AES Refuses to Modify My Private Student Loan Payment So I Can Afford It


Dear Steve,

Okay, so I graduated from school about two years ago and accumulated roughly 90K in federal and student loan debt. During this time I was not able to find a suitable job.

The only job I’ve had in that span is a part time job at a local warehouse store where I get paid 10.50/hour. Obviously not enough to make my monthly loan payments.

The federal loans, which make up about half of the debt are in forbearance. As for the private student loans, well that situation is getting ugly.

I recently defaulted on five out of my 8 loans. This is after trying to negotiate lower payments with my lender and being denied a loan modification program (for stupid reasons!). I actually went to my state representative’s office and filed a complaint with the CFPB about my loan servicer, which is AES, the worst company I’ve ever dealt with for anything.

Long story short they withheld necessary information from me regarding the application for the modification program on how I was supposed to fill it out and every time I called I got a different story from the representative I was speaking to.

I called my lender and they were only willing to allow me to pay $500 on the defaulted loans and as for the other ones the new application is processing for the modification program that will lower the payments. Who knows what’s going to happen there. All in all I’ll actually be paying more than what my minimum payments were before this whole mess began.

I also asked how much it would cost to settle and they told me that they could only go as low as 90 cents on the dollar which would only save me 5K. I’ve been seriously thinking about this and I really need to start saving money up for retirement (I’m 26 by the way) and just to have money saved up in general for emergencies. At this point I don’t care about my credit score but I do care about my father’s who co-signed. I feel quite guilty about that. I live at home with him and my car is nearly paid off.

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Should I wait and see if my lender is willing to work with me and possibly lower my payments or settle for less? Or should I just file for bankruptcy (Ch. 13) and get my finances together? Also, I’ve already scheduled an appointment with a local bankruptcy attorney.



Dear Patrick,

The federal student loan debt is much easier to deal with to get a more affordable payment. You just need to consolidate those federal loans into a new Direct Loan and then elect an income driven repayment option to determine your monthly payment. Based on income, the payment can be as little as 10 percent of discretionary income. See this post for help. But there are issues to be aware of.

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

The private loans are certainly more problematic. Private lenders are not required to make any adjustment or modification. They are not required to offer any reasonable or affordable repayment plan other than what was agreed to when the loans were taken out.

And having a co-signer is a big problem. A co-signer guarantees the loan payments and if you don’t pay then they can go after the co-signer. In fact, if you file bankruptcy, in some cases it can accelerate the total amount due and your father can be pursued.

Before you elect to do anything with the private loans or let them default, I would absolutely urge you to develop a strategy to deal with them in conjunction with your co-signer. Together you may elect to engage in a strategic default strategy in hopes of getting a favorable settlement. See Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan. But if you do decide to go that route I would absolutely urge you to hire an experienced attorney in these matters or a debt coach like Damon Day.

Without an experienced professional to help guide you through the private student loan settlement process you have no idea if the offer you are getting is good or bad. In fact, you would be the least qualified person to represent yourself against a process that you don’t know.

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In fact, there are many factors that go into dealing with private student loans. You need to be aware of how the loans were used, validation, school certification, etc.

I’m glad you are going to meet with a bankruptcy attorney. The more information you have, the better off you will be. I would make sure you have a discussion with the attorney to the risk your co-signer faces when you file bankruptcy.

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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