Thursday, June 18th, 2009

Student Loan – go to default? with Sallie Mae + AES?

AES Student Loan
shrlytmpl1 asked:


Hi, I have 100k in student loans with Sallie Mae and 60k in student loans with Amercian Education Services. If I default on each of these, does anyone know the absolute consequences for each – the outcome and what it will do to myself and my co-signers (each of my parents)?

My loan payment total each month is 1500.00 and I do not have any forbearance nor deferment left. Any thoughts would be AMAZING! I am behind by 2 months on each.

My work slowed down and I have just left my lease, in order to live with family for 2-3 months…to cut costs’.

I know that they say certain things will happen if you default, but I have never heard from people who this has happened to directly.

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4 Responses to “Student Loan – go to default? with Sallie Mae + AES?”

Andre Says:
June 19th, 2009 at 1:14 pm

They will try and work with you. I’ve been in a similar position and what happens is that they put you in some kind of “loan rehab” program. Chances are, the payments will be lowered to something like interest only and it would take a longer time to pay off.

Do not stop making payments! They are extremely difficult to discharge in bankruptcy. Futhermore, the government has all sorts of remedies at its disposal to collect if you continually refuse to pay.

Slimick Says:
June 19th, 2009 at 5:08 pm

There is nothing worse than a defaulted student loan…The consequence is that Sallie Mae will just keep adding on interest and other fees…the end result is that your debt could go up much higher….

Student loan debt:
- cannot be discharged in a Chapter 7 BK filing
- there is no statute of limitations on the debt
- is 100% guaranteed against default by the government. This means that the companies you have loans with have no incentive whatsoever to settle the debt at a reduced rate…as is common with credit card debt

I wish I had better news for you but I don’t…Try to keep the loans out of default. If you can’t and the situation is completely out of control, one option might be to file for Chapter 13 BK….Student loans CAN be included in this form of BK…where you pay back the loans under a court supervised repayment plan…This puts a freeze on Sallie Mae’s notorious add-on and interest charges.

Bill K Says:
June 23rd, 2009 at 3:07 am

I’m in your same situation i also have AES and the interest rate went from 4% to 14% while i was in school bringing my debt to a whopping 125K i haven’t been able to make payments, but i signed up for a website to see if i can get donations from people to help me, the website is free and just like the other person posted on student justice, i though i was alone but after reading some of the profiles posted i feel better. I work as a public servant and my wife is a teacher on our salary’s we barely make ends meet. the website is I hope Obama changes the bankruptcy law to allow private student loans to be discharged.

Lys C Says:
June 25th, 2009 at 9:29 am

One other thing you should know any Tax Refunds or Stimulus payments for you or your co-signors will be used to off-set your balance.

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