In this post, I'll review private student loan settlements with Younomics/My Rich Uncle specifically.
Who is Younomics Private Student Loan Trust
Younomics Private Student Loan Trust is a trust. It is not a private lender. It does not loan money. Instead, it owns private loans made by banks and other financial institutions like My Rich Uncle.
The Younomics trust is owned by Younomics Holding Corporation.
Younomics Holding Corporation is wholly owned by PSLT Holdco I, Inc.
All three entities are registered in Delaware.
Admittedly, that organizational structure doesn’t tell you much about who Younomics is and who owns them. That’s by design.
Instead of worrying about who are the humans that ultimately own Younomics, let’s talk a bit about how the organization structure is setup.
Younomics' organizational structure
This section is for you curious nerds out there that want to know more about Younomics.
Feel free to skip this section and jump straight to the settlement talk down below.
Right away, we see three different types of entities:
- A trust
- A holding corporation
- A corporation
A trust is an entity involving two parties: the trustor and the trustee. The trustor gives the trustee certain property to hold title to for the trustor’s benefit.
In the student loan world, we typically see a trust when the loan has been securitized.
A securitized student loan is a process in which loans made to individual student loan borrowers are pooled into securities backed by cash flows from these loans.
A security, in this case, represents an ownership interest in a student loan trust. These securities are sold to investors who hope to generate a consistent cash flow from the payments made by student loan borrowers on the loans owned by the trust.
A holding corporation is an entity that exists for the sole purpose to control other entities. You create a holding company to protect your other business from losses.
In the case of Younomics, the business that’s being protected from losses is PSLT Holdco I, Inc.
The reality is that there’s a chance that the student loan pool held by Younomics Private Student Loan Trust may have a higher than expected default rate. If that happens, the trust may suffer losses. If it does, PSLT Holdco Inc., is protected from those losses because it created Younomics Holding Corp to be its firewall.
What types of loans does Younomics have?
Younomices holds private student loan debt. So if your student loan is owned by Younomics or MyRichUncle, then your loan is a private student loan.
And because it's a private loan and not a federal loan, that means you may be able to negotiate a settlement for a lot less than your current loan balance.
What are your Younomics loan settlement options?
In my experience, you can settle a Younomics student loan after you default.
Before you default, you'll be told by UAS, or whoever the loan servicer is, that a student loan settlement isn't possible. Settlement becomes a possibility after you default and your loan is sent to another company (usually a debt collector).
Once the loan is sent to a collection agency, they'll contact you to explore repayment options.
It's at that point that you'll want to start negotiating a student loan settlement.
In the past, I've seen them accept settlement offers for 30-60% of the current loan balance, which may be double your original principal balance.
Usually, they'll want the settlement to be paid in a lump sum. But I have seen them accept a lump sum plus fixed monthly payment amounts.
Settlements for private student loans are way better than the settlement offers I see for defaulted federal student loan debt. In my experience, the best settlement offer you'll see for a federal student loan is 85% of the loan balance less collection fees. On top of that, you only have 90 days to pay the federal student loan settlement in full.
Negotiating a student loan settlement will hurt your credit score
As I shared above, you have to default on your student loan debt before you can negotiate a settlement.
I have never seen a lender accept a student loan settlement offer from a borrower who was in good standing with her student loan debt.
Click here to read Why You Can't Settle Student Loans in Good Standing.
Because you have to default, that means you have to stop making your payments due under your repayment plan and not request a deferment or forbearance.
And because you have to stop making your payments, each payment you miss will be reported to a credit bureau as a late payment. Usually, it takes about 6 months of missed payments before your loan defaults.
If you have a cosigner, their credit report will also show each missed payment.
How long does the negotiation take?
The settlement negotiation for private student loans typically takes about 6 to 9 months. The exact timeline mostly depends on when's the last time you made a payment. The longer it's been since your last payment, the quicker you usually can reach a settlement.
Conversely, if you're about to miss your first payment this month, don't expect to start a settlement negotiation until 6 months from now.
Does Younomics offer loan forgiveness?
Like most private student loans, Younomics doesn't have an official loan forgiveness program.
They have in the past, however, agreed to eliminate the debt for a borrower who was totally and permanently disabled.
In that case, I sent Younomics a letter explaining my client would no longer earn an income and would never be able to payoff the defaulted loan. I also explained suing the borrower to get a court judgment would be a waste of time because she didn't own a home and had no assets in her name.
It took about 6 weeks for them to let us know they were wiping out her student loan debt.