Private Student Loan in Default — You Have Options

What Happens When a Private Student Loan Goes Into Default?

A private student loan typically enters default after 90–120 days of missed payments, though the exact timeline depends on your lender. Once in default, the consequences can escalate quickly:

• The lender reports the default to all three credit bureaus, damaging your credit score
• Your entire loan balance becomes immediately due ("acceleration")
• The lender may sell the debt to a collection agency
• The collection agency may pursue a lawsuit to obtain a judgment
• With a judgment, they can seek wage garnishment — but only after winning in court

There Is No Default Rehabilitation for Private Student Loans

Federal student loans have a built-in rehabilitation program where you can make a series of agreed payments to exit default. Private student loans have no equivalent program. Once you are in default on a private loan, you either:

• 1. Pay the lender in full (often impossible)
• 2. Call PSLA Center to explore debt validation
• 3. Do nothing and PRAY — the statute of limitations may eventually run out, but this comes with the greater likelihood of being sued if you don't have protection and getting tricked by the debt collectors

How PSLA Center Helps Borrowers in Default

PSLA Center's debt validation program challenges the collection agency's legal right to collect on your defaulted private student loans. Under the Fair Debt Collection Practices Act, collection agencies must prove — with documentation — that they have a valid, legal right to your specific debt.

Private student loan debt is frequently bought, packaged, and sold between institutions. Each transfer requires complete documentation. Many collection agencies holding defaulted private student loan debt cannot produce a complete, unbroken chain of ownership from the original lender. When they cannot validate the debt, it can be legally invalidated.

Lenders We Have Experience With

The Statute of Limitations on Defaulted Private Student Loans

Private student loans are subject to a statute of limitations that varies by state — typically between 3 and 10 years from the date of the last payment or default. Once the statute of limitations has passed, a collection agency is legally barred from suing you to collect the debt. This is one reason why it is critical to never make a payment on a defaulted private student loan without first speaking with PSLA Center — even a partial payment can reset the clock on the statute of limitations in many states.