Navient Student Loan Settlement: Not for Pennies on the Dollar But You’ll Save Thousands

October 31, 2019

Tell me if this sounds familiar: You borrowed or cosigned for a private student loan from Sallie Mae several years ago. Over the years you’ve made payments when you could and asked for forbearances and rate reduction program opportunities when you couldn’t. Still, despite your best efforts and paying thousands of dollars, the balance is more than what was originally borrowed.

Do you feel seen right now?

I know your story. I heard it all the time as I was settling over 1 million in student loans last year.

Quick Navigation

  1. Sallie Mae created Navient to be your loan servicer
  2. How to submit a complaint about Navient’s bad servicing actions?
  3. Can you sue Navient for violating your consumer protection rights?
  4. Will Navient waive interest and collection fees?
  5. Can I refinance Navient student loans?
  6. Can I file bankruptcy on Navient private student loans?
  7. Should I strategically default to negotiate a settlement?
  8. Will Navient sue you if you default on a private student loan?
  9. What happens after your stop loan payments?
  10. What does a Navient student loan settlement offer look like?
  11. Do you need to hire a law firm to negotiate a student loan settlement?

Because I know your story, I’m going to answer some common questions that come up with Navient student loan settlements.

But before I do that, I want to make sure you know how Navient got your loans.

#1 Who is Navient

When you first borrowed your private loan debt Sallie Mae was both your lender and loan servicer.

In 2014, that changed. That year, Sallie Mae created Navient to handle loan servicing for both federal student loans and many of Sallie Mae’s private loans.

Later that year, your account was sent to Navient so it could provide guidance on your repayment options and loan forgiveness programs like the Public Service Loan Forgiveness program.

But does it feel criminal and slimy and just plain fucking wrong? Hell yes.

Attorney Tate

#2 Is Navient’s Student Loan Interest Rate Criminal

Is the interest rate Sallie Mae/Navient charged you illegal?

No. It’s an interest rate you agreed to pay (even if you were young and/or didn’t understand what you were signing) when you signed the contract

But does it feel criminal and slimy and just plain fucking wrong?

Hell yes.

But what can you do about it?

You can try submitting a complaint to your state attorney general or to the Consumer Financial Protection Bureau (CFPB).

Related: List of Attorneys General by State

I’m not sure where that will get you, seeing as that their former student loan ombudsman quit because the CFPB under the Trump administration “abandoned the very consumers it [was] tasked by Congress with protecting.”

Seth Frotman now heads the Student Borrower Protection Center

#3 Suing Navient for Violating Consumer Financial Protection Laws

Could you sue Sallie Mae or Navient for violating consumer protection laws by charging you that ungodly amount of interest?

I mean you could, but would you win your lawsuit? Likely not. After all, you agreed to the loan terms.

My pessimism aside, each state has its own broad consumer financial protection laws that may give the ability to sue. You’d want to speak with an attorney where you live to find out your rights.

#4 Will Navient Waive Interest and Collection Fees

Since we know filing a complaint or trying to sue likely won’t work, what are your options?

You could keep paying. But with the loan repayment plans they offer you, it feels like you’re throwing good money after bad. And isn’t that what you’ve already done over the years?

Could you ask them to wipe away the interest and collection fees and let you pay what you borrowed?

Technically, there’s nothing stopping you from asking. Nor is there any legal reason why they couldn’t do so.

But will they agree to do that?

Probably not. In fact, the representative will likely rudely dismiss you and tell you there’s nothing that can be done and you need to pay what you owe.

So what then?

#5 Can I Refinance Navient Student Loans

If you can get it, student loan refinancing may be the right choice. It may give you better loan repayment options and maybe even offer loan forgiveness if you become totally and permanently disabled.

But here’s the thing:

Few people who have trouble paying their private student loans qualify to refinance their loans.

Typically, I see borrowers fail to qualify for refinancing because:

  • they’ve previously defaulted on the loan
  • they have other negative marks on their credit report
  • their credit score is low or
  • they don’t work in the right industry (some loans require you be a physician, engineer, lawyer, etc.).

In my opinion, no one servicer/refinance company is demonstrably better than the other.

You simply want to find a company that offers you a great interest rate and flexible student loan payments.

#6 Can I File Bankruptcy on Navient Private Loans

Possibly.

I’ve had debtors in bankruptcy file a lawsuit to discharge their student loans.

While we don’t always get a discharge, we’ve been able to negotiate a private student loan debt settlement whereby we wiped away thousands of dollars of interest.

If you’ve already filed bankruptcy, you may be able to reopen your old case to file the lawsuit. You’d want to speak with a bankruptcy attorney near you to review your options.

#7 Should I Strategically Default on My Private Loans

But maybe you don’t want to file bankruptcy.

After all, it’s scary as fuck and it’s complicated. Plus, you don’t want to lose your home, car, etc.

So what are your options then?

You could stop paying.

Some refer to this is as strategically defaulting.

Screen grab of Forbes Headline

But then the natural question to have is what happens when you stop payment?

#8 Will Navient Sue You if You Default on a Private Student Loan?

Likely yes. You see, suing you is the only way Navient (or any private student loan lender) can forcefully collect on defaulted loans from you.

Unlike the federal government, which has the power to garnish your wages and take your tax refund automatically, private lenders need a court order to forcefully collect from you.

But how long will it take Navient to sue you?

There’s no one answer. A lot depends on when you made your last payment, what the applicable statute of limitations is, etc.

Since there’s no one answer, let’s assume it takes at least a few years after you stop paying the debt before they sue you.

#9 What Happens After You Stop Loan Payments

Collection calls. And lots of them.

Navient’s going to be calling you, your momma, your best friend, your job, your ex., etc.

On top of that, they’ll send threatening letters and send negative information to each credit bureau, which will likely cause a serious drop in your credit score.

Of course, those are all bad, stressful things that trigger all types of anxiety and depressive and fearful moods.

But there’s also some good that happens:

A Navient student loan settlement becomes a possibility.

While the student loan settlement won’t be for pennies on the dollar, in my experience, based on the Navient settlement offers I’ve seen over the years, you’ll end up paying about 30 to 60% of what you owe.

Related: What I learned Negotiating $1 Million in Student Loan Settlements in 2018

#10 What Does a Navient Student Loan Settlement Offer Look Like

Say you owe $100 thousand.

If you can get it, your private student loan debt settlement will likely be somewhere between $30 thousand and $60 thousand.

Do you have to have a lump sum to negotiate a settlement?

Not always. But it’s super helpful.

Typically, the greater your lump sum, the more you save.

Here’s a Navient settlement offer where my client saved over $100 thousand dollars:

Navient private student loan settlement offer terms

That may not be your story though.

And that’s okay. You still may be able to negotiate a settlement for monthly payments.

It’s just that settlements with no lump sum can lead to extremely high monthly payments because you usually get somewhere between 24 to 48 months to pay the settlement amount in full.

Let’s put that in perspective by using our example from above.

Say you settle the $100 thousand you owe for $50 thousand. Your monthly payment will be somewhere between $1041 and $2083 depending on how many months you’re given.

Many borrowers simply don’t have that amount of money available each month.

Looking at those numbers, you may be thinking: maybe I could afford the settlement if you negotiate it down to 30% of the balance payable over 48 months.

Yeah, sure. That’s a possibility. But is it probable?

Here’s the difference between those two.

If I stand outside during a thunderstorm, it’s possible I will get struck by lightning. But it’s likely not going to happen.

Meanwhile, it’s totally probable that I will get wet.

When you don’t have a lump sum and you can’t afford a high monthly payment, you’re basically hoping to negotiate the lowest settlement possible payable over the longest period of time possible.

In my experience, that outcome is unlikely. And I’d tell you that and wouldn’t take you on as a client.

About that last part.

#11 Do You Need to Hire a Law Firm to Negotiate a Settlement with Navient

No. You don’t have to hire a lawyer or a debt settlement company to negotiate a settlement on your behalf.

You can do it yourself. Just prepare yourself for all the hours of phone calls and rudeness and harassment that comes with negotiating a student loan settlement.

If that doesn’t sound appealing to you, and I don’t know why it would, look into hiring an attorney, preferably a student loan lawyer, to handle your settlement.

It’s like my client Kacy said:

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