My daughter attended a private university here in san francisco, University Academy of Arts, and obtained a Bachelor Degree in Merchandising in 2009. She borrowed the money from SallieMae for $56,489.19 and I’m (mom) the co-signer.
Loan Amount $43,454.00 – Current Principal Balance $56,489.19 Loan $5,000 – interest 6.250% – Principal Balance = $7,583.61
Loan $9,000 – interest 6.250% – Principal Balance = 12,397.37
Loan $5,000 – interest 4.750% – Principal balance = 6,218.80
Loan $17,454 – Interest 4.750% – Principal = $21,070.39
Loan $7,000 – interest 10.875% – principal balance = $9,219.02
She has been deferring the loan for over a year, but must start making the payments in April of 2011 for $454 (raft estimates) per month. However, Vannessa has been unemployed since 2009, living of add jobs and unemployment check. She Just moved to Los Angeles, Ca since the fashion industry there has more potential than San Francisco.
Can we negotiate with them to reduce the Loan and perhaps pay off all at once? or reduce the interest rates of the loan?
Please help us.
Thank you very much.
In an effort to answer your questions I contacted members of the AACC and asked them for some feedback.
Chris Schornrak from DSN said:
If the SallieMae student loan is federally back and guaranteed by the government the best you can hope for is to contact the Department of Education to defer the payment even longer or to negotiate a lower monthly payment. They will not negotiate on the balance owed.
However, if the account is turned over to a collection agency sometimes you may be able to ask for an elimination of the interest and fee’s the collection agency is charging, but never on the principal amount. When you contact the department of education you will find them very easy and willing to work with.
Alex Viecco from New Era Debt Solutions said:
I have not seen many options for students as of late. The best suggestion is to contact the ombudsman for the University and try to get a further deferment.
I have seen an increase of people enrolling back into school to defer the payment, the catch is that they need to enroll and have 7 units to qualify. We have not experienced much luck in settling with Sallie Mae loans unless they go to a 3rd party collection agency, which may be a little more flexible.
Negotiating a reduced balance payoff for student loans can be problematic. If the loans (each of them) are completely private, you may be able to accomplish your goal of settlement.
If a loan, or any portion of the loan, was guaranteed by the federal government, challenges arise.
Government backed student loans are generally not settled. There are far reaching collection tactics that the government enjoys that private industry does not. Tax refunds being arbitrarily intercepted is one example.
As a parental co-signer, you are on the hook here as well.
There may be an option for forbearance if Vanessa has not been granted one in the past. There is the income based repayment option (IBR) that she may/may not qualify for.
I would encourage you to:
1. Look at all original loan docs and be sure to qualify the debts as private.
2. Request a loan history from the servicer
3. Call Sallie Mae and discuss the issues
One of the best resources for student loan payment information when facing a hardship is: studentloanborrowerassistance.org
I think the Income Based Repayment program (IBR) is really a good program for lowering student loan payments and eliminating student loan debt if she qualifies.
Please post your responses and follow-up messages to me on this in the comments section below.