If you can’t find a private lender willing to refinance your student loan debt, your options are limited to:
struggling to make the payments demanded
stopping your payments altogether
negotiating a settlement or
Many student loan borrowers struggle for years to try and pay back what they borrowed. But no matter what they do, they simply can’t get ahead. Something always happens. Kids, divorce, injury, unemployment, etc.
At some point, they’ll have to decide whether it makes sense to stop making payments altogether.
When that happens, late fees are added to their loan balance and negative information is listed on their credit history. But that’s the worst that happens.
When you default on private loans, you don’t have to worry about wage garnishment or having your home taken. At least not at first.
Unlike the federal government, private student loan lenders can’t automatically garnish wages or place a lien on your home.
They first have to sue you and get a court order authorizing them to do those things.
The good thing that happens when you stop making payments is that student loan settlement typically becomes an option.
In the past, I’ve negotiated settlements with Navient, Wells Fargo, SoFi, etc.
In my experience, you won’t settle for pennies on the dollar.
Instead, you’ll likely negotiate a settlement for somewhere around 40-75% of the loan balance. (Sometimes lower; hardly ever higher.)
If a settlement isn’t an option, your last option may be filing bankruptcy to get rid of your student loan debt.
Despite what you heard, it’s not impossible to get rid of higher-education loans in bankruptcy. It’s just hard.
But in my experience, even if you can’t discharge your student loans, you may be able to negotiate a really good settlement.