Ask The Get Out of Debt Experts Private Student Loans

Can I Settle My Student Loan Debt With LendKey or Aspire Federal Credit Union?

Written by Steve Rhode


Dear Steve,

Private loans. Debt balance $39K. I have switched lenders many times. Finally got an interest rate lower than 8.9%, making some head way on my loan however I’m still being jerked around.

Is it possible to request a settlement on a current loan? My lender is LendKey. They had me go through a credit union (Aspire) I’m wondering if I offered to pay 25K back in x amount of years if they’d go for that.

I guess my question is how can I get my loan company to do a settlement at a lower rate. I feel very hopeless. I have so much information from my lender before this one that royally screwed me for year. I tried getting the BBB after them etc.

So now I’m struggling with this new lender because I’ve paid between $500-$700 a month the past 11 years on a $60K loan and I’m only at $39K. Im dying! and its causing me to be depressed etc.



Dear Shannon,

So here is the straight scoop on settling. Every debt in the world can be settled. A settlement is nothing more than a meeting of the minds between a lender and borrower about resolving the debt for less than is owed.

But there is nothing that requires any lender from settling any debt they don’t want to.

Your only power over the lender is if they violated the law or you seek protection through the law in bankruptcy. Back in 2005 the lenders managed to change the bankruptcy code to give private student loan lenders some protection. But not all private student loans are protected from being discharged easily in bankruptcy. You should read These Private Student Loans Can Be Easily Discharged in Bankruptcy.

Now, all of that being said, lenders will develop their own internal policy and procedure when to settle. For some private student loan lenders they secretly negotiate settlements and extended payment plans once the loan charges off after 180 days delinquent. Before that time they try to collect hard on the loan. The default will appear as a negative item on your credit report.

READ  I Can't Afford My LendKey and Great Lakes Private Student Loans

I completely understand the frustration and depression you are suffering. The depression from debt problems makes people feel hopeless and leads to clinical depression. And what happens to people who are depressed? Well they struggle to think clearly, devise a longterm plan, carry it through, and become easily rattled. You are a perfect target to be emotionally manipulated by collectors.

This is a very common problem among people with problem debt. I would suggest you read Survey Finds Debt Equals Depression For Many: Women at risk to suffer with financial depression.

A private student loan is just a loan with some legal protections afforded under the law. An 8.9% interest rate on a private student loan is not a horrible rate based on the feedback I get from readers.

According to the LendKey / Aspire Federal Credit Union disclosures, the interest rate can be between 3.1% to 8.7% but it is a variable rate loan. It looks as if they offer a 0.25% rate reduction for autopay. – Source

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Where lenders snag people is in offering deferment or interest only payments. That causes the balance to either grow or remain the same even if you are paying.

In a perfect world you would have some other debt that is causing you from not repaying more each month on your student loans. A consumer bankruptcy to deal with that other debt would allow you to focus more on your private student loans. This will allow you to clear away that debt much quicker than paying the lender minimum payment.

Outside of a negotiated settlement with Aspire Federal Credit Union, who appears to be the underlying lender here, your options are limited, other than what I’ve laid out.

Thank you for writing me.


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.

About the author

Steve Rhode

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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