Private student loan debt settlement has proven to be possible with certain lenders, despite the fact that private student loans are generally exempt from bankruptcy due to the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Not all private student lenders settle, but the ones who do offer settlement at various stages of the collection cycle. No lender will accept a settlement while loans are current, but as long as they are “charged off” (the official term for a private loan default) the possibility of settlement exists with most for-profit lenders.
If it turns out your private student lender is a nonprofit organization, such as a local or regional credit union, then it may be exceedingly difficult to settle. Many nonprofit lenders have a form of private loan insurance for their portfolio through a bond agency, which in turn will collect on defaulted loans – and will usually not accept settlement. The good news is that most private lenders are for-profit institutions and banks which will have more of an incentive to settle private student loans.
Once you’ve confirmed who your original lender is and whether they are a for-profit or nonprofit lender, it’s best to start negotiating with them or the collection agency they’ve hired. You won’t make any progress negotiating with a loan servicer the lender has hired to offer customer service and billing for current borrowers (like ACS, AES, or UAS) – these organizations won’t have the ability or permission to accept settlements on behalf of the original lender. However, a collection agency usually will – and better results can sometimes be obtained by contacting the original private lender directly. The main private student loan lenders are Navient/Sallie Mae, Discover, Wells Fargo, and National Collegiate Trust. There are dozens if not hundreds of other smaller for-profit lending institutions who wanted to cash in on the short term private student loan investing craze before the 2007 Recession. Since then, most smaller private student loan lenders and some larger ones have closed up shop, and may be willing to take a reduced amount for a private student loan settlement.
When pursuing private student loan negotiation for the first time, it makes sense to hire an experienced financial professional. My performance based private loan negotiation program is very effective, compliant with the 2010 TSR regulations, and results in settlements under 50% in almost every case. Let us take over your debt problems and deal with the debt collectors – you only pay if we negotiate a settlement that works with your budget. For a free evaluation from a certified credit counselor specializing in private student loan negotiation, email me at [email protected], or call 937-503-4680.
