In these times along with mortgages and credit cards, many people are not able to afford student loan payments. SLM Corp., or Sallie Mae, the largest private student lender, reported a delinquency rate of 9.4% in September, up from 8.5% a year earlier. “It’s clearly because of economic conditions,” says spokesman Tom Joyce. “The credit crunch has washed onto the student-loan beach.”
Unlike credit cards, there is no statute of limitations on these types of loans, meaning that they can haunt you into the grave. Collections agencies hired by Sallie Mae are in a strong bargaining position when dealing with consumers because of this. In my experience, Sallie Mae collection agencies are typically a cut above above collection agencies dealing with credit card (unsecured) debt.
I get many people who come to me with debt exceeding $100,000 in student loans and payments of $1000/month. What to do if you are buried in debt and facing default?
- Student loan blemishes on your credit report (I’ve seen up to 25 loans on a single credit report) can be easy to fix. Any Sallie Mae loan can be “rehabbed” through the Department of Education. Typically, if you qualify for the program and make 12 payments on time, they will upgrade your paying status on your credit report as “paid, never late”. Contact information for the department of education is at http://www.ed.gov.
- Another way to handle student loans: you can possibly wipe out some or all of your student loans through a program recently introduced: public service student loan forgiveness program.
- One other ray of light: in July 2009, a program called the income-based repayment plan — designed to help those who take jobs with lower salaries — will be another option for people with federal loans.
Still the current default rate is still less from the late 1980s, when student-loan default rates skyrocketed to as high as 30%. That prompted state and federal governments to pass legislation allowing them to seize income-tax refunds, withhold professional licenses and enlist collection agencies to gather payments. Meanwhile, the U.S. Department of Education withheld eligibility from federal financial-aid programs from institutions that didn’t keep their default rates low.
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Does Sallie Mae ever settle student loans. Let us say on a 70,000 dollar student loan, would they take half of the debt owed to call it even for instance?
Ana – Yes, Sallie Mae will settle student loans, it may just take a while for them to agree. If you’ve been paying on time and regularly, they probably won’t suddenly take half of what is owed to them. If you have defaulted and are in collections, though, call the collection agency or speak to them when they call. They will try to bully you into paying anything, even $50 per month for the rest of your life, but if you ask if they are willing to settle, they most likely will. I just paid off my loan for a little under half of what I owed.
This will hard for you to take in, but here goes. I have been paying on a $10,000. student loan for 16 years, and it has not dropped one penny in principle. The loan was first held by DOE and then sold to Sallie Mae. The government took all tax refunds, some were earned income credit of up to almost $3000. and when I lost work and had unemployment compensation they told me it did not matter that I had no money to feed my kids that they wanted their money and they said they would take any assets I had, and would garnishee my wages when I got a job. As of this date I have been paying regularly and I think I have paid over $10,000 in interest to The Doe and Sallie Mae. I was told by a Sallie Mae ad that I could get 2.85 Percent, but afterwards I was told it was not approved for my loans. So I guess I will keep on paying forever. Oh Sallie Mae has changed a few things but never sends me the mail or calls. I haven’t had a coupon book for two years even though I have asked many times. See I told you it is almost unbelieveable. I send my payments in a plain envelope with my SS# and hope it goes to MY account. My advice is do not get a student loan you will regret it all of you life.
Are there any recourses for loan forgiveness if I can no longer pursue the field of training due to a cancelling health problem? I took a Sallie Mae loan for piloting…then was diagnosed with Coronary Heart Disease and had 6 bypasses. the FAA has since told me that I am not qualified to fly due to the condition. What are my recourses?
Thanks so much!
You can claim the student loans in a bankruptcy if you have a legitimate health problem or disability that will prevent you from ever earning enough money to mak ethe payments. It is the only way you can include student loans in a bankruptcy. I would consult a lawyer.
Does anyone know if I contact all of the loan people (Sallie Mae) being my most offensive one and just offer to pay the least for right now will they accept it? I was able to rehabilitate my Federal loans but Sallie MAe is not as forgiving. I have been flagrant in disregard b/c I just didn’t/don’t have the money. The private loans are in default and with collections. Is there any way to rehabillitate as I did with the government? Now the gov is off my credit well its there in a good way. Freaking Sally Mae is not as helpful! And now they have me with collection agencies who are just the worst. Any type of suggestions would be great! This is the bane of my existence and literally the only things negative on my credit report are all educational loans!
As far as garnishing tax refunds, the gov can only garnish if you are due a refund. If you are in collections and pay into the IRS on a W2, ensure you include enough deductions on your W4 that you neither owe nor are due a refund. It would not hurt you to own at year end to stay flexible enough for any last minute tax changes.
If anyone can help me please email me.. Basically two years ago my Fiance left me high and dry… He took the house and left me with bills. I moved to another state and have been trying so hard to rebuild my life. My gov loans are now being rebuilt and after so many months they will finally be in good condition but Sallie Mae is horrible.. I owe them 45 grand and now they just sent them to NES which is horrible. Im desperately afraid of talking to them because im strapped for money. I put all my money into the government loan and my rent.. i have nothing left after. If i offer them say 50 to a hundred a month will they even consider it?
They seem to be making deals these days. Most institutions are of the opinion that something is better than nothing. Don’t be afraid of talking to them. Burying your head in the sand will not make things go away.
I am in need of legal counsel and help with a defaulted student loan that originated in 1995. I no longer live in the U.S., but still want to help clear this up, as the collection agency has my overseas address and I am afraid of harassment and seizure of my foreign assets, such as my house and car. Can they do this? I haven’t lived in the U.S for 8 years, and have no assets there. I need advice as soon as possible and am looking for an attorney, accountant, agency, or anyone that may be able to help with this. I have read about the Income-Based Repayment plan and want to know if it applies to me, can the government really take no more than 10% of my income per month? Times are tough for our family, financially, but I would like advice on a compromise payment. Do I have to deal with this collection agency or can I deal with the U.S. Department of Education only? Can you please forward me names or organizations that can help advise me. My loan is not through Sallie Mae, the U.S. Dept. of Ed. is telling me to speak to Financial Assets Management Systems and they are not nice.
US courts have no jurisdiction in foreign countries so your assets are completely safe. That being said, send them a “cease and desist” letter. Even if you’re in a foreign company, collection agencies have to follow U.S. laws.
does anyone know who Sallie mae actually uses to collect defaulted loans…NCO called me today. When I looked them up online they seem to have a less than reputable past. How do I know they are actually acting on Sallie Mae’s behalf. I have nev er recieved any prior correspondence form this company until today at my work phone number.
Hi there. My wife owes on a Sally Mae loan. Fair enough. Now a company called DCS is on our case. Do we have to deal with them or can we deal with any other agencies or prefferabilly Sally Mae directly?
Hello, I have a Sallie Mae loan that just went into default. Like most, the economy has hit my family hard. At the beginning of this year, I tried to rehabilitate the loan; however, they would NOT accept a reasonable payment. In fact, they wanted more than what my payment was before I went into default. I never signed the paperwork and did not make the first payment.
I would once again attempt to rehabilitate, but it seems that Sallie Mae’s collection company is wrong. I’ve found several places that state they must accept a reasonable payment structure. They would not. It felt like more of a we get paid on how much they could get.
Any suggestions?
Wait until you can afford the payments, then go for a rehabbing of your student loan. There is no SOL – eventually, you must pay it off.
I forgot to mention that I am a teacher; however, I dont think I’ll be think I’ll be teaching another 10 years for the GW plan. Do you think the income based plan would work. I’ve been a teacher for 10 years.
I have about $70,000 in student loans from college 10 years ago. They have been doing wage garnishment and taking my tax returns for the past 6 years. I now have a pending law suit from a motor vehicle accident. Does anyone know if the settlement can be taken to pay my defaulted student loans?
Here goes I’m a 24 year old mother of two. I went to collage about 5 years ago. I’m not working, I can barely afford thing for my kids now a days. Anyway i thought my loan was in default til I got a call saying either pay 152.00 today or will sell the loan to someone else. Man, i just need help to get out of this.
Tymika, student loans have no statute of limitations, so they never go away. On the otherhand, if you’re not working – you’re right, they should not be active. Have you contacted the department of education about this? Try them at http://ed.gov.