CommonBond Student Loan Forgiveness: Is It Possible?

There’s a bitter pill to swallow for CommonBond student loan borrowers: no amount of faithful on-time payments, diligent work in public service, or repayment of the principal will earn them the elusive gift of forgiveness.

It’s a cruel irony that news headlines are filled with tales of those who have attended specific schools or worked in qualifying public service having their loans pardoned. Yet, those who refinanced with CommonBond are left in the lurch.

The truth is the forgiveness spotlight is solely focused on federal student loans. Those struggling to pay private student loans will need to look elsewhere for relief.

CommonBond student loans are private student loans, which means they don’t qualify for forgiveness programs. Unlike the federal government, CommonBond doesn’t wipe out borrowers’ balances after they’ve worked full-time in public service for a decade, made monthly payments for 20+ years, went to a school shut down due to fraud, or suffered a mental or physical disability that’s left them unable to work.

The Department of Education is the only lender that provides its borrowers with these student loan forgiveness programs. There is no way to refinance or consolidate CommonBond student loans with the federal government to qualify for loan forgiveness — even if your loans were once federal, but you refinanced with a private lender.

There are only two ways to get rid of your student loans with CommonBond or to knock some of the interest off your loan balance.

• Negotiate a settlement.

• File bankruptcy.

Both have drawbacks. For example, before negotiating a student loan payoff, you must skip several monthly payments and eventually default. You and your cosigner’s credit scores will suffer, and your balance will grow. These are just a few of the consequences of defaulting on student loans.

Similarly, declaring student loan bankruptcy will stain your credit history for years, and you must file a separate lawsuit, known as an adversary proceeding, to ask the judge to discharge your loans.

Although private student loan forgiveness remains a pipe dream, there’s a glimmer of hope for CommonBond borrowers who refinanced their federal student loans during the pandemic — but there are important caveats.

Up to $20 thousand may be refunded on the federal debt that your CommonBond refinanced loan paid off, yet there are certain qualifications for this potential refund.

The Supreme Court must approve President Biden’s student loan debt relief plan, and you must be eligible to participate in it.

Justices heard arguments last month, and a ruling is expected to come out this summer, so the future of billions of dollars in student loan debt is still up in the air.

If the Supreme Court doesn’t kill the plan, you may get a check for some or all of your money paid towards federal student loans during the pandemic.

Private student loan lenders, like CommonBond, have little incentive to forgive loans because their primary aim is to make a profit, not lose it. These companies meticulously comb through borrowers’ credit reports and personal finances during the application process to determine the level of risk and price it by adjusting interest rates. For them, it’s all about reducing risk and maximizing profits.

But the federal government operates under different parameters. Its primary objective is to make sure everyone who wishes to go to college has the opportunity to do so while also ensuring those who borrow money pay it back. To meet these twin goals, the Education Department provides Pell Grants, Grad Plus Loans, and Parent PLUS Loans and enables those with poor or no credit to borrow education loans.

The government also understands it needs to incentivize talented individuals to work in public service areas like teaching, healthcare, and law in underprivileged or rural communities. It does this by offering income-driven repayment plans and debt cancellation programs like Teacher Loan Forgiveness and Public Service Loan Forgiveness, thereby encouraging more people to enter these fields and helping build a better future for everyone.

Learn More: How to Apply for Student Loan Forgiveness

• Pause student loan payments temporarily. CommonBond and its student loan servicer, FirstMark, will let you pause payments temporarily with a deferment if your income drops because you’re returning to school or are still in residency. Also, if you’re struggling to make the monthly payments and are nearing delinquency due to financial hardship, the company will let grant you up to 24 months of forbearance in three-month increments

• Ask for an interest rate reduction. CommonBond doesn’t offer income-driven repayment plans or other student loan repayment terms that consider your living expenses. But it may let you temporarily lower your interest rate a few points or make interest-only payments while you improve your financial situation.

• Refinance for a lower interest rate. Student loan refinance can help lower your interest rate and extend your repayment period if you meet the eligibility requirements. Use an online marketplace like Credible to shop for the best student loan terms without a hard credit check, origination fees, or prepayment penalties. Note: Student loan refinancing rates have rocketed up after reaching historic lows during the payment pause. If you’re going to refinance, hold off until rates drop, or at least avoid variable-rate loans for now.

• File student loan bankruptcy. If you’ve exhausted your repayment options and refinancing is off the table, filing bankruptcy may be your only option for a long-term solution. Student loan discharges due to bankruptcy are scarce but not impossible — you must file a lawsuit known as an adversary proceeding and prove the loans pose an undue hardship. Recent bankruptcy court decisions and lawmakers’ backing of relief for overburdened borrowers have made filing private student loan bankruptcy easier.

Although CommonBond student loans won’t be forgiven, there are steps you can take to make your debt more manageable. Let’s talk if you want to get rid of your student debt quickly.

Schedule a phone call with me. I’m a lawyer with years of experience helping people deal with their loans so they can meet their personal goals: start a family, buy a house, retire, and so on.

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