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I Need a Debt Settlement Letter I Can Use for My Sallie Mae Student Loans. – Mary

“Dear Steve,

settlement offer from collection agency Allied One

I want some advice on getting settlement successfully with agency, the loans were originally from Sallie Mae.

Hi, I have massive student loan debt through Sallie Mae.

With interest and collections fees it has soared from 40k to 80k. I have not paid
on the loans and they went into default, loans sold to Allied One Collections

So now I am trying to clean up my credit and take responsibility for my debt. I got a phone call stating that they would settle for 8k. The full 80k would be settled for 8k.

So now I do not know what exactly i should request in the settlement letter as I have read of scams or tricks from collection agencies for example…simply deducting the 8k from the 80k and not getting terminating loan balance.

How do I make sure this settlement is legitamite and binding so I can successfully get it settled and not reported to credit bureaus as delinquent but settled?


Dear Mary,

If that settlement offer is true, that’s an incredible offer. You are wise to question it though, I’ve seen these things blow up badly.

For me, what I’d like to see you have is a letter from the loan holder, not just the collection company, that says they will accept $8,000 for the full satisfaction of the debt of $80,000. They must state that the remaining balance will be forgiven and no additional action will be taken against you on the forgiven balance.

Be aware, that if the balance of $72,000 is forgiven and it leaves you with assets larger than your overall liabilities that you may owe income tax on that amount.

When debt collectors make grand promises I question them thoroughly. I’ve just seen too many situations where either the collector didn’t have the authority to make the offer or the offer was not for the full forgiveness of the remaining balance.

I would proceed with exploring this offer and don’t feel pressured to make any payment until you get the written documentation you expect on the offer. Once you do get the agreement you are looking for, make sure you make the settlement payment promptly and keep some sort of proof the payment was made and received.

Staple that proof to the copy of the signed letter from the creditor and put those papers with your other most important papers and NEVER lose them.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Chris , at the bottom. Integrity Financial Partners Inc. offers 10% in their dunning letter. I think it may be a Sallie Mae policy to accept 10% after 2 years of non payment. I have over 130k myself and would love to have the nightmare over with – but I’d rather not deal with with collectors. I heard at least one account of them coming back for more AFTER the settlement, meaning somehow they did not consider it paid in full. I was thinking of sending an offer to Sallie Mae directly and see if they will do it.

  • Steve

    Hi Mary. I am in a similar situation in regards to crushing student loan debts from this lender. I have not received an offer to settle, but I would love to be in touch so I could know how this plays out for you. Warmly, Steve

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