Question:
Dear Steve,
I made the mistake of attending a for-profit college and, like most students, took out a bunch of loans to be able to complete my education. Also, like most students, I didn't know what I'd be getting myself into with private loans, which were taken out with Sallie Mae (now Navient).
I've been trying unsuccessfully to find employment since graduating in 2009 (also had an in-school deferment from 2010-2013 due to grad school), and have been paying my private Navient loans with federal loan money leftover from graduate school. I was until recently anyway, when I realized I could not longer afford to give Navient the $488 a month they expect from me (my Department of Education loans are on IBR, would be $1000+ a month with the DoE loans thrown in).
I've been writing letters to Navient to try and get them to work with me on a payment plan I can afford while getting everything in writing for my own records. I've missed two payments and they've begun sending collections letters to my cosigner. So far, they have ignored all my requests, which include:
- Mail-only communication (they call my prepaid cell phone that I rarely use every day)
- Not to contact my cosigner (have sent her collection letters)
- Provide me with documentation of debt (promissory notes, payment history, etc.)
- Hashing out a repayment plan that is not interest-only or forbearance because those are just short-term fixes that will not help me in the long run.
Settling is out of the question too; out of the $130,000 I have in total debt, about $73,000 is private loans. If I had access to tens of thousands of dollars, I'd be paying on my loans. I refuse to communicate with them by phone because I want everything in writing in the event I get taken to court. I have looked into loan refinancing options and they give me a payment estimate that is higher than what I currently am expected to pay.
I've only been repaying the private loans for 11 months. I also am still unemployed, so they have no wages to garnish.
How do I get my lender to cooperate with me? Why are they refusing to negotiate with me in writing? Is there anything else I can do to get them to work with me?
Karen
Answer:
Dear Karen,
I'm so sorry to hear about your predicament. Unfortunately it is a very common occurrence across my inbox.
Navient has every right to contact the cosigner on the loan. The cosigner agreed to be 100% responsible for the loan if you defaulted. That's the role of the cosigner. The get all the liability and none of the benefit.
Navient can even sue the cosigner if the loan is in default and they choose to.
With the cosigner in place, even if you exercised one of the more bleeding-edge solutions, like a consumer bankruptcy to wipe out the unmanageable debt as an undue hardship, it will still leave the cosigner on the hook for the total amount of the loan.
At this point the logical solution, although not perfect, would be to get all of your federal loans consolidated and on one of the income contingent payment programs. You can find details on this here.
Next, I generally suggest people consider filing bankruptcy to discharge unsecured consumer debt if it is in the way and preventing them from you making payments. It gives people the best shot of making payments when a cosigner is involved.
The ultimate reality is the private student lender has no obligation to offer you any alternative payment or affordable payment other than what you and the cosigner contractually agreed to.
So if you've done all of the above and the loan is still unmanageable then you are left with a less attractive option of defaulting on your private student loans. There is some benefit in doing this. Read Top 10 Reasons You Should Stop Paying Your Unaffordable Private Student Loan. Now for someone who does not have a cosigner, that can be a realistic and successful approach to take for Navient to eventually agree to a settlement when the loans eventually charge-off.
But unless the cosigner is onboard with that approach it will cause havoc to ensue in their lives. The cosigners credit will report the defaulted loans and they stand to be sued by Navient for the full balance plus more.
Something other people have done in this situation is talk to the cosigner and have them pitch in to help with the monthly payments to avoid a traumatic outcome.
But of course, the underlying problem here is the lack of income which is driving this unpleasant situation forward. I hate to state the obvious but you'll have to make even temp job income a priority or broaden or lower your employment prospects to start bringing in any sort of income if you want to try to protect the cosigner.
Before I go I wanted to leave you with three easy action items you can jump on right now to address your situation. Just click here.
If you have a credit or debt question you'd like to ask, just click here and ask away.
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