Wells Fargo plans to modify student loans for struggling borrowers

At a time when high student loan debt has made national headlines, Wells Fargo has announced a program to lower interest rates on eligible private student loans.

The program is designed to help people with a Wells Fargo private loan who are experiencing "financial hardship or distress," the San Francisco-based lender said in announcing the program this week. The lender said it will review borrowers' financial situations on a case-by-case basis to determine eligibility for a short- or long-term loan modification.

If a borrower is found to be eligible for a modification, Wells Fargo will lower their interest rate to make the loan payment affordable based on their income, the lender said.

The move comes as Wells Fargo has continued to offer student loans even as other lenders have backed away from them. Bank of America, for example, has gotten out of the business.

The modification program also comes as regulators have been scrutinizing the private-loan industry.

For example, earlier this year the Consumer Financial Protection Bureau released a report on complaints about the industry’s practice of placing borrowers in default even when their loans are current and in good standing.

Last month, the bureau's ombudsman said that while federal student loans have various loan modification options to help borrowers avoid default, "private student loan servicers and lenders may not make it easy for borrowers to get help in times of distress, which may have consequences for not only your financial future, but also for the broader economy."

Wells Fargo is not the only lender offering to modify student loans.

Discover, based in Riverwoods, Ill., this week announced it is also looking to introduce a repayment assistance plan for student loans next year. The details of that plan are still being determined, the company said.

Wells Fargo said people who have one of its private student loans and are experiencing financial hardship can go to https://www.wellsfargo.com/student/repay/ or call  (800) 378-5526 to learn about the options to repay.