Private Student Loan in Default

Understanding Private Student Loan Default

A private student loan enters default after 90 to 120 days of missed payments — though some lenders declare default as early as 60 days depending on your loan agreement. Unlike federal loans, which follow standardized rules set by the Department of Education, private lenders set their own default timelines and consequences.

The moment your loan is declared in default, the dynamics change significantly. The full remaining balance is typically accelerated — meaning the entire amount is now due immediately, not just the missed payments. What follows depends on what your lender does next.

What Lenders Do After Default — And What They Can't Do

What They CAN Do:

• Report the default to all three major credit bureaus (Equifax, Experian, TransUnion) — this stays on your report for 7 years from first delinquency
• Sell or assign your debt to a collection agency — often for pennies on the dollar
• File a lawsuit against you in civil court to obtain a judgment
• Contact you by phone, mail, and email to demand payment
• After winning a court judgment — garnish wages, levy bank accounts, or place liens on property

What They CANNOT Do:

• Cannot garnish wages without a court judgment — this requires filing a lawsuit and winning first
• Cannot take your tax refund — only the federal government can do this for federal loans
• Cannot threaten arrest or criminal prosecution — defaulting on a private student loan is a civil matter, not a crime
• Cannot collect after the statute of limitations expires — typically 3 to 10 years depending on your state
• Cannot collect without proving legal ownership of the debt — this is the foundation of our debt validation program

There Is No Rehabilitation Program for Private Student Loans

Federal student loans have a built-in rehabilitation program — make 9 on-time payments and the default is removed from your record. Private student loans have no equivalent. Once in default on a private loan, your options are:

• Pay in full — rarely realistic for borrowers already in default
• Negotiate a payment plan — possible but lenders are under no obligation to offer one, and payments restart the statute of limitations clock
• Call PSLA Center — our debt validation program challenges the collection agency's legal right to collect, with a 99% success rate
• Do nothing — the worst option, as the statute of limitations may save you eventually but the damage to your credit and potential lawsuit risk are significant in the meantime

The Statute of Limitations — What It Means for You

Every state has a statute of limitations on private debt — a legal deadline after which certain collection rights expire. For private student loans this typically ranges from 3 to 10 years depending on your state and your specific loan agreement. Whether the statute of limitations helps you, hurts you, or is even applicable to your situation depends on factors specific to your loan — including your state, your loan agreement, and the date of your last payment.

This is one of the most misunderstood areas of private student loan law — and one of the most dangerous to get wrong. Never make any payment on a defaulted private student loan without first speaking with PSLA Center. The wrong move at the wrong time can eliminate protections you didn't know you had. Call us first — the consultation is free.

Navient, Sallie Mae, MOHELA, AES — Who We've Helped With

We have over 13 years of experience working specifically with private student loan borrowers whose loans are serviced or held by:

How PSLA Center Helps Borrowers in Default

When a private student loan goes into default and is sold to a collection agency, that agency must be able to prove — with complete documentation — that it legally owns your specific debt. This means an unbroken chain of documentation from the original lender through every sale and assignment to the current holder.

Private student loan debt changes hands frequently. Documents get lost. Records are incomplete. Collection agencies frequently attempt to collect on debt they cannot fully document. Under the Fair Debt Collection Practices Act, they are legally required to validate the debt when challenged — and many cannot meet this standard.

We know exactly what they're required to produce. And we know exactly when they've failed to produce it. That's been our specialty since 2012.