Is Private Student Loan Forgiveness Possible?

Recent federal changes to student loan programs, including loan limits and the end of the Grad PLUS Loan program, may leave some students relying more heavily on private student loans.

Unlike federal student loans, private loans aren’t eligible for federal debt forgiveness programs like Public Service Loan Forgiveness (PSLF). Still, if you need private student loans to fund your education, that doesn’t mean you’re out of options. Some states and organizations like the National Health Service Corps administer repayment programs that include private student loans. There are also relief options in cases of disability or bankruptcy.

This guide highlights private student loan forgiveness programs and debt relief alternatives.

Generally speaking, no, private student loans can’t be forgiven the same way federal student loans can. Depending on the lender, death or disability discharge might be available.

However, most states offer some type of repayment program, and the National Health Service Corps may also help repay private loans.

The Health Resources and Services Administration (HRSA) is a federal agency that administers the National Health Service Corps (NHSC), which supports primary care providers nationwide and offers several loan-repayment programs. These programs award eligible recipients between $25,000 and $100,000 to help pay off student loans.

If you qualify, you’re required to complete the service commitment established by the program. Additionally, funds can only be used to cover the principal, interests, and related expenses for qualifying educational loans, including federal, state, local, or private student loans.

State student loan repayment programs (SLRPs) aren’t a single type; they fall into several categories:

SLRP eligibility rules allow qualifying commercial/private education loans, but state rules may add restrictions, so confirm with the state program. In addition to these SLRPs, we’ve listed state programs that explicitly include private or commercial loans.

Many state-administered programs we did not include in the list only state that applicants must have a qualified educational loan. We recommend you contact the program office directly to verify if it includes private student loans.

When a private lender exits the student loans business, borrowers usually continue repaying their loans under a new servicer. In rare cases, however, a lender may cancel certain loans instead of transferring them.

BestColleges verified that some Discover private student loan borrowers had their loan balances reduced to $0 when Discover exited the student loan business. However, it wasn’t a publicly announced program and didn’t appear to be broadly applied to all debt holders. Borrowers who had their debt forgiven received IRS Form 1099-C, though whether the canceled debt is taxable depends on federal tax law.

Unlike federal student loans, private student loans aren’t eligible for the Public Service Loan Forgiveness (PSLF) program. But even though private loan forgiveness is limited, borrowers can explore alternatives for debt relief.

If you’re in danger of missing a student loan payment, contact your lender or servicer beforehand. Lenders may offer modified payment structures, temporary pauses due to hardship (such as deferment or forbearance), disability discharges, or settlements.

Refinancing your student loans replaces them with one or more new private loans. The benefits include potentially lowering interest rates or monthly payments. But by extending your term, your total interest may also increase.

Deferment and forbearance are both ways to temporarily pause or reduce your monthly payments due to specific causes (typically financial hardship). However, terms and conditions vary by lender and might not guarantee these pauses. Additionally, interest may continue to accrue even if deferment or forbearance is granted.

Some private lenders discharge loans if the borrower becomes totally and permanently disabled due to sickness or injury, but, again, policies vary. Check your loan contract to see if it includes a disability discharge clause, and ask your lender what medical documentation it requires to confirm eligibility.

Bankruptcy can discharge student loans (both federal and private) only if the court finds that repayment would cause undue hardship. While discharging loans through bankruptcy is very difficult, it can also lead to mediation with your lender where you can negotiate down your monthly payments and principal. Consult with an attorney to determine whether bankruptcy is the right option.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues.