Ask Terry Questions Student Loans in Default — Help!

Student Loans in Default — Help!

By Terry Savage on August 08, 2018 | College Savings / Student Loans

Dear Terry
I have about 30,000 thousand or a bit more in student loan debt that went into default a long time ago. The loan is being held at a collection agency. I really want to start paying back this loan and take back control of my financial life. I tried to get help from this place called sofi to help group my federal and private loans together and get a better interest rate. However they did not approve me because of my low credit core and other reason for qualifications. The collection agency is trying to charge me some ridiculous collection fees and interest rates of course. Anyway my real question is do i have to come to a agreement with the collection agency and just pay the piper with them or is there a more reasonable place were i can find help??
Thank You.

Terry Says

Because your loan is in collection, I suspect that if you did not qualify with SoFI for a refinance, it will be difficult to get one elsewhere. Is there anyone who would lend you enough money to make an offer (to your original lender) so that maybe they will take it out of collection and start a new repayment schedule? I’d think you would need at least a 20 percent “down payment” to make that kind of offer to either a new lender, or the original company. You could even try with the collection agency — but it would be far better to remove this loan from their books, by getting a new lender to pay it off. You would have to demonstrate your ability to repay the balance though.

Federal and private loans should be considered separately. You have some protections and other options on Federal student loan debt. I suspect this is mostly a private student loan, not a Federal loan, since you didn’t mention any of the Federal opportunities such as Income Based Repayment.

If you still have Federal student loans that are in default, read this article at the Department of Education website on how to get out of default on Federal Student Loans.

Recent College Savings / Student Loans Questions



a personal
finance question