Should I Quit Paying on My Student Loans?


Dear Steve,

I am $91k in private student loan debt (20 year term). I am $28k in Federal student loan debt. My interest rates are good as far as student loan interest rates go – under 6%. I had no idea about loans, interest, and finances before college and I went to a 4 year college for sports.

I regrettably went to a 4 year college that was expensive and I lived there. I have a good job and can afford the payments. Almost all of my money goes towards interest though, the principal is barely moving. It just sucks throwing all of this money away. I can save some because I live at home.

Should I keep paying it or is it worth quitting on my student loans?



Dear Thomas,

Only you can make a determination if you are comfortable with the risks and possible rewards for intentionally defaulting on your private student loans to attempt to settle them. On the federal loan front, intentionally defaulting on those makes no sense.

I understand how a young adult is not prepared to make an informed decision about the consequences of this large amount of debt you were offered. On the other hand, you did enter into the loans and agreed to repay them according to the lending agreement.

There is no easy out here. You either increase your payment each month to reduce what you owe or you consider a strategic default which will negatively impact your credit, place you at risk of being sued, and hope that a suitable settlement can be reached.

Any option you select, outside of the terms set in the agreement you and the lender mutually agreed to carries some risk. For those who already can’t afford to make the payments, the risk is different than for someone in your position.

The question you probably need to ask yourself is if your desire to deal with the loans in this way is based on necessity or desire.

See also  My Student Loan Cosigner Died and I'm Thinking of a Strategic Default

For more information strategically defaulting on your private student loans, see this post.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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