Editor's ChoiceCategories Credit Type Issuers Blog

Falling Behind On Student Loans


One of our readers, Richie, had this question for us:

I really need good advice about my private student loan. Sallie Mae has increased my monthly payment so much that i cant pay it.

I have missed about 3 or 4 payments now, I’m behind. My loan payment i was told, was going to be about $282 before i took the loan, and when i got my payment schedule it was about $309 then it went to $332 then $360.

My balance was around $25,000 , now its $31,000 and i have been paying it for about 2 years.. I don’t understand why am i paying $300 plus only to see my balance go up $5000. I stopped paying. Someone said if i continue to pay then they wont help lower it, if i don’t pay they will work with me.

However my main question is , how does this affect my dad who cosigned? I mean how bad can this one account hurt his credit, if it is perfect otherwise ? will it kill him ? or will he be ok to still borrow money ? I don’t care what happens to my credit right now, but his I do ? and since this is not a gov’t student loan, what happens if i never pay them ?

Thank you so much for your time I greatly appreciate your help.

Richie C

Thanks for your question Richie.

Let’s start with the question about your father’s credit rating. Since he is a co-signer his credit will be affected just like yours if you do not pay. Even if his credit is perfect otherwise your student loan will do enough damage to completely ruin his credit for a long time.

What’s even worse is that if you never pay, they will come after him for the full amount of your loan. Co-signers are legally responsible for the debt just like you are. For more information on that you can check out our article on “How Does Co-Signing A Loan Affect Your Credit?“.

As for the question about private vs. government student loans – the only time it matters is if you declare bankruptcy. Private student loans can sometimes be included in a bankruptcy, while government student loans (or any money that you owe the government for that matter) can not.

So, the only real option if you don’t want this to hurt your dad’s credit rating is to work something out with Sallie Mae.

You should treat this just like negotiating with your credit card companies. Go ahead and give them a call – but follow these steps when you do:

Step 1: Speak with someone in the collections department.

If you are getting phone calls from Sallie Mae asking about your bill, then you are already speaking to the collections department. If you call them to arrange payments, make sure you ask to speak to someone in collections.

Collection reps (or anyone trained to handle a past due account) are going to have the most leeway when it comes to negotiations.

Step 2:
Ask them why the total amount of your debt increased from $25,000 to $31,000.

If there were fees added, you need to know. If they changed the interest rate on your loan, you need to know!

Step 3: Ask them to remove the fees

You may need to speak with a manager. If the representative you talk to won’t help you, hang up and call back!

Make sure that you get any late fees, or other penalties off of your total balance. It doesn’t hurt to tell them that you are willing to make a payment that day if they will negotiate with you.

Step 4: Reach an agreement and negotiate a payment schedule

When you do get all of your penalties removed, and you set up a new payment schedule, make sure that you stick to the schedule that you set. Otherwise, the fees will get added back on, and you will be right back where you started.

Also, make sure you check out these options for deferring student loan payments. (From Sallie Mae’s site).

Richie, please come back and let us know how this goes. If you have any other question I’ll be happy to answer them.

Mr. CC

We also had another reader, Fran, who had this question:

I’m looking for a birthday invitations that look like a credit card. wondering if you could help me find some?

Hi Fran, thanks for your question!

I looked around a bit online, and couldn’t find anything like what you requested. So, my best advice would be to create an account with Dreamstime.com (A legitimate site that sells photos – we use things from them on this blog occasionally). Find a credit card photo that you like, and the image. (Anywhere from $1 to $5).

Then, visit Shutterfly.com where you can upload the image and create your own birthday invitations. They will mail them right to your door, and shipping is cheap.

Alternately, you could check out the deal Kodak has going on, you may be able to have them printed even cheaper.

It’s a really great idea, I hope this helps!

Mr. CC

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