Is It Possible to Use Debt Settlement for Student Loans?


Dear Steve,

I’m currently dealing with $103K of private loan debt (plus another $23K in federal loans). My cosigner on two of my largest loans just ended a bankruptcy at the beginning of 2016, so those loans now have monthly payments due at around $1,000 together. I have been continuously paying a fourth private loan at $400/month cosigned with another family member, plus my federal loans in IBR at $250/month.

Needless to say, the $1K/month increase is not in my budget. After doing a lot of research into refinancing (no available cosigner, plus no guarantee of affordable payment terms), it looks like I am on the verge of default on these two loans, with payments past due that I just don’t have. I got in touch with a law firm in New York City, where I live, who handle settlement negotiations with student loan debt. They don’t seem to be a scam – I am seriously considering going this route.

The law office is Lebedin Kofman in NYC – www.nycdebtlawyers.com. Mr. Lebedin seems trustworthy and knowledgable and has met with me twice to answer questions in detail. He has said that student loans are a relatively new niche in debt settlement law, but he routinely reaches settlements 50-70% lower than the starting debt amount, with affordable monthly payments at zero interest, etc. He would charge a flat fee of $3,500 to reach a settlement on the total $103K private debt (I would not be including federal loans in this – would continue to pay those through IBR).

Despite my research, I still have a nagging feeling that taking this big step could be a huge mistake and blow up in my face. I have had a hard time finding testimonials in my online research from other people who have reached a successful settlement with legal representation.

Is debt settlement for student loans a legitimate legal practice that you’ve heard of? Or, should I be wary of this and think it’s a scam? It sounds so too-good-to-be-true, but also seems like it’s my only option.

See also  How Can I Get My Federal Student Loan History?



Dear Michael,

Is it possible to settle student loans? Yes and no. Some private student loan lenders are excited to settle and offer some incredible terms. Some don’t. It really depends on your personal situation, when you approach the lender, if you talk to the right department, and what you are prepared to accept.

Even among private student loan lenders that settle, some will go to 40 percent and some will hold firm at 70 percent. So the range you were told is reasonable.

But not all private student loan lenders will settle.

Some of the best settlements I’ve see have been part of an Adversary Proceeding in conjunction with a bankruptcy or the consumer being sued over the debt.

From what you’ve shared with me I have no reason to doubt the information you said they gave you. It seems reasonable based on the professionals I know who are experts in this area.

They firm you found may be awesome! I just don’t any personal experience with them to give you deeper insight.

One question you might want to ask them is about their policy if they are unable to negotiate a settlement for you. Do you get a refund if they are unable to reach some agreement on your behalf?

If you do get stuck on the federal loans, there are programs available for them. You seem to be aware of them.


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.

Do you have a question you'd like to ask me for free? Go ahead and click here.

Damon Day - Pro Debt Coach

Follow Me
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.
Steve Rhode
Follow Me
Latest posts by Steve Rhode (see all)
See also  I Have Never Made a Payment on My Student Loans and I Just Got a Settlement Offer - Jason

3 thoughts on “Is It Possible to Use Debt Settlement for Student Loans?”

  1. Michael, I just answered your question. I tried to use the firms chat feature to get an email address from them so I could include them in this answer. The chat person Kelly said she did not have an email address she could give me.

    • Steve,

      We received your message and are sorry we missed you. You can reach us anytime at 212-500-3273 or info@lebedinkofmanlaw.com. We would be happy to discuss any questions with you regarding student loans or any clients who may have questions. Please also review our client’s testimonials about previous private student loan matters on our Yelp and Google+ pages.

      Arthur Lebedin

    • Steve – thanks SO MUCH for this very speedy response! I am pretty much decided I will go this route at this point – but even having your “yes and no” second opinion on this is extremely helpful. Will keep you posted with the outcome – hopefully it will be a good one.


Leave a Comment