When talking to potential clients seeking information about repayment options for student loans, one of the first questions I ask has to do with whether the student loans are government issued or government insured, or if the loans are private loans.

If the loans are government loans – owed or managed by the U.S. Department of Education, we have a variety of options set out in federal law. Although the rules are not consistent among the various types of federal loans, for the most part, we have the option of curing defaults, restructuring payments based on the borrower’s income, getting some or all of the loan forgiven based on the borrower’s employment, and otherwise avoiding wage garnishment or bank account levy.

Basically, the Department of Education offers many options to help put struggling student loan debtors back into non-defaulted payment status. The rules to effectuate this goal are not always clear or consistent but that is the goal.

Private student loans are another story. None of the borrower friendly payment modification or default cure provisions set out in federal law apply to private loans. In fact I would go so far as to say that private student loans are one of the worst financial moves you can make – the loans are generally not dischargeable in bankruptcy, lenders have no incentive to work with you, and high interest and penalties that apply to private loans could leave you in unmanageable debt for decades.

This is why recent moves by Wells Fargo and Discover Financial Services come as such a surprise. Wells Fargo and Discover are two of the larger private student loan lenders in the country and according to a recent Wall Street Journal article, these two lenders have started to offer loan modification programs to their borrowers.

Details are forthcoming but it appears that borrowers who are behind or who are about to get behind due to reasons beyond their control (job cuts, medical issues) will have an opportunity to reduce their interest rates or make interest only payments.

Another private student loan servicer, Sallie Mae, has already put into place programs to extend repayment periods on loans and to reduce interest rates.

Generally these programs are not available to borrowers already in default – they are geared towards borrowers who are or who are about to fall behind.

My guess is that these private lenders are offering these modification programs because of pressure from members of Congress who are hearing grumbling from their constituents. Over the past couple of years, several members of Congress have floated the idea of reducing bankruptcy protection for private student loan lenders or otherwise adding consumer friendly regulations.

Private student loan lenders would prefer to avoid legislative mandates so they are taking baby steps to reduce the pressure on some borrowers.

If you have private student loans, I encourage you to express your frustration with your federal elected representative that private student loan lenders should not enjoy the same legal protections as government student loans unless they do a lot more to help struggling borrowers manage their debt.

• Link to Wells Fargo modification page: click here
• More about Sallie Mae interest rate reduction: click here