Reply to I owe $125,000 in private student loans to one institution. How to get them to settle?

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[quote=Anonymous][quote=Anonymous]Neither federal student loans nor private student loans are dischargable in bankruptcy. I'm not aware of any statute of limitations on collections on defaulted private student loans.

Do you have guaranteed Federal student loans (federally backed loans issued by a private lender, often with a fixed interest rate), or truly private student loans with no Federal backing (not through the FAFSA, often variable rate)? If the former, please look into income based repayment. If the latter, you have few options other than negotiating with the company. But I don't think its a lost cause -- they'd rather get something easily now than something later through costly bankruptcy proceedings.

If truly private, what company offered you unsecured loans at 17 without a cosigner, and when? I'm genuninely curious.[/quote]

You can discharge federal and private student loans in bankruptcy, but only if you meet the standard of "undue hardship," which is difficult, but not impossible to show.  Info:  http://www.studentloanborrowerassistance.org/bankruptcy/

You're right that there are very few private student loan lenders now who would offer loans to a 17 year old without a cosigner, but back before 2008 there were plenty. Also, at some for-profit colleges, they offer private student loans as way to get around certain regulatory requirements that limit how much they can receive in federal loans.  Since the federal loan profits are so high for them, they don't care if they make some portion of crappy private loans that default.

OP's best bet (assuming she can't show "undue hardship" for bankruptcy) is probably to just bite the bullet and default sooner rather than later.  Private student loans are covered by state statute of limitations, just like any other private credit.  After 4-7 years they won't be able to come after her.

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