To get out of default on a Sallie Mae private student loan, you can:
Pay the balance in full.
Negotiate a settlement for less than you owe.
Obtain a discharge in bankruptcy.
Refinance with a new lender.
Wait for the statute of limitations to run out.
Paying the balance in full may not be possible for most borrowers, but negotiating a new agreement that lets you pay less than the full amount due is an option for some. Sallie Mae loan settlements typically range from 50-75% of the outstanding balance, paid in a lump sum or over several months.
Related: How to Negotiate a Student Loan Payoff
If you do not have the cash to pay a settlement, bankruptcy can be a helpful option. It will stop all collection efforts and give you a chance to prove that you cannot afford your loan payments and living expenses, which will lead to the debt being discharged.
Related: How to File Bankruptcy on Student Loan Debt
Refinancing usually isn’t an option after you fall behind on monthly payments, as most lenders prefer borrowers with a good payment history, credit score, and income. However, Yrefy specializes in refinancing delinquent and defaulted student loan debt. They work with your loan holder to buy the loan and set you up with a new payment plan and a fair interest rate (usually no more than 8%) for subprime debt.
Waiting for the statute of limitations to end is risky because you and your cosigner can be sued before that date. However, if you cannot afford a settlement and do not want to file for bankruptcy, you can wait and hope that the time runs out before Sallie Mae takes legal action against you. The time you need to wait depends on the applicable law and where you live.
Related: Can Sallie Mae Loans Be Forgiven?
Unfortunately, Sallie Mae doesn’t offer a loan rehabilitation program or let you consolidate defaulted student loans into a new consolidation loan. And they aren’t eligible for the Fresh Start Program or President Biden’s debt cancellation plan announced last year. Those options are only possible with federal student loans.