Sallie Mae Loan Forgiveness: What you need to know

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Sallie Mae Loan Forgiveness

If you hold a Sallie Mae loan, you may qualify for loan forgiveness. According to the type of loan you have, you will be eligible for loan forgiveness or not.

Student loans from Sallie Mae were available in both forms. However, all federal student loans came from Navient beginning in 2010. Sallie Mae no longer services federal student loans, so Navient became the student loan servicer. For more information, visit mycreditcounselor.net.

If you have federal student loans, you may be eligible for a loan forgiveness program. Sallie Mae is not eligible for loan forgiveness on any of its remaining private student loans. This does not apply to all private student loans. Find out more below.

Settlement in connection with ITT Tech & Art Institute by Sallie Mae

A coalition of attorney generals sued Navient for $1.85 billion after it took over Sallie Mae loans. In the lawsuits, Navient is accused of plying borrowers with predatory student loans and costly repayment plans.

What you need to know are these three things.

  • Students who borrow federal student loans. For about 350 thousand of its students who are in long-term forbearances, Navient will pay a $260 check.
  • Students who borrow private student loans. ITT Tech and the Art Institute Schools are set to wipe out the student loans of nearly 66 thousand people. In total, Navient is writing off $1.7 billion in private student debt.
  • It is not necessary to apply. No action is necessary to obtain this relief. In July, Navient will send a notice to borrowers who qualify for loan forgiveness.

The Washington Post reports on the details of the settlement.

What is a federal student loan and is Sallie Mae one?

The Federal Family Education Loan Program (FFELP) was a government student loan program before 2010.

Government-backed and insured loans were made through the FFEL Program by private banks. As soon as the FFEL program ended in 2010, Navient was responsible for managing Sallie Mae’s FFELP loans. In this case, if your loan started with Sallie Mae but is now with Navient, it is likely that it is a federal student loan.

Forgiveness of private student loans by Sallie Mae

Private student loans from Sallie Mae are not eligible for loan forgiveness. Nonetheless, they can cancel a loan if the primary borrower suffers a total and permanent disability.

Can’t pay your Sallie Mae student loans? What should you do?

Salalie Mae does not offer repayment plans based on your income, unlike the U.S. Department of Education.

In contrast, they offer two types of repayment, Graduated Repayment Period and Fixed Monthly Payment.

You can make interest-only payments during the first year after leaving full-time status at school under the Graduated Repayment Period. You will receive a fixed amount for your monthly payments once those 12 months are up.

This type of payment plan requires you to make fixed monthly payments until the loan is paid off, identical to what it sounds like. No matter which plan you choose, if your monthly payment is too high, you’re out of luck.

What then do you do?

Most borrowers of student loans ask for deferment or forbearance first. However, deferments do not lower interest rates. Moreover, they don’t prevent your loan balance from increasing—in fact, they do the opposite.

There are few repayment options available if you run out of deferments but still cannot make your payments. Those who choose Smart Option can defer their payments up to five times for a period of 12 months.

You could, of course, look into student loan refinancing with a different private lender.

Despite what some people think, you cannot consolidate private student loans into federal student loans. Consolidation of federal student loans can only take place for federal student loans.

The variable rate may be low depending on your credit score. Unless you can refinance, you’re out of options.

As you make your payments, you will either keep making them or start missing them. You will lose credit score points and your co-signer’s credit score points if you start missing payments. You have no choice.

Sallie Mae delinquent loan repayment options

Despite your failure to make on-time payments, it’s not the end of the world. To help delinquent borrowers bring their accounts current, Sallie Mae offers three repayment options:

  1. Program to reduce interest rates
  2. Changes to the terms and rates
  3. The Three Pays

If you enroll in the Rate Reduction Program, you’ll have a lower interest rate and can make interest payments for a period of time. A temporary financial hardship is a benefit of this program for borrowers.

For a limited period of time, you can lower your interest rate and monthly payment through the Term and Rate Modification program. However, the program will also extend your loan’s term. As a result, you will end up paying more over time.

Three consecutive monthly payments equal to or greater than the amount due will bring your loan current through the 3Pay repayment program. Bringing your account current is the principal benefit of this program.

RELATED ARTICLE: How to use SBI Personal Loan EMI Calculator?

Is Sallie Mae able to settle student loans?

The past decade has seen me negotiate settlements for student loans from Sallie Mae. If you default on your loan, you can negotiate a settlement, just like other private student loan settlements.