Teacher Crushed by Private Student Loans Looks for Help


Dear Steve,

I started my student loans with Sallie Mae in 2004/2005. At the time, they asked for my parents information (my mother being a single mother was not able to help me, however financial aid said she made “too much” and I did not qualify and could not apply for federal loans on my own until I turned 25 or 26). Therefore, I was told my only option was taking a private loan through Sallie Mae.

At the time I thought this was great news so I could go to school. Years later, I am $150,000 in debt to Sallie Mae (now in debt to Navient). My payments were originally set at $900 per month which was absurd and completely undoable with my teaching salary.

I was able to work out a deal with them around August 2015 to a payment of $500. This definitely strapped me very tight with money, however it was slightly doable and I just wanted this student loan nightmare over with. In September and then in January, my district made significant pay cuts and I make making significantly less money than I had been.

These $500 dollar payments are leaving me without being able to pay for food, gas, and leaving me behind on rent payments, any chances of being able to save, etc. and they will not work with me because they had already made a deal with me to lower the payments once.

What are my options? What can I possibly do about this situation? There is no way I can continue to live in this manner. I am unable to provide clothes, food, and gas for myself while payment rent, car, car insurance, and these loans on a very low teaching salary. I need help and guidance on what I can do.



Dear Nichole,

It is so ironic that for many the worst decision they ever made was to pursue a degree using private student loans.

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While I would love to tell you your situation is rare and there is an easy answer, neither would be true.

Private student loans are covered by a unique set of rules and options. Distilled, those rules are whatever the lender wants to do.

Unlike federal student loans which offer options like income driven repayment plans or loan forgiveness for teachers, private loans just don’t. And without action by Congress to make them offer such options it is unlikely they will.

You’ve taken the first step I recommend, talk to the lender. Typically they will put you on an interest only payment or deferment, which is worse. An interest only payment never reduces your balance and a temporary no payment holiday just explodes your balance.

Your realistic best options for dealing with this are not easy swift solutions. But they can be potentially effective.

The first would be to consider what the loans were used for. If your borrowed amount was used for expenses above what the eligible education cost was then that amount could be discharged in bankruptcy. See this article for more information. If your school you attended was not accredited, then your debt could be totally discharged in bankruptcy.

But when faced with making the loan payments, tossing away your future retirement savings, and struggling to live safe and eat; your options become apparent. At some point you are going to have to throw in the towel.

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If the lender is unwilling to work with you and your life is unable to support the payments then strategically defaulting is a logical option to consider. You should read this article.

I have a soft place in my heart for teachers. My mother was a teacher for 35 years. I have good friends now who are teachers.

It’s not like teachers have enough free time during the school year to work a second job without sacrificing their ability to deal with all the requirements that a modern teacher has.

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So your choice is to abandon teaching and look for a better paying profession or make some hard choices and face the rocky path forward on dealing with this debt.

I’m not saying you should not pay your loans because you don’t feel like it. What I am suggesting is it is a logical issue to contemplate considering that you are throwing away massive amounts of lost retirement savings you will need when you are least able to afford to live.

Unless your loans are, in part or in full, eligible for discharge in bankruptcy then your ultimate choice is going to come down to quit teaching or quit paying. Either way you will have to deal with miserable consequences.

Damon Day - Pro Debt Coach

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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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