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 you’re 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.
Anyone struggling with a Navient private loan, or any other servicer or debt collector, is welcome to post comments and questions below for feedback and resources in response. If you would like to discuss your options for settling student loans with a professional you can call 800-939-8357, and choose option 4.
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. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
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.