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Advice For Dealing With Defaulted Student Loans

Savvy Community: Dealing With Defaulted Student Loans

This post was shared by reader monnie72385 in our Ask Savvy group.

I was recently contacted and was told I have defaulted on two of my student loans. I was given two options: (1) pay lump sum at a reduced rate or (2) pay 10 percent and make monthly payments immediately. I cannot do either at this point as I can't defer loans and go back to finish school because it is too expansive and my current job is only barely covering life expenses.  I have no idea what I'm supposed to do next. I can't find who I am supposed to contact because the loans were sold from GMAC to another company to another company without notification. I just need to know if anyone knows what my next step is supposed to be. Anything!

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idanceinmycar idanceinmycar 6 years
This happened to me about a year ago and it felt like the worst feeling in the world. Depending on your situation, is there a family member of friend you can turn to, who can help you with maybe some of the expense? Not sure how much you owe, but if it's an amount someone can help you with, that could be a solution. I turned to someone important in my life, laid all my cards out on the table and explained everything. I felt humiliated. They loaned me the money and now I pay them back every month without interest. I know not everyone has this option but swallowing my pride and my guilt and asking for help got me out of my mess. Best of luck!
lilkimbo lilkimbo 6 years
Oh, and I meant to mention, I would only accept the offer to pay off your loans for less than the amount owed if you've exhausted all other options. I was horrible with credit when I was younger and wound up taking this option on one of my credit cards. It is now the only black mark on my credit report and is seriously damaging my credit score. I am counting down the months until it gets erased from my report; it stays on there for seven years.
lilkimbo lilkimbo 6 years
It's really difficult to give you advice without knowing more details. Are these FFELP loans? If so, there are several types of deferments you can get, even if you are no longer in school. There's an economic hardship deferment, a working mother deferment, etc. Even if you are working, depending on what you make, you may be eligible for the economic hardship deferment. If you are not eligible for the deferment, you can typically get an economic hardship forbearance or a voluntary forbearance. The deferment is preferable because you continue to accumulate interest if you have to take a forbearance instead, but at least you wouldn't have to worry about making the monthly payments. Oddly, I have had the complete opposite experience from lizzyopal when dealing with Sallie Mae. I've been able to take voluntary forbearances twice and all I had to do to request them was take about 2 minutes to fill out a form online.
nicky360 nicky360 6 years
Look at your statements and the company holding your loans should be listed. Contact them first to work out a deal- they would rather receive something than go through the hassle of docking your paycheck (which they will do if you continue to not pay.) If someone tells you no, keep going up the ladder until you reach a supervisor who will work out a deal with you. Be aggressive and don't give up. You may also look into forbearance which is available if you don't make enough money to cover the debt. @Skigurl- if you can't say something nice (or helpful) shut your trap!
lizzyopal lizzyopal 6 years
if you're dealing with sallie mae you're screwed. i had the EXACT same thing happen to me. when i told them i couldn't afford the monthly payments, they didn't care one bit, just wanted their money. dealt with that for over a year. the only reason i could eventually pay them off is cuz i was in a car wreck that wasn't my fault.
mschelley mschelley 6 years
a friend of mine negotiated with them a bit. the lump sum was obviously too much for her to pay and they offered her a 90% settlement (she pays 90% of the loan amount) so she told them she'd take the settlement amount (for you that's the 10% deal, which is ridiculously good - assuming YOU are payment 10% of the total loan). she told them that she couldn't pay the offered plan though and that she'd pay a lesser percentage (ie: 65-70%), which reduced the monthly payments. They agreed, and she asked the first payment be due the following month to give her time to put some money together. get creative and don't take no for an answer - if the agent can't help you, ask for their supervisor. remember they want to get paid - they know your income, and would rather take some money rather than no money.
skigurl skigurl 6 years
If it's too expAnsive, you better get a second job.
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