You can negotiate a student loan settlement with Wells Fargo after you default on your private student loan debt. But only after your loan is no longer in good standing. That means you'll have missed payments. And that means your credit score will take a hit, and your cosigner's credit score will take a hit for each missed monthly payment. (Kiss good credit bye -- at least temporarily.)
There is no other way to get a settlement offer for private loans.
So if you're thinking about strategically defaulting on student loans, you may want to try and get a cosigner release from Wells Fargo.
What settlement offers can you get for Wells Fargo student loans?
Typically, Wells Fargo's representatives in their internal debt settlement unit will accept a lump sum payment to settle your loan balance. How much will you need in a lump sum? Usually, I see them ask for somewhere around 60-75% of the loan balance. This isn't a bad settlement offer, but it's more than offers I see with Navient student loan settlements. (Still, it's better than the offers I see for federal student loan settlements. Settlements with the federal government for defaulted loans suck.)
After a few more months of missed student loan payments, your loan will be sent from Wells Fargo (the loan holder) to a debt collection agency. Once the loan is with a debt collector, better settlement amounts and repayment options usually become available.
How much better?
I usually see settlement amounts for around 40-60% of the loan balance. You'll typically need to put a few thousand down as a minimum payment and then pay the rest off over 12 to 24 months with an interest rate of 0%.
In case you're wondering, the COVID-19/Coronavirus pandemic hasn't started leading to better settlement offers yet. Maybe in a few more months, if we're still struggling to deal with the coronavirus, that will change.
Consequences of defaulting on Wells Fargo student loans
As ist true with other private lenders, the consequences of defaulting on Wells Fargo student loans are mostly to your credit report history. Unlike the Department of Education and federal loans, private lenders can't automatically send a wage garnishment order to your job, they can't take your tax refund, or garnish your Social Security benefits.
Private lenders can't take any money from you until they sue and get a judgment. Only then can they garnish your wages, take money out of your bank account, or place a lien on your home.
How long after you default before you get sued? Usually, that depends on the statute of limitations.
In my experience, you don't have to worry about getting sued for private student loans until the statute of limitations is near its end.
How to fix your credit history after student loan settlement
Unlike credit card debt, it's uncommon for the lender or debt collector to agree to remove negative credit reporting items from your credit history as part of the settlement.
Some people have reported success in contacting the credit bureaus after the settlement is reached to try and get the negative items removed.