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Negotiating a Pay-off of Student Loan

New Contributor

Negotiating a Pay-off of Student Loan

I have a Sallie Mae Student loan which is OUT OF CONTROL with all the fees and interests. It is $111,000. 75% of it is interest (8.5% RATE) and fees (could not afford the payments-too high). I have a large sum of money I an willing to pay if they will negotiate a pay off. I figure it is beter to do this and part with the money ($50,000) than be a slave to monthly payments.

 

I can also qualify for the Loan Forgiveness Program because I have been in public service all my life (but it doesn not seem like a real benefit). I can tolerate apayoff less than the amount for 7 years on my CR vs. paying for 10 years to a plan in which they will probably try to find a loop hole to not forgive any debt.

 

I have cleaned my cresit up tremendously and only have 4 major bills. 1. My Mortgage which is being paid off really fast now because of the loan I have 2. My Student Loan 3. One hav one CC $600.00 limit 4. A small Cap 1 loan for LASIK Surgery (48 mon 0% interest)...all my cars paid off and only have my monthly living expenses.)

 

What do you think? Do you think they will negotiate?

Message Edited by RLL1171 on 12-16-2008 08:25 PM
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7 REPLIES
Frequent Contributor

Re: Negotiating a Pay-off of Student Loan

Federal  loan  not  in  default??   Then  absolutely  no.    Federal  loans  are  guaranteed by your  guarantor....why  would  S M settle  for  less?   Settlements  only  happen  of  defaults and  they  wont  settle  off on  50% of  the balance.    Plus  you would be dealing with  24% in  collection  fees.   

 

 

Ex-Financial Aid Officer

Ex-Student Loan Collector
Valued Member

Re: Negotiating a Pay-off of Student Loan

If you have $50K available, what's the problem?
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New Contributor

Re: Negotiating a Pay-off of Student Loan

This is money I have in a retirement fund. I figure since the interest on my SM is growing in leaps and bounds compared to the little growth of my fund. I could do better with this out of my way and make up the difference.

 

I make pretty good money and have a big settlement coming through in 2009. I just want to be done with it it is a thorn in my side.

 

What actually happened is I borrowed $30,000 in 1989. I came from a poor family but went to a big expensive University. In short could not afford it. Well my loan was split up 12 times (partial sums of my loan sold and purchased.) Then everyuone wanted 200.00 a month. IMPOSSIBLE! It was absolutly crazy! I got nervouse and consolidated which then made my loans inelligible for forgiveness. So I had hardship deferremnts.....that $30,000 grew to what you see today. Clinton signed that bill which gave student loan companies the authority to charge APR from 4% all the way up to 8.5%..This loan last year was $65-70,000 last year and see where it is now?

 

This is CRAZY! I was in the credit dump for a bit when my wife got sick and we had a tremendous amount of medical bills and procedures to pay. If I could just get rid of this...I would be golden.

 

Not in default, but trying to find a way to eliminate this bad debt.

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FICO 12/17/08 TU (?), EFX 635
FICO 12/24/08 TU (?) EFX 616
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Established Contributor

Re: Negotiating a Pay-off of Student Loan


RLL1171 wrote:

This is money I have in a retirement fund. I figure since the interest on my SM is growing in leaps and bounds compared to the little growth of my fund. I could do better with this out of my way and make up the difference.



Hmm.  I would consider that a last resort if you want to retire comfortably Smiley Happy  If you pull out now after the market has taken such a beating, you may miss out a great recovery period.  Even a few days of great gains can make a big difference.  At worst, stop contributing to the retirement plan and re-direct the funds toward pay-off. If you have a settlement coming through next year, why not leave the retirement plan alone and just use the settlement to pay off the loans?

Frequent Contributor

Re: Negotiating a Pay-off of Student Loan


RLL1171 wrote:

I got nervouse and consolidated which then made my loans inelligible for forgiveness. So I had hardship deferremnts.....that $30,000 grew to what you see today. .


Who did you consolidate with??   Sallie Mae I think.

 

Have  you read the forgiveness regs??   

 

 http://www.finaid.org/loans/publicservice.phtml

 

Beginning on July 1, 2008, FFEL borrowers may obtain a Federal Direct Consolidation Loan in order to qualify for public service loan forgiveness even if they had previously consolidated in the FFEL program.

Message Edited by LynnInMN on 12-17-2008 07:30 PM
Ex-Financial Aid Officer

Ex-Student Loan Collector
New Contributor

Re: Negotiating a Pay-off of Student Loan

Hey LynnInMN! I consolidated with William D. Ford Federal Direct Student Loans and I believe they were bought out by S&M (LOL!)

 

I will most definitely apply for the forgiveness.....I will get back with you in the beginning of the year to let you know what is up.

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FICO 12/17/08 TU (?), EFX 635
FICO 12/24/08 TU (?) EFX 616
FICO 1/21/09 TU (?), EFX 623
FICO 3/3/09 TU 654, EFX 700
FICO 4/9/09 TU 655, EFX 705
Frequent Contributor

Re: Negotiating a Pay-off of Student Loan

The Direct Loan program was most definately NOT bought out by SM.  Direct Loans is the USDOE...SM is a FFELP lender.

 

I really dont think you "apply" for forgiveness per se.  I believe you still have to make the 10 years of payments starting Oct 2007 going forward.You need to qualify first.

Ex-Financial Aid Officer

Ex-Student Loan Collector