My Daughter Has a Sallie Mae Loan for Aveda Cosmetology School


Dear Steve,

My daughter took out a student loan thru Sallie Mae for an Aveda Cosmetology school. We co signed for the loan. She has always struggled with the payments, deferments, reductions, etc. she has done it all. Basically she has gotten no where on the principle of the loan. We and she got a letter from Allied Interstate, who took the account from Navient, who took the account from Sallie Mae. This letter is giving her the option to settle a $31,862 debt for $11,366. What a deal!

Is it legitimate, should we help her pursue the funds to get this loan closer to something she may actually be able to pay for. What kind of documentation should we ask for to assure this loan doesn’t come back as us or her. To assure it is PAID IN FULL.
At one time she was unable to pay even the minimum payment and when it came tax time, they took their refund. Since then she arranged payments again and have kept up, so not to loose their tax refund. They are now a family of 5 and she is a stay at home mom. They really need this off of their heads. Looking for good feedback please.



Dear Gwen,

I would be highly suspect if the Aveda Cosmetology School was a Title IV federally recognized school. It’s a loan that could be pursued to be discharged through bankruptcy. See this and this.

But the big problem here is you co-signed for the loan. So both you and your daughter would have to file for bankruptcy since you are both 100 percent liable for the loan(s).

The interesting issue here is if there was a tax refund intercept it could not be a private student loan. Only federal loans can do that.

So who is the federal loan really under? Is it under one particular Aveda operation and who was the accrediting agency. It’s a mystery but you can post updates in the comments below to give me more to go on.

See also  I Think I've Paid Enough to Navient and SallieMae

The settlement offer isn’t all that horrible. But if you decided to take it to end this matter quickly, I would certainly get the offer in writing before you pay and then never lose that letter. Put it with your other important papers.

Otherwise, I either pay the settlement and be done with this or hire a consumer attorney who is licensed in your state, to fight this and hope the balance does not go up.

Only you can decide to risk losing the settlement offer and fight or accept the settlement offer and put it behind you.


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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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