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Private Student Loan Repayment Options: What You Need to Know

By Edvisors Network

April 9, 2019

Options for paying back private student loans are set by each lender, so it's important to understand the repayment process before you take out your loan. Our Loan Payment Calculator can help you estimate your monthly payments and decide what you can afford to borrow.

Private Loan Repayment Period

Repayment periods for private student loans are typically 7-15 years. Some lenders offer extended repayment periods of up to 30 years, depending on the amount of debt. Loans with fixed interest rates usually have shorter repayment periods than loans with variable interest rates.

Student Loan Repayment Plans

Private student loan lenders may offer several plans to choose from. Here are some common examples:

Repayment Plan Type	Description	Benefits / Drawbacks
Immediate Repayment	You start making principal and interest payments immediately after the loan is fully disbursed.	You save money on interest and your loan will be paid off faster. Some lenders offer lower interest rates to borrowers who agree to repay their private student loans while they are still in school. You will have to make payments while you are in school, which can be difficult for many borrowers.
Interest-Only	You make interest-only payments while you are in school, and start making principal and interest payments after you leave school or drop below half time.	You save money on interest because the interest won't be accruing while you are in school. Some lenders offer lower interest rates to borrowers who agree to repay their private student loans while they are still in school. You will have to make payments while you are in school, but those payments will be much smaller than a principal and interest payment would be.
Fixed	You make low fixed monthly payments, typically $25 per loan per month, while you are in school, and start making regular principal and interest payments after you leave school or drop below half time.	The monthly payments are more affordable than full interest payments. Some of the interest will still be added to your loan balance when you start making principal and interest payments.
Full Deferment	You make no payments while you are in school at least half time. You start making principal and interest payments approximately six months after you leave school.	You don't have to worry about making payments while you are in school. You will pay more for the loan. Interest continues to accrue during the deferment period and will be added to your loan balance when you start making payments.

Repayment Difficulties

If you're having trouble making your private student loan payments, your lender may offer a program that can help. (Some examples appear below.) Contact your lender immediately to find out what may be available.

Private Student Loan Forbearance

Many lenders will offer reduced or delayed payments during a short-term period if you experience a financial difficulty. You will need to contact your lender to explain your circumstances, and you should be prepared to do so in writing (or sign an official forbearance request form). A partial forbearance allows you to make interest-only payments for a period of time determined by your lender.

Death and Disability Discharges

Some lenders will discharge a private student loan in the event the primary borrower becomes totally and permanently disabled. In addition, many lenders will forgive any unpaid balance in the event of the primary borrower's death.

Private Student Loan Refinance

You can refinance your private student loans to extend your loan term, possibly qualify for a lower interest rate or release a cosigner. Start your search by comparing student loan refinancing lenders.

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