If you have a financial hardship and are struggling to repay private student loans, don't give up. Private student loan lenders don't have mandatory rules to follow to help you through financial hardship, but you do have options.
The good news is that many private lenders do work with borrowers on repayment, especially during tough times when the sheer numbers of borrowers experiencing financial hardship demand it. It's likely that you could get one of these options:
- Private loan forbearance, if the company you chose offers it, for a few months or a year. In a loan forbearance, you stop making payment installments but you must pay the interest that accrues on the outstanding balance of the loan.
- A temporary reduced payment schedule, if available, based on your financial circumstances.
Tip: If you have a mix of private and federal student loans, also consider getting forbearance on your federal loans when you're in a financial bind. This will allow you to make payments on your private loans that may have less flexibility than your federal loans do for financial hardship situations.
The bottom line is that you won't know what your options are unless you read your loan paperwork and ask questions. In other words, think of a financial hardship situation as if you were taking one of your tougher college courses: Ask questions. Work with your professor. Dealing with a financial hardship situation when you have private student loans is the same way. Study up, ask questions, and you'll get through it.
Checklist for Dealing with Private Loans when Experiencing Financial Hardship:
- Whether or not you already have a problem, ask your lender what would happen if you were to experience financial hardship.
- Read your paperwork, but more importantly, call your loan company and see if they will work with you, since you intend to repay your loan when your financial situation improves.
- Don't assume you have the same options for dealing with financial hardship as with a federal student loan, but don't assume you have no options, either. Read your original promissory note for the rules regarding your loan. Have a copy sent to you if you don't know where you put it.