I currently owe Navient $163,000 on my private student loans. After graduating in 2009 with few job prospects, I put these loans into forbearance for the first two years while I could. This raised my original debt total from $153,000 to the current figure of $163,000. I have paid interest-only repayments for the past four years and have made every payment of around $500.
I have seven loans in total, six of which have interest rates of 2.75 percent - 3.25 percent. My last loan which is about $21,000, has an interest rate of 7.25 percent.
Now that my interest only repayment period has ended with Navient, they asked me to pay a total of $1,511 per month to pay off the debt in just over 10 years. I called to see what I could do to lower the payment and they offered me a term of just over 20 years for $850 a month. While $850 a month is far more reasonable, it is still very high for what I can afford.
They asked for my living expenses and what I currently take home, but as a freelance producer I do not have guaranteed monthly income. Therefore I would not always know if I could make an $850 a month payment.
All seven loans are private student loans, which I used for tuition and living expenses throughout my four years of undergraduate college. The first two loans that I took out have a cosigner, and I am tempted to default on my Navient Loans unless I can come up with a more reasonable payment plan with my lender.
Given my situation, I am unsure of how to proceed with paying off these loans. I was told that no matter what I do, Navient will not extend my term, even though at this point I would be willing to pay more throughout the life of the loan if I could reduce my monthly payments. Is there a possible way to get a lender to extend the repayment term even further? Would I have to intentionally default to do so?
Also, since one of my loans has a much higher interest rate, is it ever possible to negotiate that particular interest rate with the lender? Can I get a consolidation loan for that loan, to pay a lower rate somewhere else?
Any advice would be extremely helpful.
So here is the straight scoop on private student loans, as it stands right now these private student loan lenders are not required to offer you any repayment plan beyond what you originally agreed to. Private student loans have no reasonable and affordable repayment options like federal student loans do.
The loans that someone cosigned for you are problematic. If you default, the lender will go after the cosigner for the full amount due. That's the role of the cosigner, to pay up when you can't. Most people incorrectly assume the cosigner is needed to qualify for the loan. While that is partially true, the real role of the cosigner is to give the lender deeper pockets to go after in case of default.
Navient has been battling with the Consumer Financial Protection Bureau (CFPB), that fights for fairness in financial transactions. While Navient vehemently denies they had anything to do with the misrepresentative ad below that is airing, the American Banker said, "As detailed by an article in The Intercept, American Action Network has connections to Navient, a student lender under investigation by the CFPB. Two board members of the conservative group are registered lobbyists for Navient, according to the article, while another board member works for a lobbying firm that serves student and payday lenders."
What is so ironic about that advertisement is access to consumer debt and consumer debt balances have been rising since 2010 when the CFPB was formed.
You can certainly look around for private student loan consolidation companies but I would be surprised if you find a better rate.
You basically have four options.
- Your private student loans may be able to be discharged in bankruptcy today. Even if the loans may not be fully dischargeable, the amount of the loans that was used above what would have been "qualified higher education expenses" may be.
- If you other consumer debt that is preventing you from making the payment and all or none of your private student loans is not dischargeable as explained above, then you still might have to consider bankruptcy to clear the decks and make room for the student loan payment. Keep in mind that most of what you assume about bankruptcy is just plain wrong. Click here to get the facts.
- Faced with an impossible situation, defaulting on your private student loans can give you other options. You should probably read "Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan". I will agree that is an imperfect solution to an imperfect problem but it can and does work for some.
- Despite of what some people say, Navient will settle student loan debt for up to half of what is owed. The kicker is you will typically need to repay them over a short period of time or they might give you a year or two to make all the payments. The key to this approach is you really talk to someone who is experienced in dealing with this type of situation. My friend Damon Day is one of those experienced people who I mentor. Navient will tell you they don't settle, but they do if you know how to go about it.
I wish I had a magic wand to wave but at the very least I've steered you towards four possible options in what most consider to be a problem with no solutions.
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