Sallie Mae loans may be eligible for loan forgiveness. Your eligibility for loan forgiveness depends on whether the loans are federal loans or private loans.
Sallie Mae used to have both types of student loans. But in 2010, they sent all their federal student loans to Navient. At that point, Navient became the loan servicer for all the federal student loans Sallie Mae used to service.
Those federal student loans are eligible for loan forgiveness.
Any private student loan that Sallie Mae still has does not qualify for loan forgiveness. But there is an exception. More on that below.
How to tell if Sallie Mae is a federal student loan
Before 2010, Sallie Mae acted as a loan servicer for federal student loans made under the Federal Family Education Loan Program (FFELP).
FFEL Program loans were made by private banks and backed/insured by the federal government.
When the program ended in 2010, Sallie Mae sent all the FFELP Loans it serviced to Navient.
As a result, if your loans started with Sallie Mae but are now with Navient, your loans are likely federal student loans.
You can confirm they are federal loans by visiting studentaid.gov. That website lists all the loans you borrowed from the federal government.
FFELP Loans in good standing are not covered by the student loan freeze through September announced by President Joe Biden. You can pause payments in two ways: (1) by asking for a COVID-19 forbearance or (2) consolidating your FFELP Loans into a Direct Consolidation Loan.
Loan forgiveness programs for Sallie Mae federal loans
If it turns out your Sallie Mae loans are federal, then those loans may qualify for loan forgiveness under the:
- Teacher Loan Forgiveness Program
- Income-Driven Repayment Plan Forgiveness Program
- Public Service Loan Forgiveness Program
Click here to learn more about FFELP Loan Forgiveness Programs
But what if you aren't a teacher?
In that case, your Sallie Mae loans can qualify for forgiveness after 20 to 25 years of qualifying payments under an income-driven repayment plan. The Department of Education offers 4 IDR plans:
- Income-Based Repayment (IBR)
- Income-Contingent Repayment (ICR)
- Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
Sallie Mae federal loans qualify for both the IBR and ICR plans. They don't qualify for the REPAYE and PAYE plans.
No matter which payment plan you choose (IBR or ICR), your loan balance can be forgiven after you make all of the required payments. The amount forgiven will be treated as taxable income, however.
Lastly, borrowers who work for PSLF qualifying employers can get their Sallie Mae federal loans forgiven after 10 years of qualifying payments.
But there's a catch.
You have to consolidate your FFELP Loans into a Direct Consolidation Loan.
The PSLF Program has 5 requirements for forgiveness:
- You must have Direct Loans
- You must work full-time
- You must work for the government or a non-profit organization, or other qualifying employer
- You must be enrolled in an income-driven repayment plan
- You must make 120 qualifying payments under that IDR plan
Click here to learn How to Get Loan Forgiveness for Public Service
Sallie Mae private student loan forgiveness
Sallie Mae does not offer loan forgiveness for its private student loans.
But they do offer loan cancellation if the primary borrower has suffered total and permanent disability.
What to do if you can't afford your Sallie Mae student loan payments?
Unlike the U.S. Department of Education, Sallie Mae doesn't offer repayment plans based on your income.
Instead, they offer 2 repayment options: Graduated Repayment Period and Fixed Monthly Payments
The Graduated Repayment Period lets you make interest-only payments for the first 12 months after leaving full-time status at school.
When those 12 months are up, your monthly payment will be for a fixed amount.
The Fixed Monthly Payment plan is just what it sounds like: you make fixed monthly payments until the loan is paid off.
Of course, neither of these plans helps if your monthly payment is more than you can afford.
So what do you then?
The first thing most student loan borrowers do is ask for a forbearance or deferment. But deferments don't lower your interest rate. And they don't stop your loan balance from growing—just the opposite.
When you run out of deferments and still can't afford your payments, your repayment options are limited. (For example, Smart Option borrowers are allowed five 12 month deferments.)
You could, of course, look into student loan refinancing with a different private lender.
(In case you're wondering, you can't consolidate your private student loans into a federal student loan. Federal loan consolidation is limited to federal student loan debt.)
Depending on your credit score, you may qualify for low variable rates.
If refinancing isn't an option, then you're stuck.
You'll either keep making your student loan payments as agreed or start missing payments. And if you start missing payments, your credit score and your cosigner's credit score will take a hit. There's no way around it.
Repayment options for delinquent Sallie Mae loans
All isn't lost if you stop making on-time payments.
Sallie Mae offers delinquent borrowers 3 repayment options to help bring their account current:
- Interest Rate Reduction Program
- Term and Rate Modification
- 3 Pay
The Rate Reduction Program lowers your loan's interest rate and lets you make interest payments for a while (usually 6 to 12 months).
This program benefits borrowers who are going through a temporary financial hardship.
The Term and Rate Modification is a student loan repayment program that lowers your interest rate and monthly payment for a limited time. But it also extends your loan term. So you'll end up paying more over the long term.
The 3Pay repayment program lets you bring your loan current by making payments equal to or greater than the current amount due for three consecutive months.
As you can see, the main benefit of this program is bringing your account current.
Does Sallie Mae offer student loan settlements?
In the past, I've negotiated settlements for Sallie Mae student loans.
Like other private student loan settlements, you have to default on your loans before you can negotiate a settlement.
Once you default, you may be able to negotiate a settlement for around 40-75% of your loan balance.
Do you have to have that settlement amount in a lump sum? Not necessarily.
While a lump sum is helpful, you may be able to negotiate a settlement for a lump sum plus monthly payments.
Or, in rare instances, just monthly payments.