Private Loan from College

[alwaysaangel]

I was wondering if one of the older students or financial aid officers might have some suggestions for a friend of mine.

He went to an expensive private school and had to take out private loans in his own name to pay for it. And he owes quite a bit of money on them. When he was working for several years before medical school he was making his payments but now that he's back in medical school he can't afford to make payments.

They're claiming there is nothing they can do to work with him. There is no deferment or forbearance, and now they are saying they are about to pass it on to an outside collection agency at which point it will start affecting his credit score. He already lives on the bare minimum so making payments of the loans he has is not really an option.

I was wondering if anyone on here knows the idiosyncrasies of private loans: would it be possible for him to just refinance with someone else and have a few years of deferment during medical school?

I suggested he put off campus on his FAFSA (even though he lives off campus) because that would give him an extra 10k/year in loans through the government but he's not comfortable lying. If he talked to the finanical aid officer at our school could he make it off-campus to increase the COA even if he knew he wasn't living off-campus? Or is that illegal?

He's trying to find a way to either defer/forebear or make minimum payments for 4 more years until he's done with medical school. If anyone has any leads or suggestions at all I'd really appreciate it.

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[campusvitals]

It's entirely up to the lender. I assume that your friend has reviewed the loan documents? Has he/she made a formal request for forbearance via certified mail or just talked to a service person on the phone? You need to make sure the request is made in writing.

One thing to remember is that the lender DOES NOT want to go into collections. They will pay at least 30% of the money to the collector. That gives your friend some position to negotiate. Maybe he can negotiate a lower payment while in college?

If all else fails, he can talk to a credit counseling service and they will most likely be able to negotiate a better deal for him. This doesn't come without a tradeoff and his credit will be affected, but not in the same way as a default or credit agency.