I have two private loans, one is with Great Lakes ($37,707.28) and the
other one is with Lend Key ($77,712.35) with an interest of 3.27% (variable)
The loan with Lend Key was originally with AES, but I refinanced with
Lend Key. In total I owe $115,419.63 in student loans, and this is excluding the federal loans.
My monthly payment for Great Lakes is $430 and with Lend Key it’s $579.85.
As you can see this is a huge amount that I am paying and unfortunately most of my payments are going towards the interest and therefore the balance keeps increasing. I have been paying these loans for about a year now, but it’s getting to the point that I can’t afford to be making so much payments due to my family size/dependents increasing. If there is anything else that you would need to know please feel free to let me know.
What steps can I take to stop paying these loans? How should I properly prepare for the said consequences?
Private student loans offer no income based repayment options like federal loans do. The most they offer is some sort of deferment or forbearance option that just increases the amount you owe. If your balance is increasing at all then your monthly payment is not going to be sufficient to ever reduce your balances.
If the lender is unwilling to offer you any repayment solution you can afford then you are really only left with three options.
1. Increase your income/Reduce Expenses – Try to find more money to pay each month. But you would have already done this.
2. Strategically Default – Read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan to discover the pros and cons of this traumatic approach.
3. See if Bankruptcy is an Option – Some private student loans are good candidates for bankruptcy discharge. Read These Private Student Loans Can Be Easily Discharged in Bankruptcy.
As far as your private student loan lenders are concerned, the increasing size of your family is your problem, not theirs. They offer but one easy option, “Pay Up Buttercup.”