topic Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please! in Student Loans

How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Sun, 08 Jun 2008 22:53:34 GMT

I am looking for anyone who can share their advice and experience on negotiating partial loan forgiveness with Sallie Mae. Here briefly is my situation:

I am the co-signer on a $60K Sallie Mae student loan where the primary borrower has defaulted.

I want to negotiate a simple settlement with Sallie Mae (SLM): I am asking them to forgive some of the loan principal (20% or more), and in return I will pay off the rest in full. My goal is to reduce my loss, and end any loan liabilities with SLM.

It seems SLM cannot proactively work with me, they only have procedures in place for working with defaulted loans. I made the loan current with 2 payments, thinking this goodwill would make negotiation easier, but to no effect. The only advice I received from them was to let the loan go 120 days into default, then they will work with me. This sounds risky to me.

My question to everyone is: How do I best negotiate with Sallie Mae? What can I reasonably expect Sallie Mae to do for me? How would you advise I proceed? PLEASE SHARE YOUR ADVICE AND EXPERIENCES!

Thank you!

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Mon, 09 Jun 2008 00:37:46 GMT

I have not had to deal with anything like this-

However- SM has no reason to work with you while the loan is current-

Student loans have no SOL

The can do IRS intercepts w/o notice

They can do all kinds of thing most creditors must goto court to do.

My advice is to get a attorney-

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Mon, 09 Jun 2008 01:20:07 GMT

If this is a government backed loan, call the DoE ... I'm not sure how it would all work, but in the end, if it's a gov loan, they're the ones who've guaranteed it (therefore, you'd really be settling with them!).

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Mon, 09 Jun 2008 08:29:41 GMT

My understanding is that a loan will go into default after 270 days of missed payments, and that default is a situation to be avoided at all costs, since all bad things kick in, including collections agencies, wage garnishment, etc.

I have no intention to go into default. I just want to negotiate with SLM to lower the principal to a more manageable amount for me. This is exactly why I am posting my question... I would like to hear the experiences of other people who have faced this situation and found a way to avoid default by negotiating with SLM.

I have done all the research on what could happen at default, I have no intention of going there. I really need the advice of someone who has experienced a negotiation with SLM... how did you do it, and what was the outcome?

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Sun, 15 Jun 2008 11:21:17 GMT

Student loans is, unfortunately, one of the places I'm sort of an expert in. Unfortunately, you have nearly no bargaining power with SLM. Legislation has made even private school loans non-dischargeable. There is no incentive for SLM to negotiate with you at this point since they can just garnish your wages. And since, as someone above pointed out, there is no statute of limitations on schools loans (as per the above mentioned legislation), they can do this until you are dead or medically disabled.

SLM is kind of correct. The only way they are going to give you the time of day is if you are actually in default. Even then, your leverage is limited. Your only option is to either pay the debt or risk damaging your reputation with the CRAs by going into default. I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.

Message Edited by Wesley23 on 06-15-2008 04:21 AM

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

MattH — Sat, 21 Jun 2008 02:44:24 GMT

@Anonymous wrote:
I am looking for anyone who can share their advice and experience on negotiating partial loan forgiveness with Sallie Mae. Here briefly is my situation:
I am the co-signer on a $60K Sallie Mae student loan where the primary borrower has defaulted.
I want to negotiate a simple settlement with Sallie Mae (SLM): I am asking them to forgive some of the loan principal (20% or more), and in return I will pay off the rest in full. My goal is to reduce my loss, and end any loan liabilities with SLM.
It seems SLM cannot proactively work with me, they only have procedures in place for working with defaulted loans. I made the loan current with 2 payments, thinking this goodwill would make negotiation easier, but to no effect. The only advice I received from them was to let the loan go 120 days into default, then they will work with me. This sounds risky to me.
My question to everyone is: How do I best negotiate with Sallie Mae? What can I reasonably expect Sallie Mae to do for me? How would you advise I proceed? PLEASE SHARE YOUR ADVICE AND EXPERIENCES!
Thank you!

Unfortunately, I fear you are between the proverbial rock and hard place. Most creditors are willing to settle because they can choose between accepting a reduced amount or risking a much smaller amount imposed by a bankruptcy judge. But student loans have an extra-special legal status, they are almost as hard to escape as taxes, so the lender has very little incentive to be flexible. Your best option may be to hire a lawyer and sue the person who defaulted on the loan.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

LynnInMN — Sat, 21 Jun 2008 05:20:22 GMT

Wonderin wrote:
If this is a government backed loan, call the DoE ... I'm not sure how it would all work, but in the end, if it's a gov loan, they're the ones who've guaranteed it (therefore, you'd really be settling with them!).

Calling the DOE wont help. SM is a FFELP lender....they lend for FFELP state and regional guarantee agencies. Any settlement would be with the guarantor, not the DOE.

Federal or Private, SM wont settle, particularly if a loan is in good standing. No such thing as good will, it just wont happen....there is no incentive for them to settle. If it is a federal loan, the guarantor has guaranteed SM 100% of the funds. If private, it could be owned by SM or it could be guaranteed by another agency and just serviced by SM. If you have good credit and or assets, there is no way they will settle, even once it has defaulted. As a cosignor, you are legally as responsible for the the debt as the borrower. (Obviously there was a need for a cosignor in the beginning.) Private loans do routinely file for judgments against both borrowers. And as someone else has said, these are not dischargeble in BK.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

LynnInMN — Sat, 21 Jun 2008 05:29:44 GMT

Wesley23 wrote:
I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.

Message Edited by Wesley23 on 06-15-2008 04:21 AM

Why should private loans be dischargbeable in BK? I am not a big fan of private loans but they do serve a purpose...bridging the gap between federal aid and cost of attendance. Without them, a lot of students wouldnt be able to finish or even go to school. With the high rate of BK's nowadays, private loans would disappear if they became discharageable again. Big lenders are already pulling out of the program as it is.

Education is the key to student loan management and borrowing. When I was working financial aid, I saw tons of students borrowing money to live in dorms, even though they only lived 12 miles from campus. The didnt want work study cause it would interfere with their social life. After 4 years of studying history, they would graduate and whine that they couldnt get a job. They had loans all over the place and would have no clue how to find them either. Yup, I got those calls too.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

MattH — Sat, 21 Jun 2008 13:41:11 GMT

@LynnInMN wrote:

@Anonymous wrote:
I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.

Message Edited by Wesley23 on 06-15-2008 04:21 AM

Why should private loans be dischargbeable in BK? I am not a big fan of private loans but they do serve a purpose...bridging the gap between federal aid and cost of attendance. Without them, a lot of students wouldnt be able to finish or even go to school. With the high rate of BK's nowadays, private loans would disappear if they became discharageable again. Big lenders are already pulling out of the program as it is.
Education is the key to student loan management and borrowing. When I was working financial aid, I saw tons of students borrowing money to live in dorms, even though they only lived 12 miles from campus. The didnt want work study cause it would interfere with their social life. After 4 years of studying history, they would graduate and whine that they couldnt get a job. They had loans all over the place and would have no clue how to find them either. Yup, I got those calls too.

Maybe there should be a required two-day seminar on personal finance, employment, debt management, etcetera as a condition of getting any student loan (call it "Real World 101")). Such a seminar might be even more effective if each institution whose students were getting Federally subsidized loans were required to present detailed numbers on rates of graduation and employment for their own students, broken down by program or major, since it can make a big difference what they study and where they study it!

Message Edited by MattH on 06-21-2008 06:41 AM

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Sun, 22 Jun 2008 14:39:00 GMT

@LynnInMN wrote:

@Anonymous wrote:
I highly suggest you also mail your congressmen/women about the scam of non-dischargeable private school loans. This subject has been getting more press attention lately in the NYT and WSJ.

Message Edited by Wesley23 on 06-15-2008 04:21 AM

Why should private loans be dischargbeable in BK? I am not a big fan of private loans but they do serve a purpose...bridging the gap between federal aid and cost of attendance. Without them, a lot of students wouldnt be able to finish or even go to school. With the high rate of BK's nowadays, private loans would disappear if they became discharageable again. Big lenders are already pulling out of the program as it is.

Education is the key to student loan management and borrowing. When I was working financial aid, I saw tons of students borrowing money to live in dorms, even though they only lived 12 miles from campus. The didnt want work study cause it would interfere with their social life. After 4 years of studying history, they would graduate and whine that they couldnt get a job. They had loans all over the place and would have no clue how to find them either. Yup, I got those calls too.

I have nothing against making federally backed Stafford/Plus loans non-dischargeable in BK. Those do serve a purpose; they are low interest loans that help people get through school. With careful planning, one should be able to get through college solely on federally backed loans. Besides, the tax payers are footing some of the bill on these loans, so it's only fair that we get our money back from the debtors.

Private loans, on the other hand, should be dischargeable in BK. Non-dischageable (private) school loans are very unique in the lending industry. In fact, it's the only example of the government making a private loan non-dischargeable that I can find. Every other private loan made is based solely on risk and is therefore dischargeable in BK. Some people make the argument that since there is no tangible asset to repossess in the event of default, the entire loan should be non-dischargeable in order to mitigate risk. This is a fallacious argument since lots of loans the lending industry makes are not based on tangible assets. A salient example of this is loans based on derivatives.

The only reason that private education loans have been made non-dischargeable is because there has been an intense lobbying effort by Sallie Mae and their ilk to keep these non-dischargeable. It is extremely profitable for these companies. These loans are quite literally risk free, and Sallie Mae is free to charge a relatively high interest rate on these loans.

The fact that these private non-dischargeable loans exist points to a much larger problem-- the government is not doing enough to help people through college. The solution isn't to make Sallie Mae richer by making their debtors indentured servants to the corporation via legislation. The solution is to make Staffords and PLUS loans easier to get.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

MattH — Sun, 22 Jun 2008 17:42:58 GMT

@Anonymous wrote:

...The fact that these private non-dischargeable loans exist points to a much larger problem-- the government is not doing enough to help people through college. The solution isn't to make Sallie Mae richer by making their debtors indentured servants to the corporation via legislation. The solution is to make Staffords and PLUS loans easier to get.

The real solution is to make grants and scholarships much easier to get.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

LynnInMN — Tue, 24 Jun 2008 14:25:13 GMT

Education is affordable and accessable if you make the correct choices and plan properly. Biggest problem as I see it is that we live in a "gotta have it all now" society. I come from single parent household and it came down to if we wanted to go to college, we had to pay for it. I worked and saved thoughout high school and my summers. I got good grade and got scholarships. No car, no expensive clothes, modest family vacations. In other words, I worked my ass off. I got my BA and went to law school and ended up with less than $10,000 in debt. (I graduated in 83.) When I got a job, I shared an apartment, took public transportation and paid off my debt in just over 2 years. Yes, expenses were lower back then but so were salaries.

When I worked financial aid, rarely did I see students with much savings. They didnt want to take work study because it would take time from the "college experience"...i.e....partying. I saw a lot of stupid choices.

My advise to those of you who have kids.....

1. Make sure they complete as many AP courses as they can while in high school. Any college credits you can get while in high school are a huge savings in the long run.

2. Complete your general education courses at a community college....huge savings there. Then transfer your credits to a 4 year college.

3. Attend state schools for undergrad. A Harvard undergrad degree is really no better that a University of Minnesota or Wisconsin degree. There are a lot of great state schools with grad programs too!

4. Stay away ....I mean run away from proprietary for profit schools. University of Phoenix is a great example of a degree mill. Employers chuck resumes with that school listed. ITT is another one.

5. Live at home if at all possible. Take public transportation. In most major cities you can live without a car.

6. Start saving early. My girls are 10 and 12 and we have been saving since birth. We make it a point to put something in their education accounts each month. When my hubby was unemployed we still managed to squeek $20 a month into their accounts. Even my girls will add money to the accounts from their birthday and christmas money.

Post secondary education is not a right in this country. If you cannot afford, obviously you will have to borrow to attend. Borrow the minimum amount possible

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Tue, 01 Jul 2008 15:15:13 GMT

Thank you to everyone who posted, especially LynnInMN, I appreciate the clear-headed and objective advice of an ex-professional in the student loan field. Your assessment was not what I had hoped to hear, but it is the reality, and that's all I've been trying to get at here with soliciting everyone's advice, so thank you.

And with that I have an update: I discovered that on this loan, in my state, if I as co-signer make 24 consecutive payments on the loan then I am free and clear off the hook on future obligations and payments. This is a private loan, issued in a particular state, so if my situation applies to you, please don't assume the 24 months applies to you as well. Talk to your loan agency and ask them to review the fine print of the loan with you and find out what are the legal ways for you to be released from obligation on the loan. So, I intende to make 24 payments, it is painful, but not as bad as paying off the full loan amount, and it protects my credit that I have worked so hard to build up.

I will also post a separate thread on the subject of co-signing, and why not to do it, I want other people to learn from my experience.

Re: How Do I Negotiate With Sallie Mae - Your Advice + Experience Please!

Anonymous — Tue, 01 Jul 2008 16:54:05 GMT

I have just completed my new post on cosigning student loans on the Student Loans forum:

Cosigning Student Loans - Learn From My Mistakes - Please Read

http://ficoforums.myfico.com/fico/board/message?board.id=studentloans&thread.id=752

If you are thinking of co-signing a loan, or know someone who is, or who may in the future, I ask you to please pass them a link to my posting. It will open their eyes to the reality of what they are getting into, and could literally save their financial life.

Peace, health and happiness.