SunTrust Student Loans: Options for Relief

SunTrust was once a go-to source for private student loans. But in 2020, following a merger with BB&T to create the new entity Truist, they halted their loan program.

The upshot?

If you’re a former SunTrust student loan borrower, you can no longer secure new loans from them. Instead, you’ll need to explore refinancing with a different private lender for a lower interest rate or better repayment terms.

Are you finding it difficult to meet your monthly payments? Feeling uncertain about how to navigate your SunTrust student loan situation? Don’t fret. My team and I have scoured the landscape and pinpointed the three best alternatives:

1. Refinance with a new lender

2. Negotiate a settlement

3. Consider student loan bankruptcy

I’ll guide you through these options, highlighting the circumstances under which they make sense and outlining their pros and cons. But before we dive into those, let’s first tackle three questions about loan forgiveness and repayment choices.

Let’s jump into it.

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Unfortunately, most SunTrust student loans are not eligible for forgiveness. The primary reason being these are private student loans, and the U.S. Department of Education’s forgiveness programs are mainly for federal student loans.

But if you borrowed Stafford Subsidized or Unsubsidized Loans through SunTrust under the Federal Family Education Loan Program (FFEL), you might have a silver lining. These particular loans qualify for several forgiveness programs, such as President Biden’s debt cancellation plan, the Public Service Loan Forgiveness, and income-based repayment plan forgiveness.

Related: How to Apply for Student Loan Forgiveness

No, your SunTrust student loans remain private student loans, not federal ones, despite any changes in loan servicing.

Now, some context might help.

Back in May 2020, SunTrust declared they were ending its private student loan program.

What does this mean for you as an existing SunTrust private loan borrower?

The main change is in loan servicing, which has now been transferred to American Education Services (AES). Rest assured, your repayment schedule and other loan terms should remain unaffected.

Related: Are AES Loans Eligible for Forgiveness?

Previously, SunTrust offered these types of student loans:

• Custom Choice Loan: A private student loan for both undergraduate and graduate students, offering a 2% reduction in the principal amount upon degree completion.

• Start Student Loan: A private student loan that kept interest from accruing for six months after disbursement.

• Union Federal Private Student Loan: Specifically designed for international students, this loan rewarded borrowers with a 0.25% interest rate reduction after three years of on-time payments.

• Graduate Business School Loan: Aimed at those pursuing MBAs or other graduate business degrees.

Much like other private lenders, SunTrust offers limited repayment options and loan terms. There are four repayment plans on the table:

1. In-School Deferment: This plan meant no monthly payments until six months after leaving school. But remember, interest starts accumulating the moment you take out your loan, so this is usually the priciest repayment plan.

2. Partial Interest: Borrowed at least $5,000? This plan allowed you to pay $25 a month while in school, chipping away at some of the accumulating interest. Hence your loan balance wouldn’t balloon too much while you were still studying.

3. Interest Only: You would only pay the interest you owe each month while in school, preventing your loan balance from growing during your study period.

4. Immediate Repayment: You would start full principal and interest payments as soon as your loan was disbursed — typically the most cost-effective option, as you’d pay down the principal in addition to interest while still in school.

When you applied for a private student loan, you chose your loan repayment term. Here are the terms for SunTrust loans:

• Custom Choice Loan: 7, 10, or 15 years

• Start Student Loan: 15 years

• Union Federal Private Student Loan: 7, 10, or 15 years

• Graduate Business School Loan: 7 or 10 years

One pro tip: shorter repayment terms usually equate to lower interest rates from most lenders. The quicker you clear your loan, the less you’ll pay in interest overall. While it does mean higher monthly payments, if you can afford it, always go for the shortest loan term.

Unfortunately, the federal government doesn’t offer consolidation loans for SunTrust’s private student loans. But don’t worry! You can still consolidate or bundle them with other student loans by refinancing through a new private lender.

Refinancing your SunTrust student loans could lead to lower monthly payments and, possibly, freedom from your cosigner. But to release your cosigner, you’ll need a solid credit score and sufficient income to handle not just your new student loan payment but also any credit card debt, mortgage payments, and other debts you might have.

Since SunTrust Bank doesn’t have refinancing options, consider turning to an online marketplace. Platforms like Credible allow you to shop with multiple lenders simultaneously.

One thing to keep in mind: with interest rates projected to rise in the coming months, a loan with a fixed rate could be your best bet. While a variable rate may seem appealing with lower rates today, it could increase soon as the Federal Reserve hikes the rates.

Sometimes, keeping up with your SunTrust loans’ monthly payments may become an uphill battle. You might consider refinancing, but your credit history or income might not meet the eligibility requirements.

What’s your next move?

You could request that AES or SunTrust grant you a deferment, forbearance, or lower your interest rate. But remember, these are temporary solutions. Once they run out, you may find yourself stuck between a rock and a hard place, choosing between student loan payments or rent.

I’ve guided hundreds of borrowers through this predicament. One escape route? Negotiate a settlement for less than the current loan balance. But it’s not a guaranteed option, and it carries risks. You would need to stop making monthly payments and let your loan default before settlement becomes a possibility.

The journey from defaulting to negotiating a settlement can be a rocky one. Debt collectors will hound you and your cosigner, threatening wage garnishments, bank account seizures, or property liens.

But here’s a silver lining: between the time you default and SunTrust takes you to court, there’s a massive opportunity to negotiate a deal. This could knock off thousands from your balance and allow you to pay the settlement amount in one go or possibly over several years at 0% interest.

Related: Private Student Loan Debt Settlement

Dread the thought of relentless debt collectors on your tail? You might want to consider bankruptcy as a potential lifeline to escape your SunTrust student loan debt. Here’s the deal: once you file for bankruptcy, it generally immediately stops all collection calls.

But there’s a catch: bankruptcy won’t automatically wipe out your student loans. For that, you’ll have to file an additional lawsuit, known as an adversary proceeding. In this process, you will need to prove that paying back your student loan would cause an “undue hardship,” a term that typically requires showing that:

1. You can’t maintain a minimal standard of living if you have to repay the loan.

2. This hardship will continue for a significant portion of the repayment period.

3. You’ve made a good-faith effort to repay the loan before filing for bankruptcy.

You might have heard from many bankruptcy attorneys that shedding student loan debt via bankruptcy is akin to climbing Everest.

But that’s not the full story.

In my experience, I’ve successfully navigated this process for clients who found themselves unable to refinance or strike a settlement. If you’ve got the right people in your corner, bankruptcy can be a potent tool to either obliterate your entire SunTrust student loan or achieve a significant reduction of the principal. This could lead to manageable installments over time, offering you a realistic path to eventually becoming debt-free.

Related: Can You File Bankruptcy on Student Loans?

Navigating the complexities of student loan repayment can be daunting, particularly with private loans like those from SunTrust. Whether it’s understanding your financial aid, weighing the benefits of autopay, assessing your loan amount, or looking at options available to undergraduate students, it’s vital to have a solid strategy.

We can assist if you’re in New York or any other state. With over a decade of experience in solving intricate student loan challenges and qualifying borrowers for optimal solutions, our team stands ready to help. We have expertise in areas like FAFSA, federal student aid, and achieving principal reduction.

Don’t hesitate to book a call with us today. Let’s work together to tackle your SunTrust student loans, irrespective of the type of loan, and guide you on your path to financial freedom.