Two of the biggest private student loan lenders are getting more flexible with borrowers in distress.
Wells Fargo and Discover are both starting to work with borrowers who have had life circumstances and suddenly can’t make payments. Both are phasing in new programs for those who are 3 to 4 months delinquent.
Flexible payment options for private student loan borrowers
With the modificiations they’re offering, the interest rate and minimum payment will flex based on you being able to document that you have a hardship, job loss, or reduction in income.
Discover is still fleshing out the details of its program. Wells Fargo, meanwhile, aims to lower payments to 15% of your current income or less. Under extreme hardship, distressed borrowes may have their interest rates cut to as low as 1%.
But you must have documentation. This is not something you can fake.
Pay special attention to this caveat: If you are already in default, they won’t help. You have to be in distress and reach out for help proactively before you’re completely drowning.
Today’s private student loan market only accounts for about 7% of all educational borrowing. The lion’s share of borrowing is done under the federal student loan program. But all of this is a step in the right direction.