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. 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 to discuss your specific situation. It’s not something I can do here with you.

  2. 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.

      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.

  3. 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.

  4. 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.

  5. 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?


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