Private student loan settlements are difficult to get, but are possible in some cases. There are no specific laws or regulations requiring private lenders to offer settlements. The policies and programs vary considerably by lender.
Private lenders will offer settlements in some cases. However, the lenders generally require very large lump sums to settle debts even from borrowers with low incomes.
Most private lenders will not even discuss settlement or modification until the loan is in default or written off. At this point, the borrowers’ main point of contact is usually a collection agency. Interestingly, the collection agencies working on behalf of the lenders will often settle for smaller amounts than the originating lenders.
As with some federal loan settlements, there may be tax consequences if you get a private student loan settlement. It is a good idea to consult a tax professional for more information.