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Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan

By on November 14, 2014

Right now if you have federal student loans there are good options to help lower or eliminate your monthly payment. To see those options, click here.

But what about when your private student loan lender won’t work with you. What are your options?

Well one of the options is to stop making payments on that unaffordable student loan. If the lender isn’t willing to work with you and you simply can’t continue to make payments, maybe you should just stop making payments. I know it sounds crazy, but listen to what attorney Greg Fitzgerald from California had to say about that. Greg can be found at It’s not as crazy an idea as it first sounds.

1. There is a statute of limitations on private student loans. At some point, the creditor must decide to sue you or lose the ability to force payment from you. The sooner you stop paying, the sooner this time will come. If you get sued, see #7 below. If you don’t get sued, you will not have to pay anything. Not all private student loans get sued on.

2. If you are making some type of payment and the balance is not going down, you will owe the balance- FOREVER.

3. So long as you are making payments, no private student loan creditor will seriously negotiate with you to reduce the interest, let alone the principle amounts

4. The FDCPA (Fair Debt Collection Practices Act) and the RFDCPA (the CA state law version) DOES apply to private student loans.

5. The loan may be dischargeable in bankruptcy (not usually, but it does happen).

6. Your loan may be sold to a debt buyer. In fact, it may be sold several times. Your chances of success (defined as paying less than 100%) increases dramatically.

7. If you are sued: First, do not assume they will win. Second, they are not going to be able to force any payment from you until after: a) they win the lawsuit (get a judgment), AND b) enforce the judgment. This process can take several years and will motivate the creditor to negotiate. Third, we are finding the court forum is better for realistic payment arrangements or lump sum settlements than attempting to negotiate with a collector.

8. Save your money and use the time value of money on your side. $200/month saved will grow to over $7,200 in 3 years. Cash is king and will get you discounts.

9. Paying a private student loan before setting aside a small rainy day fund will leave you unprepared for life’s inevitable emergencies (which if you don’t have the money for will only cost you more as you borrow more).

10. The laws may actually change in your favor.

That Was Good Stuff. Here’s Some More.

Greg shared some excellent reasons why you might want to just stop paying on your private student loan. Keep in mind if you stop paying and the statute of limitations expires and they don’t sue, those loans can now be easily discharged in bankruptcy. But don’t forget that some private student loans can be eliminated in bankruptcy right away. Read this.

If the do sue you and the loans have been sold or transferred more than once, there is a good reason to suspect the current loan holder won’t be able to properly validate the loan if you push them to. If they can’t, then the whole issue may go away and the debt may be unenforceable. See this article and this one for more on how to validate the debt.

Don’t get me wrong, not paying on your private student loan has serious consequences. Not only will it negatively impact your credit score, but your balances will increase, and you could be sued.

But at some point you have to consider what your options are of heading down the dead-end path and limping along making minimum payments.

So let’s say you are just making minimum payments and that leaves you unable to save for your retirement or build an emergency fund. Not only are you sacrificing your retirement income, and that’s money you will absolutely need, but you are also setting yourself up for trouble in an unexpected financial time. It’s financial suicide to not have an emergency fund and it is ridiculous to have no retirement savings so when you are old and can’t work, you’ll be broke. If older you could kick the ass of younger you, they would.

Don’t rush to start skipping payments. If you do decide to do that, make sure it makes sense and you have worked out a plan of action in advance. If you need some help to figure this out, ask me your question and let’s get you headed in the right direction.

If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

About 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.


  1. Jane

    August 19, 2016 at 1:38 pm

    Steve, my school (Silver State Helicopters) closed before I graduated and basically took my money. They filed bankruptcy, but I don’t have that option. The loan company SLX settled with students, but I feel that I didn’t get what I signed up for. I’m still paying $300 a month for nothing. I’m afraid to stop paying. The loan is now with AES. What do I do? Its killing me and now I have additional $10,000 in debt because I have used my CC’s to keep me going. Feel like I’m digging out of a sand pit, I can’t ever get on top because the side keep caving in. Help please, thanks~ Jane

  2. Luis Barros

    August 19, 2016 at 12:35 pm

    Well we the tax payers bailed out the banks and carmaker/big businesses , also we give money to other countries with our tax money (even to countries who hates what this country represents), so as a tax payer I don’t mind if people won’t pay back their forced student loans, the richest country in the world where people have to pay to go to college….nice.

  3. Steve Rhode

    June 3, 2016 at 5:01 pm

    Good points. I addressed most of them in

    Look at the discussion on how this is a multifaceted issue and not a good guy / bad guy thing.

    Keep in mind, private loans are entirely different than federal loans.

  4. nick

    January 14, 2016 at 9:14 pm


    What about the Education they received for $150k. They should just get that for free??? I hope the loan companies use the full force of the law to go after these people that purposely let their loans default. I have no empathy for these people that had to go to the fancy schools for their fancy degrees in meaningless fields. What kind of society are we building that people think its ok to purposely not fulfill their SIGNED contracts. They wanted an education and these loan companies provided the funds so they can receive one. Now you are telling people its ok not to pay them. Good luck having shitty credit for at least 7 years if not more.

    • Steve Rhode

      January 15, 2016 at 12:53 pm

      I understand that point of view. But what about the schools who are not truthful about graduation rates, college counselors who get paid a commission for enrolling students, lender who pass out money like water, and of course the student has a responsibility as well. To dump the entire broken process on the student is not a fair and balanced approach. And let’s not forget the private lenders who radically changed their lending process after lobbying for bankruptcy reform. After the reform passed private lenders stopped granting credit based on credit score and started passing it out to everyone regardless. They also sold loans telling cosigners they could be released but data shows 90% or more are refused a release.

      I think it you carefully read the article you will find default is the best worst option in the face of no other solution. It’s certainly better than suicide, which many consider, and as the article says, it opens the doors to negotiate some solution.

      • Chris Jackson

        June 3, 2016 at 10:51 am

        Here is my issue with this line of thinking. You clearly state that the schools lie, the counselors lie, and we all know who sets the tuition at the schools. Borrowers that are smart enough to attend school should be smart enough to understand the difference between a loan and a gift. Yet when the borrower can’t pay back the loan, its not the school that takes the hit, its the lender. How is that fair?
        The lenders are handing out money like water, but when they weren’t, people were complaining that it wasn’t fair that only people with good/established credit got loans, meaning poor/young people were denied the opportunity to go to college.
        Lenders are a business, not a charity. I don’t understand how they are any different from any other lender. When someone buys a Mercedes and can’t make the payments, no one expects the lender to just shrug and say, “Don’t worry, its ok. You didn’t understand how hard it would be to make these payments. Just keep the car, and we will eat the loan.”
        I agree that your advice on successfully ducking out of this financial responsibility is correct, however it is a long way from right.

    • Cathy

      January 15, 2016 at 2:51 pm

      Some schools lie to bring students in, which is what my son’s college did. The private (Christian) college ensured that he got many private loans he should not have qualified for without any co-signer or credit at age 17 and 18 (he did not have a job or any savings, and we were in the process of foreclosing from a predatory loan, which the college knew). We told them he could not afford for him to go there at least three different times, but they said, “Don’t worry – we’ll take care of everything” (he was a pitcher and they recruited him). Lots more to tell but not enough room. Son’s gf has seven 3-ring binders of suspicious and unlawful activity with lenders and the school throughout the four years, and even though the Office of Higher Ed and the AG’s office have agreed there is a case with most of the issues, nobody will take the lenders on. This is why they keep screwing students – because they CAN.

      • Steve Rhode

        January 15, 2016 at 3:56 pm

        I have no idea what school he went to but there is a tremendous problem with schools not telling the truth to recruit students. Take a look at the Department of Education data on school performance at

        • Cathy

          January 15, 2016 at 4:10 pm

          Thank you for that information. My son’s gf is working on a case (she is not an attorney, but she could be) against the university and possibly filing bankruptcy. For example, the university denies ever having been a lender or using a preferred lender list, but I have paperwork showing they are lying. Plus, there is only a 46% grad rate there – they sure don’t mention THAT.
          Gf says my son meets all the criteria for bankruptcy, but nobody will give her information as to what kind of forms she would need to file for any of it. She has been working on this for nearly 2 years and everyone tells her she has a case (AG, etc.) but nobody will touch it. It is so frustrating to learn that these lenders can do whatever they want and these poor students are suffering. Not many 17 and 18-yo’s (or parents!) understand the financial end of college – they are just excited to be going. Son’s gf went to MN OHE early on (who said there were issues with son’s loans) and has recently found out they are now starting a program for students to refinance their student loans, and they used HER ideas.

        • Chelsie

          January 15, 2016 at 4:14 pm

          Hi Steve,
          I’m Cathy’s son’s gf and have several questions about legal proceedings with lawsuits (potentially) against the school. Quite frankly, the group that oversees this particular school also has several lawsuits against it for mismanagement of investments. After 1.5 years later 2500 hours of investigation, I have found that no one is able to help us; furthermore there are no attys where we live who are able to dispute loan issues. They have said that my bf’s case is the most complex and unique situation they have seen in their x years of experience. It is frustrating, to say the least!

          • Steve Rhode

            January 15, 2016 at 4:57 pm

            There is no doubt this is a complicated area. Most attorneys are not well versed in these issues and the cost to sue a school or lender is astronomical. But there are exposures to school through a fraud or unfair or deceptive claim. See What is the name of the school in question?

          • Chelsie

            January 19, 2016 at 1:23 pm

            The name of the school in question is Concordia University (St. Paul). It is part of the Lutheran Missouri Church Synod. I would be interested in sharing more details with you, but perhaps through email. Do you have an email address? I have brought up the fraudulent activity and deceptive practices (of the school) with AG Lori Swanson, Senators Franken and Klobuchar, CFPB, FTC, FBI, MN Office of Higher Education, US AG, NY AG, and many others (including the Dept. of Education). Although each has found issues, because the issues are so intertwined with federal and private loans, they lack the jurisdiction to put blame on the school. It’s so frustrating when the fraud is so apparent, but no one has the jurisdiction because the private lenders have incredible power over federal limitations, or so it seems. Quite frankly, it may not be the power they have, but the fact that they can get away with just about anything. It’s very frustrating!

    • Mirna

      July 11, 2017 at 1:36 pm

      Lift the country up with fair rates, not bring it down with bad business loan sharking:
      I love my Federal loans because I borrowed what I needed and was able to pay back what I borrowed at an affordable, fair rate (4%-6%). That is good business and good for the economy.

      However, I’m not sure what I can do about my private ones (now at 14%)….no attorney wants my case (understandable) and Navient has no intention of lowering the rates. In just one month, my monthly bill will go up $487.49!!! ($241.01 to $728.50 in 30 days)

      I called – thinking there was a mistake. Did they not receive last month’s payment? No, everything is fine and my account is in good standing – the rep simply told me that the rate went up…(for no reason other than it can). Why am I being punished? My account is in good standing – for years!

      I understand business needs and that people need/should make a living, but this is a company charging well beyond reasonable means without an alternative (just as unethical as a monopoly). Private student loans are a trap, because unlike a business venture that fails, there is no way out for the student. Navient could go bankrupt and change its name to walk away from a bad deal, but I can’t.

      Bankruptcy does nothing to my private loans and older folks need to understand that before passing judgment on students – students of parents like them who don’t have money that grows on trees or lavish inheritances. Victims like the bloated housing market that helps no one but the few who dreamed up the scheme…

      I can’t consolidate (like I did with my Fed loans), I was denied refinancing (for years and recently too) and I can’t get out of this legal bind without filling a suit (that I will likely loose). My balance (borrowed $30,000; now $50,000) is still going UP, not down. I told the rep it was like I was borrowing more money, but I’m not…

      I was hoping I could just make the payments I can afford (not the full $728.50) only to find out it would be like defaulting anyway…I can’t even get a second job in time to make up the difference. One month is just not enough time and after that, what if they just raise it again? …And they will; my account history is proof of it.

      I see no end in sight, I have no control or idea of what I will owe them from one month to the next. By contrast, my federal loans have been consistently the same amount so I can (and have) pay them off (good business).

  5. Kirk Bergere

    January 14, 2016 at 4:46 pm

    its a bit shocking that youre advising people to basically be irresponsible. how about INSTEAD, we advise people not to take on debt they cant afford. period.

    • Steve Rhode

      January 15, 2016 at 12:57 pm

      In a perfect world I’d have a wand to fix the entire student loan mess. It does not begin or end with the student alone. All parties play a part, from parents, students, admission sales counselors, schools, lenders, and false data on graduation rates. But when it hits the fan it all lands in the students lap. I’ve talked a lot about maybe people should not go to college. As an example, see

    • Diana

      May 3, 2016 at 12:36 am

      Only if the lenders were not so pushy so that we could look for other options we wouldn’t have gotten in this mess Kirk but they kept telling us we had a date to do it all and rushed to get it done. Believe me if we would have known we wouldn’t have gotten in this mess and a lot of the s don’t have the two me to do the eraser have we should. It’s not that easy, thank you Steve for the help. It’s not like we are the ones stealing friends m them, they are stealing from us, I would love to pay them back a FAIR amount not an outrageousness amount that don’t make sense. What about what they are doing to us Kirk?

  6. Gary

    January 9, 2016 at 5:34 am

    Steve, PA limitations I believe are 4 years from last activity. For myself, that will be in October of this year. In the past 3 years, I have not spoken to anyone about this student loan. My question is, once that time has passed, what are my options for eliminating that debt history? What I assume is that after the statute of limitations is up, they can’t collect on the debt. Then I would have to wait until the 7 year mark to ask the credit bureau’s to remove it from my credit report. Is this thinking correct? Would I still need to file for bankruptcy to eliminate the default from my credit report? Or hire an attorney to do it for me somehow?

    • Steve Rhode

      January 13, 2016 at 3:34 pm

      The state statute of limitations has nothing to do with the Fair Credit Reporting Act. It should remain on your credit report for up to 7.5 years. I would not file bankruptcy just to remove the default because that would just be a newly reported item. ironically, recovering for a default is actually very easy to do. See

      Keep in mind, they can still collect outside the SOL and trick you to activating the clock again. I would advise that if you are leaning on a SOL position that you consult with an attorney licensed in your state to discuss your situation. So many small issues can impact the actual date it goes past the SOL.

  7. Tamar

    September 22, 2015 at 6:32 am

    thank you for this blog. I have found some very useful information that I believe will help me in the next year. I graduated from the Miami university of art and design in 2009. Right after the economic hardship hit Miami. Due to hard times and beginning a new career that doesn’t pay enough to make ends meet I had many times in deferment and other times able to pay but only the minimum, after graduating with $79,000 in debt I now owe almost $84,000. I am 36 and just got married. I don’t want my husband affected by the debt issues. He is a French man and we live in France. I pay for my own student loans. Will he be affected or have to pay my debt if I stop paying and try to file bankruptcy

  8. Megan

    September 8, 2015 at 2:40 am

    Hi Steve- We stopped paying on my husband’s $110K of Navient Private Loans over 18 months ago. They have given his account to a collections service (I believe it’s still owned by Navient). We tried to settle, but their terms we’re still ridiculously unachievable for us. I’m wondering…how do they determine which state’s statue of limitations is applied to the loan? My husband signed the loan papers in WI, went to school in FL, and now lives in CA. We were living in CA when we stopped paying…would we be under CA statute of limitations?


    • Steve Rhode

      September 9, 2015 at 1:54 pm

      You would need to consult with an attorney who is licensed in your state for legal advice.

  9. Courtney

    January 22, 2015 at 1:32 pm

    I read the article about 10 reasons to stop paying your private loans if you cant afford it…I am there. I did default a couple years back and pay 50.00 a month to a debt collector. The article talked about status of limitations and not paying the loans back. Lets say my private loans were issued for a MI school where I graduated and now I live in IL. What state would I follow for statue of limitations and how long is the status of limitations if I wanted to not pay and wait it out? Lets say for fun I owe 140,000 in private loans and make 37,000 a year and I just cant repay and save and make smarter decisions….

    • Steve Rhode

      January 22, 2015 at 1:33 pm

      For specific legal advice you would need to meet with a lawyer licensed in your state. However, if you are still making payment to statute of limitations is not running yet.

  10. Steve Rhode

    January 5, 2015 at 5:09 pm

    Krystal sent in the question below but I think this article already addresses her concerns.

    I have tons (upwards of 100,000) of private student loan debt (majority of which is Sallie Mae) that I am unable to pay. I did everything I could to keep up. I sought deferments, made as many payments as I could until I realized that it was just not possible. I made 30,000 at the time now 40,000 and after taxes I take home only a little more than half of that. I had a great credit score as I had never failed to pay anything in my life but at that point I decided to file for Chapter 13 Bankruptcy so I can discharge some of my other debt and maybe pay my loans one day. This really is not a good plan either I guess because all this time I am making minimal payments that are not even putting a dent in my debt and although I will soon be relieved of the dischargeable credit card debt, the interest on my loans has just been accumulating and I am sure I will not be able to afford the incredibly high payments once they stay has ended. My biggest concern at this time is that I want to start a solo law firm which I will be able to do with very little overheard in order to make more money. I am worried, however, that even if I incorporate my business, they will sue me and be able to take all of the money paid out to me which would be the majority since I will be the sole owner of the business. I want to pay my loans if I can but I do not want to work crazy hours in order to establish a somewhat profitable business just to find out that it will all be taken from me someday.

    To what extent can my personal private student loan creditors, if they sue me and win, get to my business assets or my income from the business? Is being sued common? Really I just want to know what you opinion is on my overall situation. Any information would be very helpful. Thank you.

  11. Urban Sidhe

    December 18, 2014 at 7:17 pm

    Steve don’t forget that making any kind of payment on the Private loan resets the statute of limitations.

    Thank you for your good advice. I have found this site immensely helpful.

  12. Brandon Scherder

    November 25, 2014 at 11:00 am

    Hello. I have found this website very helpful. I am currently trying my hardest to make the payments but it’s just to hard when i live alone and have so many other bills. They are not willing to work with me at all. I really just want some sort of relief from them. I’m assuming this is the best route to go. The worst ones I have right now are thru Sallie Mae and AES. Do you think this is me best option then?

    • Jrose

      January 24, 2017 at 11:27 am

      Call Priority Documents, I have (2) AES Chase loans and they will not work with me on anything. I stopped paying about a year ago and have sought out alternatives. The best option for me and may be for you is to see if the debt is invalid. If your already in default, it won’t do much to you except help. And if you’re approved for their particular program, you have some legal protections while on the program. They also have programs in the event that they are not able to invalidate the debt. If you’re in my situation – everything is paid on time but your private student loans you took out when you were 17 because the school said you didn’t qualify for financial aid (which is bogus – everyone is approved for federal fin aid, I found out later) were exorbitantly high minimum payment and then you got a new job and its 3 hours away from the apartment you just rented. Like many of us, it’s not about not wanting to pay it back – it’s about the terms as to what and how they want to be paid back. And someone made a comment about being irresponsible – is it not irresponsible to back loans that are being backed by even riskier loans…No? Think again – this is how our economy crashed in 2008. Please don’t put all the blame on the borrowers – the banks are at fault as well and all they care about is that bottom line – and also if you default – the bank gets to discharge your debt and can claim in on their taxes as a loss there by still making money off you.

      • Steve Rhode

        January 24, 2017 at 11:52 am

        Keep in mind, if the problem involves legal issues surrounding the debt, there is no substitute for specific legal advice from an attorney who specializes in consumer issues, is licensed in your state, and you have an attorney-client relationship with. One place to find such an attorney is through the National Association of Consumer Advocates at

  13. National Debt Relief

    November 17, 2014 at 4:10 pm

    Basically, you can apply the principles of credit card debt settlement for private student loans. Good advice for millions of student loan borrowers who need the help.

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