Wednesday, June 26, 2019
Watch on YouTube here: Private Student Loan Settlement - Lender Profiles: National Collegiate Trust Settlement
Monday, June 17, 2019
Tuesday, May 14, 2019
Friday, March 1, 2019
The following post Sallie Mae Student Loan Forgiveness – Is It Available To You? was first found on My Credit Counselor Website
Does Sallie Mae offer such a thing as loan forgiveness?
If you're wondering if Sallie Mae loan forgiveness exists, you should first understand a little more about the lender. Sallie Mae is a name that is ubiquitous within the student loan industry, and rightfully so. Beginning with a head start as a government organization that converted to a private organization, Sallie Mae and now Navient dominate the private student loan market. Long before they split into two companies, Sallie Mae was the subject of many regulatory lawsuits . It did not take Navient too long to also fall under scrutiny and become the subject of multiple state and federal regulatory actions which are still ongoing. Chances are, if your private loans were originated by Sallie Mae, they are now more than likely serviced and held by Navient - but as with all private loans there are exceptions to every rule and trend, and lenders try new strategies on a fairly regular basis.
What Loan Forgiveness Options Do Sallie Mae offer?
Sallie Mae does not offer any traditional “forgiveness programs” for private student loans, except for very rare cases such as the Career Education Corp fallout which, unlike other for-profit college regulatory lawsuits, dealt primarily with private loans. In that ruling, it was Career Education Corp itself that is responsible for the forgiveness payments of the private loans borrowers took out. Sallie Mae, and it’s sister company Navient do sometimes offer settlements under certain conditions. However, borrowers attempting to settle on their own often run into issues with aggressive debt collectors, not knowing what stage of the collection cycle to maximize the savings of a settlement while minimizing risk; and making common mistakes like opening up with the offer that you want to settle for or disclosing too much about personal finances.
Sallie Mae spins off to form Navient
In 2014, Sallie Mae "spun off" or split into two companies. Navient would handle most of the servicing for federal loans and origination plus servicing for private loans, while Sallie Mae themselves became an FDIC insured bank (and thus the end of Sallie Mae federal student loans as a government-backed guarantor). However, not all loans were transferred to Navient - Sallie Mae still retains some. I still run across these and settle them from time to time when we do see the rare SLM loan that was not transferred to Navient (more on this later). This is very rare. For instance, I have come across this about 3 times in the last 2 years.
In my opinion, a big reason for them splitting into two companies was to re-brand and get past some of the baggage that they were associated with. Unfortunately for them, it didn't take long for their new subsidiary/spin-off Navient to develop a negative reputation of their own, as both a consistently negatively ranked federal loan servicer; and a private loan lender with few options whose loans appear to never go down for many borrowers, despite on-time and even additional payments.
This was not the typical kind of partnership between two student loan companies - the easiest way to describe it as that Sallie Mae split into two separate companies - sort of like cell mutation. The CEO for Sallie Mae previously was Jack Remondi. Guess who the CEO for Navient is now?
So this was not the typical type of merger between two separate companies. I have also talked to reps at Sallie Mae who used to work for Navient, and vice versa. The two companies are very closely related and there is somewhat of a revolving door between them; but despite that they follow two very different tracks when it comes to settlement negotiation and how they handle defaulted accounts.
Similar business - drastically different collection procedures
I can typically negotiate good Navient settlements soon after charge-off (default). In some rare occasions, where Sallie Mae borrowers find their loan that has not been transferred to Navient, follows a very different track despite the similarities between the two companies. Sallie Mae used to do some settlements with their internal Recovery department (similar to Navient, and they may still do this), but recently I have noticed a different track that almost resembles the type of strategy that a lender like the National Collegiate Trust would take.
Debt buyers can become involved on SLM accounts
On a recent Sallie Mae settlement, the loan was actually sold to a debt buyer - which other than NCT, and to a lesser extent Discover and Citi, is extremely uncommon in the private loan industry (Navient never does this for example). The debt buyer then assigned the account to a collection agency staffed by some rude and unprofessional agents whose clear strategy was to hardball me for months (nearly a year). During this time I was working with both the debt buyer and the collection agency, and communicating with a manager at the debt buyer's company - the multiple points of attack strategy.
The debt buyer recalled most of the loans back to their office after some time, once they realized the collection agencies hardball tactics won't work with me, but still left one small one with the collection agency - an odd practice that does not make sense from a collection standpoint. Once the debt buyer for SLM recalled the majority of the loans, I was able to negotiate a sub 50% settlement with them - not as good as what we would get with Navient, but still very good (I consider any settlement at 50%-55% or less to be a good private loan settlement). Previously I was able to negotiate 40% settlements with SLM internal recovery, but apparently they are trying a new strategy of selling defaulted loans to a debt buyer (US Asset Management in this case).
During this time the collection agency that was still holding on to the smaller account and hard balling me at a much higher percentage. Not surprisingly, when I worked out the deal with the debt buyer, suddenly the collection agency called me and wanted to match a similar percentage on the tiny account they still inexplicably held.
Unfortunately, my client recently experienced a major unexpected medical hardship and can only afford to settle the larger account (close to $50k, while the smaller account is close to $10k). In these situations I always recommend settling the larger threat, because it is the larger, more powerful barbarian at the gates of the castle wall (to use one of my favorite analogies).
A larger account has the threat of going to a collection attorney much more so than a smaller $10k account. So we deal with the biggest threat and defeat the barbarian who is battering against the castle walls. The smaller $10k account poses little to no threat of this - just a long term drag on credit for the most part - we wait them out and grind them down until they settle. I have heard about lawsuits on private loans as small as $4k, but these are very very rare. We will let it get kicked around for a while, age it out, and then settle it down the road once the family gets back on their feet from this major medical event with major costs associated.
Third party debt collectors are not an objective source of reliable information
I told this third party collector, who was collecting on behalf of the debt buyer, that if they had just worked with me.. if they had given me this same offer three or 6 months ago on the small account, we would have taken it! But now a serious medical problem has left my client with only funds to settle the biggest threat. Too bad for the collection agency - it's their loss. Time and effort spent, for nothing - all because they were unreasonable about the smaller account for months and months. I know how to execute a quick victory and take steps to limit my opponent's offense, and I also know how to grind down and opponent for months and win a war of attrition. Each negotiation requires a unique strategy based on the circumstances.
At one point the collection agency, who only had the small account (inexplicably not recalled back to the debt buyer with the others) told me that they offered a settlement that equated to roughly 70% (terrible). They said I had 7 days to take advantage of the offer, which was presented to me in early February, and they said this in a very serious tone. I tried, but could not hold back uncontrollable laughter - simply because I know better.
The collector made the mistake of talking to me the same way they would to a normal borrower, who would not know if what they were saying was true or not (unlike me - one of the advantages of hiring the best private student loan negotiator in the US/world in addition to total net monetary savings and the peace of mind of having an ironclad settlement).
I tried to have a conversation after that along the lines of, "hey, I've settled millions in private loans and been in the industry in a long time, and the tricks you use with borrowers don't work with me". They stuck to their "hardball" script and I ended the call still laughing. Of course a few weeks later, past the "7 day deadline" I get a call with a much better offer. I scolded them for not accepting my repeated offers and counter offers over the last 10 months before the medical emergency took place with this family. Now we just let the small account marinate and let them reflect on the lost opportunity on the small account (at least for now). But the most important things is that the larger account, which had a serious threat for potential legal action because of the size, will be settled for roughly 48%.
Depending on your situation, I will impose my will, utilize past strategies, overcome resistance, and go for a quick finish. Or, if circumstances dictate, we will drag your lenders into deep water and win a war of attrition over a long period of time (I should know which of these scenarios to expect during our initial evaluation - but again, there are always exceptions and lenders do try new strategies from time to time).
To conclude - this is the closest thing that exists for Sallie Mae loan forgiveness for the vast majority of borrowers (except for very rare cases like the regulator action against Career Education Corp, which is only for a limited number of borrowers; that I will be writing about in my next blog).
I enjoy difficult situations where I have to put my full 10 years of negotiating experience into play to solve complex problems while dealing with unexpected variables issues with my clients or with the lender (which sometimes pop up). I'm creative, adaptive, and flexible. Call my office today at 937-503-4680 to schedule an evaluation, or better yet, fill out my evaluation form here.
Friday, December 7, 2018
Financial counselors or companies should never advise someone to default. This is a decision that must be made by the borrowers themselves. Most borrowers intentionally stop making payments in order for the account to default. The decision to default should directly come from the borrower after considering the pros and cons.
When there appears to be no decrease on the loan after paying huge monthly sums over a long period of time, defaulting on a loan becomes an appealing option even if that borrower hasn't missed a single payment up to that point in time. In a perfect world, this option should only be considered by those who are frequently late on their payments. But as a consequence of the limited payment options and incredibly high interest rates, strategic default is an option that is being considered by more and more students, regardless of their track record or ability to pay on time.
Your Credit Score
One of the most serious concerns for defaulting on your loan is damage to your credit score. This is a serious consideration given that it can take up to 2 years after you've settled to rebuild your score. Because of this, it's best to ensure you decide on other loans such as mortgages before you decide to embark on a strategic default.
What Savings Can Be Made Through Settlement?
Despite the credit damage, you have to weight up the pros and cons. Yes you will suffer from a low credit score for 2 years, but a strategic settlement can save you a lot of money. In fact its more common today for private student loan lenders to write off millions of dollars each year. They actually expect this to happen. This means it opens up the way for negotiating settlements with your private lender.
To avoid the possibility of litigation, you shouldn't have a long period of time of avoiding your payments. Instead, if you're struggling to make payment, don't put things off any longer. It's best to start the settlement process as soon as you can. The longer the period of time where you've avoided meeting your monthly payment requirements, the less chance you have of successfully negotiating a strategic default.
If you get the ball rolling sooner, you can expect a settlement of anywhere between 40% to 50% settlement.
Private Lenders Playing Hard Ball
In theory it might sound simple, but the reality is that many lenders (particularly Navient) will make it as difficult as possible for you. They will take advantage of someone who isn't fully aware of the process and leverage their lack of understanding to their benefit. There are many pitfalls and frequent mistakes a borrower will make when entering the negotiations. This is why it's highly recommended to have a skilled negotiator like Andrew Weber on your side.
Tuesday, November 6, 2018
Private student loan debt only affects a small percentage of overall student loan borrowers, but it sure does cause big problems for those who have them. Private student loans are notoriously inflexible, and despite the recent introduction of some limited payment modification programs, I still hear from borrowers every week who are struggling to manage these loans.
If you’re looking for information on private student loan forgiveness, you can read this article I wrote here.
Making years of payments without seeing real progress:
The common refrain that I hear, over and over again, is that despite paying for years; the balance is not going down or may even be increasing over time. People understandably feel like they are throwing their money away. And this is just the loans that are current – for delinquent or defaulted borrowers, navigating a complex web of vaguely threatening calls and letters is the norm.
“Accounts will be ‘terminated’ if a payment isn’t made. “We intend to file a lawsuit against you if no payment is made before charge-0ff”. “Your account has been escalated to our super duper, last chance, really seriously, for real-for real, no we are completely not joking department”.
The voices coming across the other end of the line are often rude and threatening. The letters are scary, but vague, and look like high ranking directors or vice presidents are personally getting involved with the accounts. Options are limited! Last chance! Call by tomorrow at 5pm, or we will force you to sell your internal organs on the black market.
The calls and language used are intentionally opaque, because the collectors know that playing on a borrowers’ lack of understanding of a particular lenders’ collection cycle -and letting the borrowers’ own imagination collect on the account for them- is a surefire winning tactic. This is not to say that lawsuits don’t occur on private student loans. They do. But from my experience, there are many, many opportunities to settle or work out a payment plan with Navient private student loans prior to this happening – and with other private lenders as well. However, the vague threat of legal action is often brought up at multiple times in the collection cycle, and is often the go-to response for a collector who is hard-balling or bluffing on a borrowers’ settlement offer.
People are surprised when they attempt to negotiate a settlement on their own and are flatly refused, or are denied a reasonable payment plan during this process. And in many cases, they’ve unknowingly given up information about their income or assets that can hurt their chances of settling down the road. Negotiating a settlement is definitely not like asking for a different payment date or signing up for electronic debit payments – it’s an adversarial process that is not for the faint of heart, and is essentially a renegotiation of the original contract. It can take months and months of negotiations – negotiations which will not be successful unless a specific strategy to reach a desired settlement is implemented from the very first negotiation call. Lenders don’t really want to settle, so they will try everything they can to scare people back into making payments on 100% of the balance plus interest first – locking them back into the same never-ending cycle of perpetually paying down inflexible private student loans.
Collectors use the threats they think will be the most effective in getting borrowers to pay up.
We are even seeing Navient try different tactics to twist and tweak their threats for maximum effectiveness. In the past, borrowers who have contacted me for help settling their private student loans have told me that immediately before charge-off (6 months of nonpayment), they received a form letter that used very strong language – namely, that the account will be referred to a collection attorney and that they intend to file a lawsuit. I have seen many times that this is just an empty threat, for the time being anyway. After receiving these threatening letters about impending referral to an attorney collection agency to file suit, the accounts instead remained with the lenders’ internal collections department for several more months. During which time, I was able to negotiate lump sum and structured settlements.
Recently, this tactic has become even more exaggerated. Clients received the same letter, “signed” by the VP of Navient Credit, that specifically says their account will be referred to an attorney in the clients’ state upon charge-off – and it even names the attorney collection firm, and says specifically that they intend to file a lawsuit. Instead, just as before, the client received calls the next month from a regular collection agent at Navient internal collections.
I don’t mean to be rough on Navient. Believe it or not, I’ve talked to some good people that work there in my many negotiations calls with them, but at the same time I think it’s fair to criticize them for flat out lying to borrowers about what is happening during the private loan collection cycle. What borrowers don’t realize is that these scary sounding generic collection letters are mass produced and are completely identical – the only thing that is different is the name of the attorney collection firm in that particular borrower’s state. Navient made the calculation, which was very intelligent on their part, that naming a specific attorney collection firm in the borrowers state could get them to call in and make a payment before the account defaults.
It’s not time to panic, but it is time to take action.
If an account is actually referred to a “same state attorney” collection firm, it’s nothing to sneeze at, but the threat is often blown out of proportion. Private lenders can’t afford to sue every single person who defaults on their loans, but they know that it’s an effective collection threat. It sure is a good thing that private lenders are making these threats directly, because if they had third party collection agencies making these threats, it could be a violation of the Fair Debt Collection Practices Act. The FDCPA only applies to third party collectors unfortunately, but some states have adopted similar laws that govern the conduct of original lenders.
When an account is actually referred to a “same state attorney” collection firm, as I call them, it’s time to make the account a priority if you haven’t already. It’s important not to panic or engage in doomsday thinking, but at the same time there is a potential threat of a lawsuit at this point. As renowned credit card debt negotiator Jared Strauss told me the other day, attorney collection firms are often just a normal collection agency with an attorney in the back – and he would know, having spent years on the other side of the industry working for and directing collection agencies.
A reputable consumer defense attorney can defend and settle unsecured debts during the legal process if a borrower is facing an actual lawsuit, but there are often many chances to settle on your own or with a non-legal negotiator prior to this happening. Even the debt collection attorney firms want to settle or get a payment rather than having to take someone to court. Studies have shown that 80-90% of civil cases settle outside of court, and my experience settling “same state attorney” collection accounts reflects this also – just take a look at the many attorney collection firm settlements on my homepage slideshow.
Open all collection letters and take a proactive approach.
At the same time, many borrowers ignore mail – including court documents – and end up getting default judgments. Once a judgment is attained, the creditor can begin the process of trying to garnish wages or levy a bank account via judgment execution. This is the worst case outcome and you want to do everything you can to avoid it. Taking a proactive approach to settling or negotiating a payment plan on unpaid debts is the best way to prevent this from happening. Open all your mail regarding collection accounts, and at the minimum screen your voicemails even if you’re not communicating with debt collectors who are calling.
If you’ve actually received a summons, you need to hire a reputable consumer defense attorney as soon as possible – there’s no two ways about it. However, this is the last step of a lengthy collection process, and if you’re proactive; you or your professional negotiator can work out a settlement or payment plan long before this happens. Judgments can still be settled in some cases, but it’s usually better in the long run to settle accounts prior to a judgment being awarded to the creditor. Settling a judgment does not remove it from your credit report, but it will show that it has been paid. You will usually get a better settlement on a non-judgment account also.
I’ve never had a client get sued as long as they hire me to negotiate prior to the legal process being initiated by the lender. However, I am quick to tell clients that I cannot provide legal advice, nor can I represent them in negotiations if they have been served a summons. In most states, borrowers have 20-30 days to respond to a summons. I’ve heard that some borrowers have been able to negotiate a settlement even during that period, but in my (non-legal) opinion; the creditor has much more leverage during these types of negotiations and a better settlement can be obtained by hiring an attorney to first defuse the impending threat of a judgment.
Lenders came up with the idea of settlement in the first place.
It’s important to note regarding private student loan debt settlement, that if lenders did not want to settle, they simply wouldn’t. Despite the adversarial process, this is a system that is ultimately created by the lenders themselves. With high interest rates, lenders are calculating that a certain percent of their borrowers will default and never pay, or pay a reduced amount; and the high interest rates make sure that they will still turn a profit overall.
While taking a beating in the stock market in 2015, largely due to federal loan practices; in 2014, Navient originated $4.3 billion in private student loans with expected losses of $116 million to $130 million. Put another way, Navient expected to lose over $100 million on their private loan portfolio – which seems to be the closest thing to actual Navient private student loan forgiveness. By the way, their total private loan portfolio is over $8 billion – a pretty good chunk of change. Next to the FFEL program, loans which Navient services on the federal side; private student loans are their second largest portfolio. Since the expected losses are baked into their figures, we can see that Navient expects to settle some accounts each year – and expects to not be able to recover on other accounts at all.
Taking a logical, strategic, and proactive approach to settlement or repayment planning affords the borrower with many opportunities to work out mutually acceptable arrangements before the long, winding path of debt collection leads to wage garnishment, liens, or bank account levy – the nightmare scenario that all defaulted borrowers fear, but far fewer actually experience. If you’re interested in hiring me to settle your private student loans (and make sure they stay settled), fill out my quick online evaluation form here.
You can find out more about whether to strategically default on your private student loan here.
Friday, August 10, 2018
The following information Is Private Student Loan Consolidation Right For Me? is available on http://mycreditcounselor.net/
Private loans for students are notorious for being inflexible and for lacking the same types of repayment options as federal loans. Private student loan consolidation is one of the few options available for borrowers to obtain some relief from the burden - whether it's a lower payment, a lower interest rate, or both.
It can be tough to qualify for, with most refinance/consolidation lenders looking for borrowers who have good income, a good credit score, a low Debt To Income Ratio, and potentially even a cosigner willing to bear responsibility for the loan if the original signer is unable to pay.
There are quite a few lenders who have entered the market, so borrowers have a variety of choices - although all refinance/consolidation lenders are going to offer a similar product and have similar requirements. Most lenders offer both fixed and variable interest rates.
For those who don't qualify or want a more aggressive approach as far as net savings and length of repayment, the other main option to deal with private loans is settlement negotiation (which occurs only under specific circumstances). Consolidation is a relatively non-aggressive approach that offers a decent amount of net savings over the life of the loan, without many downsides for those who qualify.
What Is The Difference Between Private Loan Refinance And Consolidation?
When it comes to student loans that are private, the terms "refinance" and "consolidation" are often used interchangeably. A consolidation, by definition, is the process of combining multiple loans into one. A refinance is the process of a lender buying a loan and reissuing it at a lower interest rate than what it was originated at. Both of these processes usually happen simultaneously when a borrower either applies to consolidate or refinance a loan.
For federal loans, the term consolidation means something very different; and usually refers to the process of Direct Consolidation - which combines federal loans through the Department of Education and reissues them (as a federal loan) without lowering interest rates. It is also used by federal loan borrowers to get out of default or to gain eligibility for certain programs.
Federal loans can also go through "outside" consolidation or refinance with third party lenders, and many of the lenders who offer this service for private loans will also do the same for federal loans. However, there is more to lose when refinancing a federal loan, as this converts it into a private loan and any federal loan benefits such as payment plan eligibility, Public Service Loan Forgiveness eligibility, etc. are lost. However, private loans going through consolidation/refinance are simply being converted to a different private loan with a different lender.
How To Consolidate Private Student Loans
Refinance/consolidation is relatively easy to apply for. The lenders usually have an online application process directly on their website, and there are also several sites that allow you to compare and contrast different rates and availability.
To go through the process, you'll just need to complete the application for each lender you want to apply with. If you're approved, the refinance/consolidation usually happens pretty quickly, and should be done within a month or two at most.
If you qualify, the new lender will purchase your old loans, and will then reissue you a new private loan with the new terms you agreed to - whether it's a lower interest rate, different payment amount, or a combination of both. Then, you just make your monthly payment to your new lender.
Typically, unless you have loans with Wells Fargo, Discover, or Citizens Bank; refinance/consolidation will not be available with the lender who you originally borrowed from.
Those with National Collegiate Trust private loans will have to find a third party lender, as will borrowers seeking Navient loan consolidation for their privately backed student loans.
Here are some of the main lenders who can refinance/consolidate your loan:
SoFi Student Loans
- One of the first companies to refinance and consolidate student loans
- Interest rates between 2.63% - 7.75%
- Geared toward high income borrowers with very good credit profiles
- Reportedly aggressive with legal action towards defaulted borrowers
Wells Fargo Student Loans
- A major, well known and established national bank
- Interest rates between 4.99%-9.99%
- 15 and 20 year repayment terms are available
- Not known as a particularly aggressive lender in terms of legal action against defaulted borrowers
Lendkey Student Loans
- A lending platform that works with a network of regional, local, and national credit unions and community banks
- Interest rates between 2.58% - 8.12%
- Cosigner release option
- Credit union backed private loans are known to be aggressively targeted for post default collection efforts
CommonBond Student Loans
- Started by MBA grads who had their own student loan debt
- Interest rates between 2.57%-7.25%
- They offer deferment and cosigner release
These are other lenders as well - when applying, you'll want to shop around and compare rates, terms, and read user reviews who have gone through the process with that particular lender.
Which Private Loan For Students Option Is Right For Me - Settlement, Refinance or Consolidation?
Whether or not refinance/consolidation versus settlement is right for you depends on both your eligibility and your goals. If your loans are defaulted, you have a low credit score, a high DTI Ratio, or no income; it's highly unlikely that you will get approved for a refinance/consolidation with any lender. Instead, you may want to consider the other major debt relief option for private loan borrowers - negotiating a reduced-sum payoff.
- Requires a lump sum or large down payment
- Requires you to be in default
- If current you must go through a strategic default which causes significant credit score damage until 1-2 years after settlement
- Results in significantly more savings than refinance/consolidation
- Pays off loan much faster than refinance/consolidation
- Cuts loan balance by 40-60% or more (depends on many variables)
- Requires you to be current
- Requires good income
- Requires good credit score
- Requires good Debt To Income Ratio
- Will not cause drastic credit damage
- Less aggressive but still results in some net savings over time versus the original loan terms
- Will not interfere with short term plans to get a mortgage, auto loan, etc
Can A Student Discharge A Private Loan Through Bankruptcy?
If neither of these options seem like a good fit for you, there are some other routes to attack private loan debt but you'll have to think outside the box. Private loans are generally exempt from bankruptcy discharge under the 2005 BAPCPA; but there are exceptions for borrowers who have extreme financial hardship, disability, or even for those who have used private loan funds to pay for non-education related expenses.
Private loans cannot be discharged in bankruptcy without going through a complicated legal process called an Adversary Proceeding, which must be undertaken as part of the bankruptcy. There are not many bankruptcy attorneys who have experience in discharging student loans through an "AP", and those that do usually charge upwards of $5,000 - $10,000 just to attempt it -with no guarantee of success.
Student loans can be packaged into a Chapter 13 bankruptcy as an extended "stalling tactic", without the expectation of discharge. However, this will result in a great deal of interest being added to the loan during the bankruptcy, and the statutes of limitation can remain active if the loans receive payments during the bankruptcy. On the positive side, loans being entered into a bankruptcy will prevent a lender from pursuing legal action due to the "automatic stay" provision.
Refinance/consolidation for private loans is a viable, minimally aggressive option to net some savings and in some cases get a better monthly payment. Since the largest private lenders like Navient and NCT can be extremely inflexible and stick to high interest rates, it makes a lot of sense to look at other options.
The market for refinance and consolidation has come a long way since it was considered a form of relief just for high earning professions; but income, credit score, and credit history will continue to play a major factor in getting an approval - as well as a history of paying on time and keeping the loans in a current status with your original lender while you apply.
For borrowers who were turned down for a refinance or want a more aggressive approach, contact me today to see if you would be a good fit for settlement.