Private student loans repayment is generally more difficult for financially distressed borrowers. Private loans do not have the same range of flexible and affordable repayment plans. Private lenders may offer flexible repayment plans or other affordable options, 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. See section J of this sample private loan contract, showing a forbearance option. Some lenders will charge for these services.
You should review your private loan contracts carefully to better understand what rights you have. Many private lenders will offer short-term repayment relief such as interest-only repayment plans. Borrower should review these plans carefully to evaluate whether the plans are likely to help in the long run.
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.
The CFPB issued a report in May 2013 focusing on private student loan affordability. NCLC submitted comments to the CFPB on this topic. We have also written about the need for more relief for private student loan borrowers.