Can I Settle My Student Loans to Get Out of Debt?
Student loan debt is a serious issue for many Georgia residents. In fact, it is one of the leading types of debt associated with high amounts and defaults. According to a recent CNBC report, borrowers in Georgia and across the country are approaching a “default cliff.” What does that term mean? In short, federal student loans became due for many borrowers again this year. At the same time, the federal government began reporting student loan payment delinquencies to credit agencies. As this type of delinquency reporting resumed, credit bureaus reported “a spike in the rate of severe delinquencies.” Currently, as we approach the final months of 2025, that number has now reached “a record high.”
Approximately 5.3 million student loan borrowers are in default. An additional 4.3 million student loan borrowers are approaching the same situation; they are in “late-stage delinquency.” That means those borrowers are anywhere from 181 days to 270 days late on payments. Once a debtor is delinquent for 270 days, they are then considered to be in default. Those debtors in late-stage delinquency are approaching the “default cliff,” or what commentators are describing as a likely situation, and very soon, where many more millions of borrowers are in default. If you are in either of these situations, can you settle your student loans to get out of debt? Possibly. Our Lilburn debt settlement lawyers can tell you more.
Private Student Loans Can Be Settled Like Any Other Type of Unsecured Debt
Are you student loans from a private lender (like a bank), or are they federal student loans? If they are the former, it will likely be possible to negotiate a debt settlement agreement with your lender. Private student loans are treated like any other type of individual loan for unsecured debt, like a personal loan, or even the debt you accrue on a credit card.
Federal Student Loans Can Be More Complicated to Settle
Federal student loans, which are the type of loan that recently became due for many debtors, may be more complicated. In order to settle federal student loans, your lawyer will negotiate a settlement amount that the US Department of Education (DOE) will likely expect to be paid in a lump sum within the fiscal year, and often within 90 days of the settlement date. In addition, you may need to expect to pay an amount that reflects the current recovery rate that the DOE would expect to receive. This amount might not ultimately be worth it to you, or an amount that you are able to pay.
Contact a Lilburn Debt Settlement Lawyer for Assistance
Are you struggling to repay your student loans? If you are delinquent or in default, there is a possibility that you could settle your debt for a percentage of what you owe in order to be debt-free. An experienced Georgia debt settlement attorney at Konn Law Firm LLC can speak with you today about debt settlement options based on the type of student loans you have. If a debt settlement agreement is a possibility, we can negotiate on your behalf to reach a reasonable settlement amount. Contact our firm today for more information.
Source:
cnbc.com/2025/10/15/more-student-loan-borrowers-risk-default-as-late-payments-rise.html
