Question:
Dear Steve,
I owe Navient over $80,000 in student loans. I stopped paying in 2018 because they misallocated one of my payments. They called people who were not listed on my MPNs.
When I asked a supervisor about repayment options, I was told it was at their discretion what they tell me about all of my options. They don’t even have an actual definition for forbearance on the MPN. So I stopped paying.
I spoke to a US Debt Relief lawyer who wrote up an agreement stating my loans could be invalidated if I pay them $367/months for the next 3.5 years, which would amount to $15,000, give or take.
Should I take this route?
I tried to buy a house and couldn’t; I wanted to take out a small personal loan and couldn’t, so I feel like this is stopping me from achieving my goals soon. Let me know what you think. Have a great evening.
Rebecca
Answer:
Dear Rebecca,
I can only answer your question with the information you’ve shared with me. A key fact in your question is the mention of an MPN. I believe you are referring to a Master Promissory Note. These accompany federal student loans. So I’m assuming this is a federal student loan and giving my opinion accordingly.
It is unfortunate that you defaulted on your Navient loan in 2018 because of the misallocation. A better option would be to fight to get that repaired instead of turning your back on the federal student loan.
At the very least there is an escalation process for dealing with such issues or getting your loan into an Income-Driven Repayment plan if the loan was unaffordable.
When you default on your loan you cause the balance to explode, could incur steep collection fees, and it can lead to the interception of tax refunds or having your wages garnished.
The Navient supervisor was correct. This is the subject of an ongoing disagreement between the Consumer Financial Protection Bureau that sued Navient over providing bad information and poor assistance to consumers. Navient’s position is they are hired as a collector and loan servicer and not as a financial advisor.
I understand how difficult it is to figure out what the truth is in such a situation. You would assume the loan servicer would give you the advice you need to best deal with the situation. Sadly, as of the time I am answering your question, Navient and other student loan servicers are not required to do that.
The most authoritative source of actual information is the Federal Student Aid website from the Department of Education. But even that can be a bit of a nightmare to find answers on. A few years ago they overhauled the site but I’m not sure it is more consumer-friendly.
When Navient reached out to others that were not signatories on the MPN after you defaulted it sounds like they were trying to skip trace you for collections.
Now, the lawyer you spoke to at US Debt Relief is a bit of a mystery. I don’t even know if that person was even a lawyer or licensed to practice law in the state you live in.
Let me be clear, I am not an attorney, and only an attorney that is licensed to practice law in the state you reside in can provide you with legal advice and an attorney-client relationship.
At face value, I find the position that $375 a month for 3.5 years is going to lead to an invalidation of your federal student loan. I would be extremely suspicious this would be the outcome for a federal student loan if it is being reported on the National Students Loan Data System (NSLDS).
It sounds as if the best path would be to explore rehabilitating your Navient student loan and getting it current again. You are only ever allowed to do this once so you better make sure you have a plan before you do this.
I think it just makes sense to talk to someone like Debt Coach Damon Day and explore the specifics of your situation before jumping to do anything.
If my hunches are right here as I’ve shared above, I can see a path out of the current unfortunate situation but it would not involve trying to invalidate a federal student loan.
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Asked a question about the bad advice and customer service I got from Navient. Can US Debt really get rid of my loans?
Thank you for reaching out to me for help. I think my answer will give you other options to consider.