Sallie Mae Student Loan Forgiveness – Is It Available To You?

The following submission Sallie Mae Student Loan Forgiveness – Is It Available To You? is courtesy of the official My Credit Counselor site

Sallie Mae student loan forgiveness for students

Does Sallie Mae offer such a thing as loan forgiveness?

If you’re wondering if Sallie Mae loan forgiveness exists, you should first understand a little more about the lender. Sallie Mae is a name that is ubiquitous within the student loan industry, and rightfully so. Beginning with a head start as a government organization that converted to a private organization, Sallie Mae and now Navient dominate the private student loan market. Long before they split into two companies, Sallie Mae was the subject of many regulatory lawsuits . It did not take Navient too long to also fall under scrutiny and become the subject of multiple state and federal regulatory actions which are still ongoing. Chances are, if your private loans were originated by Sallie Mae, they are now more than likely serviced and held by Navient – but as with all private loans there are exceptions to every rule and trend, and lenders try new strategies on a fairly regular basis.

What Loan Forgiveness Options Do Sallie Mae offer?

Sallie Mae does not offer any traditional “forgiveness programs” for private student loans, except for very rare cases such as the Career Education Corp fallout which, unlike other for-profit college regulatory lawsuits, dealt primarily with private loans. In that ruling, it was Career Education Corp itself that is responsible for the forgiveness payments of the private loans borrowers took out. Sallie Mae, and it’s sister company Navient do sometimes offer settlements under certain conditions. However, borrowers attempting to settle on their own often run into issues with aggressive debt collectors, not knowing what stage of the collection cycle to maximize the savings of a settlement while minimizing risk; and making common mistakes like opening up with the offer that you want to settle for or disclosing too much about personal finances.

Sallie Mae spins off to form Navient

In 2014, Sallie Mae “spun off” or split into two companies. Navient would handle most of the servicing for federal loans and origination plus servicing for private loans, while Sallie Mae themselves became an FDIC insured bank (and thus the end of Sallie Mae federal student loans as a government-backed guarantor). However, not all loans were transferred to Navient – Sallie Mae still retains some. I still run across these and settle them from time to time when we do see the rare SLM loan that was not transferred to Navient (more on this later). This is very rare. For instance, I have come across this about 3 times in the last 2 years.

In my opinion, a big reason for them splitting into two companies was to re-brand and get past some of the baggage that they were associated with. Unfortunately for them, it didn’t take long for their new subsidiary/spin-off Navient to develop a negative reputation of their own, as both a consistently negatively ranked federal loan servicer; and a private loan lender with few options whose loans appear to never go down for many borrowers, despite on-time and even additional payments.

This was not the typical kind of partnership between two student loan companies – the easiest way to describe it as that Sallie Mae split into two separate companies – sort of like cell mutation. The CEO for Sallie Mae previously was Jack Remondi. Guess who the CEO for Navient is now?

So this was not the typical type of merger between two separate companies. I have also talked to reps at Sallie Mae who used to work for Navient, and vice versa. The two companies are very closely related and there is somewhat of a revolving door between them; but despite that they follow two very different tracks when it comes to settlement negotiation and how they handle defaulted accounts.

Similar business – drastically different collection procedures

I can typically negotiate good Navient settlements soon after charge-off (default). In some rare occasions, where Sallie Mae borrowers find their loan that has not been transferred to Navient, follows a very different track despite the similarities between the two companies. Sallie Mae used to do some settlements with their internal Recovery department (similar to Navient, and they may still do this), but recently I have noticed a different track that almost resembles the type of strategy that a lender like the National Collegiate Trust would take.

Debt buyers can become involved on SLM accounts

On a recent Sallie Mae settlement, the loan was actually sold to a debt buyer – which other than NCT, and to a lesser extent Discover and Citi, is extremely uncommon in the private loan industry (Navient never does this for example). The debt buyer then assigned the account to a collection agency staffed by some rude and unprofessional agents whose clear strategy was to hardball me for months (nearly a year). During this time I was working with both the debt buyer and the collection agency, and communicating with a manager at the debt buyer’s company – the multiple points of attack strategy.

The debt buyer recalled most of the loans back to their office after some time, once they realized the collection agencies hardball tactics won’t work with me,  but still left one small one with the collection agency – an odd practice that does not make sense from a collection standpoint. Once the debt buyer for SLM recalled the majority of the loans, I was able to negotiate a sub 50% settlement with them – not as good as what we would get with Navient, but still very good (I consider any settlement at 50%-55% or less to be a good private loan settlement). Previously I was able to negotiate 40% settlements with SLM internal recovery, but apparently they are trying a new strategy of selling defaulted loans to a debt buyer (US Asset Management in this case).

During this time the collection agency that was still holding on to the smaller account and hard balling me at a much higher percentage. Not surprisingly, when I worked out the deal with the debt buyer, suddenly the collection agency called me and wanted to match a similar percentage on the tiny account they still inexplicably held.

Unfortunately, my client recently experienced a major unexpected medical hardship and can only afford to settle the larger account (close to $50k, while the smaller account is close to $10k). In these situations I always recommend settling the larger threat, because it is the larger, more powerful barbarian at the gates of the castle wall (to use one of my favorite analogies).

A larger account has the threat of going to a collection attorney much more so than a smaller $10k account. So we deal with the biggest threat and defeat the barbarian who is battering against the castle walls. The smaller $10k account poses little to no threat of this – just a long term drag on credit for the most part – we wait them out and grind them down until they settle. I have heard about lawsuits on private loans as small as $4k, but these are very very rare. We will let it get kicked around for a while, age it out, and then settle it down the road once the family gets back on their feet from this major medical event with major costs associated.

Third party debt collectors are not an objective source of reliable information

I told this third party collector, who was collecting on behalf of the debt buyer, that if they had just worked with me.. if they had given me this same offer three or 6 months ago on the small account, we would have taken it! But now a serious medical problem has left my client with only funds to settle the biggest threat. Too bad for the collection agency – it’s their loss. Time and effort spent, for nothing – all because they were unreasonable about the smaller account for months and months. I know how to execute a quick victory and take steps to limit my opponent’s offense, and I also know how to grind down and opponent for months and win a war of attrition. Each negotiation requires a unique strategy based on the circumstances.

At one point the collection agency, who only had the small account (inexplicably not recalled back to the debt buyer with the others) told me that they offered a settlement that equated to roughly 70% (terrible). They said I had 7 days to take advantage of the offer, which was presented to me in early February, and they said this in a very serious tone. I tried, but could not hold back uncontrollable laughter – simply because I know better.

The collector made the mistake of talking to me the same way they would to a normal borrower, who would not know if what they were saying was true or not (unlike me – one of the advantages of hiring the best private student loan negotiator in the US/world in addition to total net monetary savings and the peace of mind of having an ironclad settlement).

I tried to have a conversation after that along the lines of, “hey, I’ve settled millions in private loans and been in the industry in a long time, and the tricks you use with borrowers don’t work with me”. They stuck to their “hardball” script and I ended the call still laughing. Of course a few weeks later, past the “7 day deadline” I get a call with a much better offer. I scolded them for not accepting my repeated offers and counter offers over the last 10 months before the medical emergency took place with this family. Now we just let the small account marinate and let them reflect on the lost opportunity on the small account (at least for now). But the most important things is that the larger account, which had a serious threat for potential legal action because of the size, will be settled for roughly 48%.

Depending on your situation, I will impose my will, utilize past strategies, overcome resistance, and go for a quick finish. Or, if circumstances dictate, we will drag your lenders into deep water and win a war of attrition over a long period of time (I should know which of these scenarios to expect during our initial evaluation – but again, there are always exceptions and lenders do try new strategies from time to time).

To conclude – this is the closest thing that exists for Sallie Mae loan forgiveness for the vast majority of borrowers (except for very rare cases like the regulator action against Career Education Corp, which is only for a limited number of borrowers; that I will be writing about in my next blog).

I enjoy difficult situations where I have to put my full 10 years of negotiating experience into play to solve complex problems while dealing with unexpected variables issues with my clients or with the lender (which sometimes pop up). I’m creative, adaptive, and flexible. Call my office today at 937-503-4680 to schedule an evaluation, or better yet, fill out my evaluation form here.

Private Student Loan Debt Settlement – Should You Strategically Default?

As a private student loan negotiator with many years of experience, I have been asked many different questions. One of the most common questions I am asked is whether I should strategically default on a private student loan to help me out of my financial predicament.

settling private student loans
As I so often say, any negotiator or financial advisor worth their salt should never recommend a borrower to strategically default because it is a decision that must be made by the borrower themselves. There are plenty of factors they have to take into consideration, weighing up the pros and cons, of which there are many.

It can be incredibly disheartening to realize that despite the huge monthly payments made over many years, you don’t appear to make any dent in the outstanding balance. So it is unsurprising that many students consider strategically defaulting on their private loan. Even students who are able to meet their monthly demands consider going down this route because the limited choice in payment options, combined with high interest rates, make a strategic default an appealing option.

You should understand that if you decide to go down this route it will have an adverse effect on your credit rating. Despite this, when you take everything into consideration you may still decide this is the best option available to you. Why? Because in the long run you will end up saving yourself a lot of money when you factor into consideration that you will end up paying tens of thousands of dollars in interest over many years before you even come close to paying off your student loan.

This is why a strategic default is an appealing option because yes it will damage your credit score for up to 2 years but when you compare the savings you’ll make against the many years of interest payments, it seems to be a more viable option.

Is Navient Your Lender?

One of the most aggressive lenders is Navient. They are particularly aggressive in hunting down outstanding payments by contacting friends and family in order to reach the borrower and demand payments are made. They also rely on heavy-handed tactics by employing the services of debt collectors to enforce any missed payments.

Negotiating Your Student Loan With Private Lenders

Student loan lenders can make your life incredibly difficult when trying to apply for a strategic default. If you attempt to negotiate a default by yourself, these experienced lenders will use every tactic in the book to gain an advantage over your lack of understanding of the overall process, relying on you making detrimental mistakes in the negotiating cycle. This is why it is highly advisable to utilize the skills and knowledge of an experienced private student loan negotiator such as Andrew Weber.

There are many pitfalls you must avoid in the negotiating cycle. Some of these include holding back from providing documentation on your tax records, bank statements and so on in order to have a stronger negotiating hand.

Contact Andrew Weber To Help Negotiate Your Private Student Loan

If you would like to find out more about how Andrew Weber can help you negotiate a strategic default loan, you can contact him via his number 937-503-4680. Alternatively, you can visit his website at

Here is some additional advice on how to settle private student loans with Key Bank.

Is It Possible To Get Navient Student Loan Forgiveness?

Navient student loan debt

My name is Andrew Weber and I’m a highly experienced negotiator who has helped many students successfully deal with Navient. You can find out more about Navient private student loan forgiveness by clicking here.

For many students who have taken out large loans and are struggling with their debts, the ultimate outcome is to achieve forgiveness but from many it seems to be unattainable. This applies to both federal and private student loans including the lender Navient.

There are many forgiveness programs available for Federal loans as opposed to private loans. You only have to look at programs including PSLF and TLF for examples of this. There are also a range of elements which are built into plans such as income based repayment.

It is quite easy to find a wide range of forgiveness programs that are state based and related to vocations but trying to find forgiveness for private loans is very hard to come by. In fact, is there even such thing?

Private lenders don’t really offer forgiveness, but the next closest thing is to negotiate a reduced sum settlement. This isn’t the most straightforward process and does require someone who is skillful at negotiating settlement agreements. If this is done correctly a loan borrower can actually remove the heavy weight of a high balance loan which can dramatically improve your situation.

There are a few downsides to taking out a private loan. There is actually more protection handed out to the lenders than to the borrowers. Added to this there are fewer payment plans available for borrowers. Furthermore, according to the BAPCPA, a private student loan is exempt from bankruptcy (but depending on your situation, this might still be an option), thus adding another blow to the available options you have for dealing with your loan situation.


Navient is one of the largest private lenders for students around and it’s therefore no surprise I frequently deal with Navient. This particular lending company is one of the most aggressive when it comes to legal action and they will not hesitate to apply as much pressure as possible to gain an upper hand on your situation.

The closest thing to a Navient forgiveness program is to apply for settlement, but given their nature, you need to have an experienced negotiator on your side who is able to guide you through the process who knows how to deal with the often heavy handed collection law firms.

If you have any further questions, please get in touch with myself, Andrew Weber. I’m a NACCC Certified Credit Counselor and a NACCC Certified Student Loan Counselor who focuses exclusively on helping students who have taken out private loans and are struggling to pay them back.

Is Private Student Loan Consolidation Right For Me?

The article Is Private Student Loan Consolidation Right For Me? can be found on My Credit Counselor Website

Student studying

Private loans for students are notorious for being inflexible and for lacking the same types of repayment options as federal loans. Private student loan consolidation is one of the few options available for borrowers to obtain some relief from the burden – whether it’s a lower payment, a lower interest rate, or both.

It can be tough to qualify for, with most refinance/consolidation lenders looking for borrowers who have good income, a good credit score, a low Debt To Income Ratio, and potentially even a cosigner willing to bear responsibility for the loan if the original signer is unable to pay.

There are quite a few lenders who have entered the market, so borrowers have a variety of choices – although all refinance/consolidation lenders are going to offer a similar product and have similar requirements. Most lenders offer both fixed and variable interest rates.

For those who don’t qualify or want a more aggressive approach as far as net savings and length of repayment, the other main option to deal with private loans is settlement negotiation (which occurs only under specific circumstances). Consolidation is a relatively non-aggressive approach that offers a decent amount of net savings over the life of the loan, without many downsides for those who qualify.

What Is The Difference Between Private Loan Refinance And Consolidation?

When it comes to student loans that are private, the terms “refinance” and “consolidation” are often used interchangeably. A consolidation, by definition, is the process of combining multiple loans into one. A refinance is the process of a lender buying a loan and reissuing it at a lower interest rate than what it was originated at. Both of these processes usually happen simultaneously when a borrower either applies to consolidate or refinance a loan.

For federal loans, the term consolidation means something very different; and usually refers to the process of Direct Consolidation – which combines federal loans through the Department of Education and reissues them (as a federal loan) without lowering interest rates. It is also used by federal loan borrowers to get out of default or to gain eligibility for certain programs.

Federal loans can also go through “outside” consolidation or refinance with third party lenders, and many of the lenders who offer this service for private loans will also do the same for federal loans. However, there is more to lose when refinancing a federal loan, as this converts it into a private loan and any federal loan benefits such as payment plan eligibility, Public Service Loan Forgiveness eligibility, etc. are lost. However, private loans going through consolidation/refinance are simply being converted to a different private loan with a different lender.

Student applying for consolidation

How To Consolidate Private Student Loans

Refinance/consolidation is relatively easy to apply for. The lenders usually have an online application process directly on their website, and there are also several sites that allow you to compare and contrast different rates and availability.

To go through the process, you’ll just need to complete the application for each lender you want to apply with. If you’re approved, the refinance/consolidation usually happens pretty quickly, and should be done within a month or two at most.

If you qualify, the new lender will purchase your old loans, and will then reissue you a new private loan with the new terms you agreed to – whether it’s a lower interest rate, different payment amount, or a combination of both. Then, you just make your monthly payment to your new lender.

Typically, unless you have loans with Wells Fargo, Discover, or Citizens Bank; refinance/consolidation will not be available with the lender who you originally borrowed from.

Those with National Collegiate Trust private loans will have to find a third party lender, as will borrowers seeking Navient loan consolidation for their privately backed student loans.

Here are some of the main lenders who can refinance/consolidate your loan:

SoFi Student Loans

  • One of the first companies to refinance and consolidate student loans
  • Interest rates between 2.63% – 7.75%
  • Geared toward high income borrowers with very good credit profiles
  • Reportedly aggressive with legal action towards defaulted borrowers

Wells Fargo Student Loans

  • A major, well known and established national bank
  • Interest rates between 4.99%-9.99%
  • 15 and 20 year repayment terms are available
  • Not known as a particularly aggressive lender in terms of legal action against defaulted borrowers

Lendkey Student Loans

  • A lending platform that works with a network of regional, local, and national credit unions and community banks
  • Interest rates between 2.58% – 8.12%
  • Cosigner release option
  • Credit union backed private loans are known to be aggressively targeted for post default collection efforts

CommonBond Student Loans

  • Started by MBA grads who had their own student loan debt
  • Interest rates between 2.57%-7.25%
  • They offer deferment and cosigner release

These are other lenders as well – when applying, you’ll want to shop around and compare rates, terms, and read user reviews who have gone through the process with that particular lender.

Which Private Loan For Students Option Is Right For Me – Settlement, Refinance or Consolidation?

Whether or not refinance/consolidation versus settlement is right for you depends on both your eligibility and your goals. If your loans are defaulted, you have a low credit score, a high DTI Ratio, or no income; it’s highly unlikely that you will get approved for a refinance/consolidation with any lender. Instead, you may want to consider the other major debt relief option for private loan borrowers – negotiating a reduced-sum payoff.

Loan Settlement

  • Requires a lump sum or large down payment
  • Requires you to be in default
  • If current you must go through a strategic default which causes significant credit score damage until 1-2 years after settlement
  • Results in significantly more savings than refinance/consolidation
  • Pays off loan much faster than refinance/consolidation
  • Cuts loan balance by 40-60% or more (depends on many variables)


  • Requires you to be current
  • Requires good income
  • Requires good credit score
  • Requires good Debt To Income Ratio
  • Will not cause drastic credit damage
  • Less aggressive but still results in some net savings over time versus the original loan terms
  • Will not interfere with short term plans to get a mortgage, auto loan, etc

Can A Student Discharge A Private Loan Through Bankruptcy?

If neither of these options seem like a good fit for you, there are some other routes to attack private loan debt but you’ll have to think outside the box. Private loans are generally exempt from bankruptcy discharge under the 2005 BAPCPA; but there are exceptions for borrowers who have extreme financial hardship, disability, or even for those who have used private loan funds to pay for non-education related expenses.

Private loans cannot be discharged in bankruptcy without going through a complicated legal process called an Adversary Proceeding, which must be undertaken as part of the bankruptcy. There are not many bankruptcy attorneys who have experience in discharging student loans through an “AP”, and those that do usually charge upwards of $5,000 – $10,000 just to attempt it -with no guarantee of success.

Student loans can be packaged into a Chapter 13 bankruptcy as an extended “stalling tactic”, without the expectation of discharge. However, this will result in a great deal of interest being added to the loan during the bankruptcy, and the statutes of limitation can remain active if the loans receive payments during the bankruptcy. On the positive side, loans being entered into a bankruptcy will prevent a lender from pursuing legal action due to the “automatic stay” provision.

Final thoughts for students

Final Thoughts

Refinance/consolidation for private loans is a viable, minimally aggressive option to net some savings and in some cases get a better monthly payment. Since the largest private lenders like Navient and NCT can be extremely inflexible and stick to high interest rates, it makes a lot of sense to look at other options.

The market for refinance and consolidation has come a long way since it was considered a form of relief just for high earning professions; but income, credit score, and credit history will continue to play a major factor in getting an approval – as well as a history of paying on time and keeping the loans in a current status with your original lender while you apply.

For borrowers who were turned down for a refinance or want a more aggressive approach, contact me today to see if you would be a good fit for settlement.


Testimonial: Federal Student Loan Resources

The article Testimonial: Federal Student Loan Resources was originally posted on the official My Credit Counselor site

I received this email from a borrower who was able to take advantage of the many federal loan resources I offer on the site. Although the only service I offer is private student loan negotiation, federal loan borrowers can often find solutions to their problems by becoming educated on the many options and payment plans available. 



I am just a random guy on the internet who found your very informative slideshow PDF file while searching for answers. All of my parental figures have either passed away or moved away, so I’ve never really gotten any solid, straightforward, comprehensive explanation of student loans, consolidation, repayment plans or any of that. I felt compelled to send an e-mail to say thanks.
I’ve been out of school for a few years and finally making steady payments on my loans. I fumbled around the .GOV student loan website, and many others over time trying to understand if “student loan forgiveness” is a real thing, or if Debt Consolidation services were worth any of my time. After reading your PDF slideshow document, I was able to search for exactly what information I needed and make decisions.
Thank you for creating and sharing your work, I really appreciate it!
A very grateful “Repayment” Status debt holder,
(name removed for privacy)

Do Lenders Such As Sallie Mae And Navient Offer Private Student Loan Forgiveness Programs?

The short article Do Lenders Such As Sallie Mae And Navient Offer Private Student Loan Forgiveness Programs? is from My Credit Counselor Blog

Private student loan forgiveness

Student loan forgiveness is the ultimate ideal outcome for all student loan borrowers, but remains out of the reach of all but a very few – and private student loan forgiveness such as Navient student loan forgiveness are no exception.

The majority of forgiveness programs are for federal loans – programs such as PSLF and Teacher Loan Forgiveness (TLF); as well as the forgiveness elements built into payment plans like Income Based Repayment, RePAYE, and Income Contingent Repayment.

There are a multitude of other state and vocation-related forgiveness programs, but there are no specific private loan forgiveness programs for students.

The closest thing for most borrowers is the negotiation of reduced sum settlements. Through the skillful negotiation and execution of settlement agreements, loan borrowers can remove the seemingly existential burden of a high balance loan and all of the negative consequences they can carry.

Private loans for students are a truly unique financial product. Generally exempt from bankruptcy due to the BAPCPA passed in 2005, student loans originated by private lenders have more protections for lenders and less payment plans for borrowers than other types of unsecured debt.

Over half of the cosigners who completed a 2017 survey said that their credit scores had declined. This is one of the most common problems I hear about from borrowers who have cosigned. Any late payments or missed payments by the borrower will result in the cosigner also incurring credit damage.

These types of loans are often taken out by cosigners and borrowers who aren’t fully aware of the difficulty of repaying these loans; or the limited repayment choices and general aggressiveness of the lenders from whom they are borrowing.

The smallest private loan for students experiencing litigation I have heard about was only $4,000; while larger loans over $50,000-$100,000 are almost certain to experience litigation at some point in the collection cycle without pre-emptive action; unless by sheer luck the borrowers have managed to get loans from one of the few relatively non-aggressive lenders who originate private education loans.

Do Navient Have a Private Student Loan Forgiveness Program?

Navient student loan forgiveness This type of loan settlement experience can depend a great deal on an individual lender’s policies. For borrowers seeking forgiveness from Navient via settlement, they will have to contend with very aggressive and savvy collection agents both before and after the default occurs.

Navient can also be one of the more aggressive lenders when it comes to legal action. Occasionally with larger accounts, they can go directly to a collection law firm licensed in the client’s state.

The collectors working atthese types of law firms are fully aware of the fear and anxiety they can invoke by being employees of a collection law firm, and they use this to their full advantage.

Do Any Other Lenders Offer Forgiveness Programs?

Sallie Mae

SallieMae private student loan lender For those who want to pursue Sallie Mae by settlement, there are many similarities to Navient (since Navient split off from Sallie Mae in 2014), but also some behaviors and policies specific to “SLM”; which is now an FDIC insured bank.

National Collegiate Trust

Other lenders like the National Collegiate Trust have developed an aggressive reputation, even though the “NCT” loses many cases when they are challenged by competent attorneys.


Discover loans are often handled by some very polite yet very difficult collection negotiators in their internal collection department in Salt Lake City, UT; while Keybank and Wells Fargo are also commonly handled by internal collection departments in addition to third party agencies.


Chase is rumored to have halted all collection lawsuits for it’s student loan portfolio, while they are no longer originating new loans and have sold some of their portfolios to the National Collegiate Trust; as well as to Navient.


Citibank employs tough third party debt collectors, but will settle their loans in a similar range as their credit card debt with skilled negotiations. There’s no substitute for the experience a professional brings to the negotiating table, or the confidence that experience instills.

Understanding the Ins And Outs

Knowing the ins and outs of how to communicate with each lender, and how to time negotiations to get the best possible deal while reducing the risk of more aggressive collection activity, is central to finding success in dealing with potentially hostile collection agencies and internal departments.

Although there are not any specific private student loan forgiveness programs in existence, the possibility to discharge this type of loan in bankruptcy is real – even with these loans being generally exempt due to the passage of the BAPCPA.

There are several notable circumstances, such as the involvement of a non-accredited university, or the use of funds for non-education related expenses, that can increase the chances of a loan being discharged in bankruptcy.

Although there have been multiple encouraging cases, this is still a very uphill battle that requires an attorney who is experienced in filing Adversary Proceedings against private lenders (and winning).

Adversary Proceeding And Bankruptcy

This “Adversary Proceeding” technique is required to discharge a loan in bankruptcy. There are not very many attorneys who have experience in discharging private loans for students through the use of an “AP”, although this area of the legal profession is attracting more and more attention.

Claiming bankruptcy

Most lawyers that I have talked to who are experienced in this realm of bankruptcy will charge anywhere from $5,000-$10,000 or more as a legal retainer to do the “AP”, without any guarantee that the “AP” will be successful.

An Adversary Proceeding, as the name suggests, is a very adversarial process which is basically a lawsuit against the private lender. The best attorneys will not attempt an “AP” that they don’t think has a good chance of winning.

According to a study in the American Bankruptcy Law Journal (although 7 years old), only a tenth of a percent of bankruptcy applicants attempt to discharge their student loans. I would assume this number has grown, but has still not come close to a mainstream solution for the majority of private loan borrowers (or federal borrowers, for that matter).

With bankruptcy being out of realistic reach for all but a small percentage of borrowers; the options left are few. Even without attempting a discharge, a borrower can include a private loan in a CH13 bankruptcy to essentially put it on hold – the lender will not be able to take collection actions, but the loan will not be discharged (without a successful “AP”) and will continue to accrue interest while the CH13 is in place.

This is nothing more than kicking the can down the road, unless the CH13 can be structured in a way that the loan receives no payments and the statute of limitations are not delayed by the bankruptcy.

That type of strategy could potentially run the loans past statutes of limitation, but is easier said than done and varies greatly depending on state law (I can’t provide legal advice, state-specific or otherwise: for SOL questions please contact a knowledgeable attorney in your state).

Payment plans are generally limited or non-existent for private student loans. Because these loans are credit based, the lenders do a pretty good job of screening for borrowers and cosigners who have income or assets to repay the loans (at least on paper, at the time the loans are originated).

Therefore, any loan repayment plans are usually in the lenders benefit – whether it’s a forbearance, or a “low interest payment plan” that serves to only help the borrower tread water and nothing more.

Refinance And Loan Consolidation

Refinance and private loan consolidation also seem appealing, and many companies offer refinance of private (and federal) student loans for applicants who meet their criteria. However, their selection criteria has been rightly criticized as only accepting “doctors and lawyers”. While loan refinance is, in theory, open to others outside of those professions; borrowers without great credit, Debt To Income ratios, and high income levels will have a hard time qualifying for a refinance.

Those borrowers who have already fallen behind or defaulted on their private loans will likely find refinance to be impossible to be approved for.

Settlement Negotiation

This leaves settlement negotiation as the remaining available option for this type of borrowing. Despite some variables, and a few lenders who try to refuse settlement at reasonable percentages reflective of the industry as a whole (ahem – Discover and PNC, I’m talking to you); settlement is the closest thing to actual forgiveness for borrowers who can afford it.

Having a lender that is a large for-profit company or bank and a legitimate financial, medical, or other hardship exponentially increases the possibility of settlement (as long as settlement funds are available).

The types of settlements possible vary depending on the lender, the hardship, a lump sum versus structured settlement, the date that the account defaulted, the skill and experience of the negotiator, and other circumstances.

Generally, anything at 50-60% of the balance or less is considered a good settlement, although some settlements can be half of that amount. It’s also important to keep in mind that loan lenders will only agree to good settlements after a significant amount of negotiation in most cases, and always after the loan has defaulted and become a business loss for the lender.

Once the loan becomes “charged off”, the lender still has the right to collect on it for a period of time, but the fact that it has become a nonperforming asset can give the lender the incentive to accept a significantly lower amount than the balance due.

The Forgiven Amount

In fact, lenders even refer to the amount canceled in a settlement as the “forgiven amount”. While taxes may need to be paid on the amount canceled in settlement if the borrower is financially solvent, many borrowers who have more debts than assets at the time of settlement can benefit from the insolvency exception to taxes on cancelled debt.

Confused students about loans

When researching private student loan forgiveness or repayment options, the amount of resources and competing blog articles can be mind boggling. However, after a careful evaluation of all of the existing options, many borrowers come to the conclusion that loan settlement is the fastest and least expensive way to get rid of a private loan (an opinion with which I agree).

However, this doesn’t mean that it’s right for everyone; although my clients come from all different types of backgrounds, financial and otherwise. In my evaluations, I take an in depth look at a borrower’s financial and personal circumstances to see if settlement is a good option.

There are three main criteria that must align to become a settlement client. 1 – There must be settlement funds available (structured or lump sum). 2 – The lender must be a for-profit student loan lender (some nonprofits settle, but not many). 3 – The loans must be in default or will eventually reach default (lenders will not settle current loans).

If these criteria are met, then the possibility for private student loan forgiveness to become a reality through settlement is very real.


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Private student loan debt only affects a small percentage of overall student loan borrowers, but it sure does cause big problems for those who have them. Private student loans are notoriously inflexible, and despite the recent introduction of some limited payment modification programs, I still hear from borrowers every week who are struggling to manage these loans.

If you’re looking for information on private student loan forgiveness, you can read this article I wrote here.

Making years of payments without seeing real progress:

The common refrain that I hear, over and over again, is that despite paying for years; the balance is not going down or may even be increasing over time. People understandably feel like they are throwing their money away. And this is just the loans that are current – for delinquent or defaulted borrowers, navigating a complex web of vaguely threatening calls and letters is the norm.

“Accounts will be ‘terminated’ if a payment isn’t made. “We intend to file a lawsuit against you if no payment is made before charge-0ff”. “Your account has been escalated to our super duper, last chance, really seriously, for real-for real, no we are completely not joking department”.

The voices coming across the other end of the line are often rude and threatening. The letters are scary, but vague, and look like high ranking directors or vice presidents are personally getting involved with the accounts. Options are limited! Last chance! Call by tomorrow at 5pm, or we will force you to sell your internal organs on the black market.

The calls and language used are intentionally opaque, because the collectors know that playing on a borrowers’ lack of understanding of a particular lenders’ collection cycle -and letting the borrowers’ own imagination collect on the account for them- is a surefire winning tactic. This is not to say that lawsuits don’t occur on private student loans. They do. But from my experience, there are many, many opportunities to settle or work out a payment plan with Navient private student loans prior to this happening – and with other private lenders as well. However, the vague threat of legal action is often brought up at multiple times in the collection cycle, and is often the go-to response for a collector who is hard-balling or bluffing on a borrowers’ settlement offer.

People are surprised when they attempt to negotiate a settlement on their own and are flatly refused, or are denied a reasonable payment plan during this process. And in many cases, they’ve unknowingly given up information about their income or assets that can hurt their chances of settling down the road. Negotiating a settlement is definitely not like asking for a different payment date or signing up for electronic debit payments – it’s an adversarial process that is not for the faint of heart, and is essentially a renegotiation of the original contract. It can take months and months of negotiations – negotiations which will not be successful unless a specific strategy to reach a desired settlement is implemented from the very first negotiation call. Lenders don’t really want to settle, so they will try everything they can to scare people back into making payments on 100% of the balance plus interest first – locking them back into the same never-ending cycle of perpetually paying down inflexible private student loans.

Collectors use the threats they think will be the most effective in getting borrowers to pay up.

We are even seeing Navient try different tactics to twist and tweak their threats for maximum effectiveness. In the past, borrowers who have contacted me for help settling their private student loans have told me that immediately before charge-off (6 months of nonpayment), they received a form letter that used very strong language – namely, that the account will be referred to a collection attorney and that they intend to file a lawsuit. I have seen many times that this is just an empty threat, for the time being anyway. After receiving these threatening letters about impending referral to an attorney collection agency to file suit, the accounts instead remained with the lenders’ internal collections department for several more months. During which time, I was able to negotiate lump sum and structured settlements.

Recently, this tactic has become even more exaggerated. Clients received the same letter, “signed” by the VP of Navient Credit, that specifically says their account will be referred to an attorney in the clients’ state upon charge-off – and it even names the attorney collection firm, and says specifically that they intend to file a lawsuit. Instead, just as before, the client received calls the next month from a regular collection agent at Navient internal collections.

I don’t mean to be rough on Navient. Believe it or not, I’ve talked to some good people that work there in my many negotiations calls with them, but at the same time I think it’s fair to criticize them for flat out lying to borrowers about what is happening during the private loan collection cycle. What borrowers don’t realize is that these scary sounding generic collection letters are mass produced and are completely identical – the only thing that is different is the name of the attorney collection firm in that particular borrower’s state. Navient made the calculation, which was very intelligent on their part, that naming a specific attorney collection firm in the borrowers state could get them to call in and make a payment before the account defaults.

It’s not time to panic, but it is time to take action.

If an account is actually referred to a “same state attorney” collection firm, it’s nothing to sneeze at, but the threat is often blown out of proportion. Private lenders can’t afford to sue every single person who defaults on their loans, but they know that it’s an effective collection threat. It sure is a good thing that private lenders are making these threats directly, because if they had third party collection agencies making these threats, it could be a violation of the Fair Debt Collection Practices Act. The FDCPA only applies to third party collectors unfortunately, but some states have adopted similar laws that govern the conduct of original lenders.

When an account is actually referred to a “same state attorney” collection firm, as I call them, it’s time to make the account a priority if you haven’t already. It’s important not to panic or engage in doomsday thinking, but at the same time there is a potential threat of a lawsuit at this point. As renowned credit card debt negotiator Jared Strauss told me the other day, attorney collection firms are often just a normal collection agency with an attorney in the back – and he would know, having spent years on the other side of the industry working for and directing collection agencies.

A reputable consumer defense attorney can defend and settle unsecured debts during the legal process if a borrower is facing an actual lawsuit, but there are often many chances to settle on your own or with a non-legal negotiator prior to this happening. Even the debt collection attorney firms want to settle or get a payment rather than having to take someone to court. Studies have shown that 80-90% of civil cases settle outside of court, and my experience settling “same state attorney” collection accounts reflects this also – just take a look at the many attorney collection firm settlements on my homepage slideshow.

Open all collection letters and take a proactive approach.

At the same time, many borrowers ignore mail – including court documents – and end up getting default judgments. Once a judgment is attained, the creditor can begin the process of trying to garnish wages or levy a bank account via judgment execution. This is the worst case outcome and you want to do everything you can to avoid it. Taking a proactive approach to settling or negotiating a payment plan on unpaid debts is the best way to prevent this from happening. Open all your mail regarding collection accounts, and at the minimum screen your voicemails even if you’re not communicating with debt collectors who are calling.

If you’ve actually received a summons, you need to hire a reputable consumer defense attorney as soon as possible – there’s no two ways about it. However, this is the last step of a lengthy collection process, and if you’re proactive; you or your professional negotiator can work out a settlement or payment plan long before this happens. Judgments can still be settled in some cases, but it’s usually better in the long run to settle accounts prior to a judgment being awarded to the creditor. Settling a judgment does not remove it from your credit report, but it will show that it has been paid. You will usually get a better settlement on a non-judgment account also.

I’ve never had a client get sued as long as they hire me to negotiate prior to the legal process being initiated by the lender. However, I am quick to tell clients that I cannot provide legal advice, nor can I represent them in negotiations if they have been served a summons. In most states, borrowers have 20-30 days to respond to a summons. I’ve heard that some borrowers have been able to negotiate a settlement even during that period, but in my (non-legal) opinion; the creditor has much more leverage during these types of negotiations and a better settlement can be obtained by hiring an attorney to first defuse the impending threat of a judgment.

Lenders came up with the idea of settlement in the first place.

It’s important to note that if lenders did not want to settle, they simply wouldn’t. Despite the adversarial process, this is a system that is ultimately created by the lenders themselves. With high interest rates, lenders are calculating that a certain percent of their borrowers will default and never pay, or pay a reduced amount; and the high interest rates make sure that they will still turn a profit overall.

While taking a beating in the stock market in 2015, largely due to federal loan practices; in 2014, Navient originated $4.3 billion in private student loans with expected losses of $116 million to $130 million. Put another way, Navient expected to lose over $100 million on their private loan portfolio – which seems to be the closest thing to actual Navient private student loan forgiveness. By the way, their total private loan portfolio is over $8 billion – a pretty good chunk of change. Next to the FFEL program, loans which Navient services on the federal side; private student loans are their second largest portfolio. Since the expected losses are baked into their figures, we can see that Navient expects to settle some accounts each year – and expects to not be able to recover on other accounts at all.

Taking a logical, strategic, and proactive approach to settlement or repayment planning affords the borrower with many opportunities to work out mutually acceptable arrangements before the long, winding path of debt collection leads to wage garnishment, liens, or bank account levy – the nightmare scenario that all defaulted borrowers fear, but far fewer actually experience. If you’re interested in hiring me to settle your private student loans (and make sure they stay settled), fill out my quick online evaluation form here.