Navient Student Loan Collection and Interest Charges – Losing Income
My spouse had a loan taking out through Sallie Mae for school purposes back in 2006. Not sure what the original amount was on that loan, but right now she was issued a garnishment order by the state of Colorado in order to pay of the loan, which according to the documentation received is over 10,000 dollars. My wife works nights at Wal-Mart and I am in the military about to move to Germany for relocation.
My wife will obviously loose her job, and be unable to pay off the loan, not even making a dent because of the interest accumulating. This will happen within the next 6 months.
Can interest still build even after loosing her job? It will never be paid of unless I will the lotto or come up with cash for a settlement. I'm just worried that the interest will accumulate making it impossible to pay the student loan off.
Can interest still build up on a collections loan even after loosing an income source? How much will Sallie Mae or Navient accept as a settlement?
—Horacio
Unfortunately, at least for the time being, there are not many options for private student loans like those obtained through Sallie Mae.
Navient student loan collections.
If the loan has not been consolidated using some of the government loan programs available, consider looking into this option. The loan with Navient may need to be brought current before it is eligible for a government loan consolidation.
Why would you consider this? You are stuck with a loan that affords you little payment options. When payments are not being made, the loan grows from the interest being charged, often at a significant rate.
Having government backed student loans means more payment alternatives, like income based repayment plans (IBR).
Settling a private student loan debt for less than the balance owed.
There are options to settle a Sallie Mae loan. While there is a garnishment, settlement is less likely. This is because Navient will continue to get paid as long as the your at the job. With some planning and availability of cash resources, and once the garnishment is removed, or no longer applied due to job loss or job transition, settling a Sallie Mae student loan is possible.
The settlements on private student loan debts are generally not as good of savings as credit card bills that go delinquent. Depending on the circumstance you may only save 20 to 50% off of the balance owed on student loans being serviced by Navient. I am seeing some signs of better settlement offers on private student loans, just not enough of them to call it a trend, or to recommend negotiating for less than half of the balance as a realistic target.
I realize that may not be helpful right now, unless you were able to identify a source of cash that would allow you to settle the student loan shortly after the job loss. But I am pointing this out to show that even saving up money over time to settle the student loan is better than no options.
I wish I had better feedback to share. But there are just no great options for dealing with unmanageable private student loan debts through Navient, NCSLT, Great Lakes, and other private student loan collectors right now. That may change in the future. The student loan debt crisis is still growing. Recent reports show that over 10% of government backed student loans are in some form of delinquency. Private loan default numbers are terrible too. With the spreading awareness of the student loan bubble popping I do expect more options on private loans in coming years.
Update: I recently interviewed Andrew Weber for Debtbytes. If you are dealing with Navient, or any private student loan servicer (or debt collector), take the time to play the video. You can get feedback from Andrew in the comments below.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry, and is a regular contributor to several personal finance websites.
Taki,
A few things to consider. Sallie Mae changed their student loan division in 2013 to Navient and kept Sallie Mae for their consumer banking division. In short they have had your loan the whole time but after your default they must have charged the loan off at some point and placed it with their internal collection division (that’s actually how Navient got started as a sub-division).
Here is the bad news first: If I understand your time line correctly you reset your 7 year window for SOL in 2013 when you began repayment in 2013 and it gets reset every month when you pay them because it is based on date of last transaction activity. So to challenge the SOL you would have to wait 7 years from your last payment.
Here is better news: You will want to check to see if indeed your loan was formally “charged off” or was just severely delinquent. They fact that they stop reporting to the Credit Bureaus is an indicator that it may (stress may) have been charged off. Since private student loans are basically glorified personal loans with a tax deduction advantage they charge off after 180 (6 months) of no payments. If that is the case the damage is already done to your credit and it comes down to how do you want to address the debt.
Here are some options:
1) Continue paying as you are now but that is why your reaching out (22k balance from an original 9k is criminal)
2) Settlement: IF it is charged off consider starting a savings account that you can put funds into each month at a comfortable level to settle the debt for a negotiated fraction of the balance.
3) Borrow: Seems You could also use a small loan from a lender or private source to offer up a settlement sooner. Because your balance is so much higher than the original loan amount you have an advantage. Note: They won’t settle if you are currently paying them so you would have to be willing to accept any collection activity if you forgo payments to them and set them aside for a settlement. Remember settling can’t hurt your credit any further if it is already charged off.
3) Renegotiate your monthly payment and total repayment term. They will only work if you are not in repayment because they won’t or need to negotiate with you if you are sending them money currently.
4) Stop paying and wait it out: Again the damage is done to your credit so unless you need to demonstrate repayment to them to qualify for a mortgage or other reasons you can just let them pound sand until your 7 year SOL is established. At that point you can challenge it on your credit but if they validate it or you make a payment again it starts all over. Plus you have to be willing to deal with any collection activities associated with not making a payment.
I hope that helps some.
Can they garnish your wages if you don’t pay for 7 years or longer? What if your cosigner is on social security, will they garnish their monthly check?
Thank you so much for the information. It was extremely helpful. I received the loan for California where the SOL is 4 years. I currently reside in Mississippi where the SOL is 3 years. My plan is to stop payments and attempt to settle the debt.
Do you suggest calling and asking to settle the debt outright for a specified amount?
Also, how can I find out if the loan has been charged off if it’s not specified on my credit report? The loan is currently listed on my report as “closed” and “transferred”. Thanks again for all your help.
I have several thousand dollars worth of private loans with Navient. I have tried to get a working monthly payments that is affordable, but they won’t budge. It’s like it’s all or nothing. I’ve been paying what I can towards the loan with the smallest balance and plan on paying them off that way. If I’m doing this and they are accepting those payments, will they still sue me for garnishment?
If you are not paying the required minimum, and simply sending in what you can because you feel it is the right thing to do, your account will typically still get dropped into the Navient collection pipeline. That can include being sued.
Settling your Navient private student loans can be a workable alternative.
I took out two Sallie Mae Tuition Answer loans in 2008 and I had a co-signer. A collection agency recently contacted my co-signer and provided the original loan application/promissory note. The original loan amount was around 17k, they now say the balance is over 40k. No payments have ever been made. The SOL is 10 years. I’m inclined to tell my co-signer to send a full dead and desist and just ignore them. My only pause is that they have a cover sheet one line statement from Navient saying borrower default with a date of 2012. Again, I know I never paid a red cent on the loan. How should I approach?
If this is a private student loan, it appears from the details you provided that the account is passed the SOL to sue, and to credit report. I am not sure I would do anything with a private student loan this old.
Is there any help against Navient for those who live in Michigan? My accounts were current up until this last month and I plan to try to make it back to current, but am curious if there is any help. I’m paying to 2 lenders and it’s a huge payment. I haven’t finished my degree as I took a year off. Curious what the best option would be to lower payments at this time. My other issue is payment based after I graduate as I feel my income will be really good and they will want a ton of money in a payment with the new income. I’ve been told by others not to do income based because of this issue. My loans are Federal if that helps. My current loan is about 56,000.
With federal loans you can pursue your normal forbearance and deferment options, and then there are the repay plans that include IBR.
If your income is strong, you may not need an IBR plan when the time comes. But if you cannot meet the required minimum, look into it.
I am wondering what my options are for allowing default on my student loans. They went into repayment in 2010 however have been in deferment and forbearance much of the time and now are in IBR but I have been unemployed so have not been paying them/the payment due is $0/monthly as I called and informed them of my unemployment late last year. They are supposed to kick back in, in 11/2019.
I am trying to figure out my options as I owe just shy of 80K from 5.5 years of schooling and there is no way for me to make the monthly payments they want on the income I would be making with acquired employment expected in the next 60 days as I am a single income household.
There are only your known payment options to handle federal student loans. You cannot settle federal student loans for less like you can private loans with Navient. And it is super hard to get student loans discharged in bankruptcy (though not impossible if you can show undue hardship).
Hi!
I have a question about credit reporting for Navient FFLP loans.
Open Date: August 2007
Repayment Start Date: January 2009
Close Date (paid in full via consolidation): Oct 2018
Last Payment made (by me): August 2012
I’ve made zero payments in the past 7 years but Navient reported my account as current for months where I was in forbearance. There are several periods where I wasn’t in forbearance and Navient reflects those as delinquencies. So my 7 year credit history is a combination of forbearance months reported as “current” and non-forbearance months reported as delinquencies. My argument is that regardless of the fact that Navient REPORTED my account as current some months, I haven’t made a payment in over 7 years. After the last payment I made in August 2012, I never came back current. I believe the purge date of this account should be based on the actual date I went delinquent and was never current again. Should the forbearance periods be included in the calculation to determine when this account should be aged from my report? Or should it be based on the last time I actually made a payment (if Navient or myself provides this evidence to the agencies)?
I would talk to an experienced FCRA (Fair Credit Reporting Act) attorney in your state about this.
A forbearance could be considered bringing the account current, and that may be why this can hang out on your credit longer.
Ok I will reach out to an attorney. I thought the same thing about forbearance bringing the account current but they continued to tack on “late fees” each month of the forbearance which seems to refute the argument that the account was brought current. I will get a legal opinion for sure thank you!
I have a navient loan taken out in 2007 for $10,000. My last payment was made in September of 2010. My cosigner filed bankruptcy in 2010 which was discharged in 2018 which made my Navient payments to become due and with interest made the new balance $30,000.
I decided to enter a strategic default which went into effect June 2018. Over the phone, Navient agreed to settle for $10,000 lump sum by June 30. I received the settlement offer in writing on June 25 stating that I had to pay $11,300 lump sum by the next day June 26.
I want to hire an attorney to ensure that the settlement is legit. How much of a settlement offer should I accept?
Thanks
Hi Christy
can you tell me how long you were past due before navient reached out for settlement? also, do they contact you directly for settlement or pass it off to some collection agency? i am thinking of strategic default too and just want to evaluate the options available and how long it takes, thank you so much
I haven’t made a payment since Dec 2010. According to my credit report, they closed the account Feb 2019 with a zero balance, but Navient has still been contacting me directly not a collection agency. I am thinking that my case is past the 7 year statue of limitations so that is why it isn’t showing as in collections on my credit report. I had my attorney reach out for the settlement offer in June 2019. Now I am no longer going to settle because I realized that I might have a better chance in court.
That is within a normal settlement range that I see with Navient. But if this is more than 7 years since you stopped paying, it is likely not on your credit reports anymore, and they would likely be passed the SOL to sue if this has not been paid since 2007.
What is your motivation for the settlement?
Thank you for your response! I have recently disputed this on my credit report. I tried to settle because I did not know much about statue of limitation.