Are Private Student Loans Eligible for Forgiveness?

The Balance is here to help you navigate your financial life. To that end, we track the money-related questions you most search on Google so we know what’s on your mind. Here’s the answer to your most recent inquiry about private student loans.

Are Private Student Loans Eligible for Forgiveness?

In general, no.

On Wednesday, Aug. 24, 2022, President Joe Biden announced federal student loan forgiveness of $10,000 per eligible borrower and $20,000 for Pell Grant recipients. This cancellation of debt applies to student loans like direct loans—rather than debt owed to private lenders such as Sallie Mae.

The vast majority of all student loan debt, 92%, is federal—that is, owed to or backed by the federal government. The rest is private debt owed to financial companies or schools themselves, and that debt is generally much harder to have forgiven.

Several existing federal programs—namely, the Public Service Loan Forgiveness (PSLF) program and income-driven repayment (IDR) plans—allow borrowers to have their loan balances forgiven if they make regular payments.

Biden also proposed in August changes to IDR plans that would make it much easier for borrowers to obtain forgiveness. Under the proposed IDR plan, eligible borrowers would pay no more than 5% of their monthly income toward their loans, and would have their remaining debt forgiven after 10 years—this is down from the 10% cap and 20 years for forgiveness under existing IDR plans.

In the case of PSLF, the payments have to be made for 10 years. But these programs also apply only to federal student loans. As of early April, a total of 113,000 borrowers had been granted forgiveness under PSLF because of a dramatic overhaul of the program in October that made it easier to qualify for.

What About Federal Family Education Loans and Perkins Loans?

In addition to direct loans, which are made directly by the government rather than by private lenders, there are two types of federal loans in a gray area: Federal Family Education Loans and Perkins Loans. These older types of student loans, which haven’t been available since 2010 and 2017, respectively, are owed to a private lender or a college, but are backed by the federal government.

Unlike people with direct loans, these borrowers generally have had to continue making payments throughout the pandemic’s student loan payment pause (in effect through Dec. 31, per Biden’s announcement on Aug. 24), and interest continued to accrue. However, these loans can be consolidated and turned into federal loans, which would make them eligible for forgiveness under PSLF, and borrowers in these programs can also have their loans discharged if they become totally and permanently disabled.

So Is Private Student Loan Forgiveness Impossible?

Private loan forgiveness through the government is not impossible.

In 2020, Rep. Madeleine Dean of Pennsylvania introduced a measure that would have given $10,000 to every student loan borrower to repay their debts, regardless of whether they were federal or private—effectively providing forgiveness for private loans. However, the measure never became law.

Some borrowers have had their private loans wiped out, but only under certain rare circumstances. For example, in 2017, students who attended the now-defunct Corinthian Colleges had $192 million worth of private loans forgiven after regulators accused the for-profit school network of predatory lending practices.

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