If Sallie Mae doesn’t lower your payments, don’t lose heart. It’s challenging — especially because Sallie Mae doesn’t offer flexible student loan repayment options like the federal government — but possible to negotiate lower monthly payments or even settle your debt. Here’s a roadmap for success:
Get familiar with your loan and financial situation: Understand your loan terms, interest rate, and monthly payments. Decide how much you can truly afford to pay.
Contact Sallie Mae: Reach out to them at 800-472-5543 and explain your financial hardship. Be honest about your circumstances and ask about potential assistance or alternative plans.
Consider their programs: Sallie Mae offers options like the Interest Rate Reduction Program and the Graduated Repayment Plan. These can reduce your payments temporarily, giving you financial breathing room.
Think about automatic payments: Enrolling could mean a 0.25% interest rate reduction, provided your loan is eligible and payments are successful.
Stay persistent and professional: Negotiations can take time and patience. Stay courteous and have your documentation at hand to validate your financial difficulties.
Contemplate refinancing: If Sallie Mae doesn’t budge, consider refinancing with another lender to lower your rate or get better terms.
Settlement: More common with private than federal loans, the settlement amount varies. But be prepared for possible implications. You’ll need to fall behind on monthly payments and default, hurting your and your cosigner’s credit. Plus, you’ll typically need a lump sum of at least 60% of the balance or be able to pay upwards of 75% of the current balance over 48 months
Then, there’s bankruptcy.
If you cannot refinance or afford a settlement, bankruptcy might be your best bet, particularly if your income to private student loan debt ratio is more than 1:1.5 or you have a high-interest rate.
For example, bankruptcy could be a viable option if you’re making $50,000 a year but owe $75,000 on your student loans with a high interest rate.
Filing for student loan bankruptcy to deal with Sallie Mae loans is a path I’ ‘ve helped several people navigate. It’s often easier to do because private lenders don’t offer income-driven repayment plans based on your family size and discretionary income or loan forgiveness programs like Public Service Loan Forgiveness.
Related: Sallie Mae Loan Forgiveness