Get Organized When Repaying Private Student Loans

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Paying back loans is a step by step process. Get organized early in the loan game with these tips.

Loan repayment can be a daunting task.These tips can help.

Over the years, repaying private student loans has proved to be a very daunting task for me. Five years ago, I was so lacking options that I turned to my Congressman’s office to figure out the next step.


Pressure is mounting on lenders to do more about the student loan “crisis.” You can’t go a day without reading about it in the news, and every major private lender now has an apparatus specifically for dealing with dire private loan issues that borrowers face. It also seems that on a case-by-case basis, some lenders are willing to help those most distressed.

If you find yourself facing repayment challenges with private loans—where you are simply unable make your monthly payments—here are a few tips that helped me get organized.

Proactively Reach Out To Your Lender

I listed this first for a reason. Under no circumstance should you simply wait for your lender to reach out to you—through either automated calls or, worse, third-party bill collectors. Simply ignoring the problem will only cause more heartache later.

The payment terms of private loans can often seem nebulous and inflexible, especially compared to federally backed student loans that offer generous repayment terms (for example, extended repayment and loan forgiveness). However, that doesn’t mean your private lender won’t help you.

If you call, the agent on the other end of the phone usually has the power to lower your bill by letting you make interest-only payments or suspending your payments (“forbearance”) until you get back on your feet. These options can cost you more in the end, but they’ll keep you out of default. If these are not enough, ask the agent to refer you to other departments for additional relief, such as temporarily reducing your interest rate or even forgiving a portion of your debts. (The latter is extremely rare, but still possible.)

Take Action

Get a account. Connect all of your financial accounts to it, including your student loans, and figure out your net gain or loss in income each month.

Be real. If you don’t have enough to service your payments, refer to my previous tip: contact your lender to explain your situation. It’s worth mentioning that if the randomly assigned agent you reach is not particularly helpful, politely hang up and call back.

Long-Term Consideration

If you’ve recently graduated, been laid off, injured, or can otherwise reasonably project that your earnings potential over the next 5 years (at least) will be less than what’s required for you to service your debts, it’s important to work toward a longer-term solution.

Again, this starts with getting organized and reaching out to your lender. This time, though, escalate your matter to a department better equipped to help you. For me, this was the Customer Advocate Unit at Sallie Mae, but it’s different for every lender.

Be A Driver, Not A Passenger

Lastly, consider the larger perspective. It’s important to take control of your finances as early as possible. Recognize that, as it is with most graduates, this is all new to you, and you’ll be more emotionally prepared for the challenges that await. Learn how to work the phones with your lenders, and you’ll be able to drive the conversation.

Do you have a tip for working with private student loan lenders? Share it below.



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