ALPLN Loan Type: Student Loan Forgiveness Isn’t An Option

An ALPLN education loan, often called an “alternative” student loan, is a private student loanPrivate Student LoanA student loan issued by a bank, credit union, or other private lender rather than the federal government. Private loans generally lack federal protections like income-driven repayment and broad forgiveness programs.. They typically carry higher interest rates than government-issued loans, such as Direct, Perkins, or Federal Family Education Loans.

But unlike other private loans, ALPLN loans do not qualify for forgiveness programs offered by the U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans. to federal student loan borrowers. This means ALPLN loans are ineligible for:

1. President Biden’s $20k broad student loan forgiveness plan.
2. Public Service Loan ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer..
3. Income-Driven RepaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. Plan Forgiveness.
4. Borrower Defense to RepaymentBorrower Defense to RepaymentA federal process for discharging Direct Loans when the school misled the borrower or engaged in misconduct related to the loan or the educational services it promised. Discharge.
5. Total and Permanent Disability DischargeTotal and Permanent Disability Discharge (TPD)A federal loan discharge for borrowers who are totally and permanently disabled, as documented by the Department of Veterans Affairs, the Social Security Administration, or a physician's certification..

Related: Will AES Student Loans Be Forgiven?

RefinancingRefinancingTaking out a new private loan to pay off one or more existing student loans, usually to lower the interest rate or change the repayment term. Refinancing federal loans into a private loan eliminates federal benefits like IDR and PSLF. your student loan can help manage your monthly payments by lowering your interest rate and extending your repayment term. Having a good credit score and sufficient income to cover your payments can also help remove a cosignerCosignerA person who signs a loan agreement alongside the primary borrower and becomes equally responsible for repayment. Cosigners are common on private student loans when the student has limited credit or income history. from the new loan.

But remember, refinancing won’t eliminate the interest that has accrued on your loan balance.

For that, you might need to consider negotiating a settlement or filing for student loan bankruptcy. Although these options can temporarily impact your credit score, they could provide the long-term debt relief you need, making way for future financial goals like saving for retirement, buying a home, or even getting married.

What are ALPLN Loans?

While the exact meaning of the acronym ‘ALPLN’ remains somewhat unclear, the fundamental facts about ALPLN loans are known. Essentially, they are private student loans from banks, credit unions, and other financial institutions. The now-defunct company, The Education Resources Institute (TERI), insured or guaranteed these loans.

It can be confusing, as ALPLN Loans are often serviced by companies like AES, which also handle payments for privately-held federal student loans. These federal loans might appear on your student loan account as FFEL Program or Unsubsidized Stafford Loans.

Unlike the ALPLN Loans, these federal loans are typically owned by a bank with Pennsylvania Higher Education Assistance Agency (PHEAA) serving as a guarantor and are backed by the federal government. They may be eligible for income-based loan repayment options and student loan forgiveness programs. But to take advantage of many of the recent benefits offered by the Biden administration during the pandemic, these federal loans often need to be consolidated into a new loan.

If your account indicates that you have ALPLN loans, your repayment options and avenues to eliminate the loans become significantly limited compared to federal loans. While it might seem daunting, there are still ways to manage and alleviate the burden of these loans.

Related: How to Lower Private Student Loan Payments

Repayment Options for ALPLN Loans

Repayment options for ALPLN Loans can seem quite limited. You can temporarily pause payments for these types of loans by requesting a deferment or forbearance or potentially request an interest rate reduction to lower your student loan payments for a short time. But these options will eventually end, and you could find yourself facing a bill you can’t afford.

So, what’s next?

One possibility is refinancing the ALPLN loan with a private lender. But if you’ve been struggling with your current loan payments, qualifying for student loan refinancing could be a steep hill to climb.

You’ll face tough decisions if you can’t refinance the student loan debt. You could strive to meet the payments your servicer demands for the ALPLN Loan, but there may come a point where you can’t afford your loan and other household expenses.

At this crossroad, you have a few options:

1. Stop paying, let your loan defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports., and wait for the statute of limitations to run out.
2. Fall behind on payments, and hope to negotiate a settlement for less.
3. File for student loan bankruptcy to eliminate or reduce the loan.

Related: Can Private Student Loans Be Discharged in Bankruptcy?

While none of these options are ideal—they will all temporarily impact your credit report—the long-term relief they could provide might be worth the temporary setback.

For instance, consider a real-life example: Last year, I assisted a teacher in Virginia in negotiating a settlement for her ALPLN loan.

As a result, she was able to pay 40% of her $150,000 balance over five years at 0% interest. Her monthly payments dropped from over $2,000 for the next decade down to $1,200 for the next 60 months. This goes to show the potential benefits that negotiating a settlement can bring.

Related: How to Get Rid of Private Student Loans

Bottom Line

Navigating ALPLN loans can be complex, but you don’t have to do it alone. A financial advisor or student loan lawyer can provide invaluable guidance.

You can also book a call with our team.

We’ve helped countless individuals wrestle control of their private student loans, empowering them to regain control over their finances. It’s time to eliminate your debt and begin a new chapter of financial freedom. Don’t let your ALPLN Loan dictate your future. Reach out today, and let’s chart a course toward your debt-free future together.

Related: SunTrust Student Loans