Long story as short as possible - I defaulted on two Sallie Mae student loans. Sallie Mae charged off the debt and (sold?) it to a collection agency/attorney. I would like to settle the debt because I would like a letter from Sallie Mae stating that my loan is no longer in default. I am trying to go back to school (so I can pay off the rest of my loans!) and I can't get any federal aid until my loan is no longer in default status. Of course, I won't be telling any of that to the CA! Does anyone have advice on how to settle the debt for the lowest possible amount? Also, do I have any leeway in trying to get the charge off or collection activity removed from my account? Should I get the agreement in writing before I make a payment? I read in another forum that the CA probably won't put the agreement in writing because the original promissory note supersedes anything put into writing now. Any advice would be very useful! Thank you!
It seems that the main purpose of this is to get federal aid by settling your student loan. This is an interesting case. Let's just assume that you are able to settle your account with the collection agency for 50%. They should give you in writing that this account is "settled", not PAID IN FULL. Even if you show that letter to get federal aid, I'm not sure if will reflect positively. Again, that's assuming you are able to settle with them. Settling student loans are extremely difficult. If I were you, I would call Sallie Mae and have them recall the loan from the collection agency, and set up some kind of payment arrangement with them to re-age the debt and get you current.
I called the CA and they said that Sallie Mae is willing to settle the debt for 80% of the current amount. Of course, the current amount is ridiculously inflated with late fees and penalties. The woman I spoke with said that they are an attorney representing Sallie Mae and are not a collection agency. My options are to pay the settled amount (80% of debt) in two payments or to pay the full amount over 24 months. The first option would be great if I had the money! Other than that, they'll take me to court. I don't know if I have any other options and I really don't know who to ask. I don't even know who to speak to at Sallie Mae to try and get some help as to having Sallie Mae take my loan out of default. Everyone I have spoken to at Sallie Mae has been extremely degrading to me. I feel completely defeated.
What kind of income do you have? Have you looked into the IBR (income-based repayment) program that was started a few years ago? I don't think you would qualify right now because you're in default, but it's worth looking into if you can get back on some sort of repayment plan. Have you thought about contacting the FSA Ombudsman? They can provide guidance with these sort of issues too. I wouldn't make any deal with the CA. Keep working on SM to see if they will pull your account back from collections so you can deal directly with them. Try the Ombudsman too to see if you can get any help navigating your options.
Yeah definitely try get things moving through Sallie Mae if possible. Dealing as little as possible with CA is always the best route to go since they have all kinds of grisly tactics that will be much more degrading than working with Sallie Mae. Hope that helps.
