I Can’t Make My Private Student Loan Payments

Q: I am out of work with an injury and can no longer afford to pay my private student loans. There is no forbearance left on my loans, and I’m desperate for help. My private loans can’t be consolidated (according to the lender), and I don’t know what to do next. Any ideas?

A: Private student loans are one of the most restrictive forms of consumer debt. Unlike federal loans, private lenders offer very few hardship programs, limited deferment/forbearance options, and they are extremely difficult to discharge in bankruptcy. However, when you cannot afford your private student loan payments, there are still several steps you can take.

Deferment or Forbearance: Many private lenders offer temporary payment pauses for situations like unemployment or medical injury. These pauses typically last up to six months, and interest usually continues to accrue and may be capitalized. Each lender sets its own rules on the total number of deferments or forbearances you can use.

For payoff strategies and ways to manage balances over time, take a look at our comprehensive section on Student Loan Debt.

Loan Consolidation or Refinancing: Some lenders still offer private student loan consolidation or refinancing. Consolidation can reduce your monthly payment by extending your repayment term. Refinancing may secure a lower interest rate, but it only helps if you can afford the new payment. Borrowers with no income due to injury may not qualify.

Contact Your Lender: Even if you’ve been told there are no options left, it is still worth contacting your lender directly. Borrowers with strong past payment history sometimes qualify for temporary relief or alternative payment arrangements that are not widely advertised.

6 Additional Tips: What to Do When You Can’t Afford Private Student Loan Payments

1. Check for Temporary Payment Relief (Deferment or Forbearance)

Even if you’ve already used your available forbearance, confirm with your lender whether any hardship extensions or emergency programs exist. Some lenders offer case-by-case relief for medical injuries or temporary disabilities.

CollegeWhale Tip: When speaking with your lender, clearly explain your situation and stress your past history of on-time payments. Lenders are sometimes more flexible when a borrower has been responsible before hardship hit.

Keep in mind that interest may still accrue and capitalize, increasing your total balance.

2. Explore Private Loan Consolidation or Refinancing

Not all lenders offer consolidation, so even if your current lender doesn’t, it may still be possible through another institution. Consolidation may reduce your payment by extending the term; refinancing may help lower your interest rate.

CollegeWhale Tip: If you refinance into a variable-rate loan, understand that your monthly payment could increase when market rates rise.

If you’re unable to make any payment right now, wait until you recover before applying.

3. Contact Your Lender Directly

Being proactive is essential. Explain your injury, current income situation, and expected recovery timeline. Ask whether they can provide a temporary payment reduction, interest-only payments, or another short-term hardship option.

CollegeWhale Tip: Always request written confirmation of any agreement. Don’t rely on verbal promises from customer service.

4. Look Into Alternative Assistance Programs

While these programs don’t typically pay student loans directly, they can free up enough money for you to continue making partial payments. Consider: – Short-term disability or medical assistance programs – State unemployment assistance – Local nonprofits or credit counseling agencies – Temporary financial hardship grants

A nonprofit credit counselor can also help you prioritize your bills and explore options.

5. Bankruptcy as a Last Resort

Discharging student loans through bankruptcy is difficult but possible in cases of extreme hardship. This requires proving an “undue hardship” standard. If your injury is long-term or has significantly affected your ability to work, consult a bankruptcy attorney to see whether this is an option.

6. Create a Financial Hardship Plan

If no forms of relief are available through your lender, consider working with a financial advisor or credit counselor. They can help you: – Prioritize essential bills – Review your budget – Determine whether partial payments can keep your account from default – Explore hardship relief options you may not have considered

CollegeWhale Tip: Many nonprofit credit counseling agencies offer free first appointments. If you’re overwhelmed, this can help clarify your next steps.