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. “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 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

  2. 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.

      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)

  3. 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.

  4. 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 to see if there is some specific new regarding these loans from a NJ licensed bankruptcy attorney.

  5. 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.


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