How Can I Lower My Discover Student Loans? - Paul
Posted July 24, 2013
WRAL Reader Question
I took out a private student loan through Citibank which was then bought out by discover student loans. The original loan amount was $30,992 and the balance is now up to $41,475 because of the outrageous interest rate of 11.375%.
I have made the minimum payment on time for about a year now since the loan entered repayment status. I have called the loan company (discover student loans) multiple times asking if there is anything they can do to lower my interest rate and have been given no help every time. I have also tried multiple times to consolidate through Wells Fargo but have been denied because I am unable to obtain a cosigner.
Is there anyway to lower my outrageous interest rate without being able to obtain a cosigner.
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An unfortunate common misperception people have is there is something special about private student loans like you obtained. While it is called a student loan it is really nothing more than a consumer loan. The only special feature it has is the lender will deny that it can be discharged in bankruptcy. But that's not exactly a true statement.
I'm in the middle of a big research project on private student loans and bankruptcy and one glaring result is if the private student loan was used for a vocational, trade, pilot, or other school outside of a typical college or university, it can be easily discharged in full in bankruptcy. Or if you have an underlying medical condition or your maximum income is insufficient to support massive loans it might be partially or fully discharged in a bankruptcy adversary proceeding. More on that later but for now you can read my initial results here.
The minimum payment a lender sets is not designed to get you out of debt but to ride that fine line between maximizing lender profits and minimizing lender risk. An 11.375% interest rate on essentially an unsecured loan and based on your risk it is not a horrible rate. So to bring the balance down and payoff the loan quicker you'd need to increase your payments to $580 a month and in ten years the loan should be paid in full.
There is no program available to reduce or lower private student loan payments like you have without either the current lender offering such a program or refinancing the entire loan.
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