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I Can’t Pay Sallie Mae – Carlos


“Dear Steve,

Sallie Mae loaned me $10,537.50 on 08/31/1994. I started making payments on it in 2003. Have been in forbearance three times. I have already paid about $7,000 on this loan. he loan is on forbearance until 03/07/2009. Because of financial hardship I wanted to settle with Sallie Mae for $4,000. Total Principal to be paid $13,989.89, estimated interest to be paid during repayment $6,796.20. Estimated total I’ll be paying $20,786.09. PLEASE HELP!!!!

Here is the email I sent Sallie Mae on Monday:

To whom it may concern,
I have made my payments to date as best as I can. My loan is in forbearance until 03?07?2009. The company were I’m employed has had a 20? salary cut accross the board company wide. On top of that, it seems that the company might be closing real soon, it has already laid off 70? of the workforce. I feel that it’s just a matter of time before I’m let go. I would like to see if there is anyway possible for me settle on this loan for the amount of $4,000. This would be everything I have, but at least the debt will be paid off. Believe when I tell you, I have looked at every option to find the best way to settle this debt and not run the risk of defaulting on it in the future. I respectfully ask that you please consider my offer and let me know if this is feasible. Thank you in advance for your prompt attention to this matter – Best regards, Carlos

Here is their response which I received today:


Thank you for your inquiry and for your business with Sallie Mae.

Sallie Mae does not negotiate reduced payment of your outstanding balance. If we may be of further assistance, please visit our Web site at

Customer Service

Is there any possible way to settle with Sallie Mae for less than the principal balance?


Dear Carlos,

Sallie Mae doesn’t need to settle on debt because they know that your obligation to them will survive even bankruptcy. Go bankrupt, they don’t care. They have all sorts of power. They can capture tax refunds, increase your balance by up to 40% as a penalty fee, and keep you treading water with no way to get out of debt.

Under § 523(a)(8) of the Bankruptcy Code, student loans are nondischargeable unless repayment of the loan would impose an undue hardship on the debtor. The burden of establishing undue hardship, by a preponderance of the evidence, is on the debtor. The Code contains no definition of the phrase “undue hardship” and interpretation of the concept has been left to the courts. In this Circuit, the applicable standard is the “totality of the circumstances” test as set forth in Andrews. In applying this approach, the courts are to consider: (1) the debtor’s past, current and reasonably reliable future financial resources; (2) the reasonable necessary living expenses of the debtor and the debtor’s dependents; and (3) and any other relevant facts and circumstances unique to the particular case.

The principal inquiry is to determine whether “the debtor’s reasonable future financial resources will sufficiently cover payment of the student loan debt – while still allowing for a minimal standard of living”; if so, the indebtedness should not be discharged. Bankruptcy courts are required to analyze a debtor’s student loans, and make a determination of nondischargeability of them, on a loan-by-loan basis. There is no authority in this Circuit for discharging only a portion of a particular loan. – Marie vs Citibank

I think the email response you got from them is fairly typical and I am sadly not surprised by it at all, even though Sallie Mae says they will work out individual repayment plans.

Sallie Mae does not offer an Income Contingent Repayment Plan (ICRP) that would allow you to repay your student loans based on what you can reasonable afford to pay. Just recently a judge ruled that because Sallie Mae failed to offer an ICRP option that a student would be unable to repay her student loans without undue hardship and allowed the student to discharge some of her student loan debts in a Chapter 11 bankruptcy which follwed a chapter 7 bankruptcy to discharge all other available debts first.

I’m afraid the news isn’t sunshine and lollipops when it comes to student loan repayment difficulties. I’d suggest that you talk to Sallie Mae about negotiating a monthly repayment that you can afford and if you can’t afford anything then go and talk to a bankruptcy attorney about a potential discharge of your student loans in a Chapter 11 bankruptcy because they pose an undue financial burden on you.


You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

See also  I Found You Through Mary Hunt and Debt Proof Living. - Shelly

About the author

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.


  • Salle Mae are nothing but scam artists!!! My student loans where with them originally and they screwed me when I was scrapping together $100 a month unemployed without benefits when I was getting regular on time payments to them and one month I got extra money and paid $500. They applied $100 of it as my payment and didn’t report the other $400 (otherwise they kept the change. They then jacked up my interest and then told me to pay $500 min. every month. I fast refinanced it and have been getting deferments for over 5 years now. I have been unemployed all this time and more and Sallie Mae bought my loans back again in July 2011 again against my wished and permission from Citi Bank. Federal Loans refinanced but the interest now is still way over what it should be. Sallie Mae also got into a lot of legal problems a couple of years ago for mistreating loans and adding extra fees and anything else they felt like and the feds came down on them but yet they are still getting away with scamming people. They on my loans back in November 2011 told me my new deferment would be for three years more but have never mailed me anything about my accounts. They refuse to tell me anything unless I pay them a $31.05 in a late fee from Citi that they have expunged and told me Sallie Mae has no legal right to charge me for only Citi Bank has the right to that fee!!! Sallie Mae should be fined for this outrageouse behavior and pay off my loans in full as a plenaltie of abuse and refussal to communicate with me about my account!!! It was written in the contract at refi that if my loan has to go to anyone else they have to write me and get written permission and the interest rate has to be dropped again and that was agreed upon but not honnored!!!

  • I’m in the same situation basically. I owe Sallie Mae a little over 17K and right now I am in forebearance. What really makes me mad is that I got tired of getting laid off & being unemployed so I went to a small time business school, Wright Career College, let them talk me into a Medical Office course and qualified me for a student loan. They said “Medical offices, clinics & hospitals never layoff; always a demand’; and “they had great success in job placement”. Yeah, right. That was 2 years ago; I am now 61 yrs old. They never placed me in a Medical position; I am employed in a different field where I don’t make very much $. It was a waste of time & money. I have 10 yrs to pay off a student loan that I will be paying for after my retirement in about 6 to 8 yrs, of which I will be living on social security. I really have issues with the school. I think it’s sad that people are taken in by these rip off, con artist schools that make people think that they can change careers at their age and get jobs. They are borderline “false advertising”. There should really be a law against these small independent business schools, at least so they can’t give government funded student loans. If you want to go to school, and on a student loan, at least go to a major university or college.

  • I applied for a loan as a co-payer for my son’s education through Sallie Mae. I was turned down and my husband co-signed for that semester instead. The following semester the original papers I sent were resent to Sallie Mae without notifying me or requiring my consent. I only found out when my son was out of college that Sallie Mae considered me liable. I am also very concerned that Sallie Mae combines applications with promissary notes in one document. How can anyone promise to pay back a loan they have not yet received? The Indiana Attorney General considered my personal case where I was turned down and the application resent without my permission as consumer entrapment. What can I do to get Sallie Mae off my back?

  • Dear Carlos,

    My name is Michelle. My mother co-signed for my brother for a student loan with Sallie Mae. She’s paying a smaller amount then what they are asking of her. Due to the ex-stream amount that their asking, she would not be able to survive without losing her car, home, etc. They call every day and harass her about putting more on her payments, after they tell her that they will go after her paycheck. She becomes frightened and pays more then what she can, knowingly she’s unable to. Question. Even paying something on it, then to pay nothing at all is substantial enough, to not put her in delinquency or any other thing that follows the private student loan?

    Thank You, 

  • How’s this for a repayment plan… sign up for all those dozens of credit card offers.  Use those credit cards to pay for your Sallie Mae loan (thereby paying off Sallie Mae).  Pay the credit cards as best as you can for a year or so.  File bankruptcy to wipe away all of that credit card debt.

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