Can you get a lower payment on a private student loan you can't afford?
Summary
Sometimes, but it's up to the lender. Private student loans have no standard way to lower a monthly payment the way federal income-driven plans do, though some lenders offer modified plans such as graduated repayment. Forbearance and deferment on private loans vary by lender, are usually more limited than the federal versions, and don't start until the servicer approves them.
What lenders offer
The Consumer Financial Protection Bureau puts it bluntly: every lender is different. Some offer repayment plans that look like the federal ones, particularly graduated repayment. Private loans may or may not have a deferment option at all, and private forbearance is more limited than federal forbearance. Some servicers charge a flat fee to put a loan into forbearance for three months.
Payments don't stop when you apply
A request for forbearance or deferment on a private loan is not a pause. The CFPB says you have to keep making payments until you've been told the forbearance or deferment has been granted. A month you skip while the request is pending is a missed payment.
How fast a private loan defaults
Federal Direct and FFEL loans go into default after 270 days without a scheduled payment. Private loans often default as soon as you miss four monthly payments, which is 120 days, and depending on the contract, a bankruptcy filing or a default on another loan can trigger it too. After default the lender can collect directly or through an agency, and it can sue within the state's statute of limitations, which differs from state to state. Once that period has run out, the lender can no longer sue you over the debt.
Death and disability are handled the same way. The CFPB points out that no law forces a private lender to cancel the balance, and only some lenders write a discharge into their contracts.
If someone cosigned
A cosigner is equally responsible for the debt if the student doesn't pay, and late or missed payments show up on both credit reports. Private lenders often send a defaulted loan to a collection agency and may take the cosigner to court. Getting a cosigner released usually takes a run of on-time payments plus a fresh credit check on the borrower, per the CFPB, with each lender's version spelled out in the loan contract. The CFPB warns that servicers might not tell you when you've become eligible.
Sources
- CFPB, consumerfinance.gov/ask-cfpb/what-should-i-do-cant-afford-student-loan-payment…
- CFPB, consumerfinance.gov/ask-cfpb/is-forbearance-available-for-private-student-loan…
- CFPB, consumerfinance.gov/consumer-tools/student-loans/answers/key-terms
- CFPB, consumerfinance.gov/ask-cfpb/what-happens-if-i-default-on-a-private-student-lo…
- CFPB, consumerfinance.gov/ask-cfpb/if-i-co-signed-for-a-student-loan-and-it-has-gone…
- CFPB, consumerfinance.gov/ask-cfpb/if-i-co-signed-for-a-private-student-loan-can-i-b…
Written by Kaz (pen name). Figures are copied from the sources' published pages on the dates shown. We have not used these products. Corrections: contact form.