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.
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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.
Hello, what happens once it is past SOL? Does it mean we can get away without paying? I was under the impression that you could do this with credit loans, but not student loans. Thank you!
If your loan with Navient is a federal student loan, you are always going to be on the hook for it. Your tax refunds, and even social security can be taken later on.
If your loan with Navient is a private student loan, the SOL to legitimately sue, or to credit report, will expire, and you can ignore it after that if you choose.
Hi Michael
I am in the same boat as Alyssa, i have a navient loan which was $30,000 original and is currently $70,000, i am unable to make the monthly payments, how long will it take navient to try and reach a settlement with me after i stop making payments on it?
i know initially they will not tell you they settle but after it discharges to a collection agency, what kind of payment plans will be available? is there any one who has done this recently
Can i contact you for advice on this directly ?
thank you
You can click the get debt help tab at the top of any page on the site and build a user profile with your Navient debt. When your profile is built click the tab to schedule a call with an expert. That will bring my calendar up so you can lock in a day and time that works for me to call you.
thanks
saw most these comments were from years ago-just verifying how accurate this information is now. I have loans thru navient which is gaining 6000 in capitalized interest a year….which is ridiculous. I have declared bankruptcy twice and would love to get a settlement.
I turned the comments off due to spam. I just turned them back on, to see how it goes, a week ago.
You can still settle private student loans with Navient. How prepared are you to pay a lump sum? If not a lump, assume they took 50% over 6 to 12 months. Could you commit to that with confidence?
I can pay a lump sum but have asked repeatedly when I call in to just be advised they don’t settle and added another 6500 to my principal as of 6/13. Please help. I would like to get this done
I replied to your direct email with a link to my calendar.
Hopefully this is a quick and easy question to be answered. My current monthly payment is avg $555 – I was on some payment plan last year where I was paying $255. During a phone call, a representative told me of some other program that would benefit me more – so she took me off the current program and processed me for the new program. To my surprise a few moments later, she replied that actually my accounts were not applicable for the new program. Then she and the manager have refused to put me back on the lower payments program I WAS JUST ON until they receive information from my cosigner (this info was not needed before). I told them I can pay then $255 a month – but they are now harassing my cosigner to pay the other $300. Are they able to go after my cosigner even when I am paying them SOMETHING? My loans are not in default at the moment. – Appreciate any insights!
Hi Alyssa, we need a little more info here. Who’s the lender? It sounds like there was some foul play involved, but in general private lenders can pursue a cosigner for an unpaid monthly payment or unpaid balance. Did you have the original agreement for the lower payment plan in writing? Some of those plans are temporary, and it may have expired, but it’s hard to say without knowing more information about what happened and who is holding or servicing the loans.
Hi, Andrew. Navient is my loan provider. I will have to go back through my e-documents (if they are still available) to see if there was something more concrete listed. In this particular case, the agreement was not ready to expire, but I was given a “better option”. Plenty of other incidents have happened over the years – too much to discuss here.
My main concern was with my cosigner – I have made all payments myself, was only late on a payment when they did the switcheroo of plans on me. I plan to still make payments, but wish to have them lowered. They say they can not lower the payments until they receive income information from my cosigner. And, of course, if my cosigner is well off in income, then they will not lower the payments and expect the cosigner to help.
I was under the impression a cosigner would come in only when a loan is in default.
This sounds like one of those situations that can really only be unraveled by going into a full account history with Navient.
Without something in writing (even an email) it will be tough to get them to agree to something they said in the past. The basic Navient customer service reps can be very inept in describing payment terms etc.
I don’t negotiate private student loan payment terms as a service, because all of the plans that I’m aware of are just a short term solution that increase the overall amount of the debt over time, or otherwise do nothing to create a long term solution. This is why I focus on negotiating reduced sum settlements on private loans (this would only be available if the accounts were in default, which would cause a significant amount of credit damage to both you and the cosigner if you’re current now).
The only payment plan I’m aware of that Navient offers for current borrowers is the “Interest only” payment plan – and this is temporary. It sounds like you may have been on this plan and it expired.
Do you know what the name of the payment plan was that they described as a “better option”?
The other payment plans available on Navient private loans are the interest rate reduction plan which is typically only available for borrowers that are behind or in default. It’s also a temporary payment plan.
They can ask your cosigner to make payments if they aren’t receiving the full amount that they want, but can’t force them. However, they can put the account into delinquent status and even default it if they aren’t getting the full amount of the payments they are asking for.
What I would recommend is contacting the Navient Customer Advocate office and opening a case with them to get to the bottom of this. That office has much more professional representatives than the general Navient customer service reps.
That office’s phone number is: 888 – 545-4199.
If after working with them they still aren’t willing to lower your payments and you aren’t able to make the payments, then you may have to plan for a potential default. Private loan lenders are very inflexible, unfortunately. Let us know how it goes with the Customer Advocate department in the comments here, and we can try to advise you further if they aren’t able to work something out for you.
Hope this helps –
I have a Sallie mae loan which apparently is now navient. I’ve had it over 12 years and it hasn’t gone down in fact it’s gone up. I’ve recently missed payments. I only work part time with a disability. They are saying I have to pay in full I don’t have $10,000. I hadn’t missed payments in the time of the loan until now. Also I have a cosigner who is a senior citizen. They say they clarge me interest by day. How is that even legal? Please respond.
Hi Tanesha, sorry to hear about the issues you’re having. It may be possible to settle this for about 40-50% of the balance, but it requires artful negotiations once the account has defaulted.
I can’t provide legal advice, but in general, interest does accrue on accounts whether they are current or delinquent, and this is usually outlined in the original borrower documentation (Promissory Note) .
If you’re not able to afford settlement, you can try their “low interest rate payment plan” although this is more of a short term solution. Private loans are difficult to discharge in bankruptcy, but more and more attorneys are attempting these. You may want to consider consulting with an experienced student loan attorney to see if you’d have a shot at a bankruptcy discharge.
I am reading the discussion in the comment section about private student loans. What does offset SSI mean exactly?
Federal student loans that go unpaid long enough can result in a hit to your social security check without being sued. There are ways to avoid that by being proactive with some of the federal loan payment options. What are the details of the situation?
Hi,
I have been paying on Navient Consolidated Federal Plus loans for six years.
Navient has six loans listed for me, 3 Parent Plus and 3 consolidated unsubsidized loans.
The 3 Parent plus loans I had consolidated and are the 3rd of the 3 consolidated loans. However, Navient refuses to believe me and I have been paying on six loans to keep this from default but I know they are incorrect, they claim they received this info from Sallie Mae and it is correct. All these loans were made back in 2008 before the Sallie Mae –> Navient switch.
I have the loan papers from my son’s school and It is clear what has happened. How can I make Navient show me where I signed for what they are charging me for? I am being charged 8.5% on each of these loans and have been paying in excess of $600 on them for the past 5 yrs and owe more now than when I started due to the interest rates and the way they are allotting the payments. against the principle and interest. I feel helpless and am sick of doing the right thing and getting screwed for it.
Hello, I would consider opening up a complaint with Navient’s Customer Advocate office. However, the interest rates you described are consistent with the interest rates for Parent Plus loans. Either Navient or Dept. of Education should be able to provide you with the original promissory note you signed for your federal loans.
One thing that may help is applying for the Income Contingent Repayment program, which is the only income-related program available for Parent Plus loans, or consolidations that included a Parent Plus loan. If the loans were originated in 2008 then you should be able to get on to Income Contingent Repayment, which may lower the payment amount (depending on your income) and also has limitations on the interest that can accrue.
Beyond that, I would recommend talking with the Navient Customer Advocate department to obtain past documentation.
I have a private student loan with Navient (Sallie Mae) I could not afford my monthly payments and let the loan default. I was contacted by Allied Interstate to either settle my loan or come up with a payment option. We worked out an agreement where I would pay $127 a month and can settle at any time (the amount to settle increases each year). Allied sent a letter that stated the interest rate on the Navient loan would be .01% and the amount I pay would go to the current interest/principle amount owed. When I log into my Navient account the interest rate is still 13.25% and I get late fees tacked on each month even though they are receiving the agreed monthly payment. The loan shows up as a closed write-off on my credit report. I’m just wondering why they haven’t changed the interest rate and stop the late payments like they were supposed to?
Hi Ashley, it sounds like you’re on the “interest rate reduction” payment plan with your defaulted Navient private student loans. The amount paid first goes to accrued interest and late fees from my understanding, and once/if that is paid down, it starts to go towards principal. This is a decent program but is more of a short term solution.
It also sounds like Allied has misled you about settlement possibilities. Unless the accounts are assigned to a collection attorney in your state, typically, acceptable settlement ranges decrease every year – not increase. The collector was probably saying this to set the tone for settlement negotiations if they occur down the road, so they can try to collect as much from you as they can. Allied Interstate doesn’t have the greatest reputation for being completely honest and forthcoming with borrowers.
As with any agreement, I would get this in writing if you haven’t already (for the payment plan).
When accounts default, there does seem to be a disconnect between Navient’s online portal and actions taken through collection agencies, so that may just be an error on the online portal.
The account will continue to show as charged off/defaulted until it is paid off or settled, and even then, it will show that in the past the loan had been in default.
If the collector said that this program would stop late payments or help your credit, that is the opposite of what I’ve seen with the interest rate reduction program on defaulted Navient private student loans.
It’s possible to bring a loan current again you enter into this program prior to default, but not if you’re already in default at the time you start the interest rate reduction program. This is just based on what I’ve heard from other borrowers, since I don’t directly assist with the interest rate reduction program (I think it’s a short term solution and that settlement is much better if possible).
I had my student loans through nelnet. Honestly I am not even sure at this moment what is private, fed, etc… I just know that I originally borrowed 24,000 and right now I owe roughly 45,000. A few years back half of my loans went to collections. I worked out the payment plan where I was told that I would pay on time for 9 months and after that it would go back to nelnet and I would just have 1 payment. Clearly I was either told wrong or misunderstood because after that 9 months it went to navient. So I had 2 different payments. I had put the other off as long as I could and continued to pay my tiny amount to Navient. So then of course my other half was just sent to collections. I haven’t even talked to them yet. So around 20,000 is on collections and 23, ish is with Navient. My Navient payment doesn’t even cover my interest so I will owe more every year. We really can’t afford more than what we pay, but we are considered a loan to pay off the school loans. Since I got these loans I did get married. My husband does ok, but he had his things before me, so that doesn’t mean he has a ton extra to be paying my loans. However he feels like if we take the payment we make and put that towards a loan, that we would at least have an end in site. So my question is, is it possible to settle with collections, navient, both, or neither. I saw something about 20%-50%. I would be pretty happy with 50% of the total and I think we could come up with that. I just wasn’t sure if either or both would work with me at all. I also saw you say something about Navient not settling as long as you have a job. My husband does and of course they can take his money, but I do not. And if my husband were to leave me, I would be a single mom of 3 children that doesn’t work. So would that be any leverage to say, “hey, take your money while you can now”?
Hi Nicole, Nelnet definitely sounds like a federal loan, and Navient services both federal and private loans; so I’d first recommend checking the federal student loan database at http://www.nslds.ed.gov to see if your loans are all showing up there.
If the Navient loans are not showing up (keep in mind they may be listed under the original names of the loans rather than the name of the servicer like Navient), then that is a good indicator that they are private.
Navient will not settle private loans for any significant reduction until they are defaulted, which involves credit damage for you and any cosigners as well as accrual of late fees and interest during the time period prior to default; so that’s something to consider if you’re going to try to “strategically default” on the loans in order to settle.
They have no incentive to accept a significantly reduced balance when the loan is current. At the lowest, I’ve seen them take 90% in a lump sum; or 85% in 3 payments if the private loan is a few months past due but not yet in default (for private loans).
The lowest settlement possible on a recently charged off Navient private loan is in the 40-45% range. You could try to wait longer on a smaller balance, but there’s still the chance that they could send the loan to a collection attorney and attempt legal action. This 40-45% number is based on the balance at the time of settlement, which will be larger than your current balance if you go into default, due to late fees and interest.
Lots of my clients had jobs or significant income when we settled for them, it all depends on what is disclosed during negotiations. For instance, if you tell them that you have a job and are making a good income, or that your husband does, they will use this information to try to pressure you into making payments or accepting a higher settlement. Knowing how, and when, to negotiate with a private lender is half the battle in obtaining a good settlement.
It’s a difficult process when you’re doing it on your own for the first time. Feel free to call in to the hotline to be connected with my office for a private student loan evaluation – but the first thing I’d recommend is checking the federal student loan database to make sure that the Navient loans are not federal, since federal loans rarely settle for any significant reduction even if you’re in default.
My daughter had a Sallie Mae loan for a medical program that she needed to drop out of due to financial reasons. Her high balance was $6,231 but they transferred the loan to EOS collections and they are wanting $7,619. She does not have the money to repay this in full as she is settling several other debts as well. What is the best way to settle with EOS (if she can). And will EOS continue to add interest? Also, how does she go about making sure the settlement is reported to credit agencies by EOS as promised. EOS is not showing up on her credit at this time but Sallie Mae is – how does she make sure that her loan is reported as paid once and if she can negotiate with EOS?
thank you
EOS is a federal loan guarantor/collector for the most part, so these loans are probably federal (but you can have her check at http://www.nslds.ed.gov to be sure).
Federal loans rarely settle for much of a reduction, it’s usually just a removal of fees and occasionally a reduction in accrued interest.
Late fees and accrued interest will continue to accumulate as long as the loan is in default, so if settlement isn’t an option (federal loans have to be settled in a lump sum), then she should consider using the free Direct Consolidation or Rehabilitation programs to get a federal loan out of default. I wrote in detail about both of these programs here:
https://blog.credit.com/2016/07/how-to-get-your-student-loans-out-of-default-without-getting-scammed-151236/
If she does do a settlement, it will likely be reported as such on her credit report by the federal loan guarantor or servicer. To ensure this, she’ll want to keep records of any documents used in the settlement including a written settlement letter. Federal loan settlement isn’t an option for most people though because they are usually 85-90% of the outstanding balance which has to be paid all at once (federal loans don’t offer structured settlements).
Hope this helps –
So – the day after I posted this, I saw the first private loan being collected by EOS CCA that I’ve seen in my career. There’s a small possibility that your daughters loans could be private, which could mean a much better settlement is possible.
I would still start with the NSLDS database to check if they are federal, and then proceed from that point. With that said, I’ve never seen a private Sallie Mae or Navient loan assigned to EOS CCA.
Hi,
I have both private and federal loans , $37,245 with sallie mae and the rest transfered over to Navient. The total balance for my navient is $127,949 which includes $55,701 ( federal loans) I have consolidated and put in income based repayment so the monthly for that is currently $0 . I still can’t afford to make the payments. which totals to about $1300 a month. I graduated in May 2016 and began repayment Jan 2017 and put both private loans in forbearance. I just called Sallie mae and the representative suggested I let my account go past due and when the sallie mae collections call ( approx in 9 days) that I can come to an agreement for repayment with them because he was unable to do so himself. He also stated that at that point they would not have reported anything to my credit because they only do that after 80 days or so. So my question is, is it smart to negotiate with the sallie mae collections that early? considering it won’t affect my credit..My other concern is that I have a cosigner on the loans and I cannot put their credit at risk so I feel like I’m in a tight spot where I can’t afford to make payments but can’t let it get delinquent , the forbearance is helping me now but what can i do to settle , is there any way I can negotiate a down payment and have a reasonable monthly payment? Im also looking to get a mortgage and don’t want to ruin my credit .
Hi Shahendah, in my experience in negotiating with Sallie Mae and Navient for the last 4 years, there are no major reductions until the account has defaulted after 6 months. Even then, it takes a while to negotiate a settlement with them, and it’s not easy.
All I can think that this rep is recommending is the short term solution of the “low interest rate payment plan”. This is a temporary solution and does not make much of a difference in the balance.
I am still a full time student and noticed my Navient loans have grown since I have started college 3 years ago. I am not waiting until I graduate to face these navient demons.
What can I do now? Can you help me negotiate or resolve, settle, my Navient nightmares?
Thanks for your help.
Hi Kelly, have you logged into NSLDS.ed.gov to see if these are federal loans showing up in the database? Or if they are private loans? Navient both services federal loans, and originates private loans; so it’s not always easy to tell which is which with Navient.
If the loans are private, settling them while in school won’t be easy. You’ll have to first convince Navient to remove your loans from any in-school deferment and into a repayment plans, possibly making one or two payments.
At that point, you’d have to do a strategic default; which involves significant credit damage for you and any cosigners. It’s impossible to settle a private loan without it being in default. But if the loans turn out to be federal, even a default won’t result in a significant settlement opportunity.
I commend you on getting a handle on these loans early on and noticing that the interest is accruing while you’re in school. Just based on that description, I think these could be private, but we need to confirm for sure. The easiest way to do that is to check the http://www.nslds.ed.gov database to see if they are showing up as federal loans.
Feel free to call in to the hotline and select “Option 4” to be connected with my office to schedule a further consultation.
Hi.
I’m 57 years old my daughter made private loans with Sallie Mae back in 2005. I did a Tution Student Loan in the amount of $43,000. She had been in and out of colleges and has made over $126,000 private loan and I’m joint with all the loans including my 43,000.00 which has turned into 83,000 over 11 years. I just recently came out of a chapter 13 which has all the loans on hold.
All the loans total to $203,000. There is 50,000 that is Federal.
Now they are asking to pay pre month $1300.00.
I have no clue what I have gotten myself into. I’m working and I don’t know what to do at this point. My daughter is not working.
Call in and talk to Andrew at 800-939-8357 ext 4. He can dig into your financial situation and help you identify the most workable plan for you from here.
Hi Laura, can you come up with half the private student loan amount to settle them? Chapter 13s without Adversary Proceedings tend to cause massive amounts of interest accrual on private loans.
The fed loans are easier to deal with and have more flexible repayment plans, but don’t settle for much.
I have private Navient (SallieMae) private loans and my 1% interest is $655 a month. While I was on disability at my job, I couldn’t make payments and my credit score dropped 200 points. I even let them know my situation. I can’t go back to paying $655 a month. I can’t afford to pay that much and still expect to pay my basic bills such as rent, gas, electricity etc. Is there anything I can do?
Can you afford to come up with 50-60 percent of the current balance to settle through strategic default?
No. 50-60% of my balance is 3x my yearly income. I can’t afford the 1% interest.
If you’re unable to afford the interest rate reduction program or a settlement, there aren’t many options. You could try entering into CH13 bankruptcy but this would cause the loan to grow even bigger unless you were able to get it discharged through an Adversary Proceeding, which requires a skilled student loan attorney. Unfortunately the attorneys who do attempt Adversary proceedings often charge a large retainer because of the amount of work involved.
I suppose the only other option is to just stop paying, but I don’t recommend doing that without a strategy and ultimate goal in mind such as settlement.
If you’re interest rate reduction program payments are $655, I’m assuming it’s a significant balance, so there’s a pretty good chance Navient would attempt legal action within a year or less of defaulting.
But – that may buy you time to save up some funds to put towards a lump sum or structured settlement.
I’m a parent who has private parent loans. I have just been downsized at work and will be unemployed soon. I have been current on payments until right now. I’m not sure if I let them go to default to negotiate or do I try paying them with my retirement savings. I feel I really have limited options. I’m 57 years old and would not have many years left to work anyway or repay over extended time
In situations like this I will often encourage looking at settling private student loans. I am not a fan of tapping retirement savings, but am also not a fan of collection lawsuits that can eventually happen, which adds to the costs and provides collectors legal rights I would prefer they not have.
Call in and talk to Andrew about your total situation at 800-939-8357 ext 4.
I agree with Michael. I think it depends on the amount of the loans, and if paying via some retirement savings would significantly hurt your retirement budget.
I have 8 private loans totaling 80k. I’m on the rate reduction and pay $450 a month. I was going to inherit my grandma’s house but a family member pulled some deathbed deed transfer and barring a 30-50k lawsuit, I’m SOL. There’s no way to repay this now that I’m going to have to pay for housing and I don’t know what to do. I doubt that they are going to write off such a large amount. I’m middle aged and unlikely to be earning much more than I currently do. My dad was planning on living with me but I was thinking about him getting a house using his VA loan and then I quit paying. I have about 30k saved and could settle for this amount. I’m just unsure about what to do because I was blindsided by the house situation. I was perfectly content to pay the $450 until I die because I had a house. I have really good credit and no other debt except for my monthly spending which I pay in full. I’m really jammed up. I feel hopeless.
Call in and consult with Andrew at 800-939-8357 ext 4 Hannah. He will help you come up with a strategy that works for you to reach your goals.
Hi Hannah, I think that amount would still work for a settlement but it may require a structured settlement with a down payment and a total of a 12-18 month structured settlement term. Feel free to call in and we can discuss further.
Hello,
Does Navient treat each loan separately? I have three private loans, two charged off and one in repayment. The two defaulted loans have past the California (where I got the loans in 2005 and where I currently live) statute of limitations and have fallen off my credit report- last payment in 2009 according to a credit report. They still appear on my account when I login to their website to pay the other loan so I’m concerned that each time I login it’s an acknowledgment of the defaulted/past SOL loans. No money ever goes to the defaulted loan. Any suggestions or comments would be greatly appreciated.
Thank you!
You are not reaging the statute of limitations for Navient to sue, or for credit reporting, by logging in to remit payment on a different account with them.
Thank you for your response. All your help here is appreciated!
Hi guys! My situation is a little different than already being in default…. I am actually still in graduate school (until May) and have been anxiety ridden for the past year about just how I will be able to pay off both my private and federal student loans. Although I have not yet defaulted (because I am not yet finished with school), I know that I WILL be unable to pay for my loans when they begin after graduation. After calculating, my federal loans alone will be over $600+ a month and private averages around $380+. I am an unlucky one in the fact that although my private loans were not switched to Navient, I am stuck with dreaded Sallie Mae in this nightmare of debt. I’m almost positive after graduation Sallie Mae will drastically up my interest rate which all loans are already at a staggering 8.25%. Is there any way to negotiate with the lender BEFORE I become delinquent or strapped down to a payment I simply cannot afford with both private/federal loans? I’ve been able to pay off 3 of my smaller private loans already in school, but the monthly averages already provided have been enough to keep me from getting married and moving out of my parent’s house-let alone think about children within the next few years. Any and all help is certainly appreciated at this point!
Hi Katlyn, the good news is that your federal loan repayment options aren’t determined by your loan servicer, so you would probably be able to apply for payments related to your income on the federal loans. You can evaluate and apply for federal repayment plans at http://www.studentloans.gov.
For the private loans, I have seen a couple instances where Sallie Mae did not switch the loans over to Navient. I have been able to settle Sallie Mae loans for between 40-50% of the balance owed, although the low end of that range is only possible with a lump sum settlement.
If you couldn’t afford a settlement, there may be a low interest repayment option on the private loans, but this is typically a short term solution and not a long term one. Feel free to call in to the hotline and press Option 4 if you’d like to schedule a full consultation regarding your private loans.
Gentlemen, I had taken out a Sallie Mae loan in 2005 for about $2280.00. the last time I paid on it was in 2009. Now they want $4329.00. Is there a statute of limitations on collection? Does this still show on my credit report and what should I do?
Check out these to posts about your state SOL to sue, and how long negatives stay on your credit reports.
Agreed with Michael and this also depends on whether the loans are federal or private. If they are federal then there are no statutes of limitation. Sallie Mae, and now Navient, both service federal loans and originate private student loans.
Is it true that Navient cannot take yours house if you into default on a Parent Plus loan?
You would have to be sued by Navient, and a judgment entered in court, before they could put a lien on your home. With a lien, a judgment creditor does not get to take your home per say. You typically would want to resolve the judgment before you sell or refinance the home.
Ok, let’s say there is a lien placed upon my home, as you stated, what does this mean?
That you have to resolve it before you can get financing, or before clean title can be passed to someone you sell it to.
I would just add that the government rarely files lawsuits against defaulted federal loan borrowers – they don’t need to since they can garnish wages, and offset tax returns and offset SSI without ever taking someone to court.
I have seen federal loan lawsuits, but only rarely, and both were in the state of Texas.
Hi Michael and Andrew,
My husband has 4 private loans totaling 28,000. two of them, his dad is a co signer. payments are about 290 a month. We are struggling on paying these. we are current. When he went to school 2005-2009, (now closed as well as the accreditor), he didn’t know the ins and outs of loans and the school did “what was best for him” and didn’t go over details. I noticed falsified information on 3 of the loan applications. Navient, who is the holder, recognized that too, but said sorry, to bad and too late and he signed it. But he wouldn’t of known if it was falsified info anyway. His dad is a veteran and now on disability permanently. He has excellent credit, above 800, and we don’t want that ruined at all. My husband didnt want him on the loans but the school said there was no other way. we are getting ready to by a home, so we can have a home for our family of 5. After purchasing a home, I want to get to a settlement point to get rid of the crappy private loans. What can I do about his dad being on two of them? could i try to refinance or consolidate those somewhere else and then default and settle?
Hi Suzie, I understand the desire to refinance the cosigned loans and then default to settle, but taking out a loan with the intention of defaulting on it could be considered fraud – you’d want to talk with a reputable consumer attorney about this strategy.
Alternately, you could keep paying on the loans that the cosigner is on (either with Navient or with another lender if you’re able to refinance them) and then default on the 3 that aren’t cosigned and settle them.
The difference being that those loans were not taken out with the intention of defaulting to settle them, so it would just be a normal strategic default. Feel free to call in to the hotline and press Option 4 to be referred to me, if you’d like a further consultation.
My daughter had a loan through Sallie Mae/Navient & didn’t pay it so they put it in my name. I am paying the bill which is $129.00 a month. Difficult to pay but I barely manage. They changed it to $240.00 a month which is out of control for me. Can’t manage that payment so now they are charging interest on top of it. Can they do that without my consent?? My credit will go down the tubes if this continues. I am still paying the $129.00 a month. What can I do to stop them?? HELP!!
Is the loan federal or private?
I’ve not heard of Navient or Sallie Mae putting the loan in a parents name if the borrower couldn’t pay. Are you sure this isn’t a federal Parent Plus loan that was taken out in your name originally?
Great article! I came across this page while researching ways to negotiate with Navient. I’ve been paying on my loans for over 13 years and I’ve never missed a payment. I’ve paid off two federal loans and now it’s just the private. As everyone knows the interest and payments are ridiculous. The loan was transferred to Navient at some point…do you think it’s possible to negotiate new terms with them considering I’ve never missed a payment, and on time 100%? Are you aware of any options I might have to help lower this monthly payment? The balance is about $16,000 – I think it started around $30,000 and the interest rate changed a few times etc…any insight or advice you can provide would be great!
Call in to the hotline Amir and get connected with Andrew about resolving your Navient account. You can reach him at 800-939-8357, ext 4.
It seems that the only thing we need to learn here is how to negotiate since it’s well known that private lenders are sharks. It would be nice to settle for 40% of the loan on a 5 year plan considering that more than 50% of any defaulted amount is interest, not principle. It’s a shame too regarding loans that are current which, if I’m reading correctly, doesn’t qualify for negotiations. I’m hard pressed to believe that the billions of dollars navient handles is an actual cash resevoir, bundle or vault; it may be an imaginary number based off of inflated profiles or financial statements. What entity besides Fifth Third Bank, Capitol One or the like invests in this monstrosity? With that said, why didn’t the student loan bubble blow up in sync with the housing market crash? Is it not odd that Sallie Mae or Navient is both lender and collector? Separating itself into 2 entities where they are the bank in one town and a collection agency in another sounds fishy to many. I too dealt with ‘former’ Sallie Mae’s reps off shored in India for a good year before finally asking for an authotized rep in the US, which took them another 2 mos after to put me on the phone with someone in Texas. Now, after defaulting, which was the best option at that time, I got the phone calls from underpaid reps doling out their emotional abuse as they lay out my life’s plan for me so eloquently before giving them some sound advice as well until I met the reps at Emergency Financial Services back in 2014. I settled a payment plan with them after paying 1500 bucks for a low interest plan, got my settlement letter and kept all documentation. After almost 3 yrs of on time payments they decide to close my account without proper notice. It wasn’t a worded letter but a list of check boxes and a hand written note saying ‘call navient’. Combined with the unusual phone calls to friends and family from a location service while my payments were being submitted to discuss my loan, I don’t believe they have the right to discuss loan options with anyone but the borrower and/or co signer. I also have yet to receive any letter from Navient to explain why my loan was first sold off to another party, closed without proper notice or phone call then magically back in the hands of the original lender. Every entity I’ve mentioned has been sued by the dept of education, the military and private civilians since 2006. Another investigative case against Navient has been opened this year for the same old thing. Where too do they get this ‘limitless’ supply of ‘money’ to pay off settlements worth millions? Perhaps that explains the variable interest rate as high as 20%! I’m aware of their aggressiveness but that doesn’t mean they’re untouchable.
Hi EJ, Navient private student loans are definitely problematic. They set aside a certain amount of money to cover losses on unpaid loans (usually smaller ones) or settlements on larger loans, with each batch of loans they originate. For example, in 2013 they set aside over $100m to cover projected losses, but they also originated billions in new private loans that year. And yes, Navient does calculate their interest rates so that they cover any projected losses and still turn a profit. However the majority of their business is in managing their FFEL federal loan portfolio.
It would be great if everyone could learn how to negotiate, but we’ve found that there’s only a small segment of borrowers who can effectively negotiate settlements on their own. It’s the difference between learning how to ride a bike, versus being a professional mountain bike rider for 7 years. All of the combined settlement experiences, and the negotiating persona that is developed, in addition to the technical negotiation skills is not something that is easily replicated or taught. The other debt negotiators we know who have tried to offer “DIY” negotiation courses have struggled with low interest, or people who take the course but still aren’t able to negotiate effectively.
For some people, it makes more sense to hire a professional than attempting it on their own. Usually, I’m able to negotiate a lower settlement for qualified clients than they can get on their own – including my negotiation charge. Negotiation is really only half of the equation though – the other half of the equation is effectively executing the settlement so that there are no problems in the future. This is even more paramount when dealing with a third party debt collector for the settlement. It’s very unlikely that Navient sold your loan, they typically don’t do that. If a third party debt collector is involved, they are most likely just contracted by Navient to collect while Navient still retains ownership of the loan. Unlike the credit card industry, we don’t see a whole lot of buying and selling of private student loan portfolios, with the major exception being a lender known as “The National Collegiate Trust”, or NCT.
Since you have documentation of the payment plan that you did for Navient with the agency, then you could use that in support of your case. I’d recommend opening a case with the Navient Customer Advocate department since there are a lot of moving parts here – they would be most able to sort through what happened and try to resolve it. I think you’ll find that this department is much more professional than the typical Navient customer service agents, or debt collectors. Their phone number is 888 545-4199. That would be the first place I’d start in trying to get this sorted out. Hope this helps!
I need help. While in school I took out private loans as recommended by the financial aid dept after my grades began sinking because personal situations and I lost my financial aid. I wish I would have known the trouble I was getting into. I was even dumber to not switch back to governemt funding once my grades improved. I switched majors a couple of times because I lost interest in the majors I were attempting to pursue. The ending result is my loans have seemingly almost tripled if not have tripled from the original amount to $127,000 all of which is private. The loans are from years I think 6 or 7 years ago and I’m in the AL and not to familiar with the SOL. Its like a revolving door for me I default then do forbearance and repeats. Last thing I tried was the 1% interest rate which wasnt knocking a dent into the loan and hurting my finances. Now Im receiving litigation review letters from Navient and Im scared of losing my home and I cant afford wage granishment. What do you recommend me to do? What are the chances of me being able to get a settlement with a low down payment (because I dont have 50% to pay up front) and monthy payments thats reasonable (because I have to provide and live)? Can they even come for me since they are so old and take my home and wages?
You have a lot going on Ashley. Call in for a consult at 800-939-8357 ext 4. There is a ton to cover and Andrew will be more effective with his feedback when is able to dig into the details.
Hi Ashley, for a private creditor like Navient to take your house they would have to take you to court, win a judgment, get a lien, and then force a sale of the property due to the lien. This is extremely rare in the collection world.
Settlements of 50% or less are possible, but require a significant down payment of at least 30% of the settlement amount, with the rest paid over 12-18 months depending on the term negotiated. The letter you received is sent to everyone at a certain stage of the collection cycle (typically the month before default). It is an empty threat as long as you or a competent negotiator works out a settlement or payment plan within 1-3 months of assignment to a collection attorney licensed in your state. Feel free to call in for a further consult.
Hi there, I have 4 private loans with Sallie Mae, now Navient from 2006 and later. My co-signer filed for bankruptcy on 3 of 4 of the loans at one point, but the loans were not discharged and they started trying to collect from me again. Once the 3 loans came back into repayment status, the payments more than quadrupled and they got way too hard to handle. I’m late by about five months now. Just got a certified letter regarding “litigation”. and am very worried. Will they actually take me to court at this point?
My ultimate goal is to settle for ten percent. With private student loans from Navient, how many months into default is the best month to try and settle at the lowest percentage? Also, when you say “a 50% settlement rate”, is that just on the principle loan amount, or does it include all fees and interest? I know someone who settled for 10%. Is that possible for me? Thank you!
Navient is going to handle each account individually. Your friend was likely late enough with payments (years of default and passed the state SOL to sue), and that is what helped him/her settle that low. It is just not common to settle that low, even when everything is aligned to suggest you shoot that low.
Call in for a phone consult at 800-939-8357 ext 4. There is a great deal to cover to determine what is possible when settling your Navient loans.
Agreed with Michael, the only time Navient takes a 10% or less settlement is in a situation when they couldn’t collect on the loans anyway (whether they are past the state SOL, credit reporting limits, or both).
Typical Navient settlements range from 30-50% depending on when the default occurred and the effort put into negotiations.
Okay so this site seems like a good place to get my question answered. I received a call today from a debt collector in regards to a settlement offer from Navient. My 4 student loans total about 20,000 and they are willing to settle for 6,024 as long as I can come up with the money within the next week or so. It would be classified as settled in full. However, if I do this am I going to be receiving a 1099-C for the 14,000 and then have to pay the 30% tax on it. Either way I understand that it’s a good deal and going to save me a lot of money I just want to make sure that I understand exactly how this works. When I called the debt collector back about it they said no that I would not receive a 1099 C and that the only money I would have to pay total would be the 6024. I was going to call Navient tomorrow to verify this and then get written confirmation before proceeding but it seems like someone on here may be able to answer my question.
How long have your private loans been in default? What state do you live in?
You do want everything in writing before you pay a penny.
DO not listen to the debt collector about you not getting a 1099c on forgiven debt. They will have nothing to do with whither Navient sends you the 1099. And you should expect to get one. Read that link about getting a 1099. Not everyone ends up owing taxes on cancelled debt.
Are you in a 30% tax bracket? If you do end up owing tax, it will be at your tax rate, not a default 30%.
You also may want to structure your settlement with Navient in a manner that puts your lump sum payment in January, which buys you an extra year to save up to pay any tax you could owe on the 14k saved.
Michael is preaching the gospel truth on debt settlement here. Debt collectors are not working on your behalf, they are working against you; and they regulary lie (which is why their industry has over 100,000 complaints each year).
Two main things here: – check your default dates and possibly talk to a reputable consumer defense attorney in your state to see if you’re past SOL.. Secondly, talk with a licensed CPA since no debt collector is licensed to give valid tax advice. Then make a decision to accept the settlement (or try to negotiate a lower one) based on that.
My daughter is still enrolled in school and Navient is telling her that she can no longer defer her loans. Not sure why. Is there a time limit on loans while you are in school?
For private loans with Navient, sometimes their forbearance or deferment runs out before the student completes their degree – unlike federal loans which have a 6 month grace period.
What would our options be to change this. They are not very nice people to talk to, very nasty on the phone and bully you. Not sure how they get away with that.
Yes they can be very nasty on the phone with borrowers unfortunately. They receive quite a few complaints due to that.
I don’t know of any options to change or extend the forbearance/deferment on a private loan. I think the main options at this point would be beginning repayment, or possible strategic default to settle.
Like many of the previous comments, I have been paying on my private student loans regularly over the last several years and the balance owed has gone no where.. My credit score was starting to rehab from a filed bankruptcy 3 1/2 years ago, but then I came off Navient’s rate reduction program and unable to reapply. With the monthly payments too much to afford and already living paycheck to paycheck, I’ve been trying to bide my time with paying what I could until I could reapply for the rate reduction program and get payments affordable again. However, they’ve reported my account as past due to the credit bureaus and now my credit score is starting to take a nose dive again. I’ve read through a lot of the comments and even watched the interview that was posted with Andrew. What can I expect if I decide to go the route of not paying them back and start to save for a settlement? I feel like that is an inevitable outcome for me and I would rather start the process of healing my credit score now instead of 5 years from now.
Andrew will provide his feedback, but for my part, I would be geared toward settling your private loans with Navient if it were me. I can see a far clearer path to financial viability, and credit report recovery too, by settling.
Hi Josh, I wrote an in-depth article about strategic default here: https://www.mycreditcounselor.net/should-i-strategically-default-to-settle-private-student-loans/
But in general, Navient will default the account between 6-7 months past due, at which point negotiations begin. Navient settlements tend to be between 40-50% on a recent default (keep in mind your balance may increase by up to 10% during a strategic default).
Structured settlements are available between 12-18 months with a down payment that is at least one third of the settlement amount. However, these carry more risk than a lump sum settlement because one missed payment can void the entire settlement. Also, better deals are usually achieved when negotiating with a lump sum settlement.
During the strategic default, expect a lot of phone calls and letters to you and any cosigners. I advise clients who choose to go this route to ignore the calls until the default occurs and I begin negotiations. The calls prior to default are meaningless if you intend to settle, since Navient will not go below 85-90% on a settlement until the accounts have become a non-performing asset for them (which happens when they default).
I am just finding out when trying to purchase a house recently that I have a student loan through navient that is showing as a charge off, just wondering what I can do from this point to correct this.
Is the loan federal or private? You can get back on track with federal student loans over a period of months so that your home loan can go through. If the loan with Navient is private, it is often ideal to offer a lump sum settlement for less. This will provide the most savings and quickest path to getting your credit reports updated, if the lender is requiring that in order to fund your mortgage.
Hi Jacqueline, I’m betting that this is a private loan and settlement is probably the best way to deal with it as Michael mentioned.
Doing payments on a charged off private loan usually doesn’t cure the charge-off and it will remain in a negative status until paid in full or settled.
Hey guys,
I have been paying on my student loans off and on for 8 years now. It’s been a struggle coming with the money to pay them on a monthly basis. So many times I would be on a interest only payments plan that did nothing for me. My credit is destroyed and my loans ballooned from 100k to 210k as of right now. My job is tied to the gas industry in wyoming and has been severely effected. My family five lives at pay check to pay check.
Not sure if I could settle the debt without bein able to make affordable payments. Right now I’m in default and they are sending litigation threats to me. I feel like I can’t afford to live and I can’t afford to die. Any help would be greatly appreciated
Thanks
Call in for a consult so that we can dig into the details of your situation Robert. You can reach Andrew at 800-939-8357, ext 4.
Hi Robert, we would need some more information – are the loans federal or private? Who’s the lender or servicer? An interest only payment plan sounds like a Navient private loan to me.. as does threats of litigation while in default. On a larger private loan balance, litigation is a strong possibility if no settlement or payment arrangements are made.
Feel free to call the number Michael mentioned to be connected with my office for an appointment.
My mom is consigner on my loan. Somehow she is listed as borrower and I as consigner. We have both spoken to Navient about this and have been told they cannot correct it. I believe I read somewhere that if I were to settle a student loan for less than I owe it could affect my taxes. I am worried if I were to make a settlement agreement it would negatively impact my mother’s taxes as she is listed as the borrower. Is that the case?
Check out this article about taxes on cancelled or forgiven debt. It is a legitimate concern. Talk to a tax pro, but both of you cannot owe tax on the same cancelled debt. You could cover the tax impact for her without wading into loan origination complications.
What is the balance owed today?
After reading my linked article, would one or both of you qualify for submitting IRS form 982? If you are, and she isn’t, and the amount of tax at issue is meaningful, let me know. Assume a 60% savings on the Navient balance and the current tax rate that is already being paid by you or her.
What I have been told by creditors is that the person the payment is coming from is likely to have the 1099 issued to them. As Michael said, they can’t issue a 1099 to both of you for the same debt. I generally try to have settlement payments in these situations come from (or look like they are coming from) the borrower directly. In your case, you may want to have the payment come from you in your name, so you are the one who receives the 1099. Generally younger people are more likely to qualify for insolvency exemptions since they haven’t had as much time to accumulate assets. Michael discusses this further in his article here: https://consumerrecoverynetwork.com/debt-forgiveness-taxes-settled-credit-card/
For a definite answer I would contact Navient and possibly even three-way a call with your CPA, since they are the only one who can give definitive licensed tax advice.
Navient’s general customer service department probably isn’t up to par for this kind of questions, so I’d recommend opening a case with Navient Customer Advocate, sort of specialized Navient Customer Service department staffed by competent agents. You can reach them at 888) 545-4199. Diana, Jessie, and Chuck are my favorite agents to work with there.
Hello Michael and Andrew,
I have a private student loan with sallie mae/navient that either defaulted in 2011 or 2012. Navient reported on my credit report on 4/30/13 that: charged off as bad debt – profit and loss write off.
I have not heard from them in years, then all of a sudden I get a call from a collection company wanting to offer me a settlement, I called them back and they stated my full debt was $9370.00
What is the statute of limitations in Missouri? Can they try to collect this debt from me almost 4 years later after they wrote it off as a bad debt?
My husband and I also had to file bankruptcy in 2014 and was discharged in July of 2014. I honestly don’t know what to do because the people at sallie mae are horrible to work with, they are extremely rude. Thank you for any help you can offer!
You are reading more into the write off (often referred to as charge off) than applies. It is just an accounting requirement.
They still have a few years to sue you on a written contract in Missouri.
I would look at pulling the money together to settle. Call in and talk to Andrew at 800-939-8357 ext 2.
Hi, I just graduated college with some hefty private loans. It’s a long story why it cost so much, I was depressed, young and stupid.
Anyways, I have two loans through sallie Mae. One for 9,500 at 5 percent interest. And another at 22,000 at 7 percent interest. I’ve been very stressed by these loans and not sure what to do. I work as a substitute teacher 5 days a week and don’t make very much money. It’s not like I’m giving up so early, but I want to see what my options are while I am young (23.)
Shitty cause I thought I’d go to grad school but unfortunately I’m too indebted. I currently have a decent chunk of cash. Will sallie mae work with me?
A cousin of mine works for Navient and she said threatening default is always an option. Thanks
Threatening default typically means nothing to loan servicers. You actually have to default for them to take a look at alternative resolutions with you. You can settle with Navient after you loan goes unpaid for several months.
If you are seriously looking at the option of negotiating a low lump sum pay off with Navient, call in and talk to Andrew at 800-939-8357 ext 4.
Hello,
Andrew or Michael,
I have 3 Navient Private Loans and my dad is a co-signer which are all current. I am trying to pay them off with some bonus money pretty soon. I have about 23K and paid about 3k with in the last week. I feel like I will never get a chance to pay all of this off when I have about 185K of private and government loans. Will Navient settle with me if I am good standing for less than what I owe?
I have 23k left to pay total for the 3 loans.
Navient does settle private student loans. Fill out the consultation request from (request consult tab at top of page). Andrew will get that and set up a time to go over your situation with you on the phone.
Hi Christina, Navient does settle as Michael mentioned, but the loans have to be in default for them to settle for a significant reduction. It can be possible to get a 5-10% reduction when you’re current on Navient private loans, but it’s not easy.
However, for the 50% or larger reductions on the balance, they will only do that after the accounts have defaulted; and even then negotiations usually take 1-3 months in order to get them to accept a settlement.
Also, if the majority of your loans are federal be sure to check out the different payment plans for those at http://www.studentloans.gov.
Hello Michael,
I took out Sallie Mae loans in 2001 and have been unable to make a payments since 2008. The loans have come off my credit report but I just received a letter from a collection agency representing Navient. I’m in a position to make affordable payments and would like to work on settling my debt. What options do I have? If I start to make payments with the collection agency, will this appear on my credit report? I went to school in New York City.
What type of loans are you dealing with, federal, or private?
I’m am dealing with private loans
Call in for a consult about dealing with these loans at 800-939-8357 ext 4.
Hello Michael! I have a private loan through Navient that has been charged off on my credit report but reported to collections. The loan was opened in 2007. Should I pay collections?
When was the loan set to start repayment? When did you last make a payment on the loan? What state are you in?
Kesha, it may be possible to settle this loan through negotiations for less than 50% of the balance. Feel free to call in and request Option 4 to do a free consultation.
Hi Andrew and MIchael,
I have a quick question I wanted to run by you guys. I have 3 private loans with Navient that defaulted Oct 31st. I called Navient today and talked to my “case manager” who stated she has just received my information and we talked about what I can do regarding my defaulted loans. I have a co-signer (my father) on these loans, and I prefer he pays nothing because he really doesn’t have the money either. Navient offered to settle where I pay 20% of my 13,000 plus defaulted loans which is around 3,600 plus, my case manager said that she can post date until Nov 30th, then it will be $269 per month after the initial payment.
My question is, I asked her if that 20% can be less but she made it seem that it was my only option, subtly threatening faxing where my father works, etc…
In your opinion is this a good deal?
Paying 20 percent to settle your Navient student loans is a good outcome. Navient accepting monthly payments on that amount is even more attractive (if I understand the offer right). Get everything in writing from them before you pay anything. If it were me I would want to pay this off in one payment if at all possible.
Hi Aina, I think the main question here: is the 20% a down payment on a payment plan, or is it the entire settlement?
If you’re just paying 20% down and then $269 per month until the loans are paid in full, then that is just the equivalent of a payment plan with a large down payment. Since defaulted Navient private loans can be settled for 40-50% through negotiations, paying 100% of a defaulted Navient private loan is not a very good deal (but, would look better on your credit than a partial settlement).
A 20% overall settlement is very good on private loans, but is rare and usually only occurs when loans have been defaulted for several years. If you’re still speaking with Navient directly, it sounds like these may have recently defaulted; and to me it sounds like they are just asking you
to pay the full balance with a large down payment (which they are known to ask for first).
Hi Andrew,
Yes it recently defaulted Oct 31st.
The case manager from Navient offered me 3 choices: 1. Pay 13,000 plus out of my 18,000 defaulted loans and be done with it. 2. Pay 8,000 to take my father off as co signer and pay the rest of the loans with a monthly payment. or 3. Pay 20% which is 3,500 at the end of the month then pay monthly of 269 to pay the rest of the loan.
She gave me those 3 choices, and she was good at slightly threatening my co signer (my father) regarding his job and his house. I will be speaking to her again regarding my choice, which right now will have to be choice #3. I don’t have the money now to pay anything bigger so #3 is seeming like a good choice.
Hi Aina, you have other choices than what this collector offered. We regularly settle Navient private loans for 40-50% of the balance, often available in a structured settlement with 2o% down. What they are presenting you with is their opening offer in a negotiation, not 3 hard and fast choices – I think it’s important to keep that in mind when dealing with Navient private loans that become defaulted.
There is also a low interest payment plan available which does not require a large down payment. This is available to all defaulted Navient private loan borrowers, which I know for a fact.
The important thing to keep in mind here is that this collection agent is trying to bully you into paying a large lump sum.
Navient cannot take your father’s house or do anything to his job. It would require a lawsuit for them to attempt to garnish wages, and a lawsuit would have to be done by a collection attorney in the same state as the borrower or cosigner. This rarely happens, and there are plenty of opportunities to settle or do a payment plan before that.
It’s sort of a one sided negotiation when you’re being bullied and intimidated with false threats. I’d recommend talking to a professional negotiator (to speak with me, call the debt relief hotline and press Option 4) or a reputable consumer defense attorney.
If Navient sends a fax to someone’s workplace regarding a private loan, it’s nothing more than a voluntary request for financial information – you can throw it in the trash. If you’re dealing with Navient Internal Recovery, which it definitely sounds like, I have negotiated directly with the manager there multiple times. The front line agents like you’re speaking with are known to be aggressive, rude, and intimidating in order to bring in as much cash as they can for themselves and for Navient (they receive a commission on collections which is why this person is falsely presenting 3 options that all involve a lump sum).
Short of getting a professional involved, I would be adamant about standing up for yourself and requesting the low interest rate payment plan; and not accepting any of the 3 “options” they presented to you.
This is a good example of how it can be difficult to negotiate with a private lender on your own though. Feel free to give us a call if you’d like a more in depth consultation.
Hello Micheal, My mother has a student loan in her name from a class I attended back in 2001-2002 Not sure of the exact year!. I withdrew from the class within two weeks. Chubb Institution which went on to change their name to Anthem Education Group which is now Florida Career College. I believe they falsified records, and continued to collect from the department of education. I checked with the national student loan data base and apparently I had three loans in my name listed under this school. also. And my mother is still being billed for over 10 grand. I start the Borrowers Defense application and came to Section 4? I am stuck as to what to cite for NY sate law.. I think I found the code in the Higher Education Act SEC. 437. 20 U.S.C. 1087 c (1). Any help is appreciated
Talk to some of the experienced student loan consumer law attorneys I sent you an email about. Let me know how things progress for you. Borrower defense is still a fluid process to submit for.
I had a loan with my college in Florida back in 2008 from Sallie Mae, i have never been able to pay on it and I recently got a job a few weeks ago in DC and somehow Navient got my work number after calling my phone for years which I dont answer 800 #’s. Anyways, Navient is using a third party to contact me and I talked to them, They offered me a payment settlement which is less then the original amount, I have a Loan grant from AmeriCorps and the government I’d like to use. Should I pay the full amount to Navient or should I pay the settlement balance through the third party collecters they have chosen to find me? Does it make a difference on my credit report once I’ve chosen either option?
Who is the third party collector? What is the settlement offer?
Once you settle, if Navient is showing on your credit reports still, they will update it to show a zero balance owed, and a resolved collection account. It can’t be far from falling off your credit as it is.
How can I learn more about the Statute of Limitations? I had a private loan through Sallie Mae that went into default in 2007. I haven’t heard from the company in years and now I have received a letter from Navient trying to collect the debt. I just want to find out if they can legally sue me or report this old debt to the credit bureaus (it had previously fallen off). Thanks so much for your time!
What state do you live in?
VA
5 years for SOL to sue on a written agreement in Virginia. You are passed that, and Navient should not put this back on your credit reports. If that happens post an update and we can go from there.
Thanks for your information.
Would I be wasting my time to write a letter to Navient (orginally a Sallie Mae Loan) asking to discuss a settlement of my daughter’s loans which came due in 2004. She has mental health issues, has never held a job and I can prove she has no income and participates in an outpatient intensive group program. She has no assets and I want my letter to emphasize that I would like to finalize a negotiated, lump sum payment on her behalf before I die. at which time Navient would have no possibility to collect even a penny on the loan. Who would I even address the letter to – as Navient wont even give me the account number for my daughter’s loan. Thank you very much.
Are the loans with Navient private or federal?
Private loans that old can simply be ignored in a situation like your daughters, or settled for optimal savings.
Federal loans can sometimes be discharged in a bankruptcy, given the situation you outlined your daughter is in.
How much do the loans total?
Thank you so much Michael for your response.
I really do not know for sure, but I feel this is a federal loan because it was with “Sallie Mae”.. The amount quoted on the phone was $21,870. The calls from Navient started
out of the blue day and night in July. 2016 and none of the callers would give me straight up answers. I finally told someone I would pay their suggestion of $99.53 per month on my daughter’s behalf which I have BUT, Navient would NOT give me a beginning balance, interest rate, payment booklet etc not even her account number from which I could verify that my monthly payments were being properly credited. . Supposedly they will not give me any info, but they will take my money. (The way they sounded on the phone I thought it was a scam at first. ) I am sure my daughter will not declare bankruptcy as she has nothing else to declare except these loans. Oh the other loan it is with nelnet for 6,233. Both are in my daughters name and I have paid off and on for the Nelnet. Do you feel if I sent verification of what I said to you formerly, that I could negoiate a settlement and if so can you offer any pointers to me. I would reimburse you for your advice. or recommendations. i would like to clear her name and I do not think that anything is detrimental on her credit rating (if she would even ever need a credit rating) Sincerely, Janet Patterson
Get with your daughter and look up her loans at https://www.nslds.ed.gov/nslds/nslds_SA/
All federal loans should appear there. If the Navient loans are not showing, they are likely private. My feedback is going to be very different depending on what you find.
OK I am going to TRY to get with my daughter to determine the origins and status of these loans. Please earmark my question and concerns as I know you have a lot of them – it may take me some time but I am focused on getting this behind me or should I say her. Sincerely, Janet Patterson
Hi Janet, Michael is spot on here. Sallie Mae and now Navient service federal loans and also originate private student loans. The NSLDS is the fastest way to tell whether they are federal or private.
If the loans are federal, a significant settlement is probably not possible regardless of whether the loans were current or in default. If they turn out to be private, you may be able to settle them but they would only accept a settlement if the loans were in default. They are relatively difficult to negotiate with as well. Please let us know what you find out on the NSLDS and we can advise you from there.
I got a letter in the mail from northstar location services That used to be with sallie mae .saying that they will settle for 500 dollars out of 8000 .the letter seems Real. do you think this could be true
It’s possible, but settlements that low are not all that common. How old is the debt? Do you still see it on your credit reports?
This sometimes happens on debts that are past the statute of limitations and are close to (or already past) the timeline for falling off of your credit report. Sallie Mae/Navient most likely still owns the loan and is just hiring Northstar to collect on an old account for them. If it’s been more than 5-6 years since you’ve made a payment, it may be worth waiting it out instead of paying the settlement.
On larger accounts, private student loan lenders usually put much more effort into collecting (including legal collections) before the statutes of limitation and credit reporting timelines have passed.
I think the answers to the questions Michael asked would be key to making your determination on whether to pay the settlement or not. Also, even though $500 is pretty low, they would probably take even less if you negotiate with them; if that was the first offer they sent you. My guess is that this account is close to falling off of your credit report, if it hasn’t already. In that case, even a 6.25% settlement like they offered you is better for them than getting nothing.
Her loans are private with Navient.
Hi, my wife is 62 and carries $90,000 in student loan debt. We no longer live in the U.S. She has no assets whatsoever but makes a decent living. Her student loans are not manageable though given her age, lack of pension and assets. What are our options? If she gies into default will they settle even if she makes a decent living? Thank you.
Hi Frank, we recommend that clients don’t disclose their income when trying to settle. There’s no way that Navient could find that out unless they were told, so it wouldn’t be a factor.
Navient has a system of collections set up where they will accept certain settlements at certain points of delinquency, so personal factors don’t play a huge role to be honest. They can be extremely difficult to negotiate with, and they can see lines of credit etc on credit reports; which can influence their desire to settle, but they can’t see income or tax returns.
Also, Navient is both a servicer of federal loans and the largest private loan originator; so if there is any uncertainty at all you’d want to check the National Student Loan Database to make sure these are not federal.
With extensive negotiations, settlements can be as low as 40-45% on a recently defaulted loan. Being out of the country, you have the option to wait longer to try to get a lower settlement; but interest and late fee accrual may outweigh any additional savings by allowing the account to age further.
Navient is also very difficult when negotiating directly with borrowers, so although 40-45% is possible, many times borrowers are unable to hit that type of percentage on their own. Navient employs some very aggressive and knowledgeable debt collectors who can be very convincing; but after doing so many settlements with them, I have a good knowledge of their collection cycle. I usually only negotiate directly with one of the managers there as well, and the fact that I’ve done several settlements with that person also helps when I negotiate for clients.
Once a settlement is reached, it’s just as important to make sure that it’s executed correctly – this is where a lot of people get tripped up, even if they are able to negotiate a decent settlement on their own. I did a recent case study that showed how hiring a professional negotiator can actually cost less (including the negotiation charge) than a borrower trying it on their own. And that’s without taking into account the time, effort, and stress involved.
I’ve negotiated settlements for borrowers in different countries, such as my client who moved to Australia, and in my credit card negotiation days, a soldier who was serving in Afghanistan. Since it sounds like she’s current, there are some other factors to consider if she decides to strategically default to settle this account. If you’d like to discuss settlement strategy with me further, feel free to call into the hotline (800-939-8357) and press “option 4” to be transferred to me.
Hi Michael,
I cosigned a loan with Sallie Mae(now Navient) around 2006. My husband was getting a BS and his CA teaching credentials. He has gone on to receive 2 MA’s in education since than and we are stuck paying an additional $3000 in interest on this loan from 2006. My husband has applied and was excepted for loan forgiveness on his other loans since he is an educator in underprivileged schools but Navient.won’t budge. I would like to try and negotiate paying the original balance only if possible. Please let me know if you have any strategies on how to address this issue. Thank you so much.
Call in for a student loan consult at 800-939-8357, ext 4.
Hi Erika, settlement should be possible if this account is defaulted. If not, you may want to consider a strategic default to settle which is a valid strategy for private loans (but not federal loans).
If you’re unsure if this loan is private or federal, you can check at the NSLDS student loan database which only lists federal loans – so if this particular loan wasn’t showing on the database then it’s most likely private. Feel free to give us a call if you’d like to chat further.
A letter from Central Credit Services LLC was sent to our home in TN addressed to our daughter who lives in the UK. She asked us to open it for her. The letter was an offer to “resolve your outstanding accounts total balance due for less than you owe. ” The offer was about 25% of the student loan total. The letter requested that she call 866-947-6802 or send in the offer payment with the enclosed coupon. She has been unable to make the payments for sometime, and we thought maybe they figured something was better than nothing. But it sounds to good to be true, and so we are trying to find out if this could be a real offer. Any suggestions would be helpful.
I should also note the creditor is Navient,
Those kind of offers do happen. Who was the originator of the loan? When did she last make a payment? Can the family work together to come up with the 25% to settle the student loan by the date on the offer letter?
I agree with Michael. Usually, getting an out of the blue offer for 1/4 of the balance indicates that it has been years since a payment has been made, and that the account may be about to fall off of the borrower’s credit report (or already has). That would be something to keep in mind.
Generally, even on a very low offer like this, there’s room to negotiate. If their opening offer is 25%, it may be possible to settle it for 15-20%. I’ve done several of these settlements in my career, and in every case the accounts were 4-5 years past due or more.
Hello Andrew,
With settlements, is there a way to settle the amount for less, with payments? If I am not able to save enough for the lump sum? Is that what structured settlements are? I know some lenders will balk at settling, because if I am able to make payments, why should they settle for less. Is the number listed on the post your consultation number? I would like to consult with you, to see what my possible options are. I am currently defaulted on both my Navient (90 days) and Wells Fargo loans (90 days).
Hi Lily, we’ve already talked and have a consultation appointment set; but I wanted to respond here in case anyone’s facing a similar situation.
It is true that lenders will balk… up to a certain point. At 90 days behind, your loans are delinquent but not actually in default yet. That usually happens at 180 days, but some lenders like Discover can charge off loans sooner at 120 days. Very limited settlements will be available with the nasty pre-default collectors (who are literally some of the rudest people I’ve talked to in my 7 years as a negotiator)
And yes, structured settlements are paying a settlement for less over time, with a significant down payment. I recently negotiated a 24 month settlement with Navient on a 39% settlement, but it was one heck of a battle and took 6 months of negotiating. Along the way, collectors tried to harass my client, and just generally be a pain in the butt,
However, I’ve negotiated a settlement on every Navient account I’ve ever attempted and I realize a lot of what they say is hot air. The BS legal threats mean nothing to me because I always settle far before that is a possibility, but if that were to happen, I know an attorney who is the owner of a nationwide attorney service, and many other attorneys in different states. They would squash any attempt at a default judgment and work out a good settlement during the legal process.
But a lawsuit is really the last resort for a lender. It costs them more, with no guarantee that they can garnish wages or offset bank accounts. There are many, many opportunities to settle prior to that. I usually just work with managers and supervisors at Internal Collection department for lenders, and at third party collection agencies.. the front line knuckle-heads aren’t always too helpful and I tend to run right through them when they try the same scare tactics that they use with borrowers.. just because I know better.
It’s tough to negotiate on your own with a private lender if you haven’t done it before, and I’ve developed unique strategies and knowledge of lenders’ collection cycles that give me an upper hand in negotiations. That’s why I’m able to negotiate 40-45% settlements on a regular basis.
In a lot of cases, I can negotiate a lower settlement than borrowers can for themselves. This is not conjecture, I actually have a case study with a real life example of this dynamic playing out. It’s on my blog here: https://www.mycreditcounselor.net/the-costs-and-risks-of-settling-private-student-loans-by-yourself-a-case-study/
It’s a long read, but interesting and worth it. In addition to negotiating the settlement, I make sure it is executed properly – something my fellow borrowers tend to struggle with even if they negotiate a decent settlement amount.
I have contacted my daughter for more specific information though I am certain it has been 4-5 years. What disturbs me is that although the offer claims to come from Central Credit Services LLC in St. Charles MO according to online sources the site there is closed. I searched the address in the letter head, and there is no Central Credit Services listed for that address but an Integrity Solution Services is. I called the number listed for that company and got instead Central Credit Services. The offer did not contain a specific date to discharge it by, and the included coupon has very little information either. Also the coupon address is a PO Box. Maybe I’m paranoid, but I would hate to send out over $5,00,00 and later discover this was a scam. Neither company seems to have a good reputatiion. Thanks very much for your info.
No debt collector has a clean reputation. It comes with the territory, or they earned it. In my professional experienced with Central Credit Services (formerly Veldos), they are easy to work with.
You or your daughter can call Navient and verify that they placed the account with Central Credit for collection. I would not bother with the details of the settlement offer, just that you would be dealing with the correct party.
As Andrew pointed out, there may be room to negotiate further.
Thanks very much for your quick reply. Information has been very helpful.
I agree with Michael.. the easiest way to contact Navient to verify that the account is with the right collection agency, would be to call Navient’s Customer Advocate department at 888 545-4199. They are generally more helpful than the normal customer service agents at Navient.
Hi –
I recently received a letter from Northstar Location Services offering a settlement on a charged-off private loan I have with Navient. Have you heard of this company acting on their behalf? It’s a really good settlement, but I want to make sure it’s legit. Also, the original Navient account is set to come off my credit report soon. If I make this settlement, does that reset that seven timing? Or will it still come off?
Thanks!
Hi James, yes, that is a collection agency that regularly collects on private student loans. Keep in mind that any initial offer you receive from a collection agency is their opening offer and they are probably able to accept lower if you negotiate.
One reason that private lenders offer very low settlements is because accounts are past the statutes of limitation or may even be close to the time period that they would fall off of a credit report (7.5 years after the charge off occurred) as you mentioned.
It can still be a good idea to settle even when accounts are past SOL.
If they are about to fall off of your credit report, you’d probably want to consider that and weigh the pros and cons versus settling. Negotiating and paying the settlement will not cause this to stay on your credit reports for any longer.
Hello,
I hope you are still receiving comments for this article. I have 2 federal and 2 private student loans with navient. My federal loans are currently on Ibr and lower balances. I have ignored my private loans for several years but filed bankruptcy in 2011. I did not attempt to have the loans discharged. As far as I can tell my last payment for the private loans was sent in 2009. They are currently in bankruptcy status with navient.
So they have not been contacting me even though the bankruptcy has already been finalized. How can I know for sure if the Sol has expired and should I make them aware ? I currently live in Arizona and lived in Oregon when the loans were taken out.
It would be a huge relief to put these loans behind me if possible.
Thanks
K
Does Navient still show on your credit reports?
What are you basing your assumption of the last payments being made in 2009 on?
Yes. They are still on my report with the last payments showing as 2009. Transunion and Equifax both say it should be removed sometime in October…
That would put your private student loans with Navient passed the 6 year SOL to sue in court in order to collect in both Oregon and Arizona. The SOL clock may have been paused by your chapter 7 for a little while, but that is often measured in months.
I am not sure what you would want to make Navient aware of? What is your goal with contacting them?
Hello,
I have some Stafford subsidized loans that were disbursed in the mid-1980s that are still hanging over my head. The original amounts were small, a total of under $7,000. When I graduated, I did try at first to keep up with the payments, but quickly fell behind. I’m not sure when the loans officially went into default, but we’re talking decades ago, not years.
In the meantime, I discovered that the university from which I graduated is withholding my official transcripts because my loans are in default. Since I was a stay-at-home-mom for years, access to my transcripts for employment or advanced education was not an issue, and the loans had been in default for so long that I no longer had bill collectors hounding me. Several times, I tried to resolve the situation, only to run into account managers who were unreasonable — demanding either full payment of the entire amount at once or monthly payments that were laughably high. So, I let it go for a long time.
I am finally at a place in my life when it would be beneficial for me to get out from under the debt, and I have a small amount of wiggle room in my budget to work on that goal.
In January, I logged onto the myeddebt site and checked my balances. I called the assigned debt collection agency and hammered out a rehabilitation plan. I made the first payment of the agreed-upon amount over the phone and authorized monthly debits from my checking account. However, almost immediately, I began getting multiple phone calls a day from the agency leaving vaguely threatening messages. They also called my family members — including my then-17-year-old son — demanding information about me. Finally, I sent a letter insisting that they stop attempting to contact me by phone and that they stop harassing my family and friends. I made sure they had my mailing address and e-mail address and instructed them to contact me by one of those methods if they actually needed to communicate with me.
I heard nothing from them for several months, and the automated payments were withdrawn from my checking account right on time each month.
Then, three months before what should have been the last payment before the rehabilitation was done, I got notices saying that they were missing paperwork, that my required monthly payment had increased and that I was no longer qualified for the rehabilitaiton program.
They have, however, continued to debit my checking account each month.
A few weeks ago, I logged onto myeddebt again and realized that the numbers shown there don’t actually add up. For one thing, I did make some payments on these loans before they went into default. In addition, my tax refunds have been offset at least a few times over the intervening years, in theory because they were being applied to my defaulted student loans. And yet the myeddebt site shows the outstanding principal for all three loans to be the same today as they were as of the date of disbursement. In other words, it looks as though there is no record that I have ever paid a single penny on any of these loans, even though that is not true.
I contacted my university and asked for copies of the original promissory notes and any related records they have, but was told that they maintain those records for only as long as is required by law (something like three years).
I wrote to the Department of Education requesting a full statement of the history of these loans and copies of promissory notes and records and received no reply at all.
At the same time, I notified the debt collection agency that I am disputing the balances due and requested copies of any records they have. Silence there, too..
Almost two weeks ago, I sent follow-up letters, this time by certified mail, to both the Department of Education and the debt collection agency reiterating my request. I made it clear to the collection agency that, if I didn’t get records from someone within 30 days, I was revoking my authorization for them to debit payments from my checking account.
I got the return receipts indicating that both agencies recieved my letters, but I still haven’t heard a peep from anyone with any actual information.
At this point, I don’t trust the collection agency at all. I feel like they have pulled a bait and switch scam, luring me in with payments I thought I could afford, then changing the rules/moving the goalpost to make it impossible for me to complete the rehabilitation.
I truly want to resolve this, but I want to know what I actually owe. It seems absurd to me that no one will so much as respond to my request to see an accurate accounting, let alone provide me with records, but I’m supposed to trust that everything will be okay if I just keep making payments.
Can you suggest any strategies to make progress on this? What happens if it turns out there actually are no records to be found?
Hi Jenny, this sounds like a complex federal loan situation that would take either an experienced federal loan specialist or an attorney specializing in loans to figure out. It’s hard to give advice in a comment without reviewing all the paperwork involved.
For a federal loan that’s been in default for decades, the balance will usually increase significantly even despite tax offset or previous payments, because a large part of the payments they take via tax offset are first applied to late fees and principal.
You may also want to file a complaint with the Federal Loan Ombudsman’s office. It sounds like you completed the Rehab and should be current, so something’s not adding up. If you’d like I can refer you to a federal loan specialist who may be able to help.
You could also try logging onto http://www.nslds.ed.gov and seeing what federal loan balances are showing there. And yet another option would be bringing the loans current once and for all with Direct Consolidation, a free process. I discuss how to apply for Direct Consolidation here: https://blog.credit.com/2016/07/how-to-get-your-student-loans-out-of-default-without-getting-scammed-151236/
I personally no longer work one on one with federal loan borrowers, but if you call the debt relief hotline at 800 939 8357 and press option 4, you’ll be connected to my office and we can refer you to a reputable federal student loan counselor. However, they do charge a reasonable fee for their services, so you may want to try the DIY method first by filing some complaints and considering Direct Consolidation to get the problem solved.
A word of caution though, the actual loan balance of today may be 2-3x the amount what you borrowed if it was in default for decades, even despite the tax offsets.
Someone is taking your payments – most likely the collection agency. They should not still be doing that when Rehab is finished, it should be transferred to a loan servicer as a current loan at that point. There have been many problems with collection agencies implementing Rehab though, and some of them have even lost their contracts with the Dept. of Ed due to their mistakes.
I have a Navient loan (was Sallie Mae) original from 1997. I got it down to 11k a few years ago, but my income just too low, and had been on forbearance here and there, and then on IBR which the last year and half my income was so low that my payment plan was ZERO. I did pay several hundred a year ago, so now my balance is at 15k due to interest capitalized.
I just sent them a letter asking what steps to do in order to do a settlement and I am waiting for a response.
What should I offer? Or what should I expect? My thought, is even though I am not in default, my IBR is zero, which means they are still not going to get money from me unless I choose to pay. So them settling would be beneficial for them because I do not expect my income to change considerably anytime soon.
Thanks for any advice!!! I’m so done with paying this and I’ve already paid 10k more than my original balance. I tried to get it discharged on my bankruptcy this year, but my atty did not do an adversary proceeding and didn’t tell me it wouldn’t be discharged.
Hi Crissy, if you’re on IBR then you have federal loans that are current, so settlement will not be possible. While “strategic default” can be a good option sometimes with private loans, I never recommend doing that for federal loans since collection fees are massive and settlement savings are minimal or nonexistent with federal loans.
They usually will just remove the fees they added at the time of the default for “settlement” – which is the same as paying 100% of the balance you have prior to default. The only federal loan settlements I’ve seen that had any kind of significant reduction were for borrowers who had been in default for years, even decades; and the savings were still relatively limited compared to what’s possible with private student loans.
The federal government has no incentive to settle a loan when it’s current and even when it’s in default, they still have all kinds of ways to collect that private creditors don’t. Have you considered just staying on IBR and if your income increases, making affordable payments, until you reach 25 years on it and the remaining balance is forgiven? I think that is your best bet. Settlement will not be possible in your situation since you’re current, and defaulting to settle on federal loans usually just causes needless credit damage with no significant savings.
Interest does accrue on the income-related payment plans if your payments are very low relative to your loan balance, despite the limitations on interest accrual that are baked into these plans; so that is a downside of staying on them. The fastest and least expensive way to pay off a federal loan is usually getting on the Standard payment plan and prepaying as much as possible on top of that.
I hear from a lot of people who understandably want to settle their current federal loans, and it literally never happens. Sorry to be the bearer of bad news, but I think staying on IBR is your best option!
ugh. okay, thank you so much for letting me know. In the meantime I had talked to Navient and they basically said the same thing.
I wish I had paid it off with my credit cards years ago and then it would have been discharged through the BK. But I never planned to file ch 7, and my student loans were tax deductible. oh well. It’s just awful that I am going to never get this paid off and I’m paying interest on interest.
One thing I found out is if you are on IBR for 25 years, then the government will forgive the loan. That might have actually worked had I done that from the beginning, but it has to be consecutive years and I fluctuated from forbearance/IBR may times.
thanks again for your help!!
Crissy
You’re welcome – and yes the IBR forgiveness does require 25 consecutive years. You may want to take a look at the new RePAYE plan which is lower than IBR payments and offers forgiveness on the remaining amount after 20 years. As of now both types of forgiveness are taxable, but there have been some legislative efforts to change that lately.
Hi I have a Sallie Mae loan that I took out 3/2016 33,333.00 Normally repayment starts 6 months after graduation. I graduated 12/2008. Sallie Mae hounded me until I paid a forbearance that only deferred them from contacting me for a month, however this payment was made March 2010. I know that I was delinquent prior to that. Isn’t that when delinquency should’ve been reported to the credit bureau? 6 months after nonpayment?
Anyway, my credit report says the account was closed and charged off 10/2010. Sallie Mae sold my loan to central credit services and I answered their call November 2013. They threatened to garnish my wages if I didn’t pay something. So I paid them 50.00 a month. They made it clear to .me that this payment didn’t count towards the interest or principal. I informed them I didn’t have anything to pay them more than that. These payments went on until 7/2015 when they called to settle a debt for around 15,000 ( the balance is now 78,000.00) I told them I would try to pay but I couldn’t commit to anything. I finally called them to not run a payment on my account and that I don’t have money.to settle for any type of debt. I then didn’t hear from.them again until 4/2016 when they started to call me again and send me letters for settlement offers now from a different company called national enterprise services. I have not responded to any calls or letters. I checked my credit report and it stated the debt will fall off 2/2017 but the date of last.payment/activity was 7/2015.
Did I restart the clock on my SOL? I live in PA and SOL is 4 years. Is it still from date the account was closed? 10/2010 or date of last payment 7/2015. Again I paid because they threatened to garnish my wages and the 50.00 didn’t even touch what I owe, meaning it didn’t count for anything. Please help me!! The dates are all over the place on my.credit report. I know I went delinquent before 2010 but I can’t find out because sallie mae no longer has the loan. I’m kinda stuck in this matter. Also, can the date to fall.off my credit report be sooner than the SOL expiration? How can they sue if it’s no longer on my credit? It erases 7 years or 7.5 years. If it’s 7.5 years then the date it’s due to expire is 2/2017 then it became delinquent 8/2009 correct? If it’s just 7 years then it went delinquent 2/2010 WHICH goes against the one month deferment payment I made 3/2010. I still have my bank statement for that
I thought about disputing the 50.00 charges from my account because I didn’t realize they were being deducted from my bank for so long. I was manipulated and lied to, tricked and now I don’t know what to do!
I also read some case law where is states you had to have knowingly revived your SOL for it to restart in PA. It also stated that a full or partial payment had to have gone towards the principal or interest, which wasn’t the case as it was only the.50.00. It’s not really clear anywhere else aside from in case law. But is this something you can clarify for me? I didn’t know that paying them 50.00 would revive MY SOL and restart the clock if that’s even what happened. How would I know for sure? Do I have to call someone about this.
Sorry for the long comment but any help or answers you can give each would be a great help!
If you make a payment toward an unpaid debt it will generally revive or reset the SOL to sue for collection legitimately in the court. You have some curious issues though, and I would run those by an experienced debt collection defense attorney in Pennsylvania. If you like, I can email you a list who have the experience you need. Let me know.
The credit reporting does not reage or reset with payments. When you failed to make timely payments is when this will have started. Count forward 7 and one half years and that should be the drop date. If I was going to try to dispute a couple of month discrepancy for this student loan on my credit report I would normally wait until the time I thought it should age off.
Ok thank you yes please send me resources! Thanks if this debt was sold to a different company, w0uld the new company have any record of phone calls made or just that payments were made. And would these attorneys be able to give me specific information of whether or not I have restarted my SOL? If it falls off 7.5 years and the date for it to erase from my credit stated 2/2017 then that means they collected payment AFTER the 4 years SOL for PA which would’ve been up 8/2013 (7,5 years from 2/2017). If they attempted to collect payment after my SOL that doesnt restart it too does it? Or am i able to file a complaint against them? Im.just desperate for clarification and am not sure who can give me specific answers.
The 4 year SOL means nothing other than a legitimate lawsuit cannot be filed. The debt does not expire. It is still collectable. There is nothing wrong with collectors collecting after that time expires. They could contact someone 10 years later and still get you to pay. This is normal.
I will send you the email with attorneys listed. They can help you understand the SOL better, and can determine, based on the details you share, whether there are law violations that they would pursue on your behalf.
Just wanted to chime in here – private loans are rarely bought and sold to debt buyers after charge off. Other than acquisition of loan portfolios like Navient did with their sister company Sallie Mae, or the types of acquisitions the National Collegiate Trust makes; private student loans are generally just contracted to collection agencies by the lenders to collect after charge off, not sold. The collection agencies are usually just collecting on behalf of the original lender. Debt buying and selling is much more common with old credit cards or other unsecured debts.
I think you also may be conflating SOL with credit reporting requirements — they are two separate timelines that are not related to each other. Making a payment could restart SOL. I agree with Michael that talking to an attorney about state-specific SOL or legal issues is the way to go.
Hi,
I graduated in 2010 and have over $80,000 in private student loan debt through Nacient. The original loan balance was $52,000. When you keep saying the 50-45% reduction through negotiation, do you mean from the current balance? I would love to negotiate a settlement but will find it hard to find that large of a sum of money to make them even consider it. What should I prepare to save while letting my account go into default? My husband and I just filed chapter 7 BK and our credit is already suffering, so we figure now is the time to settle all of our outstanding debt and would love any insight you have to offer. Thanks
Hi Erika, yes, all of the private loan settlements go off of the current balance. It’s pretty common for private loan balances to increase over time, even when making payments.. that’s probably the biggest factor that influences most people’s decision to settle.
For more info to consider when making the decision to strategically default, you can read my blog article on that topic here: https://www.mycreditcounselor.net/should-i-strategically-default-to-settle-private-student-loans/
Also, the 45-50% figure is the settlement amount, not the reduction on Navient private loans. It’s often possible to negotiate settlements even down to 40% on recent charge-offs, although they make it pretty difficult and it usually requires months of strategic negotiations.
For Navient settlements, if a good amount of the settlement is available for a down payment, we can usually negotiate structured settlement terms out to 12-18 months, and sometimes longer. For instance, on an $80k account settled at 45% of the balance, that would be a settlement of $36,000. An example structured settlement would potentially look like $20k down, and $888 per month for 18 months. It may also be possible to use a lower down payment on the settlement, but it would result in the structured settlement payments being higher.
I think working to settle the Navient private loans after doing the CH7 is a good idea. If there is going to be credit damage, it’s better to have it happen all at once and then rebuild. If you’d like to set up a time to talk about your situation further, feel free to call the Debt Relief Hotline at 800-939-8357 and choose option 4 for student loan help to be transferred to my office.
I get into default then I get put on a 5 dollar a month plan then they sell me back to Sallie Mae now I’m with navient there payment plan for me is insane. So I will end up back into default and they will take my income tax return again.
Hi Tana, this sounds like a federal student loan based on what you mentioned about the $5 a month to get out of default (which sounds like federal loan Rehabilitation) and taking your tax return (which is only possible for federal loans in default).
You do have other payment plans available on federal loans and it’s unfortunate that Navient is not telling you about that.
The payment plans are probably very low and affordable, if your Rehab payment was $5 a month. The payment plans related to income are based on a similar scale as what they used to calculate your $5 a month payment.
You can call Navient and tell them that you’d like to enroll in a payment plan related to your income, or you can apply on your own at studentloans.gov.
Hi,
Seeing all the comments and questions this is one time it doesn’t feel good not to be alone. It’s crazy how so many people have the same issues with this company Sallie Mae/ Navient, and nothing can be done about it.
Well I have two loans with them, original combined balance of $60k now over $80k. I too was grossly misinformed with regards to the co-signer release and after trying to release my guarantor based on one rep’s advise I was told I didn’t qualify by another rep,
Before Sallie Mae became Navient I was paying about $600 a month for both loans, since Navient took over one of my loans increased to over $500 a month giving me a combined total owing each month of over $900.
This has led to delinquency where I am constantly bombarded with calls and threatening letters. Note I still continue to make monthly payments on the other loan and a small amount in this loan that is currently in delinquency.
The most recent thing that happened was that I was contacted by someone who stated that Sallie Mae called them stating I had them down in my records. This was a total shocker to me because I know I did not list this individual. Anyways I called my so-called account manager who was very rude and stated that they “bought my information”, including people who I previously lived with for over 6months. Is this legal, is it considered the same as when creditors sell my information to debt collectors?
Obviously it would appear unless there is a miracle that I would never be rid of these people, what do you think are my options. So far I did the assessment of budget to have the amount lowered and they stated that they did not see a hardship….. I asked how come if every month there is something owing?
Please offer whatever guidance you can. My credit being 512 is already dead, I want to be at a position where my friends and family are not affected by attempt to further my education and build myself. That dream has turned into a nightmare!
Hi Camille, this is a very common situation for Navient private student loans that are past due. Navient is extremely aggressive, rude, and unethical in their collection attempts. Despite their threatening language and letters, there is probably a very good chance at settling this private loan for 50% or less after it defaults. From what you mentioned in your comment, I would guess that you are either past default or very close to it.
Although settlement negotiation is possible, it can be very difficult when you are dealing with someone as rude and aggressive as your account manager. Many times, my clients have told me that their attempts to negotiate a settlement went nowhere, with the account manager declining their offers.
There is also a certain way that these accounts must be negotiated for a 50% or less settlement to be available. I hear from a lot of people who make the common mistake of offering the amount they want to settle for as the first offer. Successful private student loan settlement negotiations often involve 5-6 rounds of negotiating or more – so you or your negotiator would need to start off with a much lower offer than you intend to settle for. However, you still want to make the initial offer large enough to get their attention.
Navient as an original creditor (since the loans were transferred to them from Sallie Mae when Sallie Mae spun off Navient as a new company) can try to call friends and family, or anyone who was listed on the account as a reference when the loans were originated. There are some states that prohibit these types of calls, but in many other states these types of calls can only be stopped if a third party collection agency is involved.
If you’re intending to settle, the best way is to use a lump sum; but structured settlements can be available with Navient as well, which extend the settlement out to 12-24 months with a down payment.
If you’d like to chat further about your situation, you can reach me by calling the CRN Debt Relief Hotline and selecting “Option 4” for student loan help.
Hi there,
I stopped payment on my private Navient loan ($68k) in Aug 2015 and they have not offered any type of settlement options. My school (The Art Institute of California – Los Angeles) is now closed and I don’t feel that I should pay $145,000 for a degree from a closed school that has had numerous lawsuits against it, predatory recruiting and lies of their transferability/cost. My problem is that I have cosigners so I am a bit worried to not work out a payment plan with them instead of waiting out the statute of limitations of 3 years. Do you know of any situations where one has been sued by Navient and the debtor has won due to a school closure?
There are closed school options to pursue, but they are specific to certain circumstances that need to be met.
There are also borrower defense claims that can be made if you can establish unfair or deceptive state law claims (though borrower defense is a federal program). Were there regulatory reasons the school was closed as it is already?
I read your comment to quickly… skipping the private loan aspect.
Hi Marie, is the $145k made up of federal loans and the $68k private loan? There are some routes to try for cancellation or discharge of federal loans, as Michael mentioned, but it will be an uphill battle.
For the Navient private loan, it’s a larger balance, so they may try to send it to a collection attorney in your state prior to S.O.L expiring. You can try to wait it out, but if you see a CA collection attorney assigned to the account, you’ll probably want to prepare to settle, work out a payment plan, or hire a consumer defense attorney. They usually don’t offer settlements outright, but they will respond to settlement offers from borrowers. As I like to say, settlements are taken and not given.
It sounds like the account has been charged off for about two months based on your comment. Most likely, a settlement below 50% is available, but they won’t make it easy to negotiate. I’m not aware of that defense being used in private loan litigation, but that doesn’t mean it’s not a valid defense. You may want to contact some CA attorneys who have experience with private student loan lawsuits to see if they think that is a valid defense. If the attorneys are just going to negotiate a settlement in litigation, it might make more sense to do that now instead of going through a lengthy and expensive litigation process.
Hey there, hope you are still active for a reply in regards to my situation.
I’ve played “ignore the truth” for several years now regarding my 2 Sallie Mae loans. One loan is subsidized, original principal $2,625.00, current amount to be repaid $4,931.63 . The second loan is unsubsidized, original principal $4,000.00, current amount to be repaid $$8,329.95 . The Repayment Start Date was 06/09/2008, however shortly after this time I had relocated to Canada. I attempted to make payments but Sallie Mae was very difficult with this process, so I made the young and dumb decision to ignore.
The phone calls were relentless, at one point reaching 20 calls a day. January of 2013 they got a single payment from me and nothing since. With my ever growing balances, nothing to show for the debt, and desire to go back to school I know I need to resolve this. Do I have any hope in negotiating a payment plan/reduction in what I owe?
Also may I also say that I actually did have legitimate financial hardship during most of the time preventing me from making payments, on top of there being no sensible way to pay over the phone from another country
Hi Chantel, from your description it sounds like these are federal loans. You can find out for sure by logging into the NSLDS federal loan database at: http://www.nslds.ed.gov. Only federal loans show up on that database.
Federal loans sometimes settle for a reduced amount of accrued interest, and rarely they will take a little off the original principal too. However, most federal loan settlements I’ve seen were only for a reduction in the default fees. The settlements usually have to be paid in 30-90 days also.
You do have a lot of options for repayment plans. Federal student loans have several payment plans that are related to your income. These also have limitations on interest accrual built into them, and forgiveness periods of between 20-25 years. However, the forgiven amount is taxable if you are financially solvent at the time of forgiveness. Some of the criticism of these plans is that interest can accrue on them over time, even with the built in interest limitations, if your payment amount is very low compared to your overall balance.
You would need to get the accounts out of default to be able to apply to these plans. To get out of default, you can use Direct Consolidation or Rehabilitation.
To learn more about your federal loan options, you can check out my free Ebook and federal loan resources page at https://www.mycreditcounselor.net/federal-loans/
The website to apply for these programs is http://www.studentloans.gov. I also have some of the paper applications posted on my website; you can apply by paper or through the studentloans.gov link. The electronic application process is a little easier in my opinion (I have federal loans too).
I am completely confused now! Is there a way to contact you directly?
Anyone can reach Andrew by calling 800-939-8357, then press ext 4.
Hi Chantel, I received your voicemail yesterday, but I was in negotiations all afternoon so I will try to call you back today. Normally I am only able to do phone consultations with priate student loam borrowers since I am focused exclusively on private loans with my credit counseling practice, but I should be able to chat for a few minutes.
If you need a more in depth consultation regarding your federal loan repayment strategy, we can refer you to a federal loan specialist who can take some time to evaluate your case and go over your options.
I do think that reading my ebook and going through the steps on my federal loan resource page would help clear up any confusion in the meantime. Federal loans are complex, but the steps I have laid out make it easier to get a readout of your loans, and then pick the best repayment plans and/or methods out of default.
I am writing in hope to get your expert advice on my college loan situation. I was an international student who went to a private college in the US that loaned me 24,125$ for 4 years of college from 2006. The principal plus accrued interest is now around 29, 000$. After graduating in 2011, I tried so hard to stay in the US to find a job that can enable me to pay back my loan. However, I could not find any job so I had no choice but returned to Vietnam. My first job in 2012 paid only $350, and gradually my salary has increased, but not enough for me to pay back such a big debt. Moreover, I have to take care of my father financially who has stopped working for 20 years now due to his mental health. Therefore, I cannot save much.
The school has contacted me many times but I have ignored them since they cancelled my loan deferment due to economic hardship and instead activated forbearance on my loan in 2013. I have not paid a dime to my school since I graduted in 2011. 1 month ago, a Vietnamese lawyer contacted me on behalf of my school to ask for my repayment plan.
3 questions I want to ask for your expert advice are:
1. Due to my financial limitation, I want to settle my school debt of both principal and interest for around 4000$-5000$ with my school, which is the maximum I can afford. How can I negotiate with them for that?
2. If they want higher settlment amount, what other settlement options do I have to negotiate with them?
2. If my school does not allow me to settle my debt for that amount but keep forcing me to pay full amount, I will have no choice but default on it. If so, what are the consequences of my decision considering that I have no plan to go back for graduate school or live in the US? I know that they can always have the option of suing me, but how complicated or easy would it be for them if they decide to sue me while I am in Vietnam and they are in the US?
I look forward to hearing your advice. Thank you.
Sincerely,
Mit
Hi Mit, it sounds like these are institutional loans, or possibly federal loans. In either case, I don’t think they will go for such a low settlement offer. Institutional loans either don’t settle at all, or if they do settle it would be for 50-60% of the balance or more. Federal loans have very limited settlement options, if these happen to be federal.
I’ve never heard of someone overseas being sued for a US student loan through the legal system in their country, but it is somewhat concerning that the school is having an attorney in your country contact you.
It’s unlikely that the school could take many forced collection actions if they are unable to file a lawsuit through the Vietnamese legal system, which seems like it would be an extraordinary step to try to collect.
If these loans are federal, the balance will probably continue to accrue interest and late fees over time, and if you return to the US your wages or tax return could be garnished. Aside from that, I don’t see them being able to forcibly collect on this unless they take the unprecedented step of suing you through the legal system in your country. This sounds like an issue that you would want to discuss with a Vietnamese attorney who has experience with US companies or the US government pursuing debts in your country.
Determining for sure whether these are Dept. of Ed loans, or institutional loans through the school, would also give me more insight. But it definitely sounds like an issue to discuss with an attorney in Vietnam due to the complex nature of the problem and the fact that they have already taken the step of hiring an attorney in your country to try to collect.
Hi Andrew,
Thanks so much for your reply. I don’t think it is federal loan because I am not US citizen, but you are right mine could be institutional loan. On the website of my school, it says that Student Financial Services department of my college grants Loans to students as part of the financial aid .The loans are administered by my college through ECSI. The applicable interest rate for my college loan is 8% fixed which is set by my college. This interest rate is higher than the usual federal loans. So, it is really institutional loan as it is granted by my college, isn’t it. On paper, It does say that the creditor of my loan is my college.
As you say, instutional loan only settle for as low as 50-60% of the balance, which is around 15,000$. The maximum I can pay now as a lump sum is 5000$ as I would have to borrow from Vietnamese bank to obtain such an amount. With my salary at 1000$/month now, I need up to 5 years to repay the bank if my salary slowly increases over that period. Repaying the bank is of course more important because I live in Vietnam now. Can I negotiate with my school that I will pay them the remaining 10,000$ after 5 years without accruing interest for me? I can only borrow another 10,000$ from the bank after I repay the 5,000$ loan in the first place. If they do not agree for me to settle like that, there is nothing else I can do due to my limited economic conditions. They would not go to great lengths to sue me in my country just to garnish my small salary considering I own no assets at all, wouldn’t they?
Or do I have any other options for negotiation?
Thanks so much for your great support Andrew. You are the only one so far who give me such a detailed answer.
Mit
Hi Mit, you’re very welcome. ECSI does service federal loans, although from your description this does sound like an institutional, non-federal loan. To be sure, it’s a good idea to check the NSLDS database at http://www.nslds.ed.gov. That will only show federal loans, so if these loans don’t show then they are most likely institutional or private.
From my experience, no institutional loans will settle with that type of payment plan, although you could always try. Each school handles these loans differently, but in general that type of structured settlement is not usually available on these types of loans.
It doesn’t seem like you are a very good target for litigation since you have a small salary and no assets, but you’re dealing with an international contract law issue so it really would be best to speak to a lawyer in Vietnam who has experience with similar situations.
As far as other negotiating options, you could always call them and explain your situation, and see what is available. Each school uses different policies, and if you negotiate you may be able to work something out with them, and they may be more flexible since you are overseas. The only way to find out for sure is to give them a call, or talk to the lawyer that contacted you about the accounts.
Hi Andrew,
Thanks for your reply. I have checked on the NSLDS database, but my loan do not show.. So it is definitely a non-federal loan.
My school has refused to talk to me although I have contacted them for settlement negotiation. They have appointed me to talk to the Vietnam law agency directly instead. I have actually been talking to the lawyer for negotiation for several times. I have explained my current economic hardship, small salary, no assets, and need take care of my father financially as well. Therefore I told them I would like to settle my loan for less than the balance by borrowing from Vietnam bank, which is 5000$, which will take me up to 5 years to repay the bank. However, the lawyer said my school has refused to accept my offer. He said the school would like me to repay the balance within 15 days starting from today, otherwise they would take legal action.
Of course I cannot come up with that amount. Even if they sue me now, I would not be able to come up with that amount. But I also think I am not a good target for litigation. From your experience, how do I go about to negotiate with them for me to settle for less than the balance owed. What amount of the offer would they start listening to me? I mean what options for settlement do I have considering my tight financial situation?
I am still looking for a Vietnamese lawyer who have experience in this, but it seems my case is not familiart to them, but I will keep looking for one.
Thanks so much for your support.
Mit
Hi Mit, in negotiations you usually offer a lower amount than what you want to settle for. In your case you offered the full amount you had to offer in the first offer, so you don’t really have anything to counter with.
However, I think that the overall offer is much lower than what they are looking for. The “full payment in 15 days” is a bluff, as almost no defaulted borrowers are able to pay an entire balance on short notice.
It sounds like they are hardballing you and trying to threaten you. Again I am not sure whether or not they would take legal action as this is an international contract law issue and not a situation I have heard about before. Since they did go to the effort of finding an attorney in Vietnam to contact you, they may also go through with the effort of trying to take you to court. I think that you would be able to negotiate more effectively with an attorney on your side too, because right now they think they have the upper hand because you don’t have legal representation.
There has to be someone in the legal field there with some type of related experience, I’m sure you’re not the only one to go through this kind of thing. I would keep searching for an attorney.
Since you have well below 50% of the balance available for settlement, you may want to think about getting on a payment plan with them. Even if you have 50%, there’s no guarantee they will settle. Some institutional loans don’t settle.
All you can do at this point in negotiations is to keep presenting your offer, or see if they will accept $5,000 and payments to equal a higher settlement amount. It sounds like they are not open to settlement since they did not respond with a counter offer, but instead asked you to pay the full balance.
I think your best bet is to hire an attorney, so you can level the playing field with the negotiations and defend against any possible legal action. If you keep searching for an attorney to take your case, I’m hopeful that you will find someone that can help.
Hi Andrew,
Thanks so much for your reply. I will stay strong and keep negotiating with them. I have contacted several attorneys also. I will update you if I can reach a settlement with my school.
Mit
I’m in a situation where I have one private student loan (currently approx. 31k – original loan was for 20k) in default which is now with Navient (formerly serviced by Sallie Mae) and I am considering letting it go. I am about 6 months past due. I used to have 5 other private loans with Sallie Mae that were completely paid in full (in 2008) before the switch to Navient as the loan servicer. I also have federal loans (approx. 50k) which I have paid little to none on but I have been using the IBR plan. I solely provide for my family of 3, my husband has medical issues and has not been able to work for over 5 yrs and we have one child. My gross income is approx 55k and after taxes, health insurance and 401k – I am left with closer to 40k. I cannot afford even a $100 payment on my loans. I have tried to make a $94 interest only payment for several years now. My car insurance has increase drastically due to an accident and I no longer have any financial “fluff” to get me by. I am now 180 days past due and highly considering riding the “let’s just see what will happen train” in order to keep my utilities, rent etc all paid. After I pay all my primary expenses I have about $150 left every 2 weeks for gas, unknowns etc (hence why I cannot even afford the interest only payment). I graduated in 2007 and my family helped me when they could on the other private loans that were paid in full. They will not help any more than they have and I do not expect them to.
What are my best options?
1. I would like to try to file for BK (coming up with the money to file will be difficult but if it sounds worth it I may try). I don’t have much else debt wise to try to get rid of besides this private loan, my credit is already tarnished bad and I realize how hard it is to even hope that partial forgiveness will be granted. As far as the brunner test, I think a “good faith effort” to pay has certainly been made to Navient considering the approx $100k that was paid to them in 2008. But other than that, I can’t argue much. My salary will likely increase slowly over time. Also, we only have one vehicle that I am still paying on for another year and it is in poor shape.
2. Let it go completely and wait….I wonder if Navient would feel it worth while to come after me and sue me? I was worried about wage garnishment and tax refund garnishment, but I’m fairly certain now that cannot happen with a private loan unless they sue me and win. Also, I do not own any property. If they happen to sue me within 4 yrs (I live in California) how long would it be approximately until they could garnish my wages? How long is this process normally? In the meantime I cannot buy a house, another car, have more kids… my life is literally on hold. AND JUST TODAY I GOT AN EMAIL OFFER to settle for 70% of the debt owed, great – but still something I cannot afford currently.
Hi Michelle, this is a very common situation for many people with inflexible private loans. It sounds like settlement is not really a possibility even if it were closer to 40% and spread out over time; nor would a payment plan be affordable, so that really does narrow the options.
Whether or not Navient decides to sue, it depends.. I have seen them take borrowers to court over balances in the mid $30k range before. If they send the account to a collection attorney in your state, it’s probably best to try to work out some type of repayment plan or settlement if you can to avoid a lawsuit; but if that doesn’t happen, the wait and see approach may be a good idea.
Wage garnishment or bank account levy can only happen if they win a lawsuit against you and are able to execute the judgment, which can take several months or longer after they are awarded a judgment. It’s really better to try to work out some type of payment plan or settlement prior to that happening, if you notice the accounts are sent to a collection attorney that is licensed in your state. Private creditors cannot garnish your tax return like the federal government can.
As far as filing BK, it’s an uphill battle, but Steve Rhode has a great article about discharging private loans in BK here: https://getoutofdebt.org/53288/these-private-student-loans-can-be-easily-discharged-in-bankruptcy
And another good article on the topic here: https://getoutofdebt.org/48336/how-to-really-discharge-your-student-loans-in-bankruptcy
Hi Andrew,
It’s me again. I’d love to talk to you further about my situation. Is there a direct line, extension or email of which I could have a few moments of your time.
Thanks
Hi Michelle, nice to hear from you – for a private student loan evaluation please dial the hotline and select ‘Option 4’ to be connected with me.
Hello,
I have a student loan with Navient. They claimed that I last paid in 2009, and they just contacted me today 04/14/2016, about a defaulted loan.
The loan amount was $2300. But with interests today it’s $4800. I have a lot of debt, I’m in school, and the last payment I made was 2009. How should I approach asking for a settlement? FYI I consolidated my public loans in 2014.
Hi Josh, do you know for sure that these are private student loans? These may be past the statutes of limitation in your state, although a lot of different actions can reactivate “SOL” so you’d want to check with a consumer defense attorney in your state to be sure.
After 2009, were you in in-school deferment with them or just did not make payments? If you wanted to settle, you would probably be able to get a very low settlement as I advised the poster above you; however this may not be necessary if the account is not showing on your credit report and is in fact past the “SOL” in your state.
hello,
I had a sallie mae loan that i took out in 2003 that has been since transferred to navient. i am also currently paying on my federal loans which are also listed under navient. my question is, why do i still owe money on a loan from 2003? on their website it lists that i have missed 19 payments. i stopped paying on this loan in 2005. is there a reason why this loan has not gone away? do i still owe on this loan?
i’d appreciate any insight on this.
Are you sure this loan isn’t a federal loan too? Normally, after 11 years, a private loan that didn’t have any payments made would have fallen off of your credit report. However, they may still be trying to collect on it even though it could be past SOL and not on your credit report.
Some more information would be helpful. Is it the Navient website saying there have been 19 missed payments? Are you getting calls from any debt collectors, or collection letters about this account? Feel free to respond below in comments and we can try to get this figured out.
Hello,
Thank you so much for responding, and I apologize for not replying to you right away.
I am positive that this is a private loan, and this loan does not show on my credit report.
It is the Navient website saying that I owe, and that I missed 19 payments. The Federal Loans that I have under Navient are listed as federal loans, and I am currently paying on these.
I am not getting collections calls, although they did try to contact me at my work. They are not calling there anymore. I am not getting collection letters. I am happy to give any extra info that may help.
Thank you again,
Nikki
Hi Nikki, you’re very welcome and it’s whenever you are able to reply, no worries. If you haven’t made payments since 2005 then you would have missed a lot more than 19 payments, so I’m not sure why it’s just saying 19 payments.. but your loan may be past the statute of limitations for unsecured debt.
Many things can reactivate statute of limitations such as partial payments or even just “acknowledging the debt” in some states, so you would want to check with a consumer defense attorney in your state to find out for sure.
Is this showing up on your credit report? I’m sure a very low settlement (less than 25%) would be available at this stage, but if they aren’t showing up on the credit report then there may be no reason to settle them since they may very well be past the statutes of limitation in your state.
Hello,
Thank you again for your response. I was thinking that I missed way more than 19 payments, too, as the debt is so old. And to answer your question, this charge does not show on my credit report.
However, Navient has combined the private loan along with my federal loan that I am paying on, and saying that I owe both. My private loan was transferred to Navient in 2o14. My last payment on this loan was in 2oo7.
They are not attempting to collect on this private loan, but I believe fees are accruing, but I dont understand how this can be due to the age of the loan.
Do you have any other thoughts?
Thank you much,
Nik
Hi Nik, Navient should not be able to merge the private loan into the federal loan balance, but it is possible that they are collecting on both and sending you a statement for the private and the federal loan. They are not supposed to merge the two loans together, so most likely they are just trying to get payment on the separate private and federal loans at the same time.
If the private loan isn’t on your credit report, then it really isn’t affecting you that much it sounds like. Private lenders can still try to collect after loans have fallen off a credit report or gone past S.O.L, but this is typically just sending letters or making collection calls. Interest will still accrue and the loan still exists, it just doesn’t have any impact on your credit if it’s not reporting.
Hello again,
Thank you for your comment. The two loans are not merged, but it does show that i am accruing interest on the private loan. However, they are not attempting to collect on it. The only loan I am currently paying on is my federal loan. The federal loan does show on my credit report.
The private loan is not affecting me, it just surprises me that after all this time, even after the sol has passed, the loan still shows.
Thank you for all your help and insight,
Nik
Hi Nik, even though a private loan has fallen off your credit report, they can still try to collect on it. SOL and credit reporting timelines don’t erase a private loan once they’ve passed, but as you mentioned, it does become much more difficult for them to collect and doesn’t affect borrowers via credit reporting. But, they will definitely still try to collect on it by sending letters or kicking out to a collection agency that specializes in collecting on old debt.
Hi, i wanted to jump in on this conversation because it sounds just like mine, however mine are showing on my credit. I live in az and our statue of limitations is 5 years. Mine are also from 2005. How can they still be able to report on this?
Thank you
Hi Liz, credit reporting and statutes of limitation are two separate and unrelated timelines. Depending on when your private loan charged off, it is supposed to fall off of your credit 7.5 years after that has happened.
This is not the same as statute of limitations, which is the timeframe that a creditor can try to take you to court without the borrower raising SOL has a defense. Sometimes even when credit notations are outdated, they can stay on your credit report unless you dispute them.
A review of your credit report and some more info would probably be necessary to get to the bottom of it. But if you are past SOL already then you’re probably only a few years away from it falling off of your credit.
Hi There,
I am currently in a 5 year, chapter 13 bankruptcy, all student loans. It was supposed to end 03/16, but it takes a while to close apparently. I am at the end of attempting to get my security clearance adjudicated for a prospective job, but have to provide them with my “plan” to pay off my student loans {PRIVATE: principal $3oK, owe approximately $71k (Navient) FEDERAL: $33k owe approximately $40k (FedLoan Servicing)}
My lawyer’s plan is to keep me in a perpetual bankruptcy until the law about discharging student loans is amended. I DO NOT want to do this and I don’t think my security clearance would be adjudicated if this was my grand plan. However, I have no idea how I would pay off $110k in student loans.
I have about $10k in my 401k. I have been considering a settlement with Navient and an income-based payment plan with the Federal loans. Everyone I have discussed this with, including my T.Rowe Price guy for my 401k says it is a terrible idea, but no one has an alternative plan. I know a 401k is critical, but I see no way out of this debtor’s prison I am in. Any advice would be so welcome and appreciated. Thanks!!
Hello, since no one is sure if or when the bankruptcy laws regarding student loans will be amended, I think that a more proactive strategy that utilizes existing relief options would be a better idea.
Instead of using your 401k, maybe you could use an unsecured line of credit to pay off a settlement with Navient. However, Navient would not consider any settlement on the private loans unless the accounts were significantly past due, which would cause damage to your credit. It’s a trade-off, but for some people the reduction in the balance is worth the credit damage. This is a decision that only you can make.
I do agree with your financial advisor to not tap into the $10k in your 401k unless absolutely necessary. IBR or RePAYE for the federal loans can be a great solution, but it does have some drawbacks, and not all student loan specialists are fans of these programs. But for many people, they can offer a more reasonable way to repay their federal loans.
Private loans can be more difficult because there are very few payment options, so some people decide to strategically default to settle as you mentioned. However, I’m not sure if a strategic default and settlement is the type of repayment strategy that your prospective employer is looking for. Perhaps they would be open to that if you explained to them that there are no other options other than making payments which may not reduce your balance and may result in your private loan growing even more due to accrued interest.
I have a private loan with sallie mae, now transferred to navient that’s 85k, it started at like 25k something, it went into forbearance several times while I was in school, and I had no idea what accrued interest was back then,but I unfortunately know now. Anyway, fast track to the past couple of years, I have been constantly fighting with them to get my 900 dollar payment a month reduced, they offered me a program where I’m paying 300 something a month, however I have ran into serious financial difficulties, and they are essentially saying if I cannot pay 307 this month for a “rollover payment” then my account will get charged off, my main question is if my account gets charged off , does this mean it goes to further collection, will they sue me? Take me to court? Garnish my wages? Couple of facts- it’s a private student loan, 180 days past due, paid in December through end of February 365 a month. Can’t make a payment until april, but they won’t accept that and are threatening to charge off.
Hello, this is a common issue with Navient private loans, due to their inflexible payment terms which often force borrowers into default (charge-off). By the way, Navient is just a spin off of Sallie Mae and has many of the problems Sallie Mae had.
It’s possible when an account is charged off, and no repayment or settlement attempts are made, that Navient may send the account to a collection attorney in your state. If nothing is done, they may try to pursue a judgment.
However at this stage, it is very often still possible to get on to a payment plan or even a reduced sum settlement. The larger the balance is, the higher the stakes are for a successful settlement – so it can make sense to hire a certified financial professional with experience settling charged off Navient accounts. The largest account I have settled to date had a balance of $183,000 (made up of multiple individual loans).
Keep in mind, that when they try to scare you before charge off and say that no options will be available, your account will be “terminated” (which isn’t even an actual thing), and similar threats – they are just trying to prevent the charge off.
Settlements can even be split up over 12 months or longer, with a decent sized down payment. All of my Navient settlements have been below 50% so far, but as Michael has said, a good settlement is one you can afford. And as I like to say, executing the settlement properly is just as important as negotiating a good deal.
If you’d like to chat with me about this further, feel free to call the Debt Relief Hotline and press “Option 4”.
;
Hi,
Please help. My private Sallie Mae balance is over 175,000. I am two months past due. I have paid nothing to Navient as the minimum payments are too high. My federal loans are current as I am on IBR and have 0 due.
I would like to settle however I do not have a large sum of cash up front.
Hi Cileena, we have talked about this before but just noticed your comment.. for anyone else reading, it can be possible to settle Navient private loans after they default at 6 months. Usually I can get Navient down to about 40-45% of the balance over 18-24 months of payments (with a large down payment), although this isn’t easy and they sometimes may take aggressive action on larger accounts right after it defaults – like sending it to a collection attorney in your state.
Hi Michael,
My father from CA was the sole borrower on 3 Parent Plus loans taken out in CT for my niece though her name does not appear on the loan docs. He has since passed away and the loans are in default. Are the loans eligible for discharge? If so how do we go about applying for this action? If not who is responsible? Nobody has enough money to service these loans as they stand.
Is there probate or an estate pending resolution?
Hi Lynda,
I found the following on the government student loan site:
“What happens to my parent’s PLUS loan if my parent dies or if I die?
Your parent’s PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
top
What proof of death is needed to discharge a loan?
The loan will be discharged if a family member or other representative provides the loan serviceracceptable documentation of the borrower’s or parent’s death. Acceptable documentation includes an original death certificate, a certified copy of the death certificate, or an accurate and complete photocopy of one of those documents. For more information about documentation requirements, contact your loan servicer.”
Best bet is to send a certified copy of the death certificate via Priority mail, with return receipt requested (make them sign for it). Include a short letter stating your request as well.
You may have to be persistent since discharging a loan is not what servicers really want to do. But they are required to do that under Dept. of Ed. guidelines, and filing a complaint against them may be a viable solution if they don’t grant the discharge after you ask.
Actually, private loan refinance lenders such as SoFi don’t charge any origination fees.
Hello Michael ,
I was wondering about my Private student loan. I received a letter from a collection agency on March 2. 2016 trying to collect on the full amount of my Navient loan. I was under the impression recently that I was in good standing with my Navient loan since I have been making payments to them for the at least 2 years and they have been taking my payment. My account on their website appears that my account is up to date and in repayment plan. I have even been receiving statements showing my account is in repayment. I called Navient customer service agents who said my account was in good standing but when I brought up the collection letter they referred me to their collection department who only then says my account was charged off in 2014 and they are no longer handling my account. My question is if my account was charged off why would I still have monthly statements from Navient on file requesting the monthly payments (the most recent was February 2016)?Most importantly, If the loans were charged off should they have been collecting payment from me and charging me monthly interest? Is it normal that my account online appear that it is up to date and active and allowing me to make payments to them if I was already sent to collections and the loans were charged off? I’m so confused about all of this. Any input would help. Thank you.
Hi Carol, I have quite a bit of experience dealing with Navient private student loans so I think I can chime in here.
Your situation certainly is not the norm. Sometimes, Navient will take payments on a charged-off account with their Internal Recovery department, but if that were the type of payment plan you were on then it would not have been sent to a collector, it would have stayed with Navient Internal Recovery. Plus, the fact that your account is showing as up to date on their website leads me to believe that this could be a mistake on the part of Navient.
However, it may also be a blessing in disguise, because it’s possible to negotiate settlements of less than 50% on Navient accounts when they are charged off (which I do on a regular basis).
First, I think you should reach out to Navient’s Customer Advocate Department and speak with someone there. They are generally more helpful than the reps at Navient’s general call centers (which are often offshore) and they can be more helpful than third party collection agents as well. To contact Navient’s Customer Advocate Department you can email them at: advocate@navient.com. They will email or call you back within 24-48 hours. These agents are based in the US and are usually, but not always, helpful in resolving borrower problems.
If they are not helpful, you may want to consider filing a CFPB complaint against Navient at CFPB.gov. That will really light a fire under them and will most likely get someone in their upper level customer service management to respond. I’ve been able to resolve some serious issues with Navient private loans by having clients file these types of complaints. But, I think it does make sense to try their Customer Advocate Department first.
If you can come up with about half the balance over 1-2 years, you may want to consider settling with them. Navient will often take structured settlements for half the balance or less on charged off accounts – and they can go out 1-2 years on a structured term settlement to do so. If you go this route you’ll want to make sure to get the settlement in writing and to keep copies of everything – including the payment method used to make the settlement. If it was charged off two years ago I think a settlement significantly lower than 50% may be possible based on what I know about their collection cycle.
Thank you so much for this information. The collection agency/firm is in Ohio and I live in California. What will the customer advocate do? Will they just shine some light on how my account was mishandled? In the end it looks like I still need to come up with an arrangement with the collection agency they assigned since it was charged off, correct? This has been a headache since last Friday since the first phone call I received from the collection agency/firm.
Is it Weltman Weinberg and Reis? That’s one of the big collection agencies in Ohio. My rule of thumb for these types of situations is that when dealing with lenders, especially Navient, it’s easier to work with existing options going forward than to try to prove wrongdoing going backwards. I am not sure if WW+R has an office in California, it may say whether or not they are licensed in California on the collection letter.
And yes that is about what the Customer Advocate Department will do. If you’re in a position to settle, Michael has a lot of great resources on this site on how to approach that. You can also hire a professional negotiator to assist you with the settlement process. I have settled many Navient accounts in this type of situation, and can often get a lower settlement for borrowers than what they are able to negotiate themselves.
Sometimes collection agents take a credit counselor or negotiator a little more seriously since they know that we have more experience dealing with them than the average borrower does. And if it’s WW+R I have a good contact there who I have settled with before, which can also help. I’m assuming that’s who has your account since they are one of the largest collection firms in Ohio (which is also where I’m located).
I asked Andrew to respond to you Carol. He knows his stuff. I am interviewing him next week and will likely embed the video in the original article above, so look for that.
Hi there! I have a few student loans currently being serviced by Navient. 2 are federal, which are in good standing and 2 are private. Of the 2 private loans one of them is in default and has been pushed off to NES (National Enterprise Systems). Dealing with this collection agency has been a nightmare. They are terrible people. I have been paying this loan at the rate of $115.00 per month with practically 0 interest for about 2 years. The balance is currently about $10,950. I called to make a settlement offer and received an offer of 50% of the balance. Im wondering if you think this is a good settlement and what are some things i should look out for before paying. I plan on paying ASAP. Thank you!
When I am asked “what is a good settlement offer” I often respond with “one you can afford to pay”. You are able to fund this, so from that perspective it is good, and after all… who doesn’t like a half off sale?
You may be wondering if you are leaving money on the table, and the answer to that is much more personalized. It can depend on how you are viewed by debt collectors. Real time access to your credit reports is sometimes all a collector needs to assess how much of a collection target you are.
I am doing a video interview with a former debt collector for our YouTube channel later this month. The topic is how debt collectors view your credit reports, and also how that is done with an algorithm in some cases. I will be able to point to that in response to comments like this, but for now, call me and lets talk about how collectable you look, and whether you have a realistic shot at settling for less than half. You can reach me at 800-939-8357, press option 2.
If you are thinking to just grab the deal, be sure to get the agreement in writing before you pay. That article highlights what to look for in the agreement from National Enterprise.
Thanks for the reply. I guess I should have made my question a little bit clearer. What I really meant is if I pay more than the required payment for the federal loan, can they take that extra money and apply it to the defaulted loans instead of applying it to the principal of the federal loan?
Beyond your primary question Zen, Navient is settling private student loans favorably right now. Keep that in mind as you navigate resolving your loans.
I have private and federal loans with SM/Navient. I defaulted on the private loans several years ago and they are in collection but my federal loans are current. I like to pay off my federal loan ASAP. Can they take the money and apply it to the defaulted loans without my permission?
Hi Zen, I would agree with Michael that settlement may be your best route out of default. Navient and their third party collectors will even structure settlements out to 1-2 years, or longer in some cases. This can make settlement more affordable than having to pay it all in one lump sum. Just remember to get the settlement offer in writing and keep copies of everything, including the payment method used to make the settlement.
Since Navient/Sallie Mae is so inflexible with payment options, settlement can be the best way to knock out a private loan with them. If you haven’t paid in several years then a settlement significantly less than 50% may be available.
My wife has approximately 10k dollars in loans from Sallie Mae(now Navient) from a trade school that defaulted and is now closed, are we still liable to pay off the entirety of the loan or is there grounds for reimbursement of the past 5 years of payments we have made on these loans that are accomplishing absolutely nothing due to the trade school losing its credibility, thanks in advance.
There is a good amount of attention being paid to some of the private colleges and trade schools for a host of questionable practices. Some of that has even culminated in loan cancellation. If your wife attended a school that has been shut down, she may have options to pursue for cancelling the debt now, or in the future. But I am skeptical of being reimbursed.
What is the name of the defunct school?
What is some of the back story regarding her loans and whether she is now employed in that trade, or continuing her education with any credits transferred etc?
I currently have loans in Forbearance with Navient(Sallie Mae). I am a stay at home mom of 4 and CANNOT afford to repay these loans. When i called about options last year they told me I could pay like 400$ a month for the next 21 years….. UMMMMM no! I could barely pay 50$… Are their options for something like this. It greatly affects my credit. My Fiance works hard to provide for our family and going back to work is not an option with the 4 kids not being in school, Just not affordable. Somethings got to give.
Are your loans private or federal? What are the totals?
I graduated after five years with my BA in psychology. I owe SallieMae/Navient over $100,000 in private loans. I make the minimum payment for my loans that I didn’t have a consigner for –
$140. My consigner pays around $400 on the loans he cosigned on. I make about 23k a year. I feel like I will never scratch the surface of my loans so I’m tempted to not pay and see what happens, but I’ve always paid because I’m afraid of my credit being ruined. It’s just so overwhelming. Before my son was born I even thought about ending my life because of it. Is there any hope for people like me? I am 28yo right now. Another question is will money I owe on private loans be taken out of my social security of I can’t pay when I’m old?? I don’t want to be a. Harden to my son. Thank you for reading!
You can look to qualify for one of the income contingent plans on your federal loans if you are current with them. On the private loans, they have to sue you and get a judgment in order to obtain the extra ordinary collection rights.
Who are your private loans with,and what are the balances? If late paying, how late?
Are there any attorneys in Kansas that you know of who can help me with discharging my students loans in bankruptcy? I owed $106k before I decided to do the IBR plan last year. I have a letter dated 03/25/15 from Navient stating my application for IBR was approved beginning on 03/28/15 and ending on 02/28/16 and my monthly payment will be $0.00.
I received a billing statement from Navient dated 10/21/15 which I received today 11/8/15 requesting I pay $72..06. And, now I owe $109k due. The difference if sure to interest not being paid I assume on my student loans. Has something changed with the IBR that now I am required to pay a payment each month? I have not reached my end date 02/28/16 yet. I have not had a chance to renew IBR either. I am frustrated when I talk to a Navient customer service rep they do not seem to know what is going on with my account. Am I forced to pay the $72.06…what should I do? I ama single mother raising three teens working part-time employed at $8hr barely can make ends meet. I am looking for higher paying job but where I live it is a part time workforce. I have yet to utilize my masters degree and I feel my education was a waste of time and I got snookered into believing I would have a job and get decent pay when I graduated by the college I attended, It was all a lie, there are no jobs in my career field it is over saturated. I would have to move out of state east or west coast to find work which I cannot afford that right now. I appreciate any helpful suggestions. Thanks.
I do not directly know of any Kansas bankruptcy attorneys with adversarial proceeding experience, which is typically what must be brought in order to discharge student loans in your chapter 7. You can call around to different bankruptcy attorney offices and lead with this question “Is there an attorney in your office with experience discharging student loans in an adversarial proceeding”? If not, ask if they know an attorney with that experience in your federal district.
Finding an attorney with the experience you need is only the first obstacle. You then would have to come up with a way to pay them the extra amount that would cover the legal work for representing you in the adversarial proceeding.
I would start by calling any low income legal aid office in the general area and ask if there is anyone there with the experience needed.
I am not sure why Navient is asking you to pay monthly when your current income based plan has not ended. If you are unable to get Navient to explain what is happening with your file, and why there are changes, you are not alone. Problems have been identified with communication from many student loan servicers. You may want to file a complaint with the CFPB about this and see if that leads to the information you need being made available to you.
I live in Philadelphia and i haven’t paid my student loans since 2008. I have low paying jobs where its enough to get by. I’m a mother of 3 and my youngest is autistic. Is there a way that these can be forgiven? I need help.
You would typically need to bring federal loans out of default in order to get them enrolled in an income based payment plan that could then lead to loan forgiveness if you meet certain criteria.
There are instances where you can meet the hardship criteria to discharge student loans in bankruptcy. Getting your loans discharged through bankruptcy can involve extra costs. There are some clearer qualifications for student loans to be discharged in bankruptcy coming, and I believe more people will choose that route and be successful (many multiples of how many try and qualify now).
I would consult with a bankruptcy in PA with experience discharging student debts. If you need help locating one let me know.
You can settle private student loans for less than what is owed. That is not getting them forgiven, so you would need to raise some money. If your loans are private, how much do they total?
What can you tell me about the Commercial surety Bond. Is it true that when a loan defaults lender cash in on the Bond and still charge you for those loans after they collect this Insurance on them. I ask because I have a tremendous amount of debt with Sallie Mae and I have defaulted on their loans before only to catch back up after a few month later. if they collect twice on the same loan it is consider illegal right? I would also like to know how I should go about finding an affordable debt lawyer to help in my attempt to payoff or fight with my debt I have struggled with since before my graduation in 2011. I feel that Sallie Mae has taken advantage and I need to understand how my loans were allocated and what or if any loan took a premium for commercial surety Bond. Please email me with any suggestion. Thank you!
Can you tell me what you have read and where about how Sallie Mae or Navient has applied any form of insurance against their defaulted loans they service or own? It sounds like an angle taken up as part of some stretched legal or accounting theory.
It would be difficult to have visibility into how Navient follows GAAP without that coming out in some regulatory action or as part of discovery in a lawsuit.
I do not think they are being paid twice. If payments from a consumer (or other resource) were to come in after a specific tax, accounting, or insurance element were applied, I imagine that would create an offset of some prior credit or loss. An audit would determine whether there are irregularities.
Are your student loans with Navient private? How much do you owe on them?
Settling student loans with Navient is becoming more common place when the loans are private. You have other options you can pursue with government backed student loans being serviced by Navient.
What is the name of a large city in the state you live (I will email you any consumer law attorney I know of with experience you need)?
I got hooked as a cosigner on student loans for my daughter. I didn’t know I was a cosigner after the first one that I agreed to. Fraud. It will soon be 10 years since she took out the last loan–she’d paying on them as agreed to. We’re in Louisiana. Since it’s been 10 years, can I report the fraud and get my name off as cosigner without her going to jail for fraud? Maybe statute of limitations? My credit has been trashed due to the amount of debt I show to have.
Thanks
Has there been an application to remove you as cosigner from the student loans sent in?
Private student loan releases still occur. A recent study suggests that 90% of them are declined though.
We could see improvements in how student loan lenders address releasing cosigners in the not too distant future. If you are unable to get released today, that could change.
I defaulted on a Sallie Mae student loan back in 2005. It has since dropped off my credit report. I originally attend the California School of Culinary arts for about 6 months. I moved to Utah in 2008. I now have GC Services calling on behalf of Sallie Mae. Do you know if they are able to do anything at this point?
Hi Brandon, whether or not the lender can take legal action, if that’s what you mean, is determined by the statutes of limitation for your state. This is a tricky topic that you would need to discuss with an attorney, because in some states even acknowledging the debt in a conversation can restart the SOL. In other states, it takes a partial payment to do that.
GC Services themselves are not an attorney debt collection firm so all they can do is call you and send letters. If the account does happen to be past SOL, then you would be able to raise that as a defense if it was forwarded to a debt collection attorney who is licensed in your state. If this is a private loan, that is. If it’s a federal loan then there are no statutes of limitation. Sallie Mae/Navient works with both, so you may want to check your NSLDS report or studentloans.gov to make sure these are not showing up as federal loans.
Does anyone have any resource information on where one can find assistance, or direction to begin the process ones self, of negotiating an offer and compromise settlement for an outstanding school loan balance. Nearly 15 years after Law School graduation, tens of thousands of dollars in payments my balance has not seen any appreciable reduction. The real estate market collapse, down turns in business and the economy have made any hope of satisfying the nearly 100,000 dollars remaining unlikely in the extreme.
Any help would be greatly appreciated.
Hi Paul, I wanted to respond even though this is an older post. If your loans are federal, they won’t settle for much of a reduction when in default. If they are private, you may be able to settle them for less than 50% if they are defaulted. If you still have questions about this process, or how to tell if your loans are private or federal, feel free to reach out to us here or call the Debt Relief Hotline.
my spouse has a situation with a private student loan through Sallie Mae. They are asking for a month amount that we cannot pay because it is only a 15 months and the total amount doesn’t go down much with each payment. they keep calling asking for payments and now say that it will go to charge off where they can sue, garnish etc. I cosigned on a used car loan for my spouse, can they come after me or take the car? what is the likelihood of letting the private loan default and see if they offer a better payment option than what Sallie is currently offering. There is another private loan my spouse has that only takes $40 a month even though is a $50000 loan and is going down with each payment. Sallie mae wants $230, we can’t do that and live our lives. the lowest they’ll go is $180 somehitng but only for 15 months and the amount won’t go down a bit. What is the likelihood today for Sallie Mae to sell their loan, is the charge off selling the loan or just another department that sallie mae has to come after the money. how soon till they can garnish anything? Im in the state of NY Does anyone have a comment on this?
Hi, one thing to keep in mind is that Sallie Mae/Navient talks a big game about vague “legal action” etc but they are mostly all bark and no bite.
This isn’t North Korea – they can’t just take your house. All private creditors must first obtain a judgment and then execute that judgment in order to garnish wages or get a lien or bank levy. There are so many options to negotiate a settlement or payment plan before that happens.
A private creditor can only take you to court after they’ve exhausted other collection measures and they must hire a collection attorney in your state to do so. Even then, there are options to settle or get on a repayment plan. I recently settled a Navient/SLM account with a “same state attorney” for 40% paid out over 5 years. They don’t want to sue you, they want to make a deal. Lawsuits are their favorite threat but in reality occur very rarely.
Federal loans can garnish wages without taking you to court, but private lenders can’t. Any good consumer defense attorney worth their salt can prevent a default judgment in the rare instance that they do take you to court – but you don’t need an attorney to negotiate a settlement prior to legal action taking place.
In my experience, the vague threat of “legal action” is one of Navient/SLM’s favorite collection threats, but they only take actual legal action when all other options have been exhausted. Other private lenders such as NCT are more aggressive, but their accounts can still be settled.
Whether or not you choose to strategically default to settle is a decision only you can make – it comes with a heavy price as far as credit damage to you and any cosigners. But for some borrowers, the possibility of a significant settlement reduction is worth it.
Navient/SLM rarely sells their private loans from what I’ve seen, they just contract with collection agencies to try to collect – but they still retain ownership of the loan, even years later. However, settlements at 50% or less of the balance can be possible, and they often agree to structured settlement terms that go out to 1-2 years or even more.
When your account first charges off (defaults) after 180 days of nonpayment, Navient will hold onto it for several months and try to collect via their Internal Recovery Department. This is an ideal time to work out a settlement and avoid the possibility of legal action.
If you can learn to ignore the phone pressure and vague threats leading up to the charge off, then a settlement can be a definite possibility for defaulted Navient/SLM private student loans. As far as the decision to default on purpose, that is something that only you can decide – no legitimate financial professional will tell you to default on purpose. But many borrowers find that is the least painful (and least expensive) route to knock out their private student loans.
Disclaimer – I am a credit counselor who negotiates private student loan settlements on a regular basis. I am not an attorney and I cannot give legal advice. This response is just a collection of my personal observations and should not be construed as legal advice.
Sallie Mae is a disorganized, unprofessional, flaw-filled poor excuses of a company with scum for workers. Here is my story. They made major changes on my account without my permission. Changes that were wrong. They also completely ignore a letter I sent them telling them I was moving abroad for one year to take part in a volunteer program and requesting a deferment. When this happened I had already graduated from a 4 year university and was about to begin payments as it had almost been 6 months. As I was planning to go abroad for one year to take part in a volunteer program, I sent them a letter telling that and also asking for a one year deferment. On the phone call I made they sure enough confirmed the deferment for one year and receipt of the letter so I thought I would be fine as I would be back in one year. Little did I know that they had made major changes on my account that had nothing to do with the letter I sent them. What happened was I had taken a summer school class at a community college that summer I was planning to leave the country. So at Salliemae they had completely changed everything, specifically changing my status back to being a student that will be graduating all over again but this time from a community college, hence the deferment they granted, completely unrelated to my real plans and not the deferment I was asking for in the letter sent , the letter they chose to completely ignore. So I go abroad for one year just to come back to a tarnished credit record. Their system of relying on whatever information any school sends for them to make changes on borrowers’ accounts without permission is ridiculous and flawed on so many levels. Those changes were wrong and did not reflect my status and plans. Be careful if you have to use Salliemae as a lender. They will make major changes on your account without notification or verification, and they will completely ignore letters you send to them, even letters with vital information telling them you are moving to another country and need a deferment. In trying to get this corrected I also ran into some real scum. Some workers at Salliemae need to be fired and an overhaul needs to take place with this poor excuse of a company. Workers there are careless, unethical and won’t really want to help you. Best not to deal with this unprofessional, disorganized and flaw-filled company, so if at all possible I would advise any potential borrower to borrow from a different lending company. Better yet, all borrowers should come together and not pay them a penny more. Do a mass default to force this criminal company out of business. They can’t go after everyone.
Your experiences are very common and I have heard the same types of issues from many borrowers with both private and federal loans. Sallie Mae got such a bad reputation that they rebranded themselves as “Navient”, and then promptly got investigated by regulatory agencies under their new name as well.
The mass default is a common idea among student loan activists, but I have yet to see how it would be possible to coordinate it to make it happen.
my spouse has a situation with a private student loan through Sallie Mae. They are asking for a month amount that we cannot pay because it is only a 15 months and the total amount doesn’t go down much with each payment. they keep calling asking for payments and now say that it will go to charge off where they can sue, garnish etc. I cosigned on a used car loan for my spouse, can they come after me or take the car? what is the likelihood of letting the private loan default and see if they offer a better payment option than what Sallie is currently offering. There is another private loan my spouse has that only takes $40 a month even though is a $50000 loan and is going down with each payment. Sallie mae wants $230, we can’t do that and live our lives. the lowest they’ll go is $180 somehitng but only for 15 months and the amount won’t go down a bit. What is the likelihood today for Sallie Mae to sell their loan, is the charge off selling the loan or just another department that sallie mae has to come after the money. how soon till they can garnish anything? Im in the state of NY
Please see my other reply below, in addition:
Sallie Mae / Navient will definitely take a settlement after loans are in default. They threaten to sue and garnish often, but rarely take people to court. You have the opportunity to settle many times in the collection cycle before that happens, and it’s typically a last resort after all other options have been exhausted as far as collection attempts. However this is their favorite threat.
They cannot take your car. If they were to get a judgment by you not defending a lawsuit, then they would most likely just try to levy a bank account. Which is not good, but they aren’t going to come after your personal things and make you sell them.
Charged off loans typically settle for between 30-50% depending on how long it’s been since the charge off.
If they do try to take you to court, a good consumer defense attorney who has experience with student loan debt can easily stop a judgment and work out a deal during the legal process. The best student loan attorney I know in New York is Simon Goldenberg, he has a great deal of experience defending and settling student loan lawsuits.
I apparently consigned a student loan (can’t prove I didn’t) but this person I apparently cosigned for never paid his sallie loans and then they were charged off. The total for the three loans are about $15,000. Is there a way I can get this off of my credit report? Will sallie mae accept a payment to remove my name from this? I don’t believe I cosigned but this was many years ago and I did do a $1,200 consignment. Been battling this for years saying I didn’t know it was mine or think it was. So any advice about police reports or proving I signed is wasted time. Been there and tried that. So now my focus is to see how little I can pay to have this junk off my credit report. Any help????
It depends on when it charged off, but Sallie Mae/Navient settlements between 30-50% are possible.. the lower end of that range would be after an account has passed 1-2 years of nonpayment.
In a lot of cases, you can do a structured settlement with them over time, which is easier for many borrowers than paying a lump sum. Usually you get a better deal with a lump sum though
My wife has two student loans consolidated with the Direct Loan DOE totaling $60,000, they were transferred to Sallie Mae last year who now has their own DOE service. She is in IBR and as she does not work, does not pay monthly payment. I have ability to pay about half if we can do a lump sum settlement, what is the best coarse of action… let the loans go into default, not pay them, let the collection agency call for a while, make them an offer?
Hi James, on federal loans, they will not take a settlement when the loans are current, and the default fees are exorbitant and often outweigh any of the limited settlement savings on federal loans. Strategic default can be a viable option for private loan borrowers, but not for federal loan borrowers.
I think the best bet is to stay on IBR, recertify every year, and go for the 25 year forgiveness.. that is more realistic than a major reduction via settlement on federal loans.
Hello,
This is rather very long, however I though best to included the factors in my situation, in hopes for advice that best fits. Thank You
My total original student loans were $70,000, 12 years ago. (about private $55,000, and $15,000 in federal, between Sallie Mae and American Education Services). I did use up all my deferment and forbearance, but other wises made payments mostly on time for over 10 years. And I currently owe the same amount. Not a dent. I never was able to find a job that pay as much as what I was told was out there. I’m not saying just that I could not obtain, I’m saying I haven’t found them to even exist. I have been unemployed for the last 18 months. I highest paying job I had was about $25,000 a year, but I found that to be rare, and unavailable. I am a few years away short of turning 50. I, with the help of friends and family (some with good financial and planning experience) have evaluated my current situation, family, all expenses and short of winning the lottery, I can not repay these loans before, or even after retirement age.
I researched student loan bankruptcy, including several court cases, I found a few where the situation was very similar to mine where most of the loans were dismissed. I called over 100 lawyers, some that advertised student loan bankruptcy, and every single one of them said that it can not be done period. No one even asked my situation.
Sallie Mae $25,000 private loan, my mother co-signed, she is now retired and living on social security, The only thing she has is her house and we are afraid that Sallie Mae will take it. She has a reverse mortgage on it and already used almost half. This is past a few months past due, I recently borrowed money to make a payment, but it’s still past due.
A.E.S. private is about $30,000, my wife co-signed for that. My brother lend me the $ to keep this current, because they threatened to garnish my wife’s wages.
Before I finished school, we bought a house. Which now is an upside mortgage, it is worth less than half of what is owed. All payments were interest only. If we lose the house, we have nothing, our credit rating is shot, and will be till we’re almost 60, no one will even rent to us due to our credit and we have 3 young children. (we have 2 adult children, but they are unable to help, nor will they for quite some time) With the house, kids, and what work we had, we struggled most of the time, family loaned us a lot of money for us to get by.
We are about file for bankruptcy, the regular kind, not student loan. Our credit is already ruined. And we have separated, since last summer. We have not filed anything with the courts yet, but some told me that if I haven’t lived there after a certain time, we are considered legally separated. We have separated our expenses. My unemployment benefits stopped last December. I was just approved for medical and a small amount of food stamps. Although I still need to cover most of my kids meals.
Sallie Mae calls 8 times a day, I talk to them almost daily and made a payment 4 days ago, yet they still leave messages, and tell me directly that “They made several attempts to contact me to no prevail, I need to talk to them at least once a week, but I don’t (Again, I talk to them almost daily), there’s been no activity on my account and I “refuse to pay” (??? One, I just made a payment 4 days ago, and Two, I have no money, and when I can borrow some, after I feed my kids, I do make payments.) Yet continue to use those words. One Sallie Mae rep told me the other day that after 210 days, my loan would go in to default and that my entire balance would be completely charged off. I asked about it moving to a collection agency or any company or department that I would need to pay, she said flat out “no” ” it will be wiped out completely with nothing remaining at all anywhere, except the damage to my credit rating for a decade, but she swore it was no worse than bankruptcy, and since I was going to that anyway, this sounded like my only option, except now that another rep told me “no sir, that is wrong, any number of things could happen” but she refuse to say what those things are.
This is typical conversations with Sallie Mae the last 5 years, one say “absoluty YES”, another says “NO WAY” and another says “maybe, I don’t know”
THANK YOU FOR BEING PATIENT…
Any advice???
Mark H.
Hi, I understand the difficulty in getting accurate information from reps at Sallie Mae/ Navient. They are incorrect that the loan will be “wiped completely”. There will be a collection agency or Navient themselves trying to collect on it after it charges off.
Settlement could be possible but it sounds like you may not have the funds for that.
If you pursue bankruptcy, you’d need to file an Adversary Proceeding to try to have the loans discharged. An attorney who specializes in discharging private loans is Joshua Cohen of CT, and he also has a 50 state map on his website that shows attorneys in different states who have student loan experience. That may be something to check out if you’re trying to discharge these in BK.
Sometimes, settlement can be split up over 2 years or more on Navient and AES private loans, which makes it more accessible for some people instead of having to come up with a lump sum. Sallie Mae/ Navient also has payment plans for charged-off accounts, but I am not a fan of them because they keep the account in a perpetual state of default.
Hello,
I currently have 3 loans with Sallie Mae, dating back to 2001. The total cost of all of my school loans is $65,000. Since graduating college, I have never earned more than $20k/ year, so I started out getting forbearances on those loans, but then Sallie Mae told me I was no longer eligible for forbearance. Each time I tried, they told me it would cost $150 (if I had that money, I would have put it toward my loans), so I defaulted on all of them. They went to collections. I have been paying on them consistently since 2009, but on my credit reports, Sallie Mae has been reporting every single month as “CHARGED OFF”, which I read is the WORST thing to have on your credit report, and I now have a credit score of 585 (very poor). Do you know why they are reporting it that way, even though I’m paying on it?? And do you know if there is anyway I can have them change the way they are reporting? Thank you
Hi Heather, from your description I can tell that these are private student loans. Once Navient/Sallie Mae private student loans have charged off after 6 months of nonpayment, they will continue to report that way even if you are making payments on them. Navient/Sallie Mae has no mechanism to bring charged off loans current even when you’re making payments.
The good news is that you may be able to settle your loans for less than 50%, and pay that amount over 1-2 years or more. That may be the fastest and least expensive way to get rid of these if you can afford it. By settling, you will improve your Debt To Credit and Debt To Income ratios. and most importantly the charge-off notations will be changed to show that the accounts were “settled for less than the full balance”, which is much better than a charge off.
Does anyone know the SOL laws in California? I can no longer make payments for my private student loan with sallie mae which totals 60k and they are most likely sending me to collections. What should I expect when that happens? Will they take assests if I have any?
For SOL questions it’s best to consult with an attorney in your state since so many things can affect SOL. In general, SOL for unsecured debt in CA is 4 years, but it all depends on where the loans were originated and is a question best addressed to an attorney regardless.
Trying to run the loans past SOL is not the best strategy for many people, especially if you have a larger loan balance. The private lender may try to sue you well before that happens. For example, one private lender known as “National Collegiate Trust” regularly files lawsuits within 1-2 years of nonpayment. Other lenders like Navient/Sallie Mae are less aggressive, but it’s still a roll of the dice.
Instead, you may want to try to settle the loan either on your own or with the help of an experienced negotiator who understands Navient/Sallie Mae’s collection cycle and can help you get the best possible settlement. In many cases, Navient/Sallie Mae will settle for less than 50% and structure the settlement over several years, but they don’t make it easy and there are many pitfalls to avoid during the process.
My husband took out federal student loans for our two children to get their degree… After all was said and done the total of all loans was. $100,000., which we consolidated into one huge loan.. My husband worked for Fannie Mae and when financial crisis hit , they were laying off people and he lost job.. Has been employed as contract employee off and on since that time.. Several lengthy stretches of unemployment.. We have mort to pay and we had to put sallie Mae loan in forebearance several times.. We have used up savings and retirement and had to claim bankruptcy but kept our home .. Of course student loans can’t be included in chapter 7. Income based plan isn’t option because they ask for last years income and that doesn’t give clear picture of our situation.. Our capitalized interest has added approx 50,000 to our loan amt !!! Which of course that makes payment higher and round and round we go.. I have heard that in certain situations sallie Mae will at least allow part or all of loan balance to include in bankruptcy . If you can prove it puts severe hardship on living .. Do you know anything about that or do you know if sallie Mae will ever forgive some of the huge capitalized interest portion of our loan balance.. Do they ever use common sense in looking at a borrowers unique situation? Any advice or ideas would be greatly appreciated ….
Good news – you don’t need to use last years income for IBR – you can use your two most recent pay stubs. If you are married and filing jointly, they will go off of your combined household income.
Also, there’s a new payment plan out called RePAYE that has even lower monthly payments than IBR. However, with both these plans the interest can grow over time even though there are some limitations on interest accrual built into the payment plans. Even though the remaining balance is forgiven after 20-25 years depending on the payment plan, you could be stuck with a large tax bill after the remainder is forgiven. However, I think getting on one of these plans is much more preferable than doing forbearance or deferment for years; or even worse, going into default.
I went to college from 2004 to 2009. My loans are with Sallie Mae and initial amount was 42,892 and now they are balanced at 64,161. The loans went up 21,269. (one loan went from 8249 to 16281- went up 50%) My payments were deffered for 6 months then at one point I didn’t make payments for 6 months. I’m not sure if that’s why they went up so much. It just doesn’t seem right and they have no answers for me. Thank you
they are private loans not Federal
Hi Sesar, this is unfortunately the case with many private loans. I have a recent client who paid 15,000 in the last 4 years – only to see her balance grow by $10,000. Navient/Sallie Mae makes hundreds of millions of dollar per year, and after working with many private loan borrowers I’m beginning to wonder if these loans are designed to be paid down at all.
One option you could consider is a strategic default in order to settle them for less than half of the balance. I’ve been able to routinely settle Sallie Mae/Navient private loans for less than 45% of the balance, with payments structured on the settlement out to 1-2 years.
However, you have to essentially sacrifice your credit for 1-3 years in order to do that. They just won’t settle if you aren’t significantly past due. It’s a tough, adversarial process; but if you execute a sound negotiating strategy settlement is possible. Only you can decide whether or not the benefit of settlement outweighs the negatives of credit damage which can take several years to rebuild. Because Navient/Sallie Mae is so inflexible with payment options, I’ve spoken with more and more borrowers in the last year who are deciding to take this route in order to settle – there just aren’t many other options.
Michael- My DTI is round about 30%
If that 30% DTI includes all of your bills (rent, utilities, etc) you are in good shape from the new ability to repay rule angle. If Ameris Bank does not do FHA loans (not all lenders and brokers do), find someone who does and start talking to them about your situation.
Thanks I will contact other loan officer, but will that affect my credit score when they run my credit?
Hard pulls do. But you do not need them to do that initially. Just talk to them about your situation with all of the accounts you recently settled, disputed, brought out of default, etc. I expect they will have some suggestions about any further things to accomplish to set yourself up for success, and also a better timeline to approval with FHA than I could speak to. But I think you are a couple months away from approval based on what you shared in the comments.
I am currently working with Ameris Bank. On my credit report I have some other things that was delinquent, I am currently working with Lexington Law Firm to repair my credit. As for my Transunion report…see the below results
Removed
RECEIVABLE SOLUTIONS INC xxxx8788 Collection (old cell phone bill)
ULTRA VX NEW MILLENIUM xxxx3067 Charge Off (prepaid credit card)
UNITED STUDENT AID FUNDS xxxx5397 Collection
SCA COLLECTIONS INC xxxx7564 Collection (hospital bill)
Negative Remaining
COMENITY BANK/MTROSTYL xxxx9838 Settlement Accepted (retail credit card)
[EDITED – removed negative credit reporting Sallie Mae loans already referenced above.]
WORLD OMNI FIN- RETAIL xxxx2843 30-day Late Payment (joint account car payment)
Hope this gives you a better picture.
Jonika – It does offer a better picture. Do you know your debt to income ratio?
So with that being said, do I need to cancel my membership with Lexington Law? If that is the case, how will I be approve to buy me a home with all those negative items on my report.
Jonika – You mentioned trying to buy a home already. Is your goal to buy a home right away, after the school year ends, some other time frame?
Michael I am 30 years old and I have been out of school since 2009. I am trying to buy a house now if I can, because I am tired of renting.
Okay. You may not qualify for conventional home loans with those credit scores, but are not far from being able to meet scoring models for an FHA loan. I cannot speculate with any confidence with what little I have to go on from your comments, but if those student loan debts were the only negatives on your credit report, and with the recent resolution you reached, you could be just a couple/few months from being able to meet scoring guidelines (there are exceptions even now). There are new “ability to repay” rules as of last month, and some other things you may have to prepare for. Are you working with a broker or loan officer that does FHA loans? If not, talk with one who does.
Okay I have a total of five loans with Sallie Mae. Four federal and one private. The federal loans are now consolidated after I completed the 9 month rehab program. Its been consolidated with Fedloan and Nelnet. The private loan is with Integrity Solutions Service and I currently just settled with them. I have been on for job for a while and I borrowed the money from my 401K. I just finish paying them off last week. What step do I need to take to get Sallie Mae to take this off my credit as negative standing. I check my Fico score when trying to buy a house and it stated the below.
Experian-577
Transunion-545
Equifax-595
Currently I am working with Lexington Law Firm to clean up my credit. Basically the high charge off is Sallie Mae with the private loan. I don’t understand if I only have one private loan then why is it showing on my credit as below…
Transunion
SALLIE MAE xxxx1200 Charge Off
SALLIE MAE xxxx2200 Charge Off
SALLIE MAE xxxx3200 Charge Off
SALLIE MAE xxxx1200 120+day Late Payment
SALLIE MAE xxxx2200 120+day Late Payment
SALLIE MAE xxxx3200 120+day Late Payment
SALLIE MAE xxxx4200 120+day Late Payment
Equifax
DEPT OF ED/SALLIE MAE xxxx0090 120+day Late Payment
SALLIE MAE xxxx0080 Charge Off
DEPT OF ED/SALLIE MAE xxxx0090 120+day Late Payment
SALLIE MAE xxxx0071 120+day Late Payment
Experian
SALLIE MAE xxxx2007 120+day Late Payment
SALLIE MAE xxxx2009 120+day Late Payment
SALLIE MAE xxxx2008 120+day Late Payment
Sorry for so long story, but I am 30, single and have two boys and trying to provide a better future for them. My goal is to get my credit score to 650-700.
*********Please help************************
Sallie Mae reported me 3 different times when I was trying to buy a house. My lender called, I called to beg them to only report me once. after bugging them many times I only have 1 report on my credit report from them.
It sounds like the private loan was not updated to show that it was settled for less than the full balance/paid for less than the full balance. That will look much better than the charge-off. many times, Sallie Mae/Navient private loans are bundled when sent to a collection agency so the settlement may have been on all of your loans. Or, there’s the off chance that there were other private loans that were not being collected on by Integrity. But I think the first scenario is much more likely – you paid one settlement that included all of the loans.
Navient should update your credit report within 30-60 days after the settlement. You can also dispute the credit listing yourself with a copy of the payment method you made and the settlement letter. You can also get a settlement confirmation from the collection agency in many cases and you could use that to dispute the accounts as well, or even show it to your mortgage lender as proof that the charge-offs were paid.
I agree with Lynne C. SallieMAe will not accept a settlement without going into default. I too offered them $20k to resolve my outstanding debt of $30k. They flat out refused. It’s better to pay down the loan aggressively i.e. take the $20k your mom is offering and pay down the loan. Keep to your regular payment schedule. I am doing the same thing. Paying down $24k.
Is there any way that Sallie Mae will accept a settlement without going into default? I have a $19,000 unsubsidized and $20,000 subsidized student loan with Sallie Mae from 2009, interest rate of 6.8%. I graduated in 2010 and since then the loans have been in deferment, first I was unemployed then I was self employed and bringing in approximately $17,000 a year for the last two years. At some point I’m sure I will not be able to get any more deferments and I don’t see my income increasing any time soon. My mother has offered to help with the loan if I’m able to get a settlement, she could help with about $20,000 but would not be able to go much higher than that. I would love to just have this debt go away. I’m so concerned that if I default that it will just get larger and larger and there will be no hope of ever paying it off. Do you think there is any chance of settlement?
In general no, unfortunately. They just don’t have the incentive to accept a major reduced sum settlement when the account is current, monthly payments are being made to 100% of the principal + interest (or if it’s on forbearance and accruing tons more interest).
However, I do know of a borrower who was able to get a 90% offer when the account was current after repeatedly badgering them and then filing a complaint. 10% off is pretty good for a current account, but not the kind of settlement reduction most people are looking for.
Hello
I currently have two private loans with Sallie Mae totaling 15000 . I started paying them in 2009 have had make minimum payments for most this time. I original starting balance was 14000. I’ve been paying 360 a month the past two years and my principal hasn’t gone done a penny still! Im wondering at this point if i let it default and they send me to collections would they take a settlement less than i owe?
Adrienne – What interest rates are you paying on your loans? Have you consolidated your loans in the past? Can you budget to pay more than the required minimum on your loans each month?
Adrienne: The reason your prinicipal hasn’t gone down is because all your payments are being applied to collateralized interest. I am presuming that you had forbearances on your loans. Defaulting on a student loan will ruin your credit. SallieMAe will probably settle if you default and your loans go into collections but is it worth ruining your credit rating? I’m current on my loan and they will not accept less than my outstanding balance. They would rather have me default.
Just a note of caution here – defaulting to settle can be a viable strategy for private student loans, but for federal loans it’s rarely a good idea. The reason being is because federal loans add a huge collections fee at the time of default that outweighs any of the limited settlement savings you would get.
Federal loans rarely settle for less than 80-90% of the balance unless they have been in default for years and years. If it’s a private student loan, that can work, but don’t expect them to hand you a settlement.. they will be very aggressive with their collection calls and letters for -8 months before accepting a settlement. It takes a sound settlement strategy and a lot of patience to achieve a lasting private loan settlement with Sallie Mae/Navient.
Is there anyway to get SallieMae to settle a loan debt for less than the amount owed? I spoke with a supervisor last night and he was very adamant that SallieMae does not renegotiate student loans. SallieMae makes settlements out of court on defaulted loans. So in essence they would rather have me default, file suit and then settle out of court.
Mohamud – It sounds like your payments with Sallie Mae are current. Is that correct? If you are current, with virtually any creditor, they are not going to respond well to any attempt to settle or pay less. You have not shown an inability to pay, until you do not pay.
Are the loans government backed, or private loans? My feedback will differ based on the answer. Also, what are some of the details of your situation? Why are the loan payments no longer affordable? Do you have at least an source of steady income?
I have a government backed loan dating from 1992. Original amount was $38,500 but due to fortuitious circumstances i.e. inability to land a well paying job, I exhausted all forbearances resulting in another $35-$38k of capitalized interest. I have paid off the capitalized interest and am now paying prinicipal and interest. I’m 56 and I lost my job 3 years ago. If I lose my job, I’m not getting as high paying a job as I have now. Bottomline…I owe another $30k+. I’m qualified for a HELOC at 2.5% interest as opposed to 9% with SallieMae. I’m looking to have SallieMae take $20k in full settlement of the outstanding debt and forgiving the $10k. They make these offers to defaulted loanees for out of court settlements. I’ve paid $115k over the life of this loan i.e. more than 3x what I borrowed. I want this albratross off my neck.
Mohamud – I do see settlements with Sallie Mae. One for 50% of the balance last week on a private loan Sallie Mae serviced. I do not see settlements with Sallie Mae in the way that you described with federally backed loans. If you were to try to settle, you would have to have stopped payments for some time (creditors typically will not negotiate reduced pay off while current). You end up with collection costs/fees again.
Have you looked into other options to reduce your loan payments, like an IBR?
So for SallieMae to accept 50% of the balance, I would have stop making payments, damage my credit rating and have SallieMae send a collector. What a great system we have. Punish the current borrowers and reward the defaulted borrowers. Something has to change. What is in IBR? I am just going to pay SallieMae the full amount of the HELOC and pay off the remainder. I should be free from this albatross around my neck by September. What a wonderful country we live in. Pay loans for your life if seek an education. Thanks for your help and comments.
Mohamud – Student loans, and the higher education system in general, could use a dramatic make over – no doubt!
IBR stands for Income Based Repayment. Loans not in default may qualify to get payments reduced to a more affordable and consistent amount. You can learn more about IBR options here: https://studentaid.ed.gov/repay-loans/understand/plans/income-based.
Knocking the loans down with Sallie Mae by aggressively paying down the balance, and having the lower interest rate, is a good plan with loans that are not sinking you (which I agree is a matter of perspective).
Cleveland. I have wondered why it couldn’t be bankrupt since the school closed and the federal courts found in favor of students I would think that the loan can no longer be considered force educational purposes.
I sent you contact info to two attorneys with the experience you would want.
If you do decide on chapter 7 bankruptcy discharge, be sure to screen any attorney you hire for experience in discharging student loans. So far, my experience is most don’t have it, and some even tell you it cannot be done. But this is the type of situation where student loans can be discharged in bankruptcy.
I contacted the lady in Cleveland who said I should file a complaint with cfpb.com. Well just before that Sallie mae charged off my account and sent me to this collection agency which were not nice. I ended up thinking I worked a settlement out with them then sallie mae cut off all communications because I filed the complaint. They won’t do anything now and they lied to the cfpb.com which accepted their lie and closed my case. I contacted Ellen (I should publicize her name here to avoid her bad information from spreading) and she blew me off told me it’s not her problem. So it was great advice I got from her and you for connecting me with her. I was almost to a point to make a deal and get the bs behind me and now I have to wait to loose my arbitration because sallie mae hired the arbitrators. Another government screwing and Lawyers who could care less because it’s not happening go them. It ridiculous!
brian – The CFPB is currently investigating Sallie Mae for violations of consumer protection laws. They care about the issue a great deal. The attorney referring you to file a complaint with the CFPB may not be the issue, but you said Sallie Mae lied to them in response. Can you show where they lied? Did you follow that up?
The cfpb.gov acts like they are there to help you until they take your complaint then they talk to you like your an ahole, the secretaries that answer the calls are rude and have no customer service skills. When a government agency like sallie mae
( yes our government is still in bed with them) says how it is going to be the cfpb.gov bows to them. They told them their consumer advocate was available to me till he found out about my claim then no one was available to me. They cannot even give me account details. They said we have an active legal matters which the wording was changed to litigation when I said I have no active court matter with them. I have arbitration set with them, they hired the arbitrators and everyone is losing. First they were willing to make a deal if I have $20k..now it’s $21k..if I had that kind of money, I wouldn’t be in the messed up situation with them. And why does everything always change with them? Plus collections was offering a deal for $14-15k. I was scammed like thousands also. The way the government protects these thieves is ridiculous. If they do not want to settle for what I have they will get nothing. I will adjust my exemptions so I have no tax return and if they sue for wage garnishment I will quit my job. They will not get a cent from me. Because the loan repaid will be over $150k based on their terms and I got nothing for it but a headache and my good credit destroyed by these people. Also I was not one of the people going to this school cause my mommy made me I went, no cosigner and worked my butt off for never being able to get a real job doing anything in that field. I am going to give them a pie e of my mind at arbitration
I have a sallie mae loan that is in arbitration over computertrainging.com going out of business. They have never once offered to help and want all their money now. So I have not been paying and now my loan is reported unpaid balance charged off so I get a call from collection credit service and they want to make a deal of $7000 down and reduce loan to 50% and I pay $600 a month for 2 years and they are pressuring my for bank account numbers. Seems like sallie mae sold it to them and after awhile they will sell it and after 7 years seems like this may drop off and not owe them a dime…..what do you think?
brian – What is the date of the payment you last made to Sallie Mae on the loan?
July 2012 is the last reported payment on their website.
You can still be sued for collection. Each state has a statute of limitations for how long you can legitimately be sued in court for this type of loan. The shortest amount is 3 years, and the average 4. What state are you in? What is the gist with the arbitration you referenced in your earlier comment?
The negative will drop from your credit within 7.5 years from the date you first missed a payment.
Ohio. See I hear different things. One guy told me statue of limitations is 15 years. So I do not know. The arbitration is sallie mae way of wiggling out of their predatory lending that these shady schools and them get into cohoots with. Their was a class action lawsuit and a Federal judge dismissed sallie mae probably because the judge has an interest in sallie mae and he found in favor of the students and ordered the school refund our tuition. They are so called bankrupt because they hid the money they stole so the students get nothing and sallie mae was sent discharge papers which they ignored then the arbitration company they listed in the loan paperwork were contacted and sallie mae agreed to arbitration but not as a whole group they have it so everybody in the class action suit is arbitrated one at a time and they pay off the arbitrator and screw everybody for a bogus scam school that they back again. Weird how this keeps happening all over the country and the only loan company involved is sallie mae. It’s predatory lending but no one seems to be able to do anything about it because the pos government keeps sallie mae safe while they steal from people who want to improve their lives
And from what I heard nobody is getting over sallie mae in arbitration
SOL in Ohio on written contracts is 8 years. I hear you on the arbitration clauses and how that impacts the ability to to act as a class. It is a huge problem, and is not getting any better.
What is the name of the company trying to collect? Have you called and confirmed with Sallie Mae that they sold the account?
Is that 8 years from date of loan origination or last payment? Co any is ccs credit collection service. Sallie mae has said they sent it to that company. Do you know the process this will take if I don’t settle with them?
If the statue applies it would generally be 8 years from when you defaulted. Ideally you would want to get any SOL question related to this answered by an experienced debt collection defense attorney in Ohio. Email me the city you live in and I can send you contact info to one.
Sallie Mae “sending” the file to Credit Collection Services would imply they did not purchase the debt from Sallie. CCS is not a “usual suspect” in the debt buying space either.
In the normal course of collections you could be sued. Given the arbitration proceedings, and the college closure, your loan may be handled a little differently. Your loan also may be one of the limited type that could qualify for discharge in bankruptcy.