There are benefits to taking out federal student loans rather than private ones. For one thing, the interest rates that come with federal student loans tend to be far more competitive than the interest rates private lenders charge. And also, federal student loans come with certain protections that private borrowers aren't always privy to.
One such means of protection is forbearance, or the option to hit pause on student loan payments for a period of time without being considered delinquent on that debt. There are certain circumstances where federal student loan borrowers are automatically entitled to forbearance. On the other hand, private student loan borrowers are generally at the mercy of their lenders when it comes to forbearance.
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But that doesn't mean that forbearance absolutely isn't an option with private loans. So if you're having trouble keeping up with your monthly payments, it makes sense to reach out to your lender and see what leeway you have.
Your lender might surprise you
Private student loan lenders have one goal -- to make money by collecting interest on student loans. But for this to happen, they have to actually get repaid. And if you contact your lender and let them know that, based on a change in financial circumstances, you're no longer able to keep up with your debt, they may be willing to work with you so they get their money eventually.
In some cases, that could mean that a private lender agrees to a period of forbearance. That period, however, may be brief, lasting just a few months.
Your lender might also agree to modify the terms of your student loans so that your monthly payments become more affordable. And they may prefer to go this route rather than letting you pause your loan payments completely for a period of time. Whether this makes sense might largely depend on your personal circumstances.
Let's say you're forced to take a leave of absence from work, during which time you can't repay your loans. If you expect to return to work in a few months and you're able to cover your monthly loan payments based on your salary, then forbearance might be the best route to take.
But let's say you're just plain struggling to repay your loans, and you don't see your financial situation changing for the better anytime soon. In that case, altering the terms of your repayment plan might make more sense than forbearance. And that's something your lender might agree to.
Refinancing could be an option, too
Forbearance is a route worth pursuing if your inability to pay your loans is limited to a specific period of time. But if you're generally struggling to manage those payments, it could pay to look into refinancing instead. This is an especially wise option to pursue if you happen to have great credit.
Either way, though, contact your lender and see what options they're willing to offer. You may not be entitled to the same protections as someone who took out federal student loans. But that doesn't mean your lender won't work with you in some way -- if not for your sake, then for the sake of getting repaid.
