I Make Near Minimum Wage With $200K in Student Loan Debt

“Dear Steve,

I am 28yrs old with one child. I currently owe Sallie Mae over $100,000 in student loans. I also have several other student loans with Department of Education and Citibank.

My total debt is close to $200,000. I was 18 when I started getting private loans from Sallie Mae. I didn’t know exactly what I was doing or how it could very likely impact me now.

I tried numerous times to offer my affordable payment to them and they would not accept it. They wanted me to pay over $1400.00 a month at that time and unfortunately I was only making $10.00hr and have a child. There was no way I could pay that.

So its been almost ten years and I have not paid one dime to them. As the older I get I see that this is really hurting me in many ways.

I cannot afford to pay back those loans. I only have a Associates degree. I know it sounds crazy but as I stated I was 18 at the time and really didn’t know what I was doing.

I am a single mom of a 7-year-old daughter and I feel like I have no hope for the future. I was told I couldn’t file my student loans on bankruptcy.

My question is How can I go about trying to eliminate this debt? What steps do I need to take?


Dear Carla,

If you have not made a single payment or payment promise to Sallie Mae for your private student loans for a decade, it is likely the statute of limitations has expired in your state and your private student loans would be eligible for elimination in bankruptcy.

It sounds to me as if you need to talk to a different attorney about filing bankruptcy and get a second or third opinion. The key points to mention to them are the length of time since you made a payment and the fact these are private student loans.

Sadly, not all bankruptcy attorneys understand the nuances of dealing with student loans. Many still believe they are not able to be discharged but that is an incorrect belief. Many are eligible for discharge under bankruptcy. See these articles for more information.

See also  I Think I've Paid Enough to Navient and SallieMae

On the federal student loan front, if you have not done so already you should look into the Income Based Repayment plan to keep your federal loans in good standing but with a payment that might be as low as $0 per month. There is no need to let your federal loans default with the options available for them.

Please post your responses and follow-up messages to me on this in the comments section below.


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16 thoughts on “I Make Near Minimum Wage With $200K in Student Loan Debt”

  1. Steve – if the statute of limitations has run, why would bankruptcy be necessary? The creditor won’t be able to get a judgment and collect on tbe debt if the statute ran. Not seeing how bankruptcy would help here or what benefit there would be. And, after 2005 law changes federal and private student loans are all treated the same and non dischargeable, absent undue hardship.

    Thanks for any clarification.


    • Ryan,

      You are partially correct. Private student loan debt is all dischargeable without hardship outside the Statute of Limitations after 2005 bankruptcy changes. Most people get that fact wrong. The perfect reason to file bankruptcy on the substantial debt, close the door on it and move forward. Do you really want it to chase you around for years? There is nothing that prevents collectors from chasing and suing on out of stat debt. Consumers have to fight back each and every time to deal with it.

        • Not sure of the exact section but, “The student loan creditor waited too long to sue you. Federal student loans have no statute of limitations. However, private student loans are subject to your state’s statute of limitations (time limits on how long to wait before suing) for legal action to collect on written contracts.” Also, “There is also case law to support discharging Student Loans that have past the statute of limitations.” http://debtorprotectors.com/california-student-loan-debt-lawyer_pa13381.htm

          • I think I’ll need to find a case. I can’t see how a bankruptcy discharge would stop a private student loan lender from sending letters, and calling for collection after the bankruptcy is over. Of course, if the statute has run the borrower can prevent a judgment from being entered.
            If it case law specific, your advice may not be so simple. As a bankruptcy attorney, I would not feel comfortable telling a client who has private student loans where the statute has run that a bankruptcy will automatically stop future collections. Unless, of course there is a case in my circuit that is binding. I am not aware of any however. So, for you to say that most bankruptcy attorneys get this wrong, is a bit misleading. IMHO.


          • Of course don’t forget there is a tremendous amount of private student loan debt not protected by bankruptcy by being for expenses above “qualified educational expenses” and for non-accredited schools. See https://getoutofdebt.org/53288/these-private-student-loans-can-be-easily-discharged-in-bankruptcy

            Then of course you have both private and federal student loans discharged in APs. https://getoutofdebt.org/category/debt-articles/student-loan-related/student-loan-bankruptcy-discharge

          • Yep, I understand that and it’s good to spread the word on those issues – as bankruptcy can in fact help some people with student loans.

            I still haven’t found a case to support the conclusion that any private student loan past the SOL is discharged in a bankruptcy. If the SOL has past, I don’t see bankruptcy doing a darn thing. When people read stuff like that, they come to their bankruptcy attorney and think the attorney doesn’t know what they are doing and end up with conflicted information.

            Here’s what I would tell someone in those shoes – since the SOL has run on your private student loans, you could prevent the lender from ever getting a judgment against you, so they will not be able to collect by way of wage or bank garnishments, liens, etc. If you file bankruptcy they can still send you letters and call since the private student loans are non dischargeable – so you are in the same spot as you were before.

            Now, if there is a case law that is binding in my district that is different and I would advise my client accordingly.

            If there is a case out of another jurisdiction that is not binding, the client would need to be warned that our Judges could see things different and if we want to make case law it could be expensive. The bottom line is that I don’t think it is fair, or helpful to make a blanket comment on the law that oversimplifies a very complex issue – and, it also undermines nearly all bankruptcy attorneys in the country.


          • It is simply non-dischargeable. Just like a federal student loan. I certainly wouldn’t tell my client they have some sort of recourse for a discharge violation if they had a private student loan past the SOL, and after getting a discharge, got a collection call or letter from the lender. I would tell them if the lender sues on it we have a defense (in state court) due to the SOL running. Again, bankruptcy does nothing here. They are in the exact same spot.

          • All I can tell you is others are taking it on and including it. And let’s not forget the private loans for non-qualified schools and loans above qualified educational expenses even for Title IX schools.

            Where is the harm in including out of state private student loan debt to create the documentation it was included?

            As this bankruptcy attorney says, “State statute of limitations on contracts DO APPLY to private student loans. In Massachusetts, that means that after six years of failing to pay your student loan, assuming the lender has not initiated a lawsuit, the debt is simply gone.” – https://wingfieldlaw.wordpress.com/

          • I understand that the SOL does apply to private student loans. I haven’t disputed that at all and tell my clients about that awesome protection. What I am saying is if the SOL is protecting them, and they have no other types of debt, they shouldn’t file bankruptcy. It gets them nowhere. No case law, or code section supports the statement that “private student loans are dischargeable if the SOL has run”.

  2. I am in garnishment for one loan and paying back two others. It’s an absolute mess. Not being able to find a “decent” job in this economy is no excuse to the creditors. I had a lady on the phone who said, “Well you could be dead and that would pay them off”. I’m sorry, but it is ridiculous and college now days is a scam.

    • If these are federal student loans you may want to consider a
      rehabilitation program. Usually after five on time payments the
      garnishment will be released and after 9 – 12 payments (depending on the
      type of loans) you will be out of default. Then you can consolidate your
      loans and choose a income driven program. Depending on your gross
      adjusted annual income for 2014, if you file single or joint, your
      family size and the state where you reside will determine your
      affordable monthly payment that can be as low as $0 per month.

  3. When you say a “payment promise” what exactly do you mean?
    Also if its past ten years since I had the loan does that mean I can file it on bankruptcy and wont have a huge problem?


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