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So What Can I Do About My Private Student Loans So I Don’t Default? – Temple

So What Can I Do About My Private Student Loans So I Don’t Default? – Temple

“Dear Steve,

I have an excessive amount of private school loans. My parents did not necessarily help me during college and so my loan amount was requested at a little more than my tuition in order to sustain other college expenses. At this time I have exhausted my Graduated Repayment options and am no longer eligible for any type of help and so my loans are averaging to about 2/3 of my paycheck.

What can be done to help? I don’t want to file banckruptcy if I don’t have to but I am on the brink of defaulting on my loans. What are my options here? I have tried calling around to many Default Prevention programs but they mostly deal with Federal loans. What are my options when it comes to financial hardships on private loans. Who can I contact?


Dear Temple,

You are what us professionals in the debt relief world like to call “screwed.”

No private lender is required to alter any payment plan or forgive any debt if they don’t want to. There are of course some small exceptions for those that can find a bankruptcy attorney who knows about things like this and this.

If you have other debt that is preventing you from making your student loan payments you should also consider discharging that to make room for private student loan payments.

To make things even worse, some private lenders have been calling the total loans due when the co-signer, they required, does something entirely natural like die. “Hey, your loved one died, pay in full now.”

Now you did say that part of your private student loan was not used for tuition but living expenses. That part can be discharged by bankruptcy but most are not aware of that.

The graduated repayment plan, forbearance, or deferment for private loans is not a solution. It just grows the balance and makes the problem worse down the road. But for many those pseudo-options are like a flame to a moth.

Until lawmakers change the law, student like you who received private student loans like candy will be up a creek without much of a paddle.

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

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About Steve Rhode

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.
  • Mike

    Is it an undisputed fact that the portion of a student loan that was not used for tuition can be discharged in bankruptcy? Is the lender likely to contest it? I’m in a similar situation, with a large amount of student loan debt, but most of it was not spent on tuition (I had a bad drinking and gambling problem for awhile). Thanks for your help!

    • Steve Rhode

      Will the lender fight it? I would suspect they would since creating this sort of awareness opens the doors for many to do the same. But it does appear that loans used other than for education are not protected under bankruptcy. Talk to a local bankruptcy attorney for legal advice.

      • Mike

        Do you know if this would be applicable under chapter 7 and 13?

  • Kyrie Gibson

    Wow, I am so glad I just read this article. Most, of my PRIVATE student loans were used vastly for “other living expenses”… in fact, only a small percent was allocated to my schools. I am in a similar “screwed” situation as the poster above. How do we find a bankruptcy attorney that will help with this?

    • Steve Rhode

      There is no exclusive list of bankruptcy attorneys who understand all of these issues. I would suggest you talk to a few local bankruptcy attorneys and give them the link to that article.

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