2021 Guide to Private Student Loan Forgiveness

Can I get private student loan forgiveness?

The short answer is no. 

Private student loan lenders do not forgive or cancel loans unless extreme circumstances demand it, such as death or permanent injury/disability. To add salt to the wound, Federal government programs, such as the CARES Act*, put in place to provide financial assistance during the COVID-19 pandemic, do not apply to private student loans**. This includes student loans initially financed through a private lender or those that have been refinanced.

It is also important to note that federal loan income driven repayment programs do not apply to private student loans. Some private lenders may offer similar programs, but it is recommended to speak with your private loan servicer if this is something that you are specifically interested in.

With all the options unavailable to you, private student loan debt relief options may seem virtually nonexistent, but before you give up all hope, know that most private student loan lenders have repayment options available, providing some financial assistance when needed.

*In response to the COVID-19 pandemic, the Federal government temporarily suspended student loan payments and waived interest through the CARES Act. Repayments were set to begin again on January 31, 2021 but this forbearance period has been extended, although it is unclear for how long. It is important to note that federal forbearance or forgiveness programs, such as the CARES Act, do not apply to private student loans, or federal student loans that have been refinanced through a private lender.

**Most private student loan lenders have a specific COVID-19 response plan in place, but details and terms will vary by lender.

Although options may vary by lender, here are some common repayment options that you can look for in place of loan forgiveness:

• Student loan refinancing
• Student loan deferment
• Student loan forbearance

Student loan refinancing

Most, if not all, private student loan lenders offer refinancing services for both private and federal student loans. This can be a good option if you would like to reduce your monthly payments and potentially save more on interest.

In the refinancing process, the lender will pay off your original loan and give you a new loan with better rates and terms. Since the lender is essentially giving you a better deal on your loan, they will want to ensure that you are a trustworthy borrower, which will be reflected in your credit score. Thus, if you want to qualify for the lowest rates and best terms possible, you will need an excellent credit score. 

If you do not have a well-established credit history, or bad credit overall, many lenders will allow you to apply with a cosigner which can increase your chances of qualification, as well as help you get better rates and terms.

It is important to note that if you choose to refinance a federal student loan with a private lender, you forfeit all access to federal repayment options and programs, including student loan debt relief under the CARES Act in response to the COVID-19 pandemic.

Student loan deferment

Student loan deferment is an agreement between the borrower and lender that repayment may either be reduced or postponed for a period of time. This may also include a pause on interest, but specific terms will vary by lender, including how long you are able to defer payments.

Note that some private lenders use the terms “deferment” and “forbearance” interchangeably. However, in most cases loan deferment refers to a planned need for repayment relief, such as returning to school or entering the military. Forbearance, on the other hand, is most often used when unexpected circumstances or an emergency arises and temporary payment relief is needed.

Student loan forbearance

It is a common mistake to confuse student loan forbearance with student loan forgiveness, or to assume that they are the same, but they are quite different.

Student loan forgiveness basically cancels your loan, whereas student loan forbearance allows you to temporarily stop making payments for a period of time (often up to 12 months). It is important to note that interest will continue to accrue on your loan balance over the forbearance period, and so it may not be in your best interest to prolong forbearance longer than is necessary.

To provide you with a more well-rounded idea of what the top private student debt companies on BestCompany.com have to offer in terms of debt relief options, we have included some data and analysis from customer reviews. Please note that reviews for all companies were limited and generally outdated, thus it may not be the most accurate representation of each company.

In addition, student loan deferment has not been outlined as an option provided by these top private lenders, as there is no easily accessible information on this repayment option, and varies widely between companies. If you are looking specifically for deferment options, I recommend speaking directly with your lender, or the lender you wish to do business with.

Credible

✔ Refinancing
✔ Forbearance

As a marketplace lender, any repayment options will be dependent on the lender from which you choose to borrow in Credible’s network.

Credible customer reviews are limited and somewhat outdated, but the majority are positive, speaking to how quick and easy the refinancing process is and how customers were able to lower their payments and save more money on their student loans.

"Credible helped me in a time when I really needed it. Their forms were easy to fill out, I got a personalized rate for my situation, and I had the best person working with me to help me find the best option."

— Hailey, Salt Lake City, UT

COVID-19 Response: Specific COVID-19 repayment options will depend on the lender that you choose from Credible’s network.

SoFi

✔ Refinancing
✔ Forbearance

Refinancing: Get pre-qualified online, choose your rates and terms, and get your new loan. This prequalification process will have no impact on your credit score.

Forbearance: SoFi offers unemployment protection, providing up to 12 months of forbearance in three-month increments.

SoFi customer reviews are limited and are a mixed-bag of sentiments regarding the refinancing process, but many of the 1-star reviews are outdated. More recent, and the majority of reviews, highlight reliable customer service that is committed to helping you pay off student debt.

"Great service! These guys made my life so much easier and made me solve my debt problems much quicker than if I'd deal with it myself. Thank you for your hard work!"

— Jojo, Jersey City, NJ

COVID-19 Response: To those impacted by the COVID-19 pandemic, SoFi is providing forbearance of payments for a minimum of 90 days; an initial 60 days with a 30-day extension available if needed.

Brian Walsh; CFP

Sofi Senior manager, financial planning

 

 

SoFi COVID-19 Support

As the pandemic continues, we will continue to offer support and find avenues to help our members get their money right and get back on track. Assistance for those in hardship has been expanded during the pandemic with forbearance being offered in increments of 30 days, with the option to extend for 30 additional days at a time, as deemed necessary. This program has been extremely successful in helping members during this difficult time.

Read more about SoFi’s COVID-19 response.

CommonBond

✔ Refinancing
✔ Forbearance

Refinancing: Quickly fill out an application and see your new rate. This prequalification process will have no impact on your credit score.

Forbearance: Commonbond provides up to 24 months of forbearance over the life of your loan.

It is important to note that CommonBond reviews are limited. However, most CommonBond reviews, past and present, are negative with many customers commenting on some difficulty with customer service, qualification issues, and lack of transparency.

"I would give more stars for the CommonBond Care Team. They are responsive but they cannot correct the problem. . . . The approval process itself might be quick, but once you are approved, the check to pay off your existing loan goes to the lender vis regular mail. . . . To be fair to the customer, CommonBond should disclose this upfront and not charge interest on the new loan until the old loan is paid off."

— Aurelia, Woodstock, GA

COVID-19 Response: CommonBond is offering its members national disaster forbearance, as COVID-19 has been classified as a national disaster. This means that payments can be paused for the duration of the declared national emergency, but interest will still accrue although there are no fees to participate. In addition, CommonBond has waived all late fees to further help its members at this time.

Read more about CommonBond’s COVID-19 response.

LendKey

✔ Refinancing
✔ Forbearance

As a marketplace lender, any repayment options will be dependent on the lender from which you choose to borrow in LendKey’s network.

LendKey customer reviews are limited and outdated, so it is difficult to know exactly what the LendKey borrowing experience is like currently. However, the majority of past reviews are negative, most commonly remarking on bad experiences with customer service.

"Consolidated my loans with LendKey when they were calling themselves ECSI. At first it was great, I got a good rate, then they changed the name, hiked up the interest rate (and my monthly payment) without any warning."

— Lori, Elmwood Park, IL

COVID-19 Response: Relief options will be contingent on LendKey’s lending partners, but if you are unable to make a monthly payment, you can apply online for forbearance. In most cases, options will be discussed and determined on an individual basis.

Read more about LendKey’s COVID-19 response.

Laurel Road

✔ Refinancing
✔ Forbearance

Refinancing: Easily check your rates with no impact to your credit score and lower your monthly payments.

Forbearance: Laurel Road offers forbearance for one or more three-month time periods if you are experiencing financial hardship. In addition, Laurel Road offers forbearance to those impacted by a natural disaster of up to two monthly payments.

Laurel Road reviews are limited and outdated, but the majority of reviews are negative with the most common complaint being that it is difficult to be approved, even with a strong credit score.

"We had a pretty bad experience with this company. I won't go into details but the problem seems to be this: the customer service people do not know the underwriting side of the business well enough to answer questions regarding loan applications. . . . Wasted a lot of time and was ultimately rejected for a loan."

— Kathleen, Wrightstown, NJ

COVID-19 Response: If you are experiencing financial hardship, you can apply for forbearance of three monthly payments. It is important to note that interest will continue to accrue during the forbearance period, which will lengthen the life of your loan and likely increase remaining payments.

Read more about Laurel Road’s COVID-19 response.

The final word

Although private student loan forgiveness may not be available to you, there are other student loan repayment programs offered by private lenders that can provide repayment assistance when needed. 

When considering refinancing or forbearance options with any private student loan company, make sure that you analyze your own circumstances and needs first. Doing so will help you choose the best loan repayment option for you.