Private Student Loan Income-Based Repayment Isn’t a Thing

Private student loans aren’t eligible for income-based repayment plans offered by the Education Department, and there’s no way to move those loans to the federal government.

Income-driven repayment plans tie student loan borrowers’ monthly payment amounts to a portion of their discretionary income. These plans also wipe out their remaining balance after they’ve made 240 or 300 qualifying payments.

IDR plans are a lifeline if you need some breathing room before tackling your student loan debt. They give you a payment amount you can afford to keep you can stay out of default.

Unfortunately, income-based repayment is only available for federal student loans. Private lenders such as Sallie Mae and SoFi don’t offer income-based repayment options to borrowers who need an affordable monthly payment.

At best, they’ll pause your payments temporarily with a deferment if you return to school or a forbearance if you’re experiencing financial hardship. Some lenders will let you make interest-only payments for a few months. But when that time is up, your monthly payment amount will skyrocket, forcing you to find private student loan help.

Related: Private Student Loan Repayment Options

Income-driven repayment plans don’t apply to private student loans made outside the federal student loan system. But IDR plans apply to privately-held federal loans made through the Federal Family Education Loan Program.

FFEL Loans are an older federal student loan made by private lenders and backed by the federal government. Many loan servicers who handle privately-held FFEL Loans call them commercial loans.

These loans aren’t eligible for the payment pause and many of the student loan forgiveness programs offered by the U.S. Department of Education. Still, they are federal student loans that can be repaid through an income-based repayment plan. And if they’re consolidated into a Direct Consolidation Loan, they may also become eligible for more IDR repayment options and forgiveness programs.

Related: Should You Consolidate FFEL Loans into a Direct Loan?

Private lenders typically offer two types of student loan repayment plans: one with a fixed monthly payment for the life of the loan and one with a rate reduction for a few months at a time. Check your promissory note or talk with your loan servicer for repayment options.

If you can’t afford your student loan payments, consider refinancing with a new lender. Depending on your credit score, loan balance, and personal finances, you may be able to get a new loan with a lower interest rate and better repayment terms, making it easier to repay your private loans.

Related: How to Get Rid of Private Student Loans

The best repayment plan for private student loans is the one you can afford. Most private student loan lenders put borrowers into a standard repayment plan that offers fixed, equal monthly payments throughout the repayment period.

Some lenders will let you temporarily switch to an interest-only payment plan for a few months if you’re facing economic hardship. But at some point, your lender will eventually require you to make the standard payment despite what is going on in your life. After that, the only way to get a lower monthly payment is to refinance the debt into a new loan. Keep in mind that if you have a shaky payment history, a low credit score, and a high loan balance, student loan refinancing can be difficult. You may need a cosigner to get the best loan terms and rates.

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