Navient Feels Like a Modern Day Mafia to Us


Dear Steve,

Took out Federally backed Student loans with Sallie Mae 20 years ago after a divorce.

Had to use deferments due to job losses and health issues. Borrowed around $75,000 for three degrees. Due to the delayed interest from the deferments I now owe $126,000. I am now in retirement at 69 years of age and my husband is also approaching retirement. I am making monthly payments of $740 and that is not even paying all of the interest. My principal increases every month. The total owed is now over $125,000. I will never pay this off – I mean I will be dead many years before that would even be possible.

Right now we are struggling to meet house payments and medical bills but continue to pay what is now Navient out of fear that our moderate credit record will be destroyed if we don’t. We feel like Navient is a modern day Mafia!!

Is there any legal way (other than defaulting) to get out from under these loans? Most banks and general lenders won’t let us borrow money to transfer the debt from Navient.



Dear Bette,

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

I think what you are saying is these are federal student loans that are serviced by Navient.

If I’m reading that correctly then there is some really good news for you. I would suggest you first look at consolidating your federal student loans and putting them on an income driven repayment program. If these loans are in your name alone then when you select your repayment option, DO NOT select REPAYE.

Now these income driven repayment plans are not perfect but this will give you a more manageable payment to help live in retirement.

What you probably want to look at it the Income Based Repayment (IBR) or Pay As You Earn (PAYE) program (if you borrowed after 2007, which it appears you did not). Under the IBR program, your payments will be based on 15 percent of your individual discretionary income.

For Income-Based Repayment, Pay As You Earn, and loan rehabilitation, discretionary income is the difference between your income and 150 percent of the poverty guideline for your family size and state of residence.

For Income-Contingent Repayment, discretionary income is the difference between your income and 100 percent of the poverty guideline for your family size and state of residence.

The poverty guidelines are maintained by the U.S. Department of Health and Human Services and are available at www.aspe.hhs.gov/poverty.

One common complaint I hear is that the loan servicers are not great at informing people about these life changing options. That seems to be a true statement. But loan servicers are not loan advisers. At the very least though I wish they did more to guide and help people to get in these programs.

You apply for a Direct Consolidation Loan through StudentLoans.gov. This process offers both electronic and paper options. You can complete the electronic application as explained below or you can download and print a paper application from StudentLoans.gov for submission by U.S. mail.

Once you sign in to StudentLoans.gov, you will be able to electronically complete the Federal Direct Consolidation Loan Application and Promissory Note. The electronic application on StudentLoans.gov consists of the following five steps:

1. Choose Loans & Servicer
2. Repayment Plan Selection
3. Terms & Conditions
4. Borrower & Reference Information
5. Review & Sign

After you submit your application electronically via StudentLoans.gov or by mailing a paper application, the consolidation servicer selected will complete the actions required to consolidate your eligible loans. The consolidation servicer will be your point of contact for any questions you may have related to your consolidation application.

It is critical that you continue making payments, if required, to the holders or servicers of the loans you want to consolidate until your consolidation servicer informs you that the underlying loans have been paid off.

The IBR program payment will be based on your individual retirement income and can be as low as $0 per month. This should give you the break you need while being reported current on your loans.

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Damon Day - Pro Debt Coach

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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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