Private Student Loan Repayment Options in 2025

Nearly half of families borrow money to cover college costs, according to a 2025 Sallie Mae study. For those with private student loans, knowing your repayment options is key to managing that debt.

Private loans don’t come with the same flexibility as federal loans, but some lenders do offer relief if you’re having trouble making payments. Understanding your private student loan repayment options can help you manage your debt and choose the approach that works best for you. Here's what you need to know.

Current student loan refinance rates

Private vs. federal student loan repayment

Private student loan repayment is a lot different from federal loan repayment. 

Federal student loans come with built-in flexibility. You can choose from several repayment plans, including income-driven repayment, graduated repayment, and extended repayment that can span as long as 30 years. You also have the option to change your repayment plan at any time, which allows you to adjust your payments if your situation changes. Federal loans also allow you to pause payments through deferment or forbearance if you return to school, face financial hardship, or meet other qualifying conditions.

Private student loans work differently. They don’t qualify for federal repayment plans or forgiveness programs. When you borrow, you choose a repayment term — typically between five and 15 years — and that term is fixed unless you refinance. Some lenders may offer temporary relief if you’re struggling, but options vary and aren’t guaranteed.

What repayment options do private lenders offer?

When you take out a private student loan, you often get to choose how you’ll make payments while you’re still in school. Common options include:

• Immediate repayment: You start making full principal and interest payments as soon as the loan is disbursed. This keeps costs lower in the long run, but it means budgeting for payments while you’re in school.
• Interest-only payments: You pay only the interest that accrues while enrolled in school and postpone full repayment until after graduation. Covering your loan’s interest charges up front can help keep your balance from growing while you finish your degree.
• Fixed payments: Some lenders let you make small fixed payments, often around $25 a month. This may not cover all your accrued interest, but it can reduce some of it and help you get used to making monthly payments.
• Deferred repayment: You don’t make any payments while in school, and usually for a 6-month grace period after you graduate or leave school. However, interest still accrues during this time, so your balance will be higher once repayment begins.

You must also choose a specific repayment term when you borrow, which is the length of time that you'll be paying back your loan. 

“Most private student loans offer 10-, 12-, and 15-year terms,” says Mark Kantrowitz, financial aid expert and author of “How To Appeal for More College Financial Aid.” 

“Some offer longer terms, such as 20 years, and some offer shorter terms, such as five or seven years,” he adds.

What if my monthly payments are too high?

If your monthly private student loan payments are too high, your lender may have options to lower payments. These could include: 

• Temporary deferment or forbearance: A lender may let you pause payments for a period of time if you lose your job, go on active military duty, or have another qualifying reason. However, interest will typically continue to accrue, so postponing payments would make your borrowing costs higher in the long run. 
• Hardship or income-based modification: Depending on the lender, you may qualify for a hardship plan that temporarily reduces your payments. This could mean switching to interest-only payments, extending your loan term, or adjusting payments based on your income.
• Interest rate reduction: Certain lenders may lower your interest rate for a limited period, such as 6 months. A reduced rate can lower your monthly bill and cut interest charges during that time.
• Student loan refinancing: Refinancing lets you replace your existing private loans with a new loan, often at a lower interest rate. You may also be able to extend your repayment term — sometimes up to 20 years — to reduce your monthly payment. Just keep in mind that a longer term usually means paying more in total interest.

You could also reach out to your network for private student loan help, suggests Kantrowitz. 

“Borrowers can also ask friends and family for help,” he says. “The cosigner, in particular, may be willing to help, as they will have to make payments — and have their credit ruined — if the borrower defaults.” 

What happens if I fall behind on payments?

Private student loans may be considered delinquent when you miss a payment and could go into default after a few months of nonpayment. 

“It’s safe to say that falling behind on private student loan payments can wreck your finances,” says Bruce McClary, senior vice president of media relations and membership at the National Foundation for Credit Counseling. 

Here are some of the consequences of falling behind: 

• Damage to your credit: Your lender will report late payments to the credit bureaus, and you'll see your credit score take a dive. Late payments can stay on a credit report for up to 7 years. 
• Loans sent to collections: Your loan might get sent to a collection agency, which could aggressively email and call you about paying the debt. 
• Fees and interest charges: Missing payments can rack up late fees and extra interest charges. You may also get charged collection costs if your loan goes to collections. 
• Legal action: Your lender can bring you to court to demand repayment. If a court order is issued against you, the lender can garnish your wages. Note that your lender can only sue you before the loan's statute of limitations expires. This ranges from 3 to 15 years, depending on your state. 
• Cosigner liability: If you have a cosigner on your loan, your cosigner will be expected to pay back the debt. Their credit will also get damaged in the event of nonpayment.

Since the fallout from private loan default can be severe, take action before you start missing payments. Call your lender and ask about your options to avoid default. Avoid ignoring bills, or you could end up in an even more stressful situation. 

“The sooner you reach out, the more options you'll have to prevent default,” advises McClary. “Proactive communication can make a big difference.”

Refinancing to change your repayment terms 

Student loan refinancing lets you replace your current private loans with a new loan from a private lender. This can give you the chance to adjust both your interest rate and repayment plan. 

A lower interest rate could save you money over time, while a longer repayment term can reduce your monthly payment. Just be aware that extending your repayment term may increase the total interest you pay over time. 

To qualify for refinancing, you’ll need to meet a lender’s credit and income requirements or apply with a cosigner. Also, keep in mind that refinancing federal loans with a private loan means losing access to federal benefits like income-driven repayment plans, payment relief options, and forgiveness programs. 

Repayment policies to clarify with your lender 

Policies vary among private lenders, so communicate with yours if you have questions about how to repay private loans. Some options to ask about include: 

• Forbearance or deferment eligibility: Find out if the lender lets you temporarily postpone payments, and if so, how you can request deferment or forbearance. 
• Cosigner release: Your lender may release a cosigner from your loan after you've made a certain number of on-time payments and applied for cosigner release. Refinancing the loan in your own name is another way to remove your cosigner from the loan contract.  
• Refinance requirements: If you're interested in refinancing your student loans, ask about a lender's requirements for credit, income, and any other criteria. 
• Alternative repayment options: Ask your lender about a payment modification, interest rate reduction, or other option if you're struggling to keep up with your monthly student loan payments. 
• Interest accrual: Find out how interest accrues during a payment pause and if it will be capitalized, or added onto, your principal balance. You want to avoid interest capitalization whenever possible since it will increase your cost of borrowing. 

Some lenders publish their policies online, so be sure to check your lender's website for this information. Others handle requests on a case-by-case basis and will ask for information about your situation, along with verifying documentation, before making a decision.