“Dear Steve,
Have 2 kids who are heavily in debt [one just lost their job] each has a separate student loan [57k and 83K] which they are on time paying, but won’t be for long. As their Dad I want to remove [payoff with discount where possible] both loans.
What is the best way to do this with 2 separate lenders and with no problem as to credit ratings? I will pay the total amount in with either a cashiers check, or in bullion. Is there a discount I can receive with either exchange? Can one party handle both loans in one transaction? Can it be done using one check?
JR”
Dear JR, (I thought you were dead? Bet you’ve never heard that before. Groan)
Settling student loans is a very tough thing to do. Settlement typical becomes a viable solution to consider for the lender when the borrower has demonstrated they can’t repay.
This year it seems Sallie Mae has been sending out more proactive offers to settle to loan holders that are very delinquent. I have not been able to identify any pattern to this and people who have reached out proactively to Sallie Mae have not had much luck.
Nobody has let me know they have settled any government subsidized loans this year.
The problem with student loans is the debtor has little leverage. If they default the loan holder can administratively garnish wages, add on massive collection fees, sue, and in the case of subsidized loans, intercept tax refunds.
Without a doubt, if you can and have the capacity to, the very best solution would be for you to pay off the student loans in full and setup an affordable payment plan for the kids to pay you back.
If you do this it will keep their loans from defaulting and reporting to the credit bureaus and it will avoid up to 20% of the balance being added on in collection fees.
You might want to also read The Ultimate Guide to Dealing With Student Loans You Can’t Afford.
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