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

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 DebtorProtectors.com. 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.

Talk to my friend Damon Day and find out if stopping your private student loan payments makes sense for you.

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.


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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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78 thoughts on “Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan”

  1. I graduated from ITT tech in 2009 and have since payed off all of my federal loans with the help of a small personal loan from my father, but I still have 40k in private student loan debt.
    with the school closed my degree is less than useless it is damaging to have on a resume.
    with all of the student loan forgiveness the President Biden has been giving for foormer ITT students.
    Do I have any recourse to get out of my 40k in private loans.

  2. My federal loans were consolidated when i graduated in 2007, and they are now serviced by American education services (AES), so I’m not on file with that website. This is why AES can do whatever they want it seems and my loans don’t qualify for any programs.

    • NSDLS is the single authoritative reporting source of all federal student loans. It is the national repository of the status of every loan. If there are no loans listed for you there then you don’t have federal loans and the Department of Education knows nothing about you.

      Your situation is not adding up with the facts you’ve given me. But don’t accept what AES has said and don’t give up. There is more to this story. You need more facts and fewer assumptions to help remedy this. Don’t assume anything here. Ask for proof from AES about what program you are actually in. I’ve given you the list of the only Income-Drive plan available on government loans. Nail down AES about which of those programs you are on.

  3. I was told today that i don’t qualify for the income-driven plan, yet they have been saying for years that was the plan i was in. I am in some bs plan that they made up. If i had been told the truth, i would have refinanced with a private lender years ago. My loans also didn’t qualify for the CARES act. I appreciate your help, but as i suspected i am just screwed and they stole 85k from me. My only recourse at the moment is reporting their practices to the office of the attorney general.

    • Hold on. The first thing you need to do is take action to get to the bottom of this. Go log in to https://nsldsfap.ed.gov/nslds_FAP/ and find out what status your federal student loans are actually in. You may be in a specific program that has the correct name. I’m not suggesting they put you in a fictional program. I am suggesting they are not telling you the correct name of the program.

  4. “You are currently on an Income-Sensitive Repayment Plan.

    If you take no action, your loans will automatically be placed on a Standard Repayment Plan when your Income-Sensitive Repayment Plan expires. If you would like a different repayment plan you may choose from the list below. If you would like to reapply for Income Sensitive, select Reapply Now. ”

    This is one of the options with AES, and apparently what they put me on. Probably something they made up so people are on the wrong plan and don’t get forgiveness. Meanwhile what about the 13 years i have paid in so far? Are you seeing why I am so frustrated and angry?

    • So they are using that term but that is not a term used by the Department of Education. The plans are called Income-Driven Repayment Plans and the plans are at https://studentaid.gov/manage-loans/repayment/plans/income-driven and they are only the following:

      Revised Pay As You Earn Repayment Plan (REPAYE Plan)
      Pay As You Earn Repayment Plan (PAYE Plan)
      Income-Based Repayment Plan (IBR Plan)
      Income-Contingent Repayment Plan (ICR Plan)

      Two of those have 25-year forgiveness options but the Department of Education DOES NOT offer anything called an “income-sensitive repayment plan.”

      You should login to the National Student Loan Data System and see what program your loans are in. Go to https://nsldsfap.ed.gov/nslds_FAP/

  5. Hi Steve,
    This site wont let me respond directly to you or see my previous comment. I am on an income sensitive plan. I was told today that i should have been on the income driven plan. I had multiple people at AES tell me i was on the correct plan over the years. There have been other misleading and bad information they have given me as well.

    • This link will help. https://studentaid.gov/manage-loans/repayment/plans/income-driven/questions

      It is important to figure out which plan you are on and make sure it is still active. Payments under the correct plan should count towards potential forgiveness after 20-25 years. Don’t forget they need to be annually certified to remain active.

      There is no plan named an Income Sensitive plan.

      They are:

      Revised Pay As You Earn Repayment Plan (REPAYE Plan)
      Pay As You Earn Repayment Plan (PAYE Plan)
      Income-Based Repayment Plan (IBR Plan)
      Income-Contingent Repayment Plan (ICR Plan)

  6. I graduated 13 years ago with an advanced degree. I consolidated my federal loans (no other option since monthly payments were not affordable) and AES is now my loan servicer. I have been paying what i can afford and will never pay the loans off at this point. I have continually been lied to and mislead by AES throughout the years. I was told i was on a plan that would provide forgiveness after 25 years which is just one of the lies i was told. I have now paid 85k in interest at 7.25%, and somehow my principal is actually more than it was 13 years ago. I am disgusted and dont know if my best move is to have a private bank buy the loan or what to do.

  7. Steve! Late to the game here. I have a NJ CLASS loan. Its through HESAA, NJ branch of government, and not considered private or federal. No bankruptcy will clear it. It can’t be forgiven. I work in Healthcare, but my profession doesn’t qualify for any of the HCSR programs. I consolidated. I’ve been paying the minimum for 10 years, and I still have barely dented the principle. Its insane! $125,000 loan because of my dad. I pay $1,000 every month. 8.5% interest after consolidating for the longest repayment plan. I just checked today and I still owe $111,000. How is this possible!? I’m never going to get to live my life, save for retirement, travel, afford a mortgage. SO disheartening. And when I speak to financial advisors, they tell me I’m screwed and to just pay the minimum for the life of the loan. OK. $325,000 later after 30 years. Awesome. Any advice?

    • Colleen, I wish I had some great advice for NJClass loans. I don’t. NJ legislature has not fixed the problems and people are left with two basic issues that began years ago and will haunt them for years.

      1. The cost of the financed education may never have been sustainable given the amount of the loan and the resulting income in the field.

      2. The loan agreement originally executed by the lender and borrower is being delivered as agreed. I have not heard much, if any, from people that have said HESSA is not following the terms of the contract.

      The NJClass loans are neither federal or private as you commented. One option is to talk to a bankruptcy attorney through https://www.resetbutton.com/ to see if there is some specific new regarding these loans from a NJ licensed bankruptcy attorney.

  8. I have about $180,000 in student loan debt beginning from around 1989. I managed to get an undergraduate degree and a masters degree in social work and was told I would be eligible for loan forgiveness due to my job. Unfortunately, when I attempted to get this I was informed I had to make payments for 10 years and I could not afford the payments so I was offerred deferrments and forebearances until about 5 years ago. When I was informed by Sallie Mae that I was about to default and had run out of dererrments and forebearances I still could not afford the payments. I sought the adivce of a bankrupcty attorney who said the loans could not be discharged but going into bankrupcty would stop them from defaulting and getting a court order to garnish my wages. I did this and the bankrupcty was over in October. I looked up my information and found that my loans were now owned by Navient who advised me I was two months past due on payments of $1500 a month which I cannot afford. I asked about getting into a loan forgiveness program as I am a social worker for the public school system with at risk youth. They advised I would need to consolidate the loans (but I think I already had consolidated them) and that only a certain company could do the loan forgiveness. I also had $4500 perkins loan from my undergraduate degree and a creditor sent me a letter demanding payment of almost $13,000 for the loan, interest and collection fees. These loans also should have been forgiven but the school refused a long time ago when I sent in paperwork in 2001 when I started working for the school system. I called the company Navient told me to about consolidating my loan for the public service loan forgivenss and it looks like if I do this I will have to pay the loan for 25 years instead of 10 years and I am already 57 years old with numerous health issues and not likely to be able to afford to pay for 25 years if I am even alive in 25 years. Can you suggest how I can get assistance with making reasonable affordable payments under the public service loan forgiveness program for 10 years with Navient’s loans and enforcing the perkins loans to be forgiven as they should have been in 2001.

  9. Hi Steve,
    I live in Pennsylvania and have multiple loans open from 2 separate banks, both my parents cosigned on every other loan and after graduating I owe about $164,000 and I’m way over my head in that debt, my sister had the same issue and her $95,000 debt was settled for 35 after 4 years of not paying anything. Do you think not paying them seems like the best option? Or do I even have any other options? I have almost nothing in my name other than a vehicle but I’m worried they could sue for my parents house.

    • Justin, you ask a great question. There is no one-size-fits-all approach. As a general rule settlements are easier to obtain when you are in default but default hurts your credit and exposes you to tough collections and potential legal actions. The best settlements are obtained on private student loans. While the federal loans can trim 10% off and eliminate some collection costs, the government has substantially more power than a private student loan. I would suggest you at least start with a conversation with my friend Damon Day https://damonday.com to discuss your specific situation. It’s not something I can do here with you.

  10. Steve,
    My wife has about $70,000 in private student loans that her father cosigned for. Her payment each month is roughly what she brings home. I make a decent living but I pay almost all of the other bills. We live in Va. My question is if she doesn’t pay do they just garner her salary and tax return if they win or can they come after mine? I am not on her loans, and we cant afford to pay what they want each month without forgoing on other bills. I would like to add that I think it is absolutely insane that at 18 you are not grown up enough to buy alcohol but you can take out $100k in student loans that you may never be able to pay back.

    • I agree with you on the insanity of it all. And to make it even crazier, Secretary of Education Betsy DeVos is blaming the student loan crisis on the kids alone. Don’t get me started on that. Kind of crazy though that the adults in the room don’t say no and cosign.

      I’m not an attorney and can’t give you legal advice, you need to see an attorney who is licensed in Virginia for that. I’m confident you could find a local attorney to give you a very low-cost consultation and give you the scoop on what to expect in Virginia. Here is one place to look for a student loan attorney in Virginia. https://www.consumeradvocates.org/find-an-attorney?field_areas_of_practice_list_value=Student+Loans&field_practice_states_value=VA

      In general, if your wife defaults on the payment the lender will go after her and the cosigner. They may even sue both. Since these are private student loans they can’t intercept tax refunds. To garnish wages they would have to sue, you lose, and then they go for a wage garnishment.

  11. I have a private student loan with Wells Fargo. At this time I have been unemployed for just shy of 2 years (Master Degree Holder), and I am unable to get hired from minimum wage jobs-to jobs I’m qualified for. My spouse cannot make the payments, nor is his name on the private student loan. With no employment, I have no income, therefore I cannot make my $345.00 monthly payment wells fargo wants. I have looked in forbearance (hasn’t been granted yet, and it’s a one-time only option and for 6 months); I’ve look into refinancing, which leads to much higher interest rates and higher payments that are above $345.00 a month with all other vendors I’ve spoken with; my co-signer has proven he cannot make the payment the bank is expecting; and a bankruptcy lawyer said due to current federal law and texas state law (my husband is stationed in texas for military, and since we’ve been here 2 years we have to go off texas law apparently even though our license are still from our home states), that my private student loan cannot be discharged or forgiven in court via a Chapter 7 or Chapter 13 bankruptcy (and yes, for all other debts I’m pursuing Chapter 7 within the next few months). Wells fargo has said if the forbearance is approved, and we do not pay the payment on time after that 6 months, they will put it into collection, and likely sue if my co signer and I cannot pay collection or the bank for the loan at that time. They also said, even with bankruptcy once I start the process and its granted, the bank will not lower the payments, they will still send it to collection and go after me in court, even though bankruptcy proves 100% that I have no income, no assets, no property, couldn’t pay off any of my other debts, and no employment, and no means to pay them.

    In this type of situation what are the logical options, if there are any left?

    My federal loan servicer for my federal student debt is working with me and doing income-driven payments which have a high chance of being $0.00 per month as they know I am not employed and they also know I’m having difficulty obtaining employment of any kind. So not worried about my federal student loans, at least that loan servicer is willing to work with me, has more options and programs to offer, and is understanding thank god on that one.

    An opinion an guidance on my private student loan would be greatly appreciated. I’m terrified once it goes to collection it’ll end up in court, and they will still sue me, despite the fact that I’m pursuing bankruptcy and even without bankruptcy can prove I cannot make the payment. Wondering if there are any options out there that just aren’t discussed with the common public or something like that.

  12. Hello Steve,
    I was an international student when I studied in the US between 2005 & 2009. I received part scholarship and covered the remaining tuition balance with Sallie Mae, now Navient, private student loans. At the end of my studies I had $100+k debt. After I graduated and for a several years following my return to my country I made repayments on my loans. However, I only could have afforded to pay the minimum interest and so payments didn’t even dent the principal amount. Several times, I underwent financial hardship where I had to request forbearance on my loans.

    However, two years ago 2016, it became excessively difficult for me to repay my loan.
    I explained to my loan service provider that I had come upon financial hardship, that I couldn’t find nor pay the smallest of amounts they suggested. They claimed to have made a note of this. However, on several occasions I was bombarded with phone calls, known and unknown numbers, with the possibility of being sued and/or having to settle to pay a lump sum amount.

    I had enrolled in school upon my return to my country and the great financial constraints I encountered forced me to take a leave of absence from school on 3 occasions. I also came to learn that my school could not make me eligible for in-school deferment either. I am just now finishing up my schooling. The job force in my country is significantly challenging with unemployment rate at an all new high. Foreign exchange rate is $140: $1USD, which additionally makes it even harder to pay on my US loans.
    I have no other option but to default on my loans. It is not for lack of trying; I just cannot afford to repay.

    Do you have any advice for me? I’d appreciate your insight.

  13. I have a private student loan that defaulted and has been taken over by a debt collector. The original loan amount was $10k, I paid on it for years and never made a dent on it. I went to graduate school, couldn’t afford the monthly payments and it defaulted. The debt collectors now want to settle for $7k. I don’t have that, nor can I get it with my credit score (which I’m trying to recover). I don’t want to burden family with this, and it has been enormously stressful to deal with while working full time. I’ve looked into other loans to pay for it, as I can do monthly payments, but the loan options haven’t been fantastic. I’m terrified they will garnish my wages or go after my retirement. I’m in California. What are my options?

  14. I have a 4 private student loans with AES currently 44 days past due and climbing. I cannot afford the payment. I don’t have enough equity in my assets to pay off the debt as it is 145k and climbing with daily interest. I defaulted and haven’t paid one penny towards the debt. I believe the statute of limitations law is 6 years in the state of AZ where I live, but what should I do in the mean time with any collection calls or calls from the lender or letters until they possibly sue me and subpoena me to court?

    I’ve done a tone of research and I know they can’t garnish my wages or take my house and that I have 18 months to re invest any of the proceeds from the sale of my home back into the market without them taking that if and when I do sell it.

    Best case scenario I’m of course hoping the debt will magically ride away on a unicorn, but in reality I know that somehow someday I’m going to be more than likely sued and stuck facing this giant somehow in court. What should I be doing now is the question to prepare for that as they of course will not negotiate the payments to be within reason nor the interest as it currently stands. Which why would they they have the upper hand I get that.

    I went to school during separating from active duty in the Air Force and while being in the Air Force Guard to be a helicopter pilot on a 70k private student loan from a company in 2007 that gave me that loan while being a waiter making a little over 3 dollars an hour at the time. Thankfully I don’t have cosigners to pull into my little world of financial hell, but heres the scoop. I wasn’t able to finish the helicopter pilot program which would have been roughly 120k in total as there were quickly sucking the money up in my accounts. Yes the school is a reputable school and they are still in business today, but I don’t have anything to show for it accept a private student loan and a private helicopter pilots license in my wallet I can do absolutely nothing with and now with interest my life has been forever handicapped financially for the last decade after and I’m sure for the rest of my life. Please help. Any ideas other than the lottery or calling President Donald Trump for help. Maybe some interest off the top of one of his gracious accounts that would be a sweet write of for him. lol = D jk, thank you Mr. President

  15. I have approximately $43,000 in private student loan debt with Navient. My in school deferment time (48 months) is up and they are demanding payments. I’m still a full-time student and will be so for the next several years. Would refinancing the loan and then deferring under the refinance loan terms be a good ideal? Does this even exist?

    • You realize that by deferring your loan you are just massively increasing the balance, right? You are making an unaffordable loan even more unaffordable. I’m aware of private student loan lenders but I’m not familiar with people who would refinance and defer the new note.

      When it comes to private student loans they offer none of the benefits that a federal student loan does. No income based repayment plans. You will have to talk to Navient about what they are willing to do and if that is unaffordable you may have to look at realistic options like defaulting and dealing with that in one way or another.

  16. Steve,
    My husband graduated in 2006 and ended up with $116k in federal and (mostly) private loans. His parents cosigned and have since divorced. His mom had filed bankruptcy and is currently unemployed. His dad makes a decent amount of money but has his own bills to pay since his mom filed bankruptcy against them. They also cosigned for his middle brother who has a hefty amount of loans himself. He and I were not married at the time and everything we have now (our house, utilities, our vehicles, credit cards) are all in my name. I also have student loans of my own.
    He is making approx. $33k/year (not using his degree). His take-home every 2 weeks after health insurance and taxes are taken out is around $675. His student loan payments are just under $800/month. He’s talked to the loan company but they aren’t willing to work with him and his loan payments just keep going up. He’s not even paying on the federal right now (deferred).
    I’m desperate and worried we’ll never have them paid off. Do you have any advice? We live in Iowa. Do you know of any options we may have? He doesn’t want to avoid paying because he’s worried about it hurting his parents. But right now it’s hurting OUR family. I’d like to be able to help our kids out someday. Thanks

    • Quick response: His parent who cosigned the loans is 100% jointly responsible for for the loans as well. Any default on a cosigned loan will also impact the cosigner. You really need a bigger plan of action that can move you all towards a common goal. I would suggest making an appointment with my debt coach friend Damon who can assist you with this. See http://damonday.com

  17. Steve,
    I graduated with a non credited degree ( at that time i did not know it was non credited until my 3rd year in school). A little background: I came as a refuge to this country with an I94 and I was never aware of anything that is credited or non credited, I had no idea what interest rate is and on. My mom spoke worse English then me, and she had to cosign all these loans because I did not qualify myself. To fast-forward, I graduated with 80k loan and later found out that I can’t even use any of my credits to pursue higher education. I had to start from scratch at a community school that did not take one credit. I could not find a job in my field either after applying everywhere. So I ended up going back to school, starting from scratch while my loans were deferred. 4 years later, my loans are at 120k. Navient is now saying I am supposed pay 1000 a month for 30 years. All this is too crazy and unreal. But it is true. My question is: my mom is on the loan.. is there anyway to get rid of this without affecting my mom? What are my options and what do I do?
    Thank you

  18. Hi Steve. I came across this article as I was eyeing my Navient account, which is set on auto pay of ~$134 on my $12k+ loan. It’s affordable for sure, but also insane that I pay just as much in interest every month as I do in principle.

    Unlike many, I am fortunate enough to be able to pay. My original loan taken out in 2007 was ~$17k and my parents told me at the time they would pay for that loan because I ultimate switched schools and would take on debt from the new school. Well, they ended up not telling me they hadn’t touched it so I graduated with $25k from the second school and now $24k after interest grew for a few years on that first one. Welp.

    The first loan got transferred to navient and is all that’s left. I’m tired of paying them, though, since it is basically robbery at this point, and am considering the option of just not paying anymore.

    How much of an effect will it have on my credit? Do you think I’d have a decent chance at negotiating a settlement/lump sum?

    • Every situation is different. It will impact your credit and open you to legal exposure. An intentional default is always a better solution when you can’t afford the payment instead of not wanting to make the payment.

  19. Hi Steve
    I graduated from the now defunct Brooks Institute about 10 years ago. Shortly after graduation, unabled to consilidate the loans to a reasonable payment, as the school loan officer assured me I’d be able to do, I soon defaulted on the loans when I was unable to make the payments that added up to several thousands of dollars monthly. Since then, assuming my credit was tanked, I’ve completely avoided it. I’ve never had a credit card, or signed a lease for an apartment. Well recently, after deciding to finally try to tackle these issues from my past, I ran a credit report to see where I stood, and to find out who owned my debt. Well to my surprise, there was NOTHING on my credit report. This baffled me, so I called the three big credit agencies to confirm that all was showing up online, and they confirmed it. According to them, I have no credit history, positive or negative. To them it looks like I’m a newly 18 yo just starting out in the world. Occasionally I do get a call from a collection agency, but appearently none of them are reporting. So what does this all mean? Did I somehow escape?

    • I’m assuming this is private student loan debt. It sounds like the debt is now outside the Statute of Limitations and they’ve just written it off. After 7.5 years it is no longer reported on your credit report. The big issue now is to make sure you do not acknowledge the debt with any collection company nor make a payment on it. It will bring it back to life.

      Keep in mind, just because the debt may be outside the Statute of Limitations does not mean they can’t try to collect on the debt or even sue you, it’s a defense you can raise if they come after you.

      It’s time to build some credit. Read https://getoutofdebt.org/32410/how-to-easily-rebuild-your-credit-and-have-good-credit-again

  20. HI. In 2008, three private loans were taken out for school. I had never been able to pay on them(I could never get a job in my field), and my cosigners never paid them anything at any time. The lender is threatening to take legal action now, in 2017. I talked to them and told them I surely fall under the statute of limitations after 9 years (In California, the SOL is 4 years). They said my loans had forbearances for a while and were only charged off in 2015, after I failed to make anymore payments. I or my cosigners NEVER paid them anything. I asked them who had made any payments, thinking some kind anonymous soul was making payments on my behalf. They could not give me any answer other than they think it was either me or a cosigner. I asked for proof and all they sent was a statement /history of payments made from 5-31-2014 to 6-29-15. It had no other details, not even how the payments were made. It seems very convenient for them, because payments would nullify the statute time frame- but even with their “alleged” payments, I or my cosigners never signed or agreed to any payments to reconstitute those loans! There’s a provision of CCP 360 that says if the statute of limitations has already run, payment does not revive the debt and make it enforceable again. How do I know if they themselves simply hadn’t made some random payments towards the accounts to reset the statute of limitations? Thank you

  21. 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

  22. 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.

  23. Steve,

    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.

    • 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. https://getoutofdebt.org//96815/90-percent-private-student-loan-borrowers-applied-co-signer-release-rejected

      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.

      • 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.

    • 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.

        • 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.

        • 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!

          • 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!

    • 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).

  24. 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.

    • 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 https://getoutofdebt.org//52156/maybe-i-should-not-go-to-college

    • 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?

  25. 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?

    • 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 https://getoutofdebt.org//32410/how-to-easily-rebuild-your-credit-and-have-good-credit-again

      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.

  26. 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

  27. 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?


  28. 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….

  29. 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.

  30. 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.

  31. 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?

    • 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.


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