Student Debt Refinancing and Consolidation Blog and Resources

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. Compare Top Student Debt Companies If you are looking for an alternative to private student loan forgiveness, compare top private lenders and their debt relief options. Compare

The second highest consumer debt category, student debt, has risen exponentially over the years with 45 million borrowers collectively owing nearly $1.7 trillion in 2021. To add salt to the wound, student loan debt is projected to increase to $2 trillion by 2022.  Those are massive numbers, aren’t they? Although they might seem scary and daunting, there are ways to finance your college education and plan ahead that can keep you from falling into large amounts of student debt. As far as student loans and student debt are concerned, there are two options available to you: private or federal loans.  But which is the best choice? To make the journey through private and federal loans as easy as possible, use this guide as a roadmap to help you navigate your student loans before and after college. Before college Once you’ve applied to the colleges of your choice, it’s a good idea to get started on applying for student loans right away. Federal student loans are funded through the U.S. Department of Education, while private student loans are funded through private companies/lenders. It is important to know the difference between private and federal student loans because they have different advantages and disadvantages depending on your circumstances. To this point, Brian Martucci, a finance editor at Money Crashers, says, “For most undergraduate students, federal loans make more sense; private student loans can be useful for professional school students with good credit and high income potential…” With that in mind, let’s break them both down. Federal student loans Funded through the U.S. Department of Education, federal student loans are available to undergraduate and graduate students alike.  Experts agree that the best place to start is with federal student loans. With fixed interest rates that are generally lower than those for private student loans, students have more options and benefits available to them as they pay off their loan, allowing them to potentially save more money over time. Travis Hornsby, CFA and founder of Student Loan Planner says, “You should always seek federal loans first because they are administered by the government and have more valuable programs and protections such as student loan forgiveness, repayment plans, deferment and forbearance.” The first step is to apply for a student loan through the Free Application for Federal Student Aid (FAFSA). Submitting your FAFSA application is easier than you think and requires your personal and family financial information as well as a list of colleges that you’ve applied to. To complete the FAFSA application, you must create a Federal Student Aid (FSA) ID. This ID allows you to access your information online, and apply for FAFSA each year. If a parent is applying for a Direct PLUS loan or would also like access to their child’s financial aid information, they will have to create their own FSA ID. Once you’ve completed your FAFSA application, it’s time to choose your loan. There are four types of loans available to students: Direct Subsidized — Only available to undergraduate students. Loan amounts are determined by the U.S. Department of Education, which also covers the cost of interest if a student is enrolled in school at least part-time. Interest costs are also covered for the first six months after a student leaves school, as well as during a deferment period. Direct Unsubsidized — Available to both undergraduate and graduate students. Students who apply are not required to show proof of financial need, but they are responsible for paying all interest on the loan. Direct PLUS — Available to graduate or professional students, as well as parents of undergraduate students. With the U.S. Department of Education acting as the lender, a credit check will be conducted, and applicants are required to have a good credit score to receive approval. Direct Consolidation — Allows students to merge all loans into one with a single loan receiver. It is important to note that subsidized direct and unsubsidized direct loan amounts for undergraduate students range from $5,500–$12,500 for each year. The amount of money you can receive is dependent on your year in school and whether or not you are listing your parents’ information along with your own. Graduate students can receive up to $20,500 each year in direct unsubsidized loans. Various repayment options with federal student loans can make it easier to manage and pay off your debt quickly. You should always plan to make your payments on time, but it is important to know the consequences of late payments nonetheless. In most cases, if you are late on a payment you will be charged a late fee. Furthermore, if you were to miss consecutive payments and end up defaulting on your loan, the government can garnish your wages to secure repayment on your student loan. With that being said, there are pros and cons about federal student loans that you should weigh and consider when looking at options to pay for college. Private student loans Private student loans are funded through private lending companies, and are a great option for refinancing student loans later on. Make sure that you do your research on different companies that offer student loans. Each company offers similar services, but it is important to check requirements for each. Basic requirements for private student loans include a credit check and a cosigner to ensure the lender that the loan will be paid back. Although neither a credit check or a cosigner is required for federal student loans, these requirements allow borrowers to receive larger loan amounts through private lenders, and receive lower rates if they, or the cosigner, have an excellent credit score.  Private student loans also have something called the statute of limitations. This refers to the period of time that a lender can sue if payments are not being made. Once that period of time expires, lenders can still attempt to collect money, but they are not allowed to sue. Federal student loans do not have this statute of limitations, meaning that borrowers can be sued at any time if payments aren’t being made. Weighing the pros and cons of private student loans is very important as you’re looking for a student loan. That, in addition to assessing your own needs and circumstances, will help you know which option is best for you. Important note: Many of these pros and cons are dependent on the lender. . Additional college costs Tuition is a major college cost, but it is not the only one to consider. In addition to tuition, you should consider the cost of room and board, books and other school supplies, as well as other expenses including emergencies. Student loans (both federal and private) can be put towards rent, room and board, and fees, in addition to tuition. Monthly payments There are various repayment plans available for federal student loans. The repayment options allow flexibility and you can switch your plan for free at any time. It is important to note that federal student loans do not require payments while you’re in school. In fact, payments generally aren’t due until after a student graduates. Private student loans often require payments while a student is in school, with potential opportunity for payment deferment, but that is dependent on the lender. Fixed or variable interest rates One large advantage of federal student loans is that they have fixed-term rates. This means that the interest rate of the loan will not fluctuate or change during the loan term, allowing you to know exactly how much your payments will be each month. The ability to know your monthly payments can provide some security and peace of mind as you plan accordingly. Whether or not you can get a fixed-term rate with a private student loan is dependent on the lender. After College After a couple years of stress, occasional all-nighters, and hopefully some fun, graduation day comes, leaving you with a degree and likely some student debt to pay off. To make these payments easier to manage, there are a couple of options available to you, especially if you have multiple loans. Make a payment plan For successful loan repayment it is important to establish a plan and/or budget that you can stick to throughout your loan term.  Robert Farrington, student debt financial expert and creator of The College Investor.com, suggests the following for making a repayment plan: “Develop and use a dedicated budget plan each month. Follow it, stay disciplined, and make the largest payments you can in order to get out of student debt as quickly as possible. Try to pay more than the minimum payments each month. Even just an extra $20 or $30 a month can shave time and a large amount of interest off of your loan balance.” Sign up for autopay Autopay allows your student loan lender to set up automatic monthly payments from your bank account, which can also lower your interest rate. Both federal and private loan lenders offer up to a 0.25% interest rate discount. Make a point of contacting your lender to see if autopay is an available option for you. Additionally, setting up automatic payments can give you peace of mind, removing the chance of missing a payment and getting hit with late fees. Federal student loan consolidation If you have multiple federal student loans, the U.S. Department of Education provides an option to consolidate all your loans into one single loan. Consolidation loans can lower monthly payments, but also make it easier to keep track of payments, as you’ll only have to pay one instead of multiple loans. Student loan refinancing Refinancing and consolidation may appear to be the same thing, but there is a small difference, which could make a big difference in the long run. Debt consolidation only combines multiple loans into one, whereas debt refinancing seeks to combine multiple loans in order to find lower rates and more agreeable terms. Refinancing pays all your loans at once, creating one new loan with lower interest rates. Loans can’t be refinanced on a federal level, but many private lending companies offer student loan refinancing services. Top student loan refinancing and consolidation companies on BestCompany.com: 1. Credible Credible is a third-party student loan refinancing company, meaning that once you fill out a short application, you’ll be connected with multiple loan rates from various lenders. Although Credible doesn’t provide refinancing loans directly, it offers APR rates as low as 3.5 percent.  Refinancing through Credible is not available to currently enrolled students, but is a great option for those who have graduated, or are no longer enrolled. A credit check is required to qualify for student loan refinancing through Credible, but an initial soft credit check is performed, which will not affect your credit score. Customer reviews on BestCompany.com are overwhelmingly positive, awarding Credible with 4.4 out of 5 stars overall. Many customers applaud its simple and easy online application, low rates, and great customer service. Credible Customer Review: Kellie Rae from East Troy, Wisconsin "Credible was fast and easy to use. It offered me the lowest interest rate to refinance my student loans compared to the other companies I tried. They will save me over $13,000 in interest and help me pay off my debt quicker." Read more verified Credible customer reviews. 2. Docupop Docupop specializes in assisting federal loan borrowers find the fastest and easiest way to find the perfect student loan repayment or student loan forgiveness program. Once a borrower enters their information into Docupop’s system, a list of repayment plans will be generated. Docupop offers a fixed APR rate for any program chosen by the borrower. Within the industry these rates are competitively low, ranging from 3.76 percent to 6.31 percent. It is important to note that Docupop only offers student debt consolidation services, not refinancing services. Most lenders offer both. This means that you can combine all your debt into one, but you may not get lower rates or terms. The majority of Docupop customer reviews on BestCompany.com are positive, with customers talking most about how quick and easy the application and approval process is. Docupop Customer Review: Richard from Hollywood, South Carolina "They have been able to handle my student loans with no stress being put on me." Read more verified Docupop customer reviews. 3. SoFi SoFi is quickly becoming one of the largest student debt consolidation and refinancing companies.  In addition to competitively low rates, ranging from 2.99 to 6.238 APR (with AutoPay), Sofi offers unemployment protection, and efficient customer support. The application process is quick and easy and there are no limits on how much can be borrowed to consolidate or refinance a loan. However, a minimum credit score of 650 is required to qualify for SoFi, which might be difficult for students who have not yet built up their credit history. SoFi customer reviews on BestCompany.com are positive, awarding the company 4 out of 5 stars. Customers most frequently comment on the ease of applying and then consolidating debt, in addition to great customer service and great rates. SoFi Customer Review: Steph from Gulfort, Mississippi "I wish more things in life were as easy as using SoFi. Thanks for making my experience effortless." Read more verified SoFi customer reviews. Student loan forgiveness Student loan forgiveness is only a possibility for federal student loans, and refers to no longer being required to pay all or some of your loan. The most common and well-known type of student loan forgiveness is Public Service Loan Forgiveness (PSLF). PSLF forgives the remaining balance on direct loans. A borrower qualifies if they have made 120 monthly payments under a qualifying repayment plan while working full-time for a qualifying employer — a government or nonprofit organization. It generally takes at least 10 years before an individual can qualify for PSLF. Graduate school Perhaps you’ve recently finished your bachelor’s degree and are jumping straight into graduate studies, or perhaps you’re deciding to go back to school later in life to further your career opportunities with an additional degree. Whatever your reasoning, there are financial considerations to be had when looking into graduate school. The cost of graduate school generally falls between $30,000–$40,000 per year. This cost doesn’t include room and board, rent, books, and other personal expenses. There may also be existing debt from your undergraduate studies to consider in this equation. Overall, graduate school is a large financial investment. Federal student loans are available to graduate students, offering up to $20,500 each year. However, with all costs considered and existing debt, a larger loan through a private lender could be more advantageous. If you have existing debt, refinancing or consolidating your debts could also be a good way to reduce not only the number of payments you need to make, but could lower your interest rates, saving you money in the long run. The bottom line When it comes to financing your undergraduate or graduate studies, there are financial options available to you, providing the means to pay for all of your expenses, but to also have the peace of mind that you’ll be able to pay off your debts. Federal student loans are a good option, especially for undergraduate students, who have never taken out a loan before and do not have an established credit score. The ability to postpone loan payments until after you’re done with school can relieve pressure while pursuing your studies, but it is important to make a plan to pay off your debts, setting you up for future financial success and independence. Private student loans are a great option for consolidating or refinancing your loans, but may not be the best option for a first loan, particularly for undergraduate students. However, if you’re looking for a loan that could cover all your college expenses, a private student loan would be a better option, offering larger loan amounts with lower rates. When approaching a student loan or your student debt, don’t be discouraged. The numbers involved with student debt may seem overwhelming at first, but you have options. It may take some time and discipline, but whether or not you choose federal or private student loans, you can be debt free before you know it.