financial need for many Americans. If your private loans are large and have a high interest rate, they can seem nothing less than monumental. You can find yourself in a position of not being able to make even your minimum payments. This can especially be the case if your lender won't work with you on a realistic payment option.
 
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.


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Reducing Payments is Key to the Process
Reduce payments and lower payoff
In 2017, the need for borrowers to reduce their payments and lower their payoff has increased. This is because tuition prices have risen at a pace much faster than inflation for quite some time now. 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 student loans faster. Take all this into account and add in a fairly stagnant economy, you now have a recipe for struggling young adults who are in serious need of debt forgiveness or at a minimum, forbearance.
 
The best way to obtain help in desperate circumstances is through a program that offers forgiveness for private student loans. These programs have been around for many years and are becoming more and more popular as the average college debt rises. They are, by no means, a cure all program for all situations, but for the right situations they can mean the difference in 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.

 
Forgiveness Program vs Self Help
Can you lower private student loans on your own
Getting your private loans lowered, or even a payment reduction, on your own can be hard to do, but forgiveness programs are designed for this very need. It can be very time consuming to get the results you need on your own. This is because getting your debts reduced revolves around a negotiation process. This is not good when you're in need of a reduction fast.
 
A company that specializes in this service can usually get you a reduced payoff of about 50% to 60% of what you owe, which includes their fee. Debt forgiveness companies are able to get better settlement offers because they use the power of leverage to your advantage. By settling in bulk, 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.

Getting a Reduced Payment Fast

It's not until they're in the real world with real bills that the need for private 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 being independent. 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 that moment. We don't have to explain the whole scenario to see where it's headed.
 
This is where companies that offer student loan forgiveness come in. They are in the business of making loans manageable for the thousand struggling to pay them. These struggling borrowers need help fast, and these companies know and understand that.
 
This may not be the solution for everyone, but it's a good starting place.

 
Pick a Good, Reputable Company
We can't stress this enough, when considering a company that provides debt forgiveness, make sure they are reputable. Also, make sure they are easy to deal with. This is important because you will be working with them during the duration of the forgiveness process.
 
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 I Save?
How much will Loan Forgiveness save me
The amount you save will vary based on the amount of your loan, your financial status, your current interest rate, and the debt forgiveness company's leveraging power. There can't be a specific amount stated that you will save. You will usually pay 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 you paid back your loan with minimum payments.

 
What are the Risks?

  • You will stay in default status during the settlement process. Therefore, you will likely receive a lot of calls from creditors.
  • Your credit score will be lower during the settlement process.
  • Typically you will pay taxes on the forgiven principle amount. (This is not a bad thing, just something you want to be aware of before you file your taxes)
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    Program Overview

  • 1) Filing out the application. This will require adding your creditor account information, your personal information and an income and expenditure sheet.
  • Once enrolled, your debt help company will set up a debt settlement account in your name that your payments will go into. This is similar to an escrow account that is strictly designated for settling your debts and paying your servicing fee. This will usually be set up as an auto draft payment that will come directly out of your bank account.
  • You will receive a welcome package from your debt help company. This should outline in detail how the program works, what to expect during the process and contact information for any questions or concerns you have.
  • As you make payments into you debt settlement account, your debt help company will start the process of dealing with your creditors. Once you have the funds needed to settle the smallest debt you brought into the program it will go into a pool of other debts that are also ready to be settled as part of the bulk settlement offer.
  • Thirty too sixty days after each debt is settled that debt should reflect as paid, or paid for a settled amount, on your credit report.
  • After you last debt has been settled you will be graduated from the private student loan forgiveness program.
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    Conclusion

    Once enrolled, the private student loan 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 debt forgiveness company, to your lender.
     
    The process is similar for credit cards and business debt.

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    Terms
    Not all debts are eligible for enrollment due to our underwriting guidelines. Clients who make all their monthly program payments pay approximately 38% of their enrolled debt balance before fees or 67% to 71% including fees, over a term of 1 to 59 months. Our service fee is approximately 18% to 21% of the enrolled debt amount enrolled and approximately 25% to 31% of the amount our clients pay back. Not all clients complete our debt relief program for various reasons, including their ability to save sufficient funds while in our program. Estimates based on prior results, which will vary based on specific circumstances.
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    We do not guarantee that your debts will be lowered by a specific amount or percentage or that you will be debt-free within a specific period of time. We do not assume consumer debt, make monthly payments to creditors or provide tax, bankruptcy, accounting or legal advice or credit repair services. Not available in all states. Please contact a tax professional to discuss tax consequences of debt settlement. Please read and understand all program materials prior to enrollment, including potential adverse impact on credit rating.