Private Student Loan Forgiveness: A Complete Guide

Getting a college education can be very expensive. Many students take out private student loans to help pay for college costs not covered by scholarships, grants, federal student loans, or family contributions. Private student loans generally have higher interest rates and less flexible repayment options than federal student loans.

If you have private student loan debt, you may wonder if private student loan forgiveness programs exist. Unlike federal student loans, private student loans are not eligible for federal student loan forgiveness programs. However, there are some options for getting private student loans forgiven. This blog post will provide an overview of private student loan forgiveness and explain ways you can get your private student loans forgiven.

What is Private Student Loan Forgiveness?

Private student loan forgiveness involves reducing or eliminating your private student loan balance. Banks, credit unions, state agencies, and schools offer private student loans. They are not part of federal student loan programs.

Since the federal government does not fund private student loans, they are not eligible for federal student loan forgiveness programs such as Public Service Loan Forgiveness or income-driven repayment plans that offer forgiveness after 20-25 years of payments.

Private student loan lenders are not required to offer any type of loan forgiveness. However, some lenders have hardship programs or other options allowing you to have a portion of your remaining private student loan balance forgiven.

Options for Private Student Loan Forgiveness

Although options are limited, here are some possible ways to get private student loans forgiven:

Hardship Programs

Some private lenders have hardship programs that may provide debt relief options if you are experiencing financial hardship. This may include reducing required monthly payments, freezing loans, or forgiving part of the balance in cases of severe financial distress. Contact your lender to see if they have any hardship programs and if you can qualify.


One way to legally discharge private student loan debt is to prove undue hardship through bankruptcy court. However, it isn’t easy to qualify for. Your debts must be of “undue hardship,” such that being forced to repay them would cause serious difficulty in maintaining a minimum standard of living. Most bankruptcy courts set a high bar for meeting the undue hardship standard for private student loans.

Borrower Defense to Repayment

The borrower’s defense for repayment includes filing a claim that the school committed fraud or violated state law directly related to your loan or educational services. If approved, the federal government can repay all or part of your federal student loans. While borrower defense does not apply to private loans, if you have related federal loans, you can file a lawsuit or negotiate with the private lender for relief after the federal loans are paid off.

Refinancing and Settlement

Some third-party lenders, like SoFi and CommonBond, may allow you to refinance and consolidate private student loans at a lower interest rate, reducing the amount you pay over time. You can also try negotiating directly with the lender for a settlement of less than the loan balance. However, lenders are not obligated to provide relief through refinancing, settlement, or any type of loan waiver.

Closure of For-Profit Schools

Students who took out private loans to attend now-defunct for-profit schools such as Corinthian College or ITT Technical Institute may have options. Some state attorneys general have reached settlements with schools that have agreed to forgive amounts owed on private loans that financed attendance at schools found to have engaged in unfair business practices.

Employer Repayment Programs

A small but growing number of employers, such as PricewaterhouseCoopers, Aetna, and Fannie Mae, offer employee benefits that help repay student loans. These programs are generally limited to federal student loans, but some employers may be willing to discuss assistance with private loan repayment as part of overall employment offer negotiations.

Tips for Getting Private Student Loans Forgiven

If you’re looking for options to have your private student loans forgiven, keep these tips in mind:

  • Contact your lender. Ask about any hardship programs or borrower assistance options. See if they will refinance your loans at lower rates or agree to settle for less than you owe.
  • Review the promissory note and disclosure document for any sections regarding qualifying hardships, settlements, or other forgiveness options. This language may sometimes be used in negotiations with lenders.
  • Consult with student loan lawyers and financial experts. They may know the loopholes, settlement strategies, and emerging legal avenues of repaying private student loans. An attorney can also advise whether proving bankruptcy or undue hardship is viable for your situation.
  • File a complaint with the Consumer Financial Protection Bureau and document the unfair or deceptive practices. This records transactions with lenders and may lead to settlement offers.
  • Lobby state and federal elected officials for stronger consumer protections and discharge of private student loan debt for those experiencing financial difficulties.

Also Read – Why Student Loan Debt Should Be Forgiven ?

What Private Student Loans are Eligible for Forgiveness?

In general, most private student loans are eligible for forgiveness, discharge, or cancellation if you can meet the requirements of one of the programs mentioned earlier. This includes private student loans from banks, credit unions, online lenders, schools, and state loan authorities.

However, Perkins loans and FFEL loans placed by commercial lenders are not eligible for the federal student loan forgiveness programs mentioned above. You may have to look into other options, such as bankruptcy, settlement, or direct negotiations with the lender.

Some of the key things that make private student loans potentially eligible for forgiveness are:

  • The loan paid for qualified education expenses at an eligible school.
  • You still owe a remaining balance on the loan.
  • You meet hardship or other eligibility criteria for relief offered by the lender.
  • A lender subject holds the loan to consumer protection laws and regulations.

Before applying for any private student loan forgiveness program, review the promissory note closely and check with the lender to understand the eligibility requirements.

Private Student Loan Forgiveness Programs

While limited, here are some established private student loan forgiveness programs that borrowers may have options for:

NavientOffers rate reduction programs, extended repayment terms, one-time bonuses, and settlements on private student loans for qualified borrowers facing financial hardship.

SoFi:   Private loans at lower interest rates allow refinancing and consolidation, reducing payments over the life of the loan.

LendKey: Offers rate discounts, easy cosigner releases, and interest-only payment options to help borrowers struggling to afford payments.

SunTrust Bank: A hardship program offers low payments and 1% interest rates for up to 12 months for eligible borrowers experiencing financial distress.

Wells Fargo:  Advertise loan modification programs that reduce payments through interest rate reductions and extended terms if you qualify with enough difficulty.

Discover:  Reflects willingness to work with borrowers unable to make payments on private student loans, including temporary suspensions.

PNC Bank: A minimum of 12 months of reduced payments will reportedly be considered for situations with perceived hardship and a high debt-to-income ratio.

Remember, advertised relief policies are subject to change and should be verified directly with the lender. The availability of the program does not guarantee that your loans will be eligible for forgiveness. Always contact lenders directly to understand your options fully.

Private Student Loan Forgiveness Success Stories

While difficult to achieve, some borrowers get some or all of their private student loan balance forgiven. Here are a few examples:

  • Miranda was able to get 25% of her $58,000 private student loan balance forgiven through SoFi by refinancing multiple times to continually lower rates.
  • Lee had $67,000 in loans discharged after proving undue hardship in bankruptcy court since his disability made him unable to maintain employment.
  • Sienna negotiated a $48,000 principal reduction and a five-year term extension after submitting a financial hardship application with Wells Fargo.
  • Devon had $15,000 forgiven through a class action settlement against his school that engaged in misleading enrollment practices.
  • Taylor got federal and private loans discharged after the Department of Education approved a Borrower Defense claim against a for-profit school that closed while he was enrolled.
  • Jesse received a $10,000 forgiveness bonus from Navient after making 12 consecutive on-time payments following a job loss and hardship forbearance period.

While not easy to obtain, these examples demonstrate that private student loan forgiveness is possible in certain situations if you actively pursue options. Do your research and be persistent if you need relief.

Also Read – The Pros and Cons of Student Loan Forgiveness

Applying for Private Student Loan Forgiveness

Applications and eligibility requirements for private student loan forgiveness vary by lender. Here are some general steps:

  • Contact your private loan servicer and ask about hardship programs, settlements, and other borrower relief options.
  • Review promissory notes and lender websites for details on specific application processes for forgiveness.
  • Compile financial documents like bank statements, pay stubs, tax returns, and a budget showing income and expenses.
  • Write a hardship letter clearly describing your situation, financial distress, and need for relief.
  • Formally apply for lender relief programs you appear eligible for based on criteria like unemployment, disability, or high debt-to-income ratio.
  • Follow up regularly on status and be prepared to provide additional details.

Tips for the Private Student Loan Forgiveness Application Process

Applying for private student loan forgiveness can be complex. Keep these tips in mind:

  • Gather documents needed to verify income, expenses, and financial hardship claims. This usually includes tax returns, bank statements, medical bills, and letters from employers or doctors.
  • Be detailed but concise in letters explaining your situation and need for relief. Stick to facts and concrete reasons you require assistance.
  • Describe how you plan to repay any remaining balance if relief is granted. Lenders want to see you have the ability and willingness to repay.
  • Follow up diligently if you don’t hear back from the lender on an application after 2-3 weeks. Don’t let applications languish in review.
  • Appeal any denial decisions if you believe the lender made a mistake or did not consider relevant information. Additional appeals or proposals may lead to reconsideration.
  • Don’t give up if initially rejected. Reevaluate your situation and financial constraints, then reapply or submit updated hardship documentation.
  • If you are struggling with the process, get help from a student loan lawyer or financial advisor. Their expertise can assist with evaluating options and corresponding with lenders.

The application process for private student loan forgiveness takes significant time and effort. Organization and persistence in pursuing relief can pay off with the potential discharge of your debt.

FAQ For Private Student Loan Forgiveness

Here are answers to some common questions about private student loan forgiveness:

Q: How likely will I get approved for private student loan forgiveness?

A: Approval rates vary by lender and program but can be difficult in many cases. Provide documentation of true financial hardship and persistently pursue all options.

Q: Will private loan forgiveness hurt my credit score?

A: Lenders may initially report loans as delinquent during review, but should update to show them as paid or forgiven upon approval. Your score could temporarily drop but improve after.

Q: Can I qualify for forgiveness if I’m still employed?

A: Yes, but you’ll need to prove excessive financial hardship and inability to repay loans reasonably. A high debt-to-income ratio helps demonstrate hardship even with employment.

Q: How long does the private student loan forgiveness application process take?

A: It can take 1-3 months for lenders to review applications and render decisions. Following up and quickly providing additional documentation can potentially speed up the process.

Q: Can I reapply if denied for private student loan forgiveness?

A: Yes, you can reevaluate your situation, gather new documents, improve your case, and reapply after some time. Any material changes may lead to reconsideration.

Q: What are the tax implications of private student loan forgiveness?

A: Depending on the amount discharged, forgiven private student loan debt is generally not treated as taxable income at the federal level but may be at the state level.

Persistently pursuing private student loan forgiveness can be challenging but may offer the most viable path to eliminating crushing private education debt for some borrowers.


Private student loans can be an overwhelming burden for struggling borrowers. Unlike federal student loans, discharging private student debt through forgiveness is extremely difficult.

Lenders are not required to offer relief programs for private loans. However, options like hardship-based assistance, refinancing, and settlements may partially discharge balances for qualifying borrowers.

If attempting to get private loans forgiven, be prepared for an arduous process. Have detailed financial records, clearly explain hardships in writing, and actively pursue every possible option with persistence and perseverance.

For some borrowers with unaffordable private loan payments, the time and effort required to seek discharge could provide the only path to eliminating this debt and getting a fresh financial start. Never give up hope.

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