Many college students don’t fully realize the type of financial burden they are taking on when they take out thousands of dollars in private student loans. While there are a handful of federal student loan forgiveness programs, and qualified teachers and public workers can also get relief from federal student loans, eliminating private student loans is a particularly tough nut to crack.
Private student loan debt is one of the only types of debt that can’t even be forgiven via personal bankruptcy. In reality, if you have a large private student loan debt, you are likely stuck will all or most of it. But here are several options you can explore.
1. Talk To Your Lender
Believe it or not, lenders don’t want you crippled by your debt, because then they won’t get paid. It’s highly unlikely that your student debt load will be reduced, but your monthly payments may be cut or temporarily placed on hold until you are in a better financial situation.
2. Refinance Your Debt
Again, this option will not reduce the principle you owe. But over decades of repayment on a large student loan, even a 0.5 percent reduction in interest rates can reduce your total repayment by thousands of dollars.
3. Talk To An Attorney
Possibly the only “magic” method for eliminating private student loan debt is for a bankruptcy court to rule that your debt does not meet the legal definition of a student loan. If the debt was taken out to pay for education or training provided by a school that is not an “eligible education institution,” under 26 USC 221(d) it is not a “qualified education loan” and can be fully discharged via bankruptcy. If you have questions about whether or not your private loans are legally considered student loans, contact an attorney.
4. Leave The Country
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