This article is for people who have defaulted on their Sallie Mae/Navient student loans. This won’t apply to you if you haven’t defaulted or if you’re still making payments on conventional subsidized or unsubsidized federal loans. For those of you that ARE in this position, this post is for you. You can get your life back.
Like many people, I was unemployed in 2009-2010. Regretfully, I graduated during the recession and encountered significant challenges in securing a “big kid” job. e. one that would let me pay my bills–including my student loans. Like a lot of other people who are having trouble paying off debt, I was inundated with calls, all of which were largely fruitless because stones don’t have much blood to give. Making mental space is the first step toward getting your bearings, and ceasing the unsolicited calls is the most important step.
This builds a strategic rolodex for tackling your debts when you’ve got your feet under you. If you’re like me and it takes a long time to get back on your feet, you’ll notice that settlement offers get better and better as debt is resold. I took two years to get back on my feet. This is particularly true for unsecured, consumer debt, and less true with student debt.
Sallie Mae, a major student loan provider, offers various repayment options, including the possibility of negotiating a settlement However, it’s crucial to be aware of potential scams and understand the process involved in negotiating with Sallie Mae.
Beware of Debt Relief Scams:
Sallie Mae warns against debt relief companies that promise immediate loan forgiveness or debt cancellation. These companies often charge upfront fees and may pressure you to sign contracts without fully understanding the terms. Remember, Sallie Mae does not have the ability to negotiate “special deals” with these companies.
Red Flags of Debt Relief Scams:
- High upfront fees: Legitimate debt relief companies typically don’t charge upfront fees.
- Pressure to sign contracts: Be wary of companies that pressure you to sign contracts without fully explaining the terms.
- Third-party authorization: Avoid companies that ask you to sign a “third-party authorization” or “power of attorney,” as this gives them legal permission to make decisions on your behalf.
Negotiating with Sallie Mae:
Although Sallie Mae usually doesn’t negotiate with individual borrowers, there are some circumstances in which it might be able to Here’s what you need to know:
- Default settlements: Sallie Mae may offer a settlement if you’ve defaulted on your loans. This typically involves paying a reduced amount to settle the debt.
- Reduced-interest plans: Sallie Mae may offer a reduced-interest plan if you’re experiencing financial hardship. This can lower your monthly payments and potentially save you money over the long term.
- Negotiating directly with Sallie Mae: While Sallie Mae typically outsources debt collection to other agencies, you may be able to negotiate directly with them under certain circumstances. This may involve providing documentation of your financial hardship or demonstrating a willingness to make a significant lump sum payment.
Key Takeaways:
- Be cautious of debt relief scams and avoid companies that charge upfront fees or pressure you to sign contracts.
- Negotiating with Sallie Mae is possible, but it’s not always guaranteed.
- If you’re struggling to repay your Sallie Mae loans, contact them directly to discuss your options.
- Consider seeking professional financial advice to explore all available options and make informed decisions.
Additional Resources:
- Sallie Mae’s website provides information on repayment options and contact details: https://www.salliemae.com/
- The Consumer Financial Protection Bureau (CFPB) offers resources on avoiding debt relief scams: https://www.consumerfinance.gov/topics/debt-collection/
- The Federal Trade Commission (FTC) provides information on debt collection and scams: https://www.consumer.ftc.gov/features/scam-alerts
Remember, negotiating with Sallie Mae requires careful consideration and research. By understanding the process and avoiding potential scams, you can explore your options and find the best solution for your financial situation.
Negotiating with Sallie Mae/Navient and FMS
Sallie Mae typically outsources this to other organizations and gives up on collecting debts on its own rather quickly. Unlike consumer debt, Sallie Mae does not sell the debt to the servicing organization. Rather, they continue to be the owners of the debt as well as the terms and circumstances surrounding its settlement. (In fact, you will never speak to a human being if you attempt to call Sallie Mae directly; instead, you will be routed to the servicing agency. ) The debt collector is just a proxy, but they’re the ones you’ll be dealing with.
My debt was serviced by an organization called FMS. You can Google them; there are many horror stories, but my experience was pretty good, barring a few incidents. I had settled a couple of smaller credit card debts to this point, so I made sure to unblock their phone number only when I had a small lump of money available to make a down payment. I knew I wasn’t going to be able to discuss a full settlement, but maybe I could do something to move the needle in the right direction. This ended up being a good move, though the benefits weren’t obvious until much later.
Default settlements
I’m going to use the term “default settlement” below. I’m not positive, but I think Sallie Mae’s proxies are allowed to propose a percentage (65–70%, or so) as a settlement amount without calling the Mae mothership. They would periodically make me an immediate settlement offer that didn’t require them to call home, which is why I think this is true. In contrast, my counteroffers required them to speak with someone with more authority and had a 24-48 hour turnaround time.
The reduced-interest plan
June 2011 balance: $144,586.
I brought my account up to date on July 25, 2011 with a $1,493. 38 payment, and set up a recurring payment every two weeks for $372. 56. This was their “reduced interest plan”, where the interest rate dropped to 0. 01%. There was no discussion of a settlement at this point that I can recall. If there had been, it would have been WAY more money than I had, so it didn’t matter.
I made bi-weekly payments from July 2011 to May 2012.
A bump in the road
Regretfully, FMS refused to provide me with the settlement’s terms, which (as I had anticipated) ultimately backfired on me. Additionally, I hadn’t recorded our phone conversations because, up until now, I didn’t see a need to.
When December 2013 finally arrived, I got a call informing me that I was running out of time and that I would owe approximately $45,442 by February 2014—a figure that didn’t add up. Unfortunately, I was dealing with a new representative, and she couldn’t decipher the notes of the previous representative. That was my notes against theirs. When you’re in this situation, the other person has all the cards and you just have to go along with it, hoping they don’t make a big mistake. (That said, I’m very confident that my notes were more accurate. Not that it mattered then, and I can’t imagine it would have mattered in a courtroom. ).
There was about a week of back-and-forth, but the takeaway was that I owed the $45. 4K, but that the terms were extended until September 20, 2018. That was a huge relief because there was no way my ex-wife and I could have raised the funds in that amount of time.
I made sure to record that conversation should things go awry again. Examine the laws in your state. Since my state is a two-party state, I required the representative’s consent in order to record the talk.
Due to FMS’s inability to schedule more than 12 payments at once, I only speak with them approximately once a year. Sallie Mae was taking settlements “for pennies on the dollar this month,” the representative said as she re-upped my payments for this year. She said, “I’d basically paid $35K already, and I was a model citizen,” so I wasn’t sure if that was actually pennies or what. She asked if I was interested in seeing if they would re-negotiate the settlement. Naturally, I accepted, and they made me an offer of $24K, or 68 cents on the dollar, as their default settlement on the $35K that was immediately due. I honestly told them I couldn’t do more than $10K, fully expecting a counter offer of between $10 and $20K, at which point we would need to borrow money from my wife’s parents. They said they’d have to call SLMA to see if they’d approve it.
The next morning, I got a call back: Sallie Mae had approved the $10K for the remaining $35K. The rep was shocked. The manager was shocked. They told me no one in the office had thought it would go through, which I believe. I get the feeling I’m going to be an office legend for the foreseeable future.
- $144,586 original balance
- $45,898 paid over 3.25 years
- $98,688 saved
- 68 percent discount (or 62 cents on the dollar) after everything was said and done
FMS payments
Here’s a Google spreadsheet that shows all the debits over that time. Alternatively, you can download the Excel version.
Total student loans paid during this time
I concentrated on overpaying my more conventional subsidized and unsubsidized student loans during this period because they genuinely had interest rates.
How Do I Negotiate Down a Student Loan?
FAQ
Can you negotiate a lower interest rate with Sallie Mae?
Can you lower Sallie Mae payments?
Can you negotiate payoff with Sallie Mae?
Can I negotiate my private student loans?
How much is a Sallie Mae loan settlement?
Sallie Mae loan settlements typically range from 50-75% of the outstanding balance, paid in a lump sum or over several months. Related: How to Negotiate a Student Loan Payoff
Does Sallie Mae handle student loans?
Updated on January 8, 2023 In 2014, Sallie Mae ended its contract with the federal government and moved all of its federal student loans to a new student loan servicer, Navient. Today, Sallie Mae only handles private student loans.
What if I default on a Sallie Mae student loan?
If you default on a Sallie Mae student loan, you may feel like you don’t have many options. But there are a few things you can try. For example, you might be able to negotiate a settlement with Sallie Mae, file for student loan bankruptcy, or refinance with a private lender.
What if Sallie Mae doesn’t budge?
Stay courteous and have your documentation at hand to validate your financial difficulties. Contemplate refinancing: If Sallie Mae doesn’t budge, consider refinancing with another lender to lower your rate or get better terms. Settlement: More common with private than federal loans, the settlement amount varies.