This is one of the toughest questions I get asked: I can’t afford my private student loans and I don’t see any options to get out of it – what do I do?
It’s estimated that over 1.4 million borrowers have private student loan debt, with an outstanding balance of over $150 billion in loans. And the tough part is many of these borrowers took out the private loans without fully understanding what they were getting into.
The fact is, private student loans function much more closely to a car loan or mortgage. They typically have a set repayment plan, and failure to repay that amount send it into delinquency and default. And since the collateral for student loans is your earnings, the lender could take you to court and get a judgement against you.
Not pretty.
So, what can you do if you can’t afford your private student loans? Here are your options.
If you just want to cut to the chase, basically your best bet is to refinance your student loans and see if you can get a better rate/term/deal. We recommend comparing your options at Credible because they are the kayak of student loans. You can compare a bunch of major lenders in minutes. Plus, College Investor readers get a $200 bonus for refinancing. Check out Credible here.
The Best Option: See What Help Your Lender Can Offer You
If you can’t afford your loans, the first thing you need to do is call your lender and see if they can help you. Some private lenders (not many, but some), do offer assistance programs that can potentially help you stay current with your loans.
For example, SoFi has a Unemployment Protection Program where they will place your loans into a 12 month forbearance if you are unemployed. You have to show proof of your unemployment (by showing your eligibility for unemployment benefits) and you also need to work with their Career Strategy department to help you get a job.
Another example is Sallie Mae. They offer private student loan forbearance if you are experiencing a financial hardship. However, in order to qualify, borrowers must make a good faith payment of $50 for each loan (up to $150 per account) to put the loan into forbearance. And borrowers need to remember that interest will continue to accrue on the loan.
Remember, this are not designed to be complete solutions to affording your private student loans, but they can offer you some relief until you can figure out a way to afford your private student loans.
The Second Best Option: Refinance Your Private Student Loans
The next best option is to refinance your private student loan into a new loan – hopefully with a better interest rate and terms that you can afford.
To refinance, we recommend that borrowers try Credible. Credible is a student loan comparison platform that allows you to easily see in just 2 minutes what you would qualify for. If you think one of the options makes sense for you, it only takes about 5 more minutes to apply – super easy. Plus, College Investor readers will get a special bonus of $200 when they refinance!
Checking your rates and seeing what you might qualify for doesn’t impact your credit score, so give it a try: Credible Refinancing. It honestly takes about two minutes:
There are two main challenges that most people will encounter when it comes to refinancing your private student loans:
- Not having a good enough credit score or history
- Needing to have a cosigner to qualify
Plus, College Investor readers who refinance at Credible get a $200 bonus! Check out Credible here. If you want to see what other options are out there, check out our list of the Best Places To Refinance Student Loans.
Unlike Federal student loans, private student loans rely on a borrowers’ credit score (among other factors) to make a decision. Given that most borrowers who can’t afford their private student loans typically struggle to make payments on time, or may have other credit factors negatively impact them, having a poor credit score could be a challenge.
We recommend that anyone with student loans should be monitoring their credit score and history with a free tool like Credit Karma. If you have less than perfect credit, Credit Karma will also give you suggestions to improve your credit, which in turn will help you qualify to refinance your student loans.
The other big challenge is that many lenders require a cosigner to qualify – even if you’ve improved your credit or have great credit. In many cases this is due to borrowers being young and not having a robust credit history. The challenge with getting a cosigner is that there is huge risk for the cosigner, and many people (including myself) recommend people to never cosign a student loan.
However, if you do get a cosigner, there is a proper way to do it. Make sure you fully understand how to cosign a student loan to minimize risk.
A Must-Do Option: Earn More Money
No matter what your student loan situation is, every borrower should focus on earning more money. But this is especially true if you can’t afford your private student loans.
The simple fact is, there are 168 hours in each week. You might work 40-50 hours at your day job. You sleep 7 hours per night, so a total of 49 hours per week. For simplicity, let’s call that 100 hours. What are you doing with the remaining 68 hours each week?
For too many people, they are spending money they don’t have. Whether they are at home watching TV (and paying for cable and Netflix), or out to dinner with friends or family (spending on food an alcohol), they are wasting money.
But I’m not here to tell you to budget more to afford your loans – you probably already know that. I’m here to tell you that you can also earn more money. Most borrowers I see struggling to make their student loan payments are only falling short by $100 to $200 per month.
In the big picture, $100 or $200 per month is really not a lot of money. $200 per month is $2,400 per year. Anyone who really tries could earn that extra money.
Check out this guide on the best side hustles to get started.
The fact is, many people will complain about not being able to afford their private student loans, but few will actually take action to change their situation. If you’re ready to change and earn more, here is another list of over 50 ways to make money on the side.
Create The Proper Repayment Plan For Your Private Student Loans
If you have private student loans, the key to making them affordable is to create the proper repayment plan for all of your student loan debt. This isn’t always easy, and each person will have a different preference, but here’s how to think about it.
First, handle your Federal loans. These loans typically have more repayment options, and you might benefit from setting up an income-based repayment plan. These plans will lower your monthly payment to 10% or 15% of your discretionary income. That can be a huge help in being able to afford your student loans.
Once you’re set on your Federal loans, move to your private loans. For your private loans, you need to decide if the debt snowball or debt avalanche makes more sense for you. Remember, the snowball is about starting with your smallest balance first. The avalanche is about starting with your highest interest rate first.
Mathematically, the highest interest rate first is usually better. But mentally, getting rid of some small private student loans first can be a huge early win.
The Worst Option: Default And Attempt To Settle Your Debt
The worst option for your private student loans is default. Defaulting on any type of student loans can wreck your credit, prevent you from getting future student loans, and could even cost your your job.
The sad part is I see too many borrowers get caught up in the student loan scam that is private student loan debt settlement. This is a scam where a company (or even sometimes a law firm) will encourage borrowers to stop making payments on their student loans, and instead make payments to the student aid company or law firm. Over time, the borrower’s student loan goes into default, trashing their credit score. Meanwhile, the aid company is taking in their payments happily.
However, the whole scam falls apart in the end – the lender doesn’t have to agree to any settlement, and will likely tack on fees for the defaulted loan. The borrower is out all of the money they paid the aid company, and they will still owe the student loan. It’s lose-lose all around.
Finally, it’s important to remember that your lender can sue you if you default. And private student loan default can lead to costly litigation – you’re going to have to pay a lawyer to defend you, and then you’ll still owe on the judgement in the end.
The only guarantee with student loan default is wrecked credit and harassment from debt collectors. That’s why, as a general rule, we believe you should avoid default if at all possible.
Final Thoughts
While there are no amazing repayment options or forgiveness programs for private student loans, there are simple actions you can take if you can’t afford them.
These options aren’t glamourous, and most require work, but you can work to make your private student loans more affordable.
And remember, it’s universally a good idea to focus on earning more money to get out of student loan debt.
Are you struggling to afford your private student loans?
Photo Credit: serenzniy
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Holly says
This article is not only unhelpful, what you propose shows that you have no idea how things really are. My husband was able to take out 5 private loans from Chase Bank, totalling $100,000. He graduated, the best job he could get paid $10 an hour. Chase would not allow consolidation or income based repayment. All of those loans came do, each one wanting more than $200 a month. Unable to acquire the higher paying jobs a college degree was supposed to help him attain, all loans ended up in default. Now with two kids to support, he gets 25% of every pay check taken away. He makes minimum wage. There is no amount of work he can do to ever come close to paying back these predatory loans. This is the true reality, now perhaps you could offer some real solutions.
Robert Farrington says
Hey Holly,
Sorry to hear about your family’s struggles. Hopefully you are both attacking this debt together as a unit.
The #1 solution is to earn more and budget better. You need to come up with $1,000 per month (based on what you said), and that is a large amount, but not unheard of.
Are you working two jobs? Is your husband? What extra income opportunities has he pursued? What are his skills and why is he settling at a minimum wage job? What did her get his degree in?
There’s a lot to every story, and I’m sure you didn’t share everything here – just like I can’t provide all the answers in a blog post. But what is true is that you can’t blame Chase – your husband took out these loans with some type of career aspiration. Why hasn’t he made that happen?
mariea says
@Robert I don’t think she is blaming Chase. I think she is just saying she is in an unfair position and your article is so general and cut and dry (but I get it you can’t attack everyone’s situation). I definitely can understand how she feels because I am in a similar position. Schools sale us a dream so we take out these loans but we never look at the long term picture. We pay all this money for a degree that our career field could never really afford. However I loved the article and feel you made some great points and suggestions even down to your reply to her. I guess we just need to get out of the victim mentality and take on the victory mentality and become determined that no matter what it takes we shell eat this elephant one bite at a time. I truly get your point. Thanks a million lol
Manny says
This is the most depressing article I’ve ever read… so pretty much someone has to be working all hours of their day just to make one lousy payment a month or else you’ll be taken to collections or made to pay by the government because some loan company doesn’t bother to give their borrowers any tangible options for repaying their loan? I’ll be so many people wish it was this simple to just go out and find ways of making more money. I’ve been looking for years and I’ve never found any good side jobs that could make up the difference for the loans I pay. What a bunch a bullshit… try living in a small town pal and tell me how easy it is to just go out and grab a new job to fill in my already strenuous work life to get more hours in my day to pay some stupid loan off, screw you people.
Robert Farrington says
Hey Manny, it’s definitely not an easy situation and sorry it’s depressing to read. We’re not here to sugar coat things or make you feel better about your situation, but simply share the math and give options for what works.
Care to share a little more about your situation and maybe myself and other can give you even better advice? How much do you have in student loans? What’s your monthly payment? How’s your credit? How much do you make? What have you tried to do to earn more money? What general area do you live in? What does your budget look like?
There’s so many variables where there is potential to make adjustment, earning is simply one of them. However, for many, it’s is the most do-able.
June says
Here is the bottom line .. schools don’t tell you that (1) private loans SUCK – big time!! You are ALWAYS better off with a FEDERAL loan – period / no exceptions.
(2) If you are planning on having a couple of kids AND a spouse AND a student loan .. can you afford it?
(3) Why don’t people watch YouTube and a simple “student loan” search will bring up HORROR stories of people who can’t afford their loans .. I’m surprised in this day and age students are still baffled at that.
With that said …I have a 110k student loan. But I sleep beautifully at night .. why? When most people are sweating it .. . here’s the difference: I’m a public service worker (so my loan is $315 / mo. vs. the $900 a month it would be if I were not ) because I’m income based (IBR as it’s known) …
I have NO children / NO credit card debt / NO car payment.
I have just a little over six figures in my private savings (annuity / etc)
I have a state pension which I’m fully vested in
So I have a six figure loan .. but only 8 of 10 years left to pay before the rest is forgiven TAX free. My take home income is a little more than 3k a month.
But here’s the hard lesson part guys . you have to THINK of this BEFORE you get the loan. I mapped this out – it wasn’t an “accident.” You have to RESEARCH .. and talking to your family ain’t research. Can you AFFORD the loan? If not .. think twice before you get it.
Private loans DO NOT qualify for IBR (income based repayment) .. that is a FEDERAL loan program. Ahhh .. but private lenders do not tell you that because they want you to take a loan from them … DO YOUR HOMEWORK!
It’s not the loan so much .. it’s all your debts / obligations in ADDITION to the loan and the type of loan you took out (fed / private / parent plus .. which btw is HORRIBLE!! Look it up!)
That is what makes / breaks you.
The article was NOT fun to read .. but fact of the matter is .. it is TOUGH LOVE and very honest .. you may need to work 2 jobs – bottom line (you chose those kids?? You chose that car payment .. you chose to have cable tv .. which I choose NOT to have to further beef up my retirement).
it’s a series of choices. Research and THEN choose. A degree is not a magic wand like you are sold – never has been . Two jobs may be required for a decade .. .. but hey .. it could be three jobs.
But the author is correct in what he writes – you just may not enjoy hearing it. Neither do I. So I did my homework in advance.
Amanda says
I have $100K in student loans. Luckily based on what I am reading here, most is Federal. Of the three private, only one I was able to work out a repayment program for. The other 2, which are small in comparison to the entire balance, they refuse to do anything with. When I called last week, I got a snide jerk who said “ma’m, these loans are meant to be paid back… sorry you have other bills, but you knew about these before you got married and had kids.” WHAT?! I also have chronic health issues since ten years ago, sorry I got sick? Sorry my kids need to eat? I was treated like the scum of the earth by Navient. But I guess the next time the kids are hungry, I’ll have to tell them “sorry kids… mom has to pay her student loans!”
Rachel says
I only make $11 per hour. How much of my check can they take for defaulted graduate plus loans?
Robert Farrington says
A graduate PLUS loan is a Federal loan. They won’t garnish much of your pay likely, but they can garnish government payments like tax refunds and more. You need to get out of default and get on an income driven repayment plan. Read this: Get Out Of Student Loan Default.
Stephen says
I owe about 60,000 in student loans, with a little over half of it owed to private loans. The original amount for the private loans was 25,500. I have a paid a little over 24, 500 towards these private loans including interest and principle, and my current balance on the private loans is a little over 32,000. So, instead of making a dent in the total amount it has increased. Now, there have been times when I was talked into forbearance, and I did make interest only payments for about a year (some how even when this occurred I was charged capitalized interest, not sure how). But for the most part, I made the minimum payments on time. I can no longer afford to throw money away towards interest. I believe that considering the amount I have payed (almost the original loan balance) my best option is to default and take my chances.
Robert Farrington says
Default is never a good option. We have an article upcoming about strategic default, and while it gives you some control over future choices, it will set you back financially more than other alternatives.
Josh says
I ended up in 115k debt combining all private loans and federal loans – I came from a single parent household where my father was making less than 30k a year, yet I only received 8k/year from FAFSA for a college that was 43k/year. I was forced at 18 years old to take out thousands of dollars in loans with incredibly high interest rates (two loans over 11.5%). Once I graduated, I got a full time job that paid 40k a year, my monthly income being barely over 2000. Just my private loans are 1100+ per month. I picked up a side job driving for Lyft and still barely have enough money to feed myself and pay my rent. Your solution is to just earn more money? What kind of bullshit advice is that? I struggle with suicidal thoughts on the daily because I work 50+ hours a week only to use all the money I earn to pay back Sallie Mae – even when I make payments higher than they need, the interest rates are too high it will never make a difference! My credit is shot because even though I never missed a single payment, I had my loans in forebearance while I attempted to save money, so now because my credit is low, BECAUSE OF MY LOANS, I can’t refinance? Millenials like myself have been set up for failure by generations ahead of us just so they can profit from our misfortune! I have zero help!!! It’s amazing that when I was 18 I was so easily able to obtain loans for hundreds of thousands of dollars, and now because a number on a screen (my credit) I cannot refinance. This is a national crisis that dooms people like myself! Try giving me some advice that will actually benefit me!
Robert Farrington says
Hey Josh, thanks for sharing your story. While I agree it’s crazy that at 18 you can borrow so much (I fell into this trap too by borrowing $43k), everything after that point is controlled by you.
I’d love to walk through your budget, your job/income, your side hustles, and what your plans are to improve those. It’s the best job market in history, and if you’re a few years out of college, between side hustles and your day job, you should be earning more. And yes, there are always ways to focus on spending less as well.
Drop a note here in the comments, break it down, and let’s work through it together.
Zach says
Robert this article sucks ! You students that can’t afford to live because student loans are way to high per month !!! If we make 2,000 a month and student loans are $1,185 how are you suppose to live !!???? Tell me that since you have all the answers !? You can’t even make rent or even pay grocery to eat or if you have kids like what you suppose to do
Robert Farrington says
Does the article suck, or are you frustrated that your options for private loans suck? I don’t make the options for your loans, I just write about them.
If you make $2,000 per month, it might be time to consider either getting a new job or side hustling to boost that income.
You can be a TSA screener and make $3,000 per month depending on you location – and that can rise to $4,000 or so per month. And it has benefits! When I was at Target, most of my hourly supervisors were making more than that per month.
What did you go to school for? What career path are you trying to take. With that monthly payment, I’m guessing you owe around $80,000 to $100,000 in private loans? What did you borrow that for and what’s the end goal?
Audra says
Let me tell you people something. I took out $175K in student loans when my step father was making six figures a year. I thought I would have help paying back my loans but he got in a terrible accident and they divorced leaving us with nothing. My private loans are at an average of 8.5% at $150K. My federal loans are at an average of 4.5% at $25K. My monthly private loan wants $2200 a month from me… and the federal will gladly take 10% of my income because I make $90K a year. They are robbing me for over $3100 a month and cannot even get a refinance with a 715 credit score and engineering job. Please someone tell me what to do. I am getting my private refinanced at 5.6% interest but it will still be $1800 a month plus another $500 for federal… I realize it’s crazy to complain but why is it that more than half of my disposable income has to go toward this? I thought making more money and having better credit would help but this is insane!!! Your article is WRONG!!!!!!!!! They are fucking us ALL!!!
Robert Farrington says
That’s a large amount of student loan debt? What did you go to school for and what employment were you hoping for at that level? I usually only see that for doctors and dentists.
Sounds like you’re already refinancing the private loans, which is a great start. Now continue to eliminate that debt and it will get easier.
John says
My son has a private student loan of $185,000 dollars and his monthly payment is $2,281 per month he is unable to refinance his loan or get any help he has a job that pays him $55,000 a year and even has a part-time job and still just about has enough money to make the monthly payment with no help or assistance what and already with a second job what/if any options are th
Robert Farrington says
He can likely qualify if he has a cosigner (e.g. you). Something to consider if you want to help him, but realize you’re on the hook for his loans at that point.
Windea says
While going to nursing school, I took out two federal loans totalling 15,000$. When I finished school and started paying back the loans, I was offered a lower interest rate, by lender, if I consolidated my loans into one easy payment. Sure! What they don’t emphasize is that they are switching your loan from federal to a private loan. Ok fine, but now I am on disability, due to an on the job injury, and unable to work. My original lender was Sallie Mae but I consolidated, I ended up with Navient. I feel like they scammed me with a lower interest rate to trap me into a private loan and now I have no option but to default due to my disability. Disability forgiveness is offered for federal loans but not for private loans and it should be. I would have no problem paying them if I could use my degree, that I borrowed money to get, but due to extenuating circumstances I can’t. I find it rude that you imply that people aren’t budgeting correctly or aren’t working 2 or 3 extra jobs. I never planned to fall and break my back but it happened, so Now What!?
Robert Farrington says
You may be a good candidate for bankruptcy. It is a myth that student loans aren’t dischargeable in bankruptcy – they totally are. However, you have to prove that you will never be able to afford any type of payment structure on these loans – and medical issues and disability are the biggest reasons for student loan discharges in bankruptcy. You should speak to a student loan lawyer that is understanding of your situation. Check out this guide: Finding a student loan lawyer.
Average Joe says
It saddens me to read your advice. I realize you can’t relate and have empathy for those who are struggling but you could show some sympathy. What do I do with those extra 68 ‘hours of leisure’ each week? I commute, eat breakfast, make dinner, clean dishes, clean the house, take care of (spend some time with) the children, help with homework, mow the lawn, shop for what groceries I can afford, etc. Now how many hours do I have left?
You are a typical financial advisor. Totally out of touch with the realty of the average person.
Robert Farrington says
I can totally understand – I’m not a financial advisor. I’m just a guy who started a blog because he was working through paying of $42,000 in student loans and had to deal with all sorts of drama with his loan servicer.
Do you know how I eliminated my debt in 2.5 years? I worked full time 40-50 hours per week, and I side hustled by buying and reselling stuff on eBay and also by writing for this very blog. So while my message may sound tough and non-empathetic, I lived it and did it. And I still do it today.
Everything you listed above doesn’t take 68 hours per week. You can also make money doing some of those things you do (like shopping for groceries – my sister-in-law makes about $100 per month using the Ibotta App and doesn’t change any of her behaviors, she just does her normal shopping).
If you want help, email me your loans, your monthly budget, and a spreadsheet of how you spend your time, and then take the actions I give you. Your kids will value you sucking it up for 1-3 years so much more now than being a financial mess for decades to come. Teach them right by your money habits.
Jonas says
I sympathize with the many commentators who are frustrated and depressed about the lack of better options for dealing with student loan debt. I also appreciate that the author of this article is trying to offer readers practical solutions based on the current state of affairs. It isn’t the author’s fault that there aren’t better solutions to student loan debt.
If we want better options, we have to fight for it and vote for it in the political arena. For example, there’s no good reason why private student loans shouldn’t be dischargeable in bankruptcy just like any other loan. Businesses and individuals can get unsecured debt discharged (or partly discharged) through bankruptcy, or at least restructured into an affordable payment plan (as in Chapter 13 bankruptcy). Private student loans should be treated similarly, but they aren’t because reforming the law on student loans hasn’t become a voter priority (at least not yet). So if you want better solutions, you need to fight for it by organizing and persuading policy makers to create better solutions.
Andrew says
The part about making more money is simply richsplaining. Telling someone to take any enjoyment out of life and then also work over the usual work week hours by taking up another job after you’ve worked all week AND sometimes on the weekends? What is this? I think you should be attempting to understand why a PhD in biomedical industry is offered $45k.
Robert Farrington says
How much debt do you have, both Federal and private? Are you in the field you went to college for? Why did you go to the school where you went? What was the cost of tuition, room/board, etc. to get to where you are?