I Have Decided to Default on My Private Student Loans

“Dear Michael,

I have decided to default on my private student loan. I am prepared to deal with the consequences whatever they are because for a few years now I feel I’ve been just wasting my money.

I was wondering though if you could share any insight..:

1. When you default how much percent of the time will they sue you?

2. If they sue you, how long will it take for them to make this decision generally? A year, 2 years? 3 months?

(I am considering taking an international job offer unrelated to my situation but don’t want to be sued while I am living and working abroad)



Hi Larissa,

Making the decision to strategically default on your private student loans is not necessarily going to improve your situation. I speak with many borrowers who can relate to the feeling of just treading water, and often worse, they are unable to stay financially afloat. And while having the extra cash flow is going to provide a bump to your month, it has costs that should be considered too.

I am not here to deter you. The decision to default on student debts is often one that is made for us. But be sure you are thinking long term.

Repercussions to default.

These drawbacks will mean different things to different people.

  • Your credit score takes a hit, and will stay that way if you let the loans go unpaid, for as much as 7and one half years.
  • After enough months of payment default your balances on your student loans can increase by roughly 20 percent.
  • You can be sued.

How much each of us is going to care about our credit scores will differ. If you cannot continue to make payments, like I mentioned already, the decision is made for us. But I continuously talk to people who seemingly came to terms with the credit damage when they had little to no choice, who later are looking for virtually an way to repair the damage because their life goals and finances have changed. Many will even fall for credit repair scams.

Being sued for private student loans

Your main questions about being sued show that you are thinking this through. Your risk of being sued for most unpaid debts does not being until charge off, which is typically anywhere from 4 to 7 months of nonpayment for unsecured consumer debt. When it comes to student loans, I just don’t see lawsuits in the first 12 months of delinquency. Who are your student loans serviced by?

[Editor: National Collegiate Student Loan Trust loans are a mess. Many are unable to be verified and still others can be discharged in bankruptcy. See this article. If you are sued by National Collegiate Student Loan Trust you should find a local attorney who can challenge the debt claimed to be owed.]

After a years’ time your risk of being sued for private loans will increase as the loans remain unpaid. Many private lenders will go a few years without suing, but file in time to beat your state statute of limitations to legitimately sue to collect. If your loans end up with the National Collegiate Trust your risk of being sued inside a 12 month window have increased exponentially.

What percentage of people are sued for unpaid student loans? Provide more details in the comments below and I may be able to help you asses your risk.

Student loan alternatives

There are other things you can look into in order to prepare to resolve unaffordable private student loans.

Private student loans can be negotiated for less. You can often save half or more on the balances you owe. The amount you are negotiating will be an inflated amount, but the deals can often be quite good. This will allow you to accomplish other personal finance goals, like home ownership, when the student loans are still on your credit reports.

Your loans may be ones that qualify for borrower defense claims. This is going to become an outlet for more and more borrowers as claims against certain institutions increase and become solidified.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

Your student loan situation may qualify for discharge in a chapter 7 bankruptcy. This too is a fluid situation, where we are learning that more and more “un-possible” student loan discharge is not just attainable for those willing to jump down the rabbit hole that once was the wacky world of student loans in bankruptcy.

Moving abroad may help you avoid being sued all together, but it also may toll (last longer) the SOL for you to be sued. Talk to a consumer law attorney about this.

Anyone struggling with the decision to pay/not pay private student loans can post in the comments for feedback.

Michael Bovee founded CRN, a unique company offering debt negotiation education and services, in 2004. Bovee has been contributing articles and free reader feedback on this site for several years.

Michael is a debt industry professional who has volunteered his time to help answer reader questions.

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