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Why Private Student Loan Debt Forgiveness Is Unlikely to Happen

Kat Tretina

In 2020, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act to help people deal with the economic impact of the coronavirus pandemic. The HEROES Act contained a significant measure for student loan borrowers: the cancellation of up to $10,000 in federal or private student loan loans if the borrower is economically distressed.

Why was this such a big deal? While federal student loan forgiveness has been an option for borrowers in the past through programs like Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and even income-driven repayment plans, private student loan forgiveness has never been available before.

Free eBook: How to Conquer Student Loans

Free eBook: How to Conquer Student Loans

However, private student loan relief — such as the forgiveness stipulation within the HEROES Act — has to pass the Senate before it can become available to borrowers. Private student loan forgiveness has a slim chance of passing in any capacity, so you shouldn’t count on private loan relief for your debt.

Did you know? Refinancing can help you repay private student loans.

Refinancing private student loans gives you the ability to save money with a lower rate, and customize your repayment term to fit your goals.

Takes 2 minutes • No impact on credit

If you need help with your private student loans, here’s what you can do instead — without hoping for forgiveness which is highly unlikely to occur.

Why doesn’t student loan forgiveness include private loans?

With federal student loans, the U.S. Department of Education acts as your lender. Under loan forgiveness programs like PSLF, the government absorbs the cost of discharged loans for qualified borrowers and handles the administrative burden.

Private student loans are more complicated. Instead of having one central lender, private student loans are issued by individual banks, credit unions, and other financial institutions. Each company has its own shareholders and loan servicers to satisfy. Any effort to pursue private student loan forgiveness would require billions of dollars from the government to pay back all the private lenders.


In the past, Republican leaders have not been favorable toward loan forgiveness efforts. In response to the latest effort with the HEROES Act, Senate Majority Leader Mitch McConnell declared it “dead on arrival,” signaling how difficult a path forward loan forgiveness has.

Read More: Private Student Loan Forgiveness: Where Art Thou?

Private student loan forgiveness alternatives

Private loan forgiveness is unlikely to happen any time soon. If you’re struggling with your debt, consider these alternatives to manage your loans.

1. Refinance your student loans

If you want to supercharge your debt repayment, consider refinancing your student loans. With this approach, you apply for a loan with a private lender for the amount of your existing debt. Your new loan will have different terms than your old ones, including interest rate and monthly payment.

Refinancing private student loans to a lower rate is often a no-brainer!

If you can qualify for a lower interest rate by refinancing private student loans, you can save big without any major drawbacks.

Takes 2 minutes • No impact on credit

2. Contact your lenders about hardship options

If you can’t afford your current payments because you lost your job, are facing a medical emergency, or have some other financing hardship, contact your lender right away. Some private student loan lenders offer emergency forbearance or alternative repayment programs to give you some relief.

For example, Ascent may grant you forbearance for one to three months at a time, for a maximum of 24 months over the life of your loan.

3. Research state loan repayment assistance programs

While you aren’t eligible for loan forgiveness, you may qualify for repayment assistance through your state. Some states will repay a portion of your debt if you work in certain professions and make a service commitment.

For example, healthcare professionals in Kentucky can qualify for up to $80,000 in student loan repayment assistance in exchange for two years of working in a high-need area.

Check with your state department of education to see if there is a similar program for your career.

4. Ask your employer about loan repayment benefits

More employers are offering student loan repayment benefits as a recruitment and retainment tool. According to the International Foundation of Employee Benefit Plans, 4% of responding organizations offered student loan benefits, and 23% of organizations were considering implementing benefits in the future. In many cases, they function like a retirement plan; the employer will match a portion of your student loan payments, up to a percentage of your salary.

Ask your human resources department if there is a student loan repayment program in place. If not, you can suggest that they start one to attract and keep top talent.

5. Boost your income and make extra payments

To pay off your debt faster, look for ways to increase your income. If you use the extra cash to make additional loan payments, you can save a significant amount of money by paying less in total interest.

For example, let’s say you have $30,000 in student loans at 5% interest. With a 10-year repayment term, your monthly payment would be $318. Over the course of your repayment, you’d pay a total of $38,192.

If you started a side gig delivering groceries and earned an extra $400 per month and put the entire amount toward your student loans, you’d pay $718 every month. You’d pay off your loans more than six years ahead of schedule, and you’d save over $5,000 in interest charges.


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ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 11-21-2022. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 2.24% APR to 7.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 3.49% APR to 8.24% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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