Private Student Loan Consolidation
A consolidation loan refinances two or more private student loans, replacing them with a single loan with a single interest rate. The interest rate is based on the current credit scores of the borrower and cosigner, if applicable. Thus, refinancing private student loans may be an option for borrowers whose credit scores have improved a few years after graduation.
Repayment Plans for Private Student Loans
Repayment plans for private student loans may offer borrowers a few options for obtaining a lower monthly payment. Some private student loan programs offer borrowers the option of a short-term interest-only period when the loan first enters repayment. Borrowers may also be able to obtain a lower monthly payment by choosing a longer repayment term, but this may increase the total payments over the life of the loan.
Forbearance Options for Private Student Loans
Forbearances are temporary suspensions of the obligation to repay a loan, often appropriate for short-term financial difficulty. However, interest continues to accrue during the forbearance period and will be capitalized if unpaid, increasing the size of the debt. Some private student loans offer partial forbearance as an option, where the borrower makes interest-only payments during the forbearance period to keep the loan balance from growing larger.
Forgiveness and Discharge for Private Student Loans
Some private student loan programs offer death and disability discharges, similar to the death and disability discharges available for federal education loans. Many private student loan programs offer a compassionate review process on a case-by-case basis for reviewing the circumstances of borrowers affected by misfortune.