Financial Advice

I Was Forced to Take Out Private Student Loans

Question:

Dear Steve,

In 2006, I went to a large college that provided Federal Student loans, which I used.

I then transferred schools 3 years later for personal reasons. I was no longer eligible to take out Federal loans and my parent’s credit was very poor so they could not help me either.

I was forced to take out a Private Student loan for the last year of college.

When I graduated, I couldn’t get a job outside of Starbucks for 2 years and could barely afford to feed myself let alone pay my loans even though I was working full time and getting extra shifts and extra jobs along the way. I went into default and now that I am able to put money towards my loans, my creditors will not let me create a payment plan to put money towards the loan.

They say that I must pay a lump sum to a third party (with no guarantee that it will satisfy the debt) or else I cannot pay it. What should I do? I cannot consolidate Private Student Loans and the internet has not been helpful with other options.

Mave

Answer:

Dear Mave,

I feel compelled to first address this issue that you were “forced” to take out student loans. Nobody forced you to continue to go to school. You elected to go to school and entered into the loan by your own free will. We’ve got to get this victim mentality off the table so you can best deal with your issue.

So it sounds as if your student loan went into default and it is now being handled by a third-party collector or maybe even a debt buyer who now owns the debt.

Private student loan debt may indeed be settled. However, the average person has no experience or frame of reference to understand if the deal offered is a good one or what payment options may exist.

I would suggest you schedule an appointment with an independent debt coach, like Damon Day, who can guide you through the process.

You will most likely have to pay any independent debt coach for a consultation for their professional advice but what is the cost to you of screwing this up?

Bottom line, it sounds like the making of a reasonable solution to your debt if you can get the details worked out in line with what the company normally offers.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.

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