Some Company Says They Can Make My Navient Student Loans Go Away


Dear Steve,

I’ve read numerous articles and enjoy them thoroughly. Recently I came across an article that sounds very similar to my situation. Private student loan debt — I’m only assuming this is one of your favorite subjects.

The article I read came to you from one of your readers, that they were approached to pay off their loan all in one go. Navient has done this to me recently stating I could settle out for a little over $85,000. Now I am not struggling with payments or what not but it still is a large resounding debt that I would like to get out from under.

My question is, recently I was approached from a company that could consolidate loans (which from your articles I immediately pushed that away). The caller then asked if I wanted to use a lawyer to fight the balance of my loan — basically find the discrepancies and use them to reduce the balance or eliminate it in whole. Of course this sounds like a phenomenal idea but I’m wondering if this is a to good to be true kinda scam. They did not seem to want money up front but did mention that I would pay into a retention plan for the law firm that was 40% of my principal. A cease and desist letter would be issued to Navient and at that point I would pay into a trust fund that would be either awarded to the law firm or myself depending the outcome of the case. So I would not lose any money, according to them.

If the case does not come to a conclusion in which my entire loan is eliminated I will be able to take the money from the trust and apply this directly to my principal of the loan. The caller then informed me that my credit would be restored at this point because my loan was out of litigation and current in payment. He did try to rush me into a decision stating that even though I was approved to begin this process with a lawyer it could change within the next couple of days. I assume this is just a salesman approach to try to get his finders fee.

Basically the questions come as such

1. Are these schemes legit? Can a lawyer file a letter of complaint (or whatever legal jargon they use) of sorts on my behalf to eliminate my entire debt? It was told to me numerous times on the phone with this guy that Navient and Sallie Mae are notorious for discrepancies that can eliminate the debt.

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2. How would this NOT effect my credit if i stopped paying the lender for up to 1yr while this is in litigation? I understand the cease and desist letter would be issued but does that letter allow leniency for non-payment for the entirety of the case?

Thanks again for your help



Dear Kev,

So we need to put all of this into context. The person you were talking to is attempting to sell you something. They are a sales person and you should filter what they are saying with that lens.

I would recommend that anyone considering using such a company should read the following free guides.

  1. The Ultimate Consumer Guide to Checking Out a Debt Relief Company Before You Sign On the Line
  2. How to Check Out a Business or Company to Avoid Getting Scammed or Ripped Off

That’s just prudent.

When you default on your student loans it will be reflected on your credit report, will increase your balances, and can result in a substantially higher balance at the end of this process. You may also be sued.

It is one thing for a company to make a claim they can deliver these services, it is quite another for the company to demonstrate a successful track record and provide you with information about what percentage of customers achieve that outcome. The Federal Trade Commission provides this guidance and advice when it comes to making debt relief performance claims.

Do You Have a Question You'd Like Help With? Contact Debt Coach Damon Day. Click here to reach Damon.

You are fully within your right to hire any lawyer who is licensed in your state to represent you to do anything. But unless I’m reading your question incorrectly, they are planning to charge you 40% of the balance of debt they claim they can invalidate.

I don’t know, it sounds like the whole debt settlement business plan where people paid into an escrow account and then defaulted on their debt in hoops of settling or invalidating it. The debt settlement company performance was not good with only a fraction of people ever achieving the overall goal of having all their debt settled.

One big gotcha was people wound up paying all sorts of fees to the settlement companies out of the funds sitting in the escrow account.

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Strategically defaulting on your private student loans can get you to a solution like settling the debt. Read “Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan.” But they’ve already made you a settlement offer.

Ultimately you are going to have to get some more information from the company regarding their historical track record of obtaining the desired results for people in a similar situation. If they come back and say they’ve only been successful 3% of the time or they can’t or won’t put that information in writing, that’s got to raise some red flags for you.

So while they claim you would not lose any money, I think you would if the company could not deliver on the service and your student loan balance grew much higher than they are now. Your debt would be growing and isn’t that the same things are losing ground?

So bottom line is if you default on your payments your credit report will reflect your payment history and your balances will grow with fees, penalties, and additional interest. We don’t know if the lawyer they are pitching you on is even licensed to practice in your state to represent you and I’m at a loss how a cease & desist letter would have any power over the original lender. And then when it comes to the whole credit restoration claim, don’t even get me started on that one.

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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.
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