PRIVATE STUDENT LOAN
If you're struggling to pay back a private student loan and are feeling the pressure, here is what happens when you default on a private student loan.
What Happens When You Default On A Private Student Loan Program
You’re going to be assessed penalties and fees
The loan holder can sell your account and the loan to a collection agency
There’s no statute of limitations on defaulted loans
The statute of limitations is the time limit for collecting on a debt. For example, if you default on your car payment and don't pay it back within 7 years, you can't collect anything from the company that owns your loan (and they'll probably be happy to let you know).
Your credit score will be affected
It might be harder to get financial aid in the future
- Use income-based repayment plans like Pay As You Earn (PAYE) or Income-Based Repayment (IBR). These programs forgive some or all unpaid balances after 10 years at current income levels; however, these plans don't eliminate them completely like other forgiveness programs do-they just reduce how much is owed each month based on how much income you earn from work after submitting paperwork showing proof of employment every year.*
- Consolidate existing debts into one new loan through consolidation loans such as those offered by JP Morgan Chase Bank