Do You Have A Student Loan You Can’t Repay?

 

If you ever went to college or a trade school, you probably had to take out a student loan.  You probably didn’t know much, if anything, about student loans when you signed on the dotted line.  You probably assumed that the school was arranging the best loan for you that it could.  Finally, you have probably been surprised by the difficulty of repaying the loan, and by the lender’s stubbornness about helping you out.

If this sounds familiar, you are not alone.  I hear from people every day with these complaints.  What can you do?  Well, broadly speaking, you have three options.  First, you can continue repaying the loan.  If you have both federally guaranteed and private loans, it is more important to keep the federal loans current than the private loans.  This  is because the federal government has collection powers that private lenders don’t (surprise!).  So, if you have to choose which loans to repay, pay the federal loans first.

If you don’t have the money to do that, you should see if you are a candidate for discharge of the loan.  There are basically two types of discharges:  bankruptcy (very difficult) or because you were a victim of trade school fraud.  If neither of these seems possible for you, you should contact the lender and try to work something out.  Doing this in writing is likely to be more effective than doing it over the telephone.  For strategies on how to handle this, see  http://www.studentloanborrowerassistance.org/.  This is a website sponsored by the National Consumer Law Center, which is a truly excellent organization dedicated to helping consumers.

If you simply do not have the money to repay your loan, and the lender will not offer a manageable repayment plan, you are going to have to default.  I like to think that even lenders would agree that it is more important to feed and house yourself than it is to repay your student loans.  That said, I am sure there are plenty of lenders who don’t care a whit about whether you are eating and where you are living; they just want to be repaid.

Bankruptcy is only available is you have suffered a substantial hardship, such as a disability of some kind.  I will write more on that later.  If you believe you were defrauded into enrolling in your school, you may be able to sue both the school and your lenders.  The lenders are probably on the hook for bad acts committed by the school, so if you can prove those, you might be able to get forgiveness on some or all of your loans even if the school can’t pay your claim.

I will have more on each of these options in later posts.  Be careful out there.

Picture credit to Custom Design

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