Is It True That Sallie Mae Loans Have to be Forgiven After 10 Years? – Lynn

“Dear Steve,

I’m trying to help out my son and his wife. They initially borrowed 64k from Sallie Mae for Student Loans. I believe it was a priviate loan. Through eight years and a couple of consolidations; they are still in trouble paying back the loan. They have tried to keep up on payments but haven’t always. They are seriously behind on payments. It’s not the original loan, but more than 20k of interest that is driving them crazy. They will never be able to pay all these accuring interest charges.

My question is this: Will Sallie Mae renegotiate the loan and forgive the interest in order to get paid at all? Wouldn’t that be better than never getting paid at all. Also, I heard that if a debt is 10 years old and hasn’t been collected, the lender has to forgive it. Is that true?


Dear Lynn,

Private student loans are a financial death trap. There is no doubt about that.

But with a history of defaults and delinquencies it is not unusual for a significant amount of fees and penalties to be added. The amount that can be added when a student loan account is sent to collections is substantial.

A private student loan that has exceeded it’s statute of limitations in the state they live in may not be collectible by suing. That’s a technical issue that would require them to meet with a local attorney and discuss the specifics of their situation. Promises to pay can extend the statute of limitations so it can be a complicated affair to determine the exact SOL expiration date.

But even if a debt is outside the statute of limitations it does not mean collections can’t be attempted. They can, forever.

The rumor you heard about lenders having to forgive old debt is not true.

Your son and his wife are more than welcome to attempt to negotiate a mutually agreeable payment plan with the student loan holder. But be aware, student loan holders hold nearly all the cards. Until we can return private student loans to being dischargeable in bankruptcy again, I’m afraid private student loan borrowers have few, if any good options.

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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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