You can settle your student loans on your own or hire a student loan debt settlement attorney. Here are five steps to take if you decide to go it alone.
Step 1 – Review your loans
Before starting the settlement process, check how many loans you have, the balance for each, and the last payment date. This information will help you estimate your potential settlement amount and when settlement will become a possibility.
Step 2 – Check your personal finances
You’ll get the best deal with a large, one-time cash payment. Check your bank accounts, savings, 401k, and so on to see how much money you can put your hands on and how quickly you can do it. Talk with your family members and friends to see if they’re willing to pitch in with a gift or a low-interest loan. Other options include getting a personal loan, tapping into your home equity, or taking out a cash advance on your credit cards.
Step 3 — Speak with your cosigner.
Falling behind on your payments puts you and your cosigner in harm’s way. So if if you haven’t yet missed a payment, chat with your cosigner about your plans for tackling the debt. You might also try to get them released from the loan. But that creates its own challenges. You’ll need to make at least a year’s worth of on-time payments for the full amount due or refinance the loans in your name only, which may not be an option depending on your credit score.
Step 4 — Start the settlement process
Find out which debt collector Navient sent your loans to and then contact it to start the settlement process. After asking questions about your personal finances and reviewing your credit reports, the representative may offer a settlement for a lump sum or over less than a handful of years. You can accept that offer or counter it. The representative may ask you about any financial hardship you experienced that caused you to miss payments. I typically won’t offer less than 20% of the current loan balance for loans that have just recently defaulted.
Step 5 — Review the settlement offer and pay it
When you get the agreement letter, check your name, contact information, account number, loan number(s) and balance(s), and the settlement terms (payment amount, due date, and so on). If everything checks out, call the debt collector to make the payment using your checking account information. You can also send a wire transfer. But you won’t be able to pay using a credit card.
Related: Private Student Loan Debt Settlement: How it Works