Are Student Loans Eligible for Debt Settlement?
Georgia residents in Lilburn and across the state are struggling with student loan debt. Borrowers are grappling with both private and federal student loans, and as the future of the Biden-era SAVE program remains up in the air, borrowers are also dealing with substantial anxiety about whether they will be able to afford student loan payments in the near future. According to a recent report from USA Today, more student loan debtors are falling into delinquency. As a result of these defaults, FICO credit scores are dropping significantly. Indeed, USA Today reports a “12 percent relative rise” in student loan delinquencies from the previous year. At 8.3 percent, that rate is the highest it has been since before the pandemic. And even the pre-pandemic rate hovered at approximately 8.1 percent.
As of February 2025, approximately 2.7 million student loan borrowers had “severe” delinquencies of 90 days or more. By the end of April 2025, it is possible that more than 5 million additional borrowers will have severe delinquencies reported. You may be wondering: is student loan debt eligible for debt settlement? It could be. Our Lilburn debt settlement lawyers can tell you more.
Private Versus Federal Student Loan Debt
First, it is important to understand that debt settlement options and the debt settlement process will differ depending on whether you have private or federal student loans. Generally speaking, private loans are more akin to other types of unsecured debt. As such, the debt settlement process will be more like settling credit card debt or personal loan debt. Federal student loan debt has its own rules for settling student loan debt. These settlements pertaining to federal student loans are called “compromises.”
Seeking a “Compromise” for Federal Student Loans in Default
Only certain federal student loans can be eligible for debt settlement, so it is important for this issue to be among the first you discuss with your Georgia debt settlement attorney. If your loans can be eligible for a settlement (i.e., a compromise) then your lawyer will need to negotiate. The amount you must pay to have your federal student loan debt settled may include both principal and some interest. In some cases it may be possible to pay the settled amount in a small series of payments, but typically the federal government will want payment in a lump sum.
Settling Private Student Loan Debt
Settling private student loan debt is usually less complicated than settling federal student loan debt. As we noted above, this process may be more akin to settling personal loan debt with a bank or other creditor. If you are behind on payments and the creditor believes they will only get paid if they accept a settlement, a lawyer may be able to negotiate a settlement in which you pay as little as 50 percent of what you owe.
Contact a Lilburn Debt Settlement Lawyer
If you are struggling with educational debt or any other type of unsecured debt and want to find out about debt settlement options, an experienced Lilburn debt settlement attorney at Konn Law Firm LLC can speak with you today. Contact us to find out more about debt settlement in Georgia and how we can assist you.
Sources:
bankrate.com/loans/student-loans/debt-settlement-on-student-loan-debt/
usatoday.com/story/money/personalfinance/2025/04/16/fico-score-april-student-loan-borrowers-debt/83092823007/
