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 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.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

Damon Day - Pro Debt Coach

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.

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

  1. 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….

  2. 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.

  3. 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.

  4. 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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