I took out a 30k student loan a couple years ago and have noticed that they've been charging 10% interest on the loan the whole time. Since it's a private company and not a federally subsidized loan, what is the worst that they can do to me? I know I'll take a heck of a hit on my credit score, but it's in the mid 750's so I'm not concerned. Also, I'm on disability payments so I don't have to file taxes so I'm not worried about someone taking my tax return. Any ideas?

What does 10% interest have to do with defaulting on a loan? Are you having problems paying it, or just don't feel like paying it anymore (or have you been paying at all)?

Well, I'm still in the period where I don't have to pay it but it's intimidating watching that amount constantly climb. I've called them about getting a lower interest rate and they basically tell me to deal with it. I was thinking that if we can't come to some sort of agreement to tell them to bite me. What is the worst they can do? I know it's not a federally subsidized loan and it's just a private company. My other federal loans I plan on paying off.

American Education Services is a division of PHEAA. PHEAA, The Pennsylvania Higher Education Assistance Agency (PHEAA)
In other words you took a private loan from a state agency.


I think you need to do some reading of this forum if you value your steller credit score. Just because a private loan is not federally insured doesnt mean they wont wreck havoc with your life. Most private loans are backed by other non profit companies and in some cases, federal lenders. You need to review the prom note you signed.....signing that agreement is no different than signing a mortgage or car note promisorry note....the terms of this loan were there, including your annual interest rate and consequences of default. They are under no obligation to lower your interest rate or change the terms of the note YOU signed. If you dont like the interest accruing right now on the loan, start paying on the loan or at least the monthly interest.

There is no BK on student loans private or federal. You default and your scores will tank. They will sue for judgement...I can guarantee you that. So do yourself a favor and do some research.

Usually AES just services the majority of their private loans. The interest rate on the loan is not negotiable..it is something you agreed to when signing the prom note. Defaulting on a private loan is a nightmare compared to a federal loan. If your guarantor is TERI, they are vicious. It is not even discharged when you die, they will come after your estate. Private loans are not to be messed with.

every debt will come after your estate, it's not just student loans


Federal student loans are different than a private one (if indeed it IS private)

Right, but unlike a federal loan which is discharged with death...most private loans are not. I know so many people who aren't aware of that. They think death = all student loans gone. Plus if you have a cosigner, the loan is tranferred into their name.