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4 Alternatives to Private Student Loan Forgiveness (For Sallie Mae, Discover, and Other Lenders)

If you’re saddled with private student loans from your bachelor's or master's degree and feel like you can’t get ahead, you might be looking for student loan forgiveness programs for private student loan debt.

Unfortunately, private student loan borrowers don’t have access to the same benefits and repayment plan options that federal student loan borrowers have.

Sallie Mae loans, Discover loans, and other private student loans can't be forgiven. In fact, there are actually no official student loan forgiveness programs for any private student loan company.

Federal student loan borrowers can use the Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness programs to wipe away their debt. Another option for federal student loan borrowers is to pursue student loan forgiveness with federal loans under income-driven repayment (IDR) plans, while also making student loan repayment more affordable.

The Biden Administration announced their plan to cancel $10,000 to $20,000 of student loans for all borrowers, but that only applies to federal student loans. And even then, who knows if the Supreme Court will even end up ruling in favor of allowing this to happen.

Private student loan borrowers? Nothing.

But before you give up or get consumed with despair over your loan amount, read on for other options.

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1. Defer your student loans

If you’re looking for private student loan forgiveness, it’s likely that you’re struggling with your loan payments after paying for college, once your grace period is over.

Unlike with federal student loans, private lenders don't offer income-driven repayment plans to make your student loan payments more manageable and affordable. But you may be able to apply for deferment.

Let’s say you’re looking for Sallie Mae student loan forgiveness. While there is no available option for Sallie Mae loan forgiveness, they do offer deferment for student loan borrowers. When you defer your student loans, you can reduce or pause payments temporarily.

Benefits of deferment

Sallie Mae offers deferment if you’re currently an undergraduate student or a graduate student and will reduce your payments up to 48 months. If you’re in a residency program or internship, you won’t have to make payments and can apply for a deferment for 12 months at a time, for a maximum of 48 to 60 months depending on what type of loans you have.

Discover Student Loans also has a deferment program with options available. They also offer a reduced monthly payment option that can reduce your interest rate and more during hardships.

Be aware of growing interest

For both of these options, it’s important to note that your interest will still accrue. Be mindful of how this could affect the total cost of your loan. So while your payments may be lower or put on pause, interest will continue growing. This can have a snowball effect on your student loan balance.

We’ve listed Sallie Mae and Discover, two of the top private student loan lenders, but deferment options vary by lender. If you have private loans with a different lender, get in touch ASAP to see what, if any, deferment options are available.

If you want to pursue deferment, talk to your lender about the process. Be sure to calculate how much it can add to the cost of your loan.

2. Apply for forbearance

What if you’re not a student or part of an internship or residency? If you fall into this category and are seeking private student loan forgiveness or other types of help, you can apply for forbearance with your lender.

Forbearance options

Sallie Mae used to advertise a forbearance program for borrowers who are facing difficulties making payments but that has changed. If Sallie Mae is your lender for undergraduate loans or graduate loans and you're looking for a forbearance, get in touch with them. Keep making on-time payments until anything is approved.

Discover Student Loans also has a forbearance program for up to 12 months. Unfortunately, those 12 months can’t be consecutive.

Where to start when applying for forbearance

If you want to apply for forbearance, get in touch with your lender. See what options are available and what the process is to apply. It’s important to know about time limitations or good faith payments, particularly when dealing with Sallie Mae.

Additionally, while your payments are on pause, it’s likely interest will continue to accrue. This will add even more to your student loan balance.

Before choosing this option, weigh the costs of interest and the total of any good faith payments. Also, be mindful that there is a finite amount of months to put off payments. So, you want to make sure you really need it. If you do, forbearance can certainly help.

3. Look into refinancing

Is your interest rate too high? Do you want to change your monthly payment or loan repayment options or overall loan terms? Then student loan refinancing is an option to strongly consider.

Refinancing companies offer refinance loans with lower interest rates for both private and federal student loan debt. You can also choose the term of your loan, which can impact the amount of your monthly payments.

Pros and cons of refinancing

This option can be hit or miss depending on your situation. It may not be the best fit if you’re really struggling to make payments as you might not meet eligibility requirements. Refinancing companies want a guarantee that you can make your payments. Which is why you’ll likely need a good credit history to get approved or have a co-signer.

If you have good credit and an income that supports the loan, refinancing can save you thousands of dollars in interest via a rate reduction. Money saved can then be used toward your principal student loan balance.

Check out our student loan refinance options that come with cash back bonuses. In most cases, you can check your prospective rate without impacting your credit score as it's generally not a hard credit check until you submit an application. Compare variable rates and fixed rates as well as repayment terms if you choose this route. On top of that, be on the lookout for origination fees or other types of fees.

4. Bankruptcy

If your private student loans are making your life extremely difficult and you’re barely able to survive and potentially living off of a credit card, you may be a candidate for bankruptcy. There’s a myth out there that you can’t get your student loans discharged in bankruptcy. But that’s not true; it’s not impossible to get student loans discharged, but it's very difficult.

Bankruptcy discharge

For bankruptcy discharge, you have to prove you have “undue hardship” and provide supporting info as well as legal counsel to get approved. Undue hardship typically means you are insolvent and that your education loan repayment is seriously and adversely affecting your life.

You also have to show that you’ve tried in good faith to repay the loan and provide proof that this burden will be long-lasting.

There are costs associated with filing for bankruptcy and long-term repercussions related to your credit.

After bankruptcy, your credit goes way down. It will be difficult to get approved for any credit in the months or years after. Chapter 13 bankruptcy can stay on your record for seven years and Chapter 7 bankruptcy can stay on for 10 years.

This option should be an absolute last resort and be carefully considered. It's not a get-out-of-jail-free card without consequence. However, if you’re extremely depressed or suicidal because of your private student debt or the pandemic has affected your employment options and your personal finances, this may be an option.

Total and permanent disability and death discharge programs

Loan discharge or cancellation is also possible through total and permanent disability discharge programs. This is available if you become completely disabled and are no longer able to work. Depending on your servicer and the terms of your loan, you may qualify to have the remaining balance forgiven.

Private student loans are also forgiven on account of the primary borrower's death. If you are a cosigner on a loan where the borrower dies, permanent discharge is at the discretion of the loan servicer.

Unlike federal student loans with the Department of Education, private student loan discharge and forgiveness due to total and permanent disability or death vary by lender.

Private student loan forgiveness

Although private student loan forgiveness programs don't exist in the traditional sense, there is help out there for private student loan borrowers in certain circumstances. The key is to talk to your lender if you’re struggling to see what options are available and to act fast.

You don’t want to fall into delinquency or deferment, which could hurt your credit. So if you’re facing difficulties with your student loan payments, take action today.

Caitlin See contributed to this article.

Have you used any of these alternatives to private school loan forgiveness?

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Comments

  1. Terren Flanagan July 19, 2019 at 11:31 AM
    Reply

    Hi. I read your article and feel a little more lost in my student loan debt. I currently have a loan with Sallie Mae that I cannot afford. My mother was diagnosed with lung and liver cancer and she is also my co-signer. The monthly payment is out of financial means and Sallie Mae doesn’t seem to want to help. What options would be available/ would one of the companies listed for refinancing or something of the sort be a better option? Thank you for your time

    • Travis Hornsby July 19, 2019 at 2:34 PM
      Reply

      She might be off the hook as cosigner but you wont be. You wont be able to refi unless the companies determine youre a good credit risk so you can try, but if its not a massive sum doing the Dave Ramsey approach might work well

  2. Tammy Guy February 26, 2020 at 4:47 PM
    Reply

    I want to start paying back my student loans but don’t know where you start, if I qualify for a forbearance or deferment. Please advise. Thanks.

    • Travis Hornsby February 27, 2020 at 12:27 PM
      Reply

      If you haven’t started yet, you probably just need to ask your loan company what your required payment is. If that’s too high, then you could consider refinancing to a longer repayment term if you can qualify https://www.studentloanplanner.com/refinance-student-loans/

  3. lt May 27, 2020 at 4:34 PM
    Reply

    not helpful at all. what makes SallieMae so special that they are exempt from borrower filing for bankruptcy, what makes them so special that they can’t forgive/discharge student loan for 100% disabled veteran. with the outrageous interest rate they tack on, i’ll be living on ramen noodles for the rest of my natural life. and yes, i’ve considered refinancing, i’ve considered consolidating..why do i/we need to be strapped down with another loan to pay a loan off.
    “i’ll gladly pay you tomorrow for a hamburger today”
    “taking from peter to pay paul”
    something needs to be done with this private loan monopoly.

  4. Kristy July 1, 2020 at 12:02 PM
    Reply

    I am became permanently disabled about 7 years after graduating with a bachelors in 2010. My loans are from 2002-2003 when I was to young to finance on my own. My father had to co-sign for me to get the “alternative loan” as they called, never a private bank loan. Either way, my father has had to pay my loans for the past 20 years and is current but financially distressed, he is now retired and on a fixed income. I am on permanent disability with a fixed income. Also within the past 20 years, my loan has gone from a low fixed interest rate and has now doubled to a variable rate after being sold for the third time. The principle balance has in theory (51k) been paid, and he has paid an additional 6,000 so far. I want the loan discharged I feel that the company has taken advantage of us enough, and created an extreme burden of stress and undue hardship. My question is would it be smarter to hire an attorney first who will seek to discharge (most seem to just want to settle) or attempt to jump through any loop hole I can find and deal directly with the lender?

    • Amy at Student Loan Planner July 15, 2020 at 9:03 AM
      Reply

      It depends on whether your loans are federal or private. You could reach out to an attorney for legal advice on whether the company would be willing to settle. Otherwise, you could refinance to a lower interest rate and pay it off or pursue an income-driven repayment plan. It depends on your finances and how much you owe.

      • Kristy October 2, 2020 at 1:35 PM
        Reply

        I have applied for the student loan forgiveness program for my state and federal loans. The loans currently due and being paid (the mentioned 51k alternative) will not offer any type of assistance including income driven repayment, disability forgiveness, etc. I have a co-signer so thats where the trouble starts. The attorneys that I have spoken to have stated my only options are to try and settle, which might be half of the debt owed or less, of which I pay over time with interest to the attorney, plus a retainer fee. I was told this is standard practice for private loans and that unfortunately there is little to nothing that someone in my position can do. The only other alternative would be to stop paying the loans and attempt to have them discharged, if possible, in bankruptcy court. My father is not inclined to go bankrupt and I can’t blame him. I’m NY and I have only found 3 Attorneys that specialize in Alternative loans. I called 2 and received the same advice as above and I have been attempting to call the third for 3 months now, leaving voicemails and no call back. I get depressed just thinking about this situation and the undue burden it has placed on my father, having to use social security for a school loan shouldn’t be something anyone has to do for a child.

    • Victoria July 22, 2020 at 3:32 PM
      Reply

      If it’s federal do a disability application of discharge

      • Kristy October 5, 2020 at 8:57 PM
        Reply

        I have already applied for NYS and federal discharge, I am waiting on their reply.

        My trouble is with my private loans that have been in theory paid off, if it were not for the loan being sold repeatedly and each time with a higher rate. Also, neither the co-signer or I were ever told ahead of time that our loan was being transferred. Ugh!

  5. Stacy August 26, 2020 at 9:54 PM
    Reply

    I have a cosigner on my private student loan I filed for loanforginess can i add my cosigner name to my loan forgiveness iam permanently disabled and do gulify

    • Amy at Student Loan Planner August 28, 2020 at 10:15 AM
      Reply

      For private loans, it depends on the loan company. Check with the bank or servicer who has your loans to find out what their policy is.

  6. John Gray September 25, 2020 at 12:10 AM
    Reply

    My son went to college and has a private student loan with Sally Mae and Discover. I cosigned for him and he loan payments are now in default. I am 66 1/2 and retired now and on social security and took a part time job for extra monies about two years ago. I’m getting ready to stop the part time job because of arthritis and knee issues. Can they ganish my social security? Since I’m working presently, can they force me to continue to work to pay these loans?

    • John Gray September 25, 2020 at 12:14 AM
      Reply

      Actually it’s Navient and not Sally Mae on these private loans.

    • Amy at Student Loan Planner September 26, 2020 at 4:29 PM
      Reply

      In most cases, Social Security can’t be garnished for private student loans. I suggest you contact the lender to discuss your options and work with a student loan attorney if you need additional guidance.

  7. Ruth May 14, 2021 at 8:20 PM
    Reply

    My daughter is totally and permanently disabled but somehow USNH gave her private loans instead of subsidized or PELL. They are Sallie Mae and 11.6%. I co-signed for them but she should be eligible for forgiveness. Will she need to refinance w/o me for this?

    • Abel at Student Loan Planner May 19, 2021 at 2:00 AM
      Reply

      Hey Ruth, if she is considering forgiveness via Sallie Mae, then it is best to contact them directly to confirm full eligibility requirements. This is the page for more information.

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