Industry experts reveal that student loans account for $1.3 trillion worth of debt in the United States alone, affecting more than 44 million borrowers and outranking auto loans and credit card debt.
The average amount owed by a 2016 grad? Around $37,000.
Only a part of that is private debt (around 7.5 percent, with the rest allocated to federal student debt held by the Department of Education). Yet, that still equates to a hefty portion -- about $102 billion to be exact.
What Are Private Student Loans?
Private student loans are issued by private lenders, as oppose to Federal student loans which are issued by the Federal Government through the Department of Education.
Some of the biggest private student loan lenders include: Sallie mae, Wells Fargo, Discover, SoFi, Citizens Bank, and LendKey.
If you're feeling the weight of those high payment amounts, the good news is that relief is potentially available. Today, we're discussing private loan forgiveness, and five ways you may be able to qualify.
Ready to learn more? Let's dive in!
There's no one-size-fits-all approach to private student loan forgiveness. Yet, you may be accepted into a program based on your career choice after college.
Some states offer repayment assistance programs set aside for specialized careers oriented toward public service. Many of these are location-specific, extended toward grads who choose to focus their careers in a region the program is invested in.
For instance, Texas provides loan repayment services (up to $2,500) for classroom teachers interested in coming to specific communities in the state. The Florida Bar Foundation provides up to $5,000 per year for qualifying lawyers employed by legal aid or legal services organizations.
Along the same vein, Rhode Island offers a program aimed at bringing new primary care physicians into the state, offering $80,000 over four years for interested physicians, nurse practitioners, and physician assistants.
Yet, keep in mind that not all state-based forgiveness programs will apply to those with private student loan debt. Rather, some are designated for federal student loans only. So be sure to do your research if you set down this path.
In addition to seeking graduates who pursue a specific career path, many private loan forgiveness programs are also looking for people who are willing to work under certain conditions for a set amount of time to repay their loans.
For example, the North Carolina State Loan Repayment Program requires physicians and dentists to commit to a four-year contract to receive payment. Healthcare workers in Massachusetts are required to work two full-time years or four part-time ones to receive assistance.
Most state and local repayment programs require a roughly two-year obligation.
While this type of ironclad commitment might be daunting at first, it's important to keep in mind the alternatives. If you were paying off a federal student loan through the Public Service Loan Forgiveness program, for instance, it would take 10 years to complete the repayment process.
Though it's not always the case, most private student loan forgiveness programs are focused on grads who choose to work in fields or locations that are typically underserved.
In this way, the program acts as an incentive to recruit new talent to areas that might not otherwise receive such support.
For instance, teachers and other education professionals may be accepted into the Teach NYC program. This program aims to bring more personnel into the New York City public school district.
In addition, large animal veterinarians in Missouri may be eligible for up to $20,000 worth of loan forgiveness from the state if they practice in an underserved area with defined need.
If you have the flexibility to move to an area deemed as high-need or underserved, the potential is ripe for reward. Yet, before you pack your bags, be sure the challenge is one you're prepared to tackle.
Depending on which private loan forgiveness program you choose, you may be required to be a certified resident of that state before you can receive the support.
For example, to qualify for loan repayment through the New Mexico Health Professional Loan Repayment Program, applicants must be residents who have lived in the state for 12 consecutive months.
Similarly, Arkansas offers a State Teacher Education Program that grants education professionals up to $12,000, granted they've been a resident for at least one year.
Start with the state in which you currently claim residency, and research the repayment programs offered there.
Looking to move soon? If so, read the fine print on any potential options you come across to ensure long-term residency isn't required. If it is, you may need to wait a while until you can pursue the opportunity further.
It might be counterintuitive to believe that your college or university offers private student loan forgiveness, but in fact, many do.
Recipients of this support are often those whose starting salary levels are what the school considers to be too low to adequately repay a loan and provide a living wage.
For instance, Houghton College in New York offers 100% reimbursement to grads making less than $20,000 out of school. This support is provided until either their loan is paid off or they make a higher salary. Students who make $38,000 or less may qualify for partial repayment.
Michigan's Adrian College provides the same program for those making less than $20,000. In addition, it extends partial, quarterly payments to those making between $20,000 and $37,000.
Yet, even those making a relatively high salary could still qualify for school-supported loan repayment programs, depending on their industry type.
For example, the Sturm College of Law at the University of Denver offers practicing lawyers between 15% and 75% repayment on their loans (spread out over five years) if they make less than $75,000 per year.
It's worth the time to check into your school's loan repayment options, to see if you qualify for any support.
Private Student Loan Consolidation
A private consolidation loan is a private education loan that merges several student loans into a single loan with new repayment terms and interest rate.
This can potentially results in a lower monthly payment and a lower interest rate. The terms of your new private student loan consolidation are calculated using a number of factors, chiefly among them are your credit score and loan balance.
In general, federal student loans that are consolidated with your private student loans will lose any federal benefits they may have, including federal student loan forgiveness programs.
Are you making payments on a student loan and looking for information to ease your financial burden moving forward? If so, we'd love to help.
We're experts on student loan forgiveness, and our enrollment advisors are here to help you navigate the jargon, red tape, and paperwork so you can get back on track faster and easier than ever before.
We'll assess your case, review your potential options, and prepare your documents, taking the burden off of you to find the best solution for your needs.
Feel free to contact us to schedule a free consultation. Your journey to private student loan debt relief could start today!