Payment plans vary for private student loans. There are no standard plans that all lenders offer. Private lenders may offer programs similar to the flexible options for federal loans, but they are not required to do so. They must at least fulfill any promises they have made about the types of options they offer. You should review your private loan contracts carefully to better understand what rights you have.
Many private student lenders also offer small reductions in interest or other benefits for consecutive on-time or automatic debit payments. You should be careful as these “deals” are not always what they seem to be. Some lenders offer incentives that very few borrowers ever achieve. Many private lenders will offer short-term repayment relief such as six month interest-only plans. Borrowers should review these plans carefully to evaluate whether they are likely to help in the long run.
The Consumer Financial Protection Bureau noted in a January 2015 letter that federal regulators have repeatedly offered guidance encouraging private lenders to pursue workout arrangements and other relief for borrowers. This includes guidance on graduated repayment. The CFPB letter asks lenders to provide information about whether they are actually offering this type of relief.
You should also check to make sure that your private lender is applying your payments properly. The Consumer Financial Protection Bureau released a report in October 2013 describing common problems many borrowers face when they attempt to prepay private student loans or make payments for multiple loans held by the same servicer. The Bureau also issued an advisory, including a sample letter you can use to instruct your servicer on how to apply your payments.
Some non-profit lenders may offer more flexible options. Even those non-profit lenders that offer relief, however, rarely describe these programs in loan agreements, web sites, or other descriptive materials. You generally must know to ask for particular programs.
Private lenders may also settle debts in certain circumstances.