Helping people understand student loans is our job at SALT™, and few are better at it than Betsy Mayotte—the director of regulatory compliance for American Student Assistance® (our parent company). We told borrowers to “Just Ask” her questions, so check out her answers below (as well as her cat—because if Piglet can’t make student loans better, what can?).
I currently have two private student loans that are in repayment. I also have federal student loans, which are currently in deferment. I am unemployed and cannot afford to make payments on my private loans.
I am very worried that my loans will end in default because I do not have the money to make payments. I have written both [of my loan holders] today and informed them of my situation. Since they are private loans, I do not know that they will have any options for me. Can you give me any advice on what I should do since I am unable to make payments?
I’m afraid I cannot tell you for certain what options are available for these two loans. All private loan programs have different terms and conditions—even when they’re with the same lender.
Your best bet will actually be to call both loan holders on the phone to see if there’s an interest-only or unemployment option they can offer you. I’m sorry I can’t give you more specific remedies; there just isn’t a lot out there for private loans. If you don’t have any luck calling, as a last resort, you could try filing a complaint with the Consumer Finance Protection Bureau. They have been working very hard trying to obtain relief for private loan borrowers. But absolutely call the lenders first—you may be surprised.
I’m glad you are in deferment with your federal loans—I just want to make sure you are using the best option. If you aren’t in an unemployment deferment, I would suggest you submit this form to supersede whatever you are currently in.
Please let me know if you have additional questions.
I have been in the process of speaking with [my loan holder] for a couple of weeks trying to figure out my options to help restructure or lower my monthly student loan payments. I pay roughly $600/month for my loans, but I just realized that this is for my private loans only—this does not even cover what I owe for my federal loans (which I just had to put into forbearance).
I do wish to pay my loans, but I need help and guidance. Thank you in advance.
Private loans are tough in that there are very few options available if you can’t afford your payments—as you are finding out. The only thing I can think of that might help you would be to consider consolidating those private loans. I can’t endorse any one private lender, but we’ve made a list of all the private loan consolidation programs we could find.
Now, let’s talk about your federal loans. I hate to see you use forbearance if you don’t have to. This will increase your balance and your future monthly payments, as the interest that accrues during the forbearance will eventually be added to your principal. Have you looked into income-based repayment? This option will keep the payments to no more than 15% of your income, minus an allowance for family size. You can see what those would be for you here.
Check out those options, then let me know if you have additional questions.
Have a student loan question you need an answer to? Just Ask.
(Note: The questions and answers above are real; however, they have been edited for grammar and clarity, but not by Piglet.)