Private Student Loan Forgiveness: What Are Your Options?

Federal student loan borrowers have access to some forgiveness programs. But private student loans rarely, if ever, offer any forgiveness opportunities. With borrowers holding more than $56 billion in private student loans in the first quarter of 2025, it’s likely that some are interested in having those hefty loans forgiven. 

Here’s what you need to know about private student loan forgiveness.

Current student loan refinance rates

Can private student loans be forgiven?

Private student loan forgiveness isn’t common. Unlike federal student loans, private lenders don’t offer forgiveness programs, like Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness (TLF). 

But, in some rare cases, private student loans might be forgiven after the borrower’s death or permanent disability. Additionally, some lenders may allow borrowers in extremely difficult financial situations to settle the debt for less than the full amount.

Situations where private loan forgiveness may be possible

Private student loan forgiveness is rare, but it can happen. Here are some situations when private loan forgiveness may be possible. 

Debt settlement

A debt settlement is the most common situation in which private loan forgiveness might be possible. 

“As a seasoned lawyer, I can clarify that forgiveness is possible in a technical sense, but it is rarely in the form of lender goodwill,” says Christopher Migliaccio, attorney and founder of Warren & Migliaccio, LLP. “More often, it is a result of settlement.”

A settlement involves an agreement with the lender to pay less than what you owe to discharge the debt. Typically, you’ll only be able to pursue this option after financial circumstances force you to miss one or more debt payments. 

Death or permanent disability

If you die or develop a permanent disability, your private lender may or may not discharge your loans. Depending on the situation, the private student loan debt balance may be transferred to a spouse or cosigner of the loan. 

“I am aware of extreme instances where private loans have been forgiven due to illness or disability,” says Jack Wang, host of the Smart College Buyer podcast and college financial aid adviser at Innovative Advisory Group. “These are generally based on ‘compassionate consideration’ and are very much on a case-by-case basis.”

School misconduct

If a school engages in misconduct, like defrauding students, private lenders sometimes offer forgiveness surrounding those loans. 

For example, in early 2024, Navient launched a private loan forgiveness option for students who had used high-interest private student loans to attend for-profit schools with a record of misconduct. These schools included ITT Tech and the Art Institutes. Although this initiative has been weighed down by legal challenges, some borrowers have reportedly seen relief through these programs. 

Can you discharge private loans in bankruptcy?

In some situations, you can discharge private student loans in bankruptcy. But the ability to discharge loans in bankruptcy varies from case to case. 

Typically, to discharge student loans in bankruptcy, you must prove that the loans cause “undue hardship.” According to Migliaccio, courts often use the Brunner test, which requires proof that the borrower cannot maintain a minimal standard of living with these loans. 

“It is not an easy standard to meet, although I have seen clients discharge loans from private lenders when they proceed with great preparation evidenced by budgets, tax returns, medical documentation, and even vocational expert testimony in some cases,” says Migliaccio. 

If you’re attempting to discharge private student loans in bankruptcy, getting advice from a bankruptcy attorney about your unique situation might be a helpful step. 

Negotiating a settlement or cancellation with your lender

If you want to pursue a settlement or cancellation of your private student loans, you’ll generally need to demonstrate your financial hardship first. You’ll often need to prove to the lender that the loans are putting an unsustainable strain on your finances, and potentially see your loans go into default before they’ll even consider a settlement. 

Come to the conversation prepared to explain and provide evidence of your financial hardship. Additionally, be ready to agree to a settlement amount that you could come up with quickly. If the lender offers a settlement, make sure to review the offer in writing before moving forward. 

Although you can technically negotiate a settlement on your own, it can be a good idea to enlist the help of a competent attorney to help you navigate the complex legal situation. 

What to do if you can’t qualify for forgiveness

If you don’t qualify for private student loan forgiveness, other avenues to consider include refinancing or filing for bankruptcy. For those with an unsustainable debt burden, filing for bankruptcy might be the right solution. 

If you just need more wiggle room, refinancing could make sense. When refinancing your student loans, look to lower your interest rate or extend your loan term to lock in lower monthly payments. When you extend the loan term, you might increase the total amount of interest charges you’ll face to pay off the loan. But since the lower monthly payment could breathe life back into your budget, refinancing might be worth it.