How to Negotiate your Student Loan Settlements
If ever you have a problem with regards to student loans, know that you are not alone on this. The thing is, there are still options available.
So how could you negotiate a student loan payoff? Below would be some tips that will be able to help in increasing your chance of getting favorable results. You could read more here to learn more about your options.
Avoid Default to Negotiate
You can actually avoid student loan settlements when you take preventive measures before the loan goes to default.
In federal loans, the defaults tend to start after you go without making payments in a year. With the private loans, you can actually go into default when you have not made any payments within 90 days.
Instead of having the default deadline the limit of your choices for negotiating a student loan payoff, consider talking with the lender first with regards to options like consolidations or refinancing, deferment or forbearance and income-driven repayment plans.
Through the income-driven repayment plans, you will be able to qualify as well as get a cap with the monthly payments and you also will get relief on the interests.
With the deferment or forbearance, you can actually reduce temporarily the payments or stop it temporarily.
Through the consolidation or refinancing, the former involves the case of combining balances on multiple loans to just one payment and the latter involves the case of looking for more favorable interest rates as well as repayment terms.
With a pre-default opportunity, it will vary based with the situation that includes whether you have a federal or private loan. Be sure to check on the terms of the loan agreement before you contact the lender.
Discussing Hardship Programs with the Lender
In a lot of cases, a student loan settlement is a good option for borrowers who already exhausted their payment reductions and postponement programs that was offered by the lender. For a federal government, it likewise includes income-driven repayment plans, forbearance and deferment options that were being offered by most private lenders.
Kinds of Settlement Offers
Through a student loan settlement, it is usually made possible during instances where the borrower can offer a lump sum. Collection agencies are being authorized in accepting three type of settlement offers without getting approvals from the Department of Education. These are:
The amount remaining loan principal as well as accrued interest.
Its principal and the half of the unpaid interest.
The 90% of the current loan and its interest balance.
Settlements not fitting with one of such categories are very uncommon. It could however take longer because the Department of Education still needs to do reviews about it.
Consider a Request for a Paid-in-full Statement
If ever a settlement will be possible, consider having your attorney review the terms of the offer and to also request documentation that shows all the student loans were paid and have been settled.