Is Defaulting on My Old Navient Private Student Loan Debt Even Ethical?


Dear Steve,

Some loans moved from Sallie Mae to Navient have become time-barred; 2 loans with my mother as a co-signer remain in good standing. As of July my time-barred / defaulted Navient loans will fall off my credit report.

All Federal student loans have been paid.

I am the victim of numerous deceptive practices by both aforementioned companies: phone harassment; lying about my forbearance options, misappropriating payments.

It seems to me that I should just stop paying the last 2 Navient accounts since the balance includes big collection fees.

Currently, my remaining balance is $12,000. Seems to me, however unethical, that I could just ignore these loans as well since I lucked out the first time?




You raise an interesting point.

I just would not take the strategic default approach with any loans your mother is on unless she is 100 percent onboard.

If a debt is outside the Statute of Limitations or time-barred that does not mean you can’t be sued over the debt or collections can’t be attempted. It is a defense you can raise if you are sued and that could stop the lawsuit initiated by the creditor.

Collectors will attempt to get you to admit the loan is yours or make a partial payment. This can restart the clock on your debts.

This past post can help you understand defaulting.

Now, the questions about the ethical part of strategically defaulting are interesting. I am not the holder of all truth so what I can offer are observations.

I find it interesting that consumers apply concerns about ethics or duty when dealing with their debt. Yet, creditors never made those decisions when extending the credit.

Creditors are large businesses that make decisions about what products have the best profit-making potential for the company. If you think the decision to get into the student loan business was a question of ethics or duty for the creditor, you are incredibly mistaken. It was an executive decision based on profit-making potential.

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I’m absolutely not saying that is a free pass to walk away from your debt but if an informed decision is going to be made it should be apples-to-apples.

Large creditors have a fleet of lawyers that assist the company to defeat claims and block liability. How is that different than a consumer using their rights under the law or the advice of an attorney to stop payment after a debt is time-barred?

Stopping payment after the Statute of Limitations has expired seems to be a legal strategy and not a moral failure. If we wanted an apples-to-apples approach then the creditor would negotiate a payment you could afford and be flexible. But that’s not what happens and one reason it doesn’t is that the creditor is bound by laws and regulations.

If the argument is that the consumer took out the debt and signed an agreement to repay at any cost, then repay the debt and realize you made some stupid choices when you took the debt out and repay all that is asked with a smile on your face.

But if the issue is what options are available to you under the law, then strategically defaulting is a legitimate option if you know what you are doing.

A hybrid solution would be to settle the remaining private student loan debt for a percentage of what you owe. Talk this strategy over with my friend Damon Day. He can give you the pros and cons of this approach after talking to you about your specific situation.

With a settlement, you are neither repaying the full amount nor walking away completely. It will also do more to close the door on the old debts since the creditor will agree to accept a partial amount to satisfy the debt.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

Steve Rhode

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