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Does Private Student Loan Forgiveness Exist?

Does Private Student Loan Forgiveness Exist?
Rebecca Safier
Rebecca SafierUpdated August 31, 2023
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Many students borrow private student loans to pay for college, with an average private student debt per borrower of $54,921, according to the Education Data Initiative. Unfortunately, private student loans aren’t eligible for most student loan forgiveness programs, so it’s difficult to get them canceled. However, there are other options, such as loan repayment assistance programs and student loan refinancing, that can help ease the financial burden. If you owe private education debt, read on to learn about alternatives to private student loan forgiveness that can offer relief. 

What Is Student Loan Forgiveness?

Student loan forgiveness refers to programs that cancel part or all of your student loans, usually in exchange for qualifying service. The Public Service Loan Forgiveness program, for example, forgives your federal student loan balance after 10 years in public service and 120 qualifying payments. Another example is the Teacher Loan Forgiveness program, which provides up to $17,500 in forgiveness to teachers who work for five years in low-income schools or educational agencies. And finally, the Army, Navy, and other branches also offer military student loan forgiveness to veterans and active duty servicemembers. Each student loan forgiveness program sets its own rules and guidelines, but they can offer significant relief to qualifying borrowers. 

Can Private Student Loans Be Forgiven?

Private student loans are unfortunately not eligible for federal loan forgiveness programs, such as PSLF and Teacher Loan Forgiveness. They’re also not eligible for federal loan discharge for special circumstances, such as total and permanent disability or borrower defense to repayment. That said, some lenders may cancel your private student loans in certain circumstances, such as death, disability, or fraud. What’s more, there are a variety of loan repayment assistance programs (LRAPs) that offer money that you can use to pay off both federal and private student loans. 

5 Alternatives to Private Student Loan Forgiveness

While private student loans aren’t eligible for federal forgiveness programs, there are other strategies you can use to manage your debt. Here are some alternatives to private student loan forgiveness that may help. 

1. Student Loan Refinancing

Refinancing your student loans could offer relief if you qualify for a lower interest rate. When you refinance student loans, you exchange one or more of your current loans for a new loan. Depending on your credit, you could get a better rate on that new loan than you have now. Student loan refinance also gives you the chance to choose new repayment terms. You could opt for a shorter term to get out of debt faster and save money on interest, or a longer term to make your monthly payments more affordable. Keep in mind that by refinancing federal student loans, you lose access to federal benefits, such as student loan forgiveness, deferment, and income-based repayment plans.

2. Student Loan Deferment and Forbearance

Some private lenders offer deferment or forbearance if you run into financial hardship or go back to school. Through these programs, you can temporarily postpone your payments for several months. Speak with your lender if you’re struggling to afford your payments, as it might be able to pause them. Keep in mind, however, that interest will likely continue to accrue during the time that you’re not paying off student loans, causing your debt balance to grow. 

3. Private Student Loan Repayment From an Employer

An increasing number of companies are offering a student loan assistance benefit to their employees. Through this program, participating companies can choose to offer tax-free education assistance up to $5,250 each year through at least 2025.If you’re searching for a new job or open to switching positions, consider prioritizing companies that will help you pay off your private student loans. 

4. Career-Based Student Loan Repayment

Although private loans don’t qualify for federal loan forgiveness programs, they may be eligible for loan repayment assistance programs (LRAPs). Many states, private organizations, and even some universities offer LRAPs to qualifying professionals. Minnesota’s Rural Physician Loan Forgiveness Program, for example, provides up to $33,000 per year for four years to primary care medical residents working in rural shortage areas. Maryland’s Dent-Care Loan Assistance Repayment Program offers up to $23,740 per year for three years to qualifying dentists.  Some professions that commonly qualify include doctors, nurses, pharmacists, dentists, lawyers, and teachers. These program’s typically ask for a minimum of two to three years of service in a shortage area or underserved community. Check your state’s education website for loan repayment assistance opportunities for which you might qualify. 

5. Location-Based Repayment Help

Some states and counties also offer student loan repayment assistance in exchange for moving to the area. Here are a few examples of location-based loan programs: 
  • Kansas Rural Opportunity Zones: Kansas offers up to $15,000 over five years in student loan assistance to individuals who move to designated rural areas. 
  • Opportunity Maine: The state of Maine offers student loan tax credits up to $2,500 per year ($25,000 lifetime value) to graduates of Maine colleges who live and work in the state. 
  • Maryland SmartBuy Program: This program helps student loan borrowers buy homes by offering up to $40,000 in student loan assistance or 15% of the home purchase price, whichever is lower. 
If you’re open to relocating to another area, you could qualify for one of these incentives that will help you pay off your student loans. 

Does Declaring Bankruptcy Discharge Private Student Loans?

Student loans are notoriously difficult to discharge in bankruptcy, but it is possible. You’ll need to pass the Brunner Test, which requires you to prove that repaying your loans would cause undue financial hardship. Essentially, you’ll need to show that paying your loans would make you unable to maintain a minimal standard of living. You’d also have to demonstrate that your hardship will continue throughout your loan term and that you made good faith efforts to pay back your loan.Discharging your student loans through bankruptcy is not guaranteed, and the process can be time-consuming and expensive. 

The Takeaway

Although private student loans are not eligible for federal forgiveness programs, that doesn’t mean you’re out of options. You may be able to qualify for loan repayment assistance from your state, company, or another organization. What’s more, you can also explore refinancing your student loans for better rates. Refinancing can make your loans less expensive, perhaps allowing you to pay them off faster. Plus, it lets you combine multiple loans into one, making it easier to keep track of your monthly bills. Refinancing student loans has pros and cons, though. Be careful about refinancing federal student loans, as doing so means forfeiting access to federal forgiveness programs and repayment plans. If the loans you’re refinancing are already private, however, you won’t have to worry about this loss of federal benefits. Lantern by SoFi can help you find and compare competitive student loan rates with one application and no obligation to you.

Frequently Asked Questions

Can private student loans be forgiven?
Are there legal ways of getting rid of private student loans?
Can you change your private student loans to federal student loans?
Photo credit: iStock/Coppy

About the Author

Rebecca Safier

Rebecca Safier

Rebecca Safier has nearly a decade of experience writing about personal finance. Formerly a senior writer with LendingTree and Student Loan Hero, she specializes in student loans, financial aid, and personal loans. She is certified as a student loan counselor with the National Association of Certified Credit Counselors (NACCC).
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