I've Been Trapped in Sallie Mae Loans for Almost 19 Years

Dear Steve,

I graduated college in 1995. I am still paying my student loans. I now owe more than I borrowed. My interest is 9%. That is what the interest was back in 1993. I got a fixed rate because, really, who knew that interest rates were going to go so low. I have been paying for 18 years, deferred at times due to unemployment and other debt issues and I do not see any end in sight.

My original loan was for $9000 and I now owe over $13,0000. I have not been able to pay and I am about to go into default. After 18, almost 19 years now, it is ludicrous that I can not get any relief. What, if any, advice do you have for me? Other than bankruptcy on my other finances so I could just have the student loans to worry about, are there any other options? They have already been consolidated with Sallie Mae and they are not willing to help me. In the meantime, the interest is just building up and I am afraid that my wages will soon be garnished.


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Dear Jackie,

It is unclear if these are purely private student loans or they may be eligible federal loans which Sallie Mae is servicing.

The first step would be to figure out the true status of these loans and I would suggest you read the information about accessing the National Student Loan Data System (NSLDS) and that will clear up that question, quickly. You can read this article for more information about NSLDS.

I'm not surprised the balance has grown. Simply hanging loans in deferment causes the balances to grow and missing payments kicks in late fees and penalties.

If these are truly just private student loans then there are limited options outside of what the servicer will offer. Your other options are to find and talk to a local bankruptcy attorney about filing bankruptcy that may reduce or eliminate the loans, or default on the loans and hope the statute of limitations expires before they sue you and then discharge them in bankruptcy. Despite what you might hear, some private student loans can still be eliminated in bankruptcy.

If these are federal eligible loans then there are some good income based repayment options that can lower your payment to zero and eliminate your debt in the future.

This is probably enough homework to get you started to find the right path for your situation.


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