Hi Heather - my private student loan with Sallie Mae is on the verge of being reported for collections and default.  I took out the loan a while back on the premise that as long as I attended school I would not be responsible for repayment. Now Sallie Mae is saying that as a private loan I only entitled to 4 years of in-school deferment time, but as a student loan I do not qualify for any loan forgiveness programs, or even bankruptcy.  I am currently still a student with no way of being able to repay this loan or have wages garnished.  I have tried setting up an income based repayment schedule with Sallie Mae but they unresponsive and unrealistic.  Please Help!  Trish from Peaceful Paths in Florida said you would be the person to turn to.

Thanks!

Private lenders are not required to provide the flexible repayment options of federal student loans, but they must fulfill any commitments they made in the loan contract.  Borrowers should review their private loan contracts to understand which options are available.

Private loans typically go into default as soon as a borrower misses a payment, but again, it’s the specific loan contract that sets this out.

The collection process for private student loans is different than for federal loans, but both are extremely hard to discharge in bankruptcy.

There is a time limit for private student loan collection that varies by state. The time limit gives the private student lender a certain amount of time to sue and a certain amount of time to collect if they get a judgment.  Unlike the federal government, private lenders need a judgment to garnish wages.

More info is on http://www.studentloanborrowerassitance.org

Hi Heather-

Apparently Sallie Mae has just issued a policy limiting forbearance periods to twelve months total during the life of the loan.  Is this true?  I can only shake my head and say this new policy will be devastating for anyone who suffers an out of the ordinary financial crisis in life.  Have any other private student loan lenders done the same?  Could you verify what forbearance or economic hardship deferment periods are left with a Sallie Mae loan?