You owe more for your Tuition Answer Loan than you originally borrowed.
In this post, I'll cover:
- Loan forgiveness options
- Repayment plans
- Settlement options
- Bankruptcy discharge
But first, let me go over the basics.
What is a Tuition Answer Loan?
A Tuition Answer Loan is a private student loan made by Sallie Mae or Navient. The loans can be taken out by parents, undergraduate students, or graduate students who are citizens or permanent residents.
Borrowers don't need to apply through their school's financial aid office to get a Tuition Answer Loan. Instead, they can apply directly with Sallie Mae/Navient.
If approved, the loan proceeds are paid directly to the primary borrower.
Tuition Answer Loan forgiveness options
Neither Sallie Mae nor Navient offer forgiveness options for Tuition Answer Loans.
The lack of forgiveness programs is common for private student loans, no matter the private lender/student loan servicer.
Likewise, Tuition Answer Loans aren't eligible for forgiveness programs offered by the Department of Education. And they likely won't be eligible for loan forgiveness that may be directed by President Biden's executive action.
In case you're wondering:
You cannot consolidate your Tuition Answer Loan into a federal student loan.
There's no way to make a private student loan eligible for loan forgiveness programs like the Public Service Loan Forgiveness Program (PSLF), Teacher Loan Forgiveness Program, etc.
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Although there are no loan forgiveness programs for Tuition Answer Loans, they are eligible for some loan repayment programs.
For instance, Illinois offers first-time homebuyers up to $40 thousand to pay off federal loans or private loans.
Similarly, employers like Nvidia offer to repay up to $30 thousand of your private loan debt.
Tuition Answer Loans don't have flexible repayment plans.
Navient may offer you a temporary interest-only payment. But it won't allow you to pay based on your income (PAYE, IBR, ICR, etc.) like you can with federal student loan debt.
So what do you do if you can't afford the payment they're demanding?
You can request a deferment or forbearance. But soon, those will run out.
You can also look into refinancing with a private lender. But depending on your credit score and principal balance, you may not be able to find a lender willing to refinance your loans.
At some point, your only option may be to stop paying. But Navient will sue you.
If you'd rather avoid a lawsuit, filing student loan bankruptcy may be an option.
Settling student loan debt with Navient is possible. But you have to be in default.
You cannot be in deferment or forbearance. You cannot be in repayment.
You have to miss several monthly payments before Navient considers a settlement offer for a private education loan.
Navient has accepted settlement offers for around 40-60% of the current loan balance in the past. The settlement is usually paid in a lump sum. But suppose you don't have a lump sum. You still may be able to negotiate a settlement for monthly payments over a short period.
Student Loan Bankruptcy
The Bankruptcy Code protects student loans from being discharged in Chapter 7 or Chapter 13 bankruptcy cases.
Not all student loans meet the criteria to get that protection.
A student loan is protected from discharge only if:
- it was made by the federal government (Stafford Loans, FFEL Loans, and Direct Loans);
- it was made under a loan program funded by the government or a non-profit organization (Federal Perkins Loans); or
- it was a qualified education loan (private student loans).
If a student loan is protected from discharge, you must prove that repaying it would cause you an undue hardship.
Click here to learn How to File Student Loan Bankruptcy
How to discharge Tuition Answer Loans in bankruptcy
There are two options to discharge Tuition Answer Loans in bankruptcy:
- prove the Tuition Answer Loan is not a qualified education loan or
- prove the loan is causing you an undue hardship.
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1. Qualified education loan
A private student loan is a qualified education loan if it did not exceed your school's cost of attendance. Your cost of attendance is the budget set by your school each semester.
Tuition Answer Loans were made directly to the borrower. The lender did not require school certification before making the loan. As a result, the lender often failed to confirm a borrower's cost of attendance.
In student loan bankruptcy cases, Navient has the burden to prove your cost of attendance. If it can't, then you may be able to discharge your Tuition Answer Loan without proving undue hardship.
Learn more about qualified education loans:
2. Undue hardship
If you do have to prove undue hardship, you'll need to pass the Brunner Test.
(If you live in Arkansas, Iowa, Minnesota, Missouri, Nebraska, or the Dakotas, you'll need to pass the totality-of-the-circumstances test.)
The Brunner Test asks three questions:
- Based on your current income, can you maintain a minimal standard of living for you and your dependents while repaying your student loan debt?
- Is your financial situation likely to stay the same for a significant portion of the repayment period of the student loans?
- Have you made a good faith effort to repay your student loans?
The lack of repayment plans for Tuition Answer Loans combined with their variable interest rates and short loan terms makes proving undue hardship easier than proving the same for federal student debt.
Click here to learn How to File an Adversary Proceeding for Student Loans
Bottom line: Get help
There are few options to get rid of your Tuition Answer Loan.
Forgiveness isn't an option.
Repayment plans aren't great.
Settlement is an option. But you'll need to be in default. And you'll likely need a lump sum payment.
If you can't afford a settlement, filing a student loan bankruptcy may be an option.
Let's talk to figure out the right plan for you.