Question:
Dear Steve,
I am 800k in debt for medical education but I failed the final national board exam and was dismissed from school with no degree. I have an Assoc degree that I can use to make 70k/yr but definitely won’t be enough to make my loan payments. 240k private 620k fed and maybe forgivable after 10yrs of 10% ibr and working in healthcare.
Should I not pay private loans and try to pay fed with hopes of forgiveness? Or try to get as much out of bankruptcy as possible if any?
Any advice would be appreciated.
Josh
Answer:
Dear Josh,
Well you’ve discovered one of the big problems with student loans. You don’t get the best outcome unless you earn the degree, but the school still gets paid and you still get the debt, regardless.
The Public Service Loan Forgiveness approach for the federal student loans will be the best approach. Just make 100% certain your employment will qualify for forgiveness. For more information, click here.
When it comes to private student loans, there are no such equivalent programs and those lenders are not required to offer any payment options other than the payment you agreed to. Unlike a federal student loan that has a number of features and repayment choices, a private student loan is most just like any other loan you may take out.
It would be worth discussing your private student loan situation with a bankruptcy attorney who is aware of the issues surrounding the ability to discharge private student loans that exceed the limits of “qualified educational expenses.” For more on this read These Private Student Loans Can Be Easily Discharged in Bankruptcy.
Additionally, strategically defaulting on your private student loan does have some potential for addressing the debt but it also has some big potential consequences. See Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.
Big Hug! 
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