Sallie Mae Doesn't Offer Income-Based Repayment: 5 Better Options

• Sallie Mae doesn’t offer income-based repayment plans for private student loans.

• While Sallie Mae offers temporary hardship programs, long-term solutions include refinancing, settlement (40-70% of balance), bankruptcy, or strategic default.

• Settlements typically range from 40-70% of the original loan balance.

No—Sallie Mae does not offer income-based repayment or any other income-driven plans. Unlike federal student loans, which can be tied to your income and family size, Sallie Mae is a private lender. Your monthly payment is based only on your loan balance, interest rate, and repayment term—not your ability to pay.

So what happens if you can’t afford your Sallie Mae payment? You don’t want to wreck your credit score with late payments. And if you have a cosigner, their credit is on the line too.

Here’s what you can do. Below are 5 proven strategies to manage Sallie Mae loans when traditional private student loans income based repayment isn’t an option.

Sallie Mae won’t offer income-based repayment because it cuts into their profits and makes payments unpredictable.

Unlike federal student loans, private lenders like Sallie Mae don’t have government backing, so they take on more risk. Income-driven plans mean lower payments and longer repayment terms—which isn’t in their best interest.

Federal loan servicers can garnish wages and seize tax refunds without a court order when borrowers default. Sallie Mae can’t. To collect, they have to sue you, win a judgment, and then enforce it—a slower, costlier process.

Some private lenders, like A.M. Money, offer income-based repayment for new loans. But you can’t refinance Sallie Mae loans into those programs. If you’re struggling with payments, you’ll need other options.

Related: Sallie Mae Student Loan Forgiveness Options

Sallie Mae offers several options to lower your monthly payments, though none are income-based. If you’re struggling financially, you can request a:

1. Graduated Repayment Period for 12 months of interest-only payments immediately after leaving school

2. Forbearance to temporarily postpone payments while in financial hardship

3. Loan Modification that reduces your interest rate and possibly extends your term

4. Reduced Payment Plan for six months of interest-only payments

These options require contacting Sallie Mae directly at 800-472-5543 for evaluation. Unlike federal loans, these solutions are temporary and may increase your total loan cost over time.

Sallie Mae offers temporary hardship programs as mentioned above, but these rarely provide long-term relief.

As a student loan lawyer who has helped hundreds of Sallie Mae borrowers find sustainable solutions, I’ve found five primary options that can provide more meaningful relief:

1. Refinancing private loans with another lender

2. Using Sallie Mae’s short-term hardship programs (with strategic planning)

3. Negotiating a settlement for less than what you owe

4. Pursuing discharge through bankruptcy (via adversary proceeding)

5. Strategic default (stopping payments without an immediate resolution plan)

Of these five options, most of my clients ultimately end up pursuing either settlement negotiations or bankruptcy. The reason is simple: these approaches address the core problem of unaffordable debt rather than merely postponing it.

Unlike with federal loans, Sallie Mae student loan forgiveness programs don’t exist in traditional forms, which is why these alternative strategies become so important for borrowers seeking permanent relief.

Refinancing sounds like a fix, but most borrowers won’t qualify. Lenders want a 700+ credit score and strong income—and if you’re looking for income-based repayment, you probably don’t have that.

Even if you do qualify, refinancing only lowers your rate slightly or stretches out your repayment term. It might shrink your monthly bill, but it doesn’t solve the core problem: affordability.

And unlike federal loans, Sallie Mae student loan consolidation isn’t an option—these private loans can’t be rolled into federal programs that offer forgiveness or income-driven repayment.

Sallie Mae’s hardship programs aren’t much better. Forbearance and deferment only delay payments while interest piles up. Many borrowers take a temporary pause, only to wake up to a bigger balance. These aren’t real solutions—they’re just stall tactics.

This is where settlement, bankruptcy, or even waiting out the debt can be smarter moves. Yes, these options hit your credit score temporarily, and that’s a real concern—especially if you’ve worked hard to keep it high.

But think bigger. You’re already stuck with a multi-year financial burden. Taking a short-term credit hit (one to two years) in exchange for permanent relief from unsustainable debt? That’s worth considering.

I’ve seen borrowers drop from 700 to 600—only to rebound to 700 within a year after paying a settlement. As a student loan lawyer who’s helped dozens of borrowers tackle Sallie Mae private loans, I’d call that a fair trade.

Settlement

Can you settle your Sallie Mae loans for less than you owe? Yes. If you’re in default and want to resolve your debt for less than the full balance, settlement may be your best option.

Once Sallie Mae charges off your debt, you can often negotiate a settlement for 40–70% of the balance, usually with zero interest and a payment plan of about a year. This works best if you have some ability to pay and want to resolve the debt fast.

For example:

• We helped a borrower with $150,000 in debt settle for $65,000 in a lump sum.

• Another borrower with $90,000 settled for $54,000 spread over two years.

These numbers may still seem high, but settling in 1-2 years beats struggling for 10-20 years under full repayment terms.

Once the settlement is paid, both you and your cosigner are released, protecting their credit from future damage.

Bankruptcy

If you can’t afford a settlement, bankruptcy might be your best option. It won’t automatically erase federal and private student loan debt, but Sallie Mae debt can be discharged—if you take the right steps.

Many borrowers ask: Are Sallie Mae loans dischargeable in bankruptcy? The answer: It’s tough, but possible. You’ll need to file an adversary proceeding, a separate lawsuit that asks the court to wipe out your balance.

Even if you don’t fully discharge your loans, bankruptcy can force Sallie Mae to negotiate, often leading to better repayment terms.

Here’s what else you should know:

• Bankruptcy only affects your credit—not your cosigner’s.

• If you successfully modify or settle the loan, both you and your cosigner are released.

• Your credit will recover. Most borrowers bounce back within 1-2 years—bankruptcy is not a lifelong financial death sentence.

Strategic Default

Another path is strategic non-payment—intentionally defaulting on your Sallie Mae student loans to keep your options open. Unlike settlement, which requires some ability to pay, strategic default with private student loans is an open-ended approach that doesn’t lock you into a resolution upfront.

By stopping payments entirely, you create flexibility to:

• Wait for the student loan statute of limitations to expire (as short as 3 years in North Carolina, longer in other states).

• Save money for a future settlement if Sallie Mae sues.

• Reassess your financial situation over time.

During this period, expect aggressive Sallie Mae collection attempts—against both you and your cosigner. If you take this route, talk to your cosigner in advance so they understand the risks. Your credit will take a hit, but this strategy can be an option when you don’t have the resources for settlement or bankruptcy right now.

This is a high-risk, high-reward strategy. If you’re considering it, make sure you fully understand your state’s statute of limitations and how far Sallie Mae is willing to go to collect.

There’s no one-size-fits-all solution, but you do have options. The best path depends on your financial situation and what you can realistically afford.

• If your hardship is temporary, deferment or forbearance can give you breathing room, but interest will keep adding up.

• If you can’t afford payments long-term, refinancing likely won’t solve the problem—it just spreads the debt out over more years.

• If you can settle, expect to pay 40-60% of your balance within a year. This eliminates the debt faster and avoids years of payments.

• If settlement isn’t possible, bankruptcy might help lower what you owe or create a manageable payment plan.

• If you need time to figure things out, strategic default is an option, but it comes with risks like collection efforts and potential legal action.

Here’s a breakdown to help you decide:

You can handle these processes on your own if you choose. But many borrowers find value in consulting with a student loan attorney for two key reasons:

1. Emotional distance – Having someone else handle the cognitive and emotional load of negotiations can reduce your stress

2. Expertise – Working with a specialist who navigates these situations daily often leads to more efficient and favorable outcomes

My team and I have helped hundreds of borrowers across the nation successfully negotiate settlements with Sallie Mae, navigate bankruptcy proceedings, and implement strategic default plans that protect their financial futures. We understand the nuances of private student loan resolution and have developed proven approaches that maximize savings while minimizing stress.

Book a call if you’d like to discuss your specific situation and explore which option might work best for you. We’re here to help.

Related Reading:

• Is Sallie Mae Predatory?

• Is Sallie Mae a Federal Loan?

• How to Get Sallie Mae to Stop Calling