-
PRIVATE VS GOVERNMENT STUDENT LOANS
Does it make a difference if it is a private student loan VERSUS government student loans? What if I have private student loans versus government student loans delinquent or in collections.
-
1 Reply
-
Yes, there is a big difference if private or government (federal) student loans are delinquent or in collections.
Federal Student Loans:
Delinquency/Collections: Federal student loans have more flexible repayment options. These include income-driven repayment plans, deferment, forbearance, etc. You can rehabilitate or consolidate the loans if they default to get back on track with payments.
Private Student Loans:
Delinquency/Collections: The lender sets the rules for private student loans. They’re typically not as forgiving as federal lenders. This means that you might not be able to put off payments through deferment, forbearance, or loan rehabilitation, and it also means that missing several months’ worth of payments will send your loan into collections quickly.
Credit-wise, lenders might be rougher on delinquent privates when getting mortgages than governments, which offer more resolution options.