Navient Does Settle Private Student Loans. Here's When

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Stanley tate

Student Loan Lawyer

$400M+ student loans managed

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Your student loan debt has been hanging around for years. You want to pay off your loans. But you want to get rid of the interest. And you'd like to settle for close to or less than your original principal balance.

A student loan settlement may make sense for you if:

  • your loans are in default
  • you have money to pay towards a settlement.

A lump sum isn't always necessary. But it's helpful.

Can you negotiate a settlement with Navient?

You can negotiate a student loan settlement with Navient. But the process for negotiating a settlement will change depending on whether your loan is a federal student loan or a private student loan.

Are your Navient student loans federal or private?

The easiest way to find out if your loans are federal or private is to call Navient. The representative should be able to tell you which of your loans are federal and which are private.

Phone number for Navient: 800-722-1300

You can also log in to You can find your list of loans under the Loan Details tab.

Finally, you can log in to the Federal Student Aid website,, to see all the student loans you borrowed from the federal government. Compare that list against your credit report. Any loan listed on is a federal loan. Any student loan that appears on your credit report but not on that site is private.

Click here to read How to Tell if Navient Loan is Private or Federal?

Will Navient settle federal student loans?

Navient won't settle federal student loans. As a student loan servicer, they don't have the authority. Only the Department of Education and guaranty agencies have the power to settle federal student loans.

You can settle a federal student loan that Navient services after you default on the loan. After you default, the Department of Education or guaranty agency sends the loan to a collection agency. Once the loan is there, the collection agency has the authority to accept settlement offers for defaulted federal loans.

What is a guaranty agency?

A guaranty agency is a state or private non-profit agency that helps insures federal loans made under the Federal Family Education Loan Program. A guaranty agency pays the loan holder when a loan defaults. ECMC is a guaranty agency.

Will Navient settle private student loans?

Navient will settle private student loans. But you have to default first. You cannot settle a private student loan that is in good standing, deferment, forbearance, or delinquency.

You default on a private student loan after you miss about 6 monthly payments.

>> Click here to schedule a free 10-minute phone call to talk with me about settling your Navient loans.

What if you have both federal and private loans with Navient?

You can settle your Navient private student loans and not your federal student loans or vice versa.

Consequences of settling student loan debt with Navient

The consequences of settling student loan debt with Navient depend on whether you're seeking a federal student loan settlement or a private student loan settlement.

Federal student loan consequences

The consequences of defaulting on your federal student loans are:

  • damage to credit score
  • wage garnishment
  • tax refund offset
  • Social Security Benefits offset
  • loss of eligibility for student loan forgiveness programs (e.g., Public Service Loan Forgiveness Program)

Private student loan consequences

The main consequence of settling student loan debt with Navient is damage to you and your cosigner's credit score. Because you have to default on a student loan before Navient accepts a settlement, late payments will be reported to the credit bureaus. Those late payments can cause credit scores to plummet.

A secondary consequence of settling student loan debt is taxes. The IRS will treat the difference between your student loan balance and the settlement amount as taxable income.

You'll have to pay taxes on that amount unless you qualify for an exclusion.

One final consequence is that Navient may decide to file a lawsuit against you for breach of contract. More on that below.

>> Click here to schedule a free 10-minute phone call to talk with me about settling your Navient loans.

How to settle student loan debt with Navient

  1. Review your loans
  2. Check your personal finances
  3. Talk with your cosigner
  4. Default on your loans
  5. Wait for Navient to make a settlement offer
  6. Check the written settlement offer
  7. Pay the settlement

1. Review your loans

Before you start the settlement process, check:

  • the number of loans you have
  • the loan balance for each loan
  • the repayment status for each loan

This information will help you prepare to estimate your potential settlement amount and when settlement will become a possibility.

2. Check your personal finances

A settlement is going to take money. Check your bank accounts, savings, 401k, etc., to see how much you have available. You may also want to talk with your spouse, parents, etc., to see if they're willing to help you with a settlement.

You want to know two things:

  • how much you'll have available in a lump sum within 30 days of receiving a settlement offer
  • how much you can afford to pay towards a settlement every month

Most student loan settlements I negotiate for clients are for a lump sum. You usually get a better settlement offer the more money you can pay at one time.

But sometimes, a lump sum isn't an option. So you want to know what's the most you can afford to pay towards a settlement each month.

Also, consider applying for a personal loan. You don't have to accept the loan. Just get pre-approved.

3. Talk with your cosigner

Defaulting on your student loans will hurt your credit and your cosigner's credit. So if you're not already in default, talk with your cosigner to discuss your options for dealing with the loans (e.g., student loan refinancing).

You could look into getting them released as a cosigner before you default. But the cosigner release process can take 1 to 2 years.

Note: While you can't sue the primary borrower for a cosigner release, a cosigner can sue a primary borrower to recover the money they've paid towards the loan.

4. Default on your loans

There's no way around it. You have to default before a settlement will be accepted. No private student loan lender, including Navient, is willing to take a settlement if the loan is in good standing.

Defaulting on your student loans will leave negative marks in your credit history. And those marks will cause your credit score.

But from what I've seen, it's easier to raise your credit score than it is to get rid of your student loan debt. So a reasonable settlement may be worth the damage.

5. Let Navient make the first offer

After you default, Navient will send your loans to a collection agency. The collection agency may be an internal unit at Navient. Or it may be an external unit outside of Navient.

Either way, when the debt collector calls, ask for your payment options.

They'll usually offer a settlement for a lump sum or a short payment plan (e.g., 24-36 months)

You can either accept or counter the settlement.

You don't need to counter in writing. You can counter during the phone call.

The debt collector will either accept or reject the offer during the call. They may even say they'll get back to you once they have a response.

Either way, don't pay anything until you get a written offer.

6. Check the written settlement offer


  • your name and contact information
  • your account number
  • the loan number(s) and loan balance(s)
  • the settlement terms (amount, payment date, etc.)

If anything is incorrect, let the representative know the issue and request an updated copy.

7. Pay the settlement

Navient allows you to pay them directly by setting up an electronic funds transfer. You can also mail a check to the address they provide. And, depending on the debt collector, you may even be able to pay using a credit card.

No matter how you pay, keep a record of your payment.

Navient private loan settlement offer

Here's a student loan debt settlement offer from Navient:

And here's an offer I negotiated with a collection agency for a Navient loan:

This offer isn't for a lump sum. Instead, it's for a small initial lump sum payment, followed by monthly payments over the next 4 years.

>> Click here to schedule a free 10-minute phone call to talk with me about settling your Navient loans.

How much does student loan settlement cost?

A student loan settlement for a private student loan will typically cost 40-70% of the current balance. So if you owe $100 thousand, the settlement may be for somewhere between $40 thousand and $70 thousand.

You may need to pay that in a lump sum or a lump sum plus monthly payments.

Federal student loan settlement guidelines aren't as good as private student loan guidelines are. A student loan settlement for a federal student loan will typically cost around 85-90% of the loan balance, less collection fees. Plus, you'll have to pay that settlement in full in no more than 90 days.

How much money can you save with a student loan settlement?

There's no set amount you can save with a student loan settlement. Each private lender will have its own settlement guidelines.

That said, in my experience, you can expect to save about 40-60% of your current loan balance.

What happens if Navient refuses to settle?

As I shared above, Navient will refuse to settle if your private student loans are in good standing. So if you're making your student loan payments on time, then Navient won't accept your offer.

If you default and Navient still refuses to settle, then your loans will be sent to a debt collector.

The debt collector will likely offer you a settlement.

If you can't afford that settlement amount, at some point, your loans will be sent to a law firm.

At this point, you may be wondering, "Can Navient garnish wages?" The answer is yes, but only if they sue you and get a judgment.

>> Click here to schedule a free 10-minute phone call to talk with me about settling your Navient loans.


Like most student loan lenders, Navient usually won't sue you immediately after you default. Instead, they'll wait until the statute of limitations is close to running out.

Speak with an attorney near you to check the statute of limitations for your state.

Even if Navient sues you, you still should be able to negotiate a settlement.

Click here to read Will Navient Sue Me?

Alternatives to student loan settlement

If you can't afford a student loan debt settlement, you have 4 alternatives:

  1. Deferment or forbearance
  2. Income-driven repayment
  3. Refinancing
  4. Bankruptcy

1. Deferment or forbearance

Both deferment and forbearance allow you to pause your student loan payments temporarily. Interest will continue to grow during that time. But deferment and forbearance give you time to breathe so you can figure out your next steps.

Navient, like many private student loan holders, offers deferments and forbearances for a limited period of time. At some point, you'll run out of both. From there, they'll usually offer to allow you to make interest-only payments.

2. Income-driven repayment plans

Federal student loan borrowers can put their loans into an income-driven repayment plan. Under these IDR Plans, your payments are based on your income and family size.

Depending on your income, your monthly payment could be as low as $0 without harming your credit or incurring added penalties and fees.

Plus, you can have your loan balance forgiven after spending 20 to 25 years on an income-driven repayment plan.

3. Refinancing

Refinancing may allow you to get a lower interest rate, a longer repayment term, and more flexible repayment options.

You can check out your refinancing options with a local credit union or by searching online.

Typically, you'll need a good credit score (680+) to get a lower interest rate.

4. Bankruptcy

If you can't refinance and can't afford a settlement, filing bankruptcy may be your best option.

By itself, neither a chapter 7 nor a chapter 13 bankruptcy case will discharge your student loan debt.

You have to file an adversary proceeding for student loans.

Click here to read Can You File Bankruptcy on Student Loans?

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Hey, I’m Tate.

I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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