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Can I Settle My Private Student Loan Debt? – Tim

Written by Steve Rhode

“Dear Steve,

Unemployed for two years after college, defaulted on one of my private student loans, delinquent on others. Credit is already terrible.

I have three private student loans, one of which I have already defaulted on. I recently came in to some money and want to use it to wipe out my student loan debt, or at least as much as I can.

When we went to pay the defaulted loan, they offered us a settlement price that was about 75% of the total amount owed.

While my remaining loans are delinquent, they are not in default. Do creditors entertain settlement offers for loans that are not in default? If my credit is already in shambles having one defaulted loan, how much more is another defaulted/settled loan going to affect my credit?


Dear Tim,

Settling private student loans is different than settling other types of unsecured debt. In my experience some private student loan lenders have settled for as little as 50% of the balance but even a 75% offer isn’t horrible considering they don’t have to settle at all.

You credit is the least of your concerns. The credit can always be rebuilt and repaired, easily in fact. Read How to Easily Rebuild Your Credit and Have Good Credit Again.

The secret to having better credit moving forward is close the door on the old delinquent debt and do better moving forward. It’s not rocket science.

While you can ask the delinquent student loan holder if they will settle, don’t be surprised if they don’t entertain it till the loan is soundly defaulted.

Please post your responses and follow-up messages to me on this in the comments section below.

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About the author

Steve Rhode

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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