What does all this movement mean for borrowers?

Regulators claim that the move is in the best interest of borrowers. However, the exact benefits are murky at best.

We do know that hundreds of Navient employees are becoming Maximus employees. It isn’t clear how a new corporate entity signing their checks will mean a better experience for borrowers.

The Creation of Navient

In 2013, student loan giant Sallie Mae split into two different companies: Sallie Mae and Navient. Sallie Mae tasked Navient with handling federal student loan servicing.

At the time, Sallie Mae faced significant regulatory pressures, and many consumer advocates criticized Sallie Mae for providing lousy advice to borrowers and failing as a servicer.

Borrowers were told that Navient’s split from Sallie Mae might actually be a good thing. Why? Because the Department of Education contracts were “very specific in what companies like Navient can and can’t do for borrowers.”

Instead, Navient repeatedly faced controversy, investigations, and lawsuits.

Navient’s Checkered Past – A Timeline of Failing Borrowers

Same People, Different Name

Aidvantage is supposedly different and better for borrowers.

Once again, we are told that the contract terms mean borrowers will get better servicing.

Borrowers who were around for the 2014 transition know that “strict” contract terms don’t necessarily mean better servicing.

Maybe this time will be different. Maybe the new contract terms are actually better for borrowers.

I’m not holding my breath.

The fact that hundreds of Navient employees are now Maximus/Aidvantage employees scares me. The name on the building couldn’t matter less. The guidance borrowers receive is what matters.

If the same people provide the same short-sided help for borrowers, nothing will improve.

Tips for Borrowers Stuck with Navient/Maximus/Aidvantage

New servicers are almost always an issue for borrowers. In some cases, it is a minor inconvenience. In others, the servicer transition causes major problems like missed payments and adverse credit reporting.

Sadly, borrowers don’t have the right to prevent a servicer transfer. Worse yet, borrowers have limited options for picking a new servicer.

There are several things Naivent borrowers can do right now to avoid major issues with the transition:

The post Navient’s Strange History and Student Loan Exit is a Warning to Borrowers appeared first on The Student Loan Sherpa.

Of all the reader emails we receive, the most common boils down to the following: Sallie Mae/Navient did X… they should have done Y… what do you suggest I do?

Fortunately, there are several ways of dealing with Sallie Mae and Navient complaints.

Getting Started with Compliant Management

When resolving any student loan issue, the best thing you can do is get all your ducks in a row. If you had conversations via email, have all of your emails handy. If it is a billing issue, have your lender statements and your bank statements ready to go. Your goal should be to have any document that might be useful at your fingertips.

Where do I go for help when Sallie Mae or Navient Ignore my complaints?

Normally the first call to make is to the general customer service number. The person on the other end of the phone should be trained to help you find a solution, or to put you in touch with the right person. Unfortunately, this is not always the case.

One practice that can be very helpful is to make sure that the person you are talking to has the authority to fix your problem. For example, suppose you submitted a payment over the phone and it was supposed to be applied towards loan A. Instead of applying it towards loan A, the service representative applied it towards loan B. When you call to have your issue fixed, make sure the person you are chatting with can help. You can ask them by saying: “I’m calling about a payment I made where funds were applied to the wrong account. Are you able to credit the proper account so that my payment is processed correctly?” If they cannot help you, ask to be connected to someone who has the authority to fix your problem.

Calling up the Navient and Sallie Mae Food Chain

If traditional customer service does not work, Sallie Mae and Navient both have customer service advocates. These individuals work for Sallie Mae or Navient, but they should be in a position to rectify any errors made. Think the customer advocate as ombudsman of sorts.

If you want to reach out to either customer advocate, their contact information is as follows:

Sallie Mae Advocate

Address:
Office of the Customer Advocate
P. O. Box 3349
Wilmington, DE 19804-4349

Phone:
(855) 342-2014

Navient Customer Advocate

Address:
Office of the Customer Advocate
P. O. Box 4200
Wilkes-Barre, PA 18773-4200

Phone:
(888) 545-4199

Email Address:
advocate@navient.com

What if Sallie Mae or Navient isn’t helping at all?

If you have done everything you can do with the company and not gotten anywhere, you still have options.

If you have Department of Education Loans (better known as federal loans), you can submit a Navient complaint to the Department of Education Ombudsman. The Ombudsman page with the Department of Education has a great explanation of the process, as well as contact information for getting things started.

If you have private loans, the Department of Education Ombudsman will not help.  Fortunately, the Consumer Financial Protection Bureau can be of assistance. If you file a complaint against your lender with the CFPB, they will be required to respond to explain their side of the situation. Having the CFPB act as an intermediary lets Sallie Mae/Navient know you are serious, and it also can help shed light on the issues to all parties involved. Here at the Student Loan Sherpa, we have previously discussed the steps to filing a Student Loan complaint with the CFPB.

In some circumstances, it may be possible to transfer your student loans to another lender or servicer. For example, borrowers denied a cosigner release by Navient may choose to refinance their loans with a new lender.

Organizing Your Thoughts and Getting Actual Help

Often getting an issue resolved comes down to your patience and ability to explain the problem. Yelling, losing your temper, or getting frustrated will only get in the way of getting your issues resolved. The best thing you can do for yourself is to get the person on the other end of the phone on your side.  If they want to help you, things will be much easier.

One thing to remind yourself is to focus on the facts, not your feelings. If you complain by saying something isn’t fair, you are not going to get very far. If you focus on the facts of your particular issue, you will get further. You should try to fill in the blanks on the following before you make your call:

I have an issue with Sallie Mae because they ______________________.

This was improper because ______________________.

In order to fix this issue, I need someone to ______________________.

If you are able to explain what your issue is, why it is an issue, and how to get it fixed, your odds of success will be much higher.

The post Resolving Complaints with Navient or Sallie Mae appeared first on The Student Loan Sherpa.

Given the amount of press that Sallie Mae receives, and the many controversies involving Sallie Mae, it is important for any potential borrower to get all the facts, good and bad, before making the decision on a Sallie Mae loan.

Sallie Mae Private Student Loan Basics

Sallie Mae offers both variable-rate and fixed-rate student loans. The interest rates on the low end are excellent, but the interest rates on the high-end are awful.

Like most private loan lenders, you are able to borrow up to 100% of your school’s estimated cost of attendance. This number includes estimates for books, transportation, housing, etc.

Sallie Mae’s repayment terms are fairly standard, and there is no prepayment penalty, which means there is no harm in paying off your loans as soon as you can.

One area where Sallie Mae differs from other lenders is repayment length. Most lenders allow borrowers to pick a 5, 10, or 15-year repayment plan. Sallie Mae loans have 10 to 15 years of repayment, but the exact length is determined during the loan application process.

Smart Option Benefits

The interest rates offered by Sallie Mae are fairly competitive, and a 12-month co-signer release is one of the shortest on the market. The zero-percent loan origination fee is also something that every borrower should expect.

We also like to see that there are multiple payment plans for students still in school. Making payments during this time is a great idea because it is important for the borrower to have an understanding of how much debt they are in and it prevents the interest from compounding on your loan. Borrowers have the option of making no payment, paying $25 per month, or paying the interest that accumulates each month.

One area where Sallie Mae should get some credit is their approval rate. Getting a loan with Sallie Mae is usually easier than with other lenders. Borrowers just need to make sure the loan interest rate is reasonable.

Sallie Mae Private Loan Issues

For starters, Sallie Mae’s private loans suffer from the same disadvantages that apply to all private lenders.

Even though the government loans may have a higher interest rate, Federal government loans are still a better alternative for most students, largely because the Federal loans have the most forgiving repayment plans. Therefore, students should first maximize FAFSA funds prior to selecting any private loan.

Borrowers should also be very careful about getting co-signers involved with their student loans. Sallie Mae claims that 88% of their borrowers have co-signers.

Sallie Mae recently took some heat from the government and in the press for the practice of auto-defaults. In cases where the co-signer dies or declares bankruptcy, Sallie Mae has the ability to automatically place the loan in default status. Sallie Mae does claim to have a cosigner release policy, but we have found these policies to not be of much use in real life. This is because lenders like Sallie Mae require the borrower to be independently creditworthy in addition to other requirements at the time of the cosigner release application. Because Sallie Mae has no incentive to actually release the cosigner from the loan, many are denied. We suggest that borrowers and cosigners never plan on a release. If they do want a release, this guide should help get it done with relative ease.

A final persistent issue with Sallie Mae has always been their customer service. We used the “chat with an expert” link on their page to ask a couple of questions and found the “expert” to not be very helpful. Instead of being provided with the repayment length answers requested, the expert kept sending requests to complete an application.

A good rule of thumb for borrowers to keep in mind is that customer service is normally at its best when a company is trying to win your business. Once you are stuck with a lender, things can go downhill. Sallie Mae seems to struggle even at the initial phase of the process when things should be easy.

Sallie Mae Student Loan: Final Review

If you are going to take out a private loan, make sure you get all the facts.  

Before agreeing to any terms and conditions, take the time to read them. It may all seem like useless legal jargon, but it makes a big difference and the terms vary from company to company.

Sallie Mae makes loans that are easy to get and they loan money to lots of people. They have helped many students pay for college, but they’ve also angered plenty along the way. Reading the fine print can help avoid unwanted surprises and ensure a positive experience.

Rather than checking your rate directly with Sallie Mae, we suggest checking rates using the Credible Platform. This allows borrowers to shop around by checking their rates with Sallie Mae and six other lenders.

The post Sallie Mae Smart Option Private Student Loan Review appeared first on The Student Loan Sherpa.

The idea is simple: take out one last educational loan, focus on studying for the test, and be able to pay rent and put food on the table during that time.  

To recent law school grads with 100k+ in student debt, borrowing an extra $10,000 or so in order to help ensure bar passage may seem like an easy call.

Unfortunately, the Sallie Mae bar study loan may prove to be a mistake for many aspiring lawyers.

Bar Study Loan Basics

The most important thing to know about a bar study loan is that it is not a student loan. Instead, it is a personal loan.

Unlike student loans, personal loans don’t have to be used for qualified educational expenses. If you get a bar study loan from Sallie Mae, you will receive a check from Sallie Mae.

Personal loans are treated like most other debts in a bankruptcy proceeding. Borrowers do not have to meet the rigorous “undue hardship” standard specifically required for student loans. The relative ease of discharging a bar study loan in bankruptcy isn’t a major consideration for most borrowers, but it matters a great deal to lenders. As a result, interest rates on bar study loans are usually much higher than most student loans.

Unlike other personal loans, bar study loans usually require that applicants be recent law school graduates and plan on sitting for the bar. These loans may also include a grace period where payments are not required, but interest does accrue.

Sallie Mae Bar Study Loans

In order to be eligible for a Sallie Mae Bar Study loan, applicants need to be current law school students or have graduated within the past 12 months from an ABA-accredited law school.

Sallie Mae offers variable interest rate loans for bar study and the rates currently range from a reasonable 2.90% APR to an awful 11.56% APR. Fixed-rate loans range from 5.75% to 12.68%. Borrowers are able to borrow between $1,000 and $15,000.

We like that Sallie Mae does not charge any prepayment or loan origination fees, but we don’t like the emphasis that they put on having “creditworthy cosigners” on the loan.

Sallie Mae advertises a cosigner release possibility after 12 months of payments, but due to vague credit requirements that borrowers must meet in order to secure a release, cosigners should play it safe and plan on being on the loan for the life of the loan.

Reviewing Sallie Mae vs. Other Bar Study Options

Sallie Mae’s interest rates on the high end are especially terrible.

Anecdotally, the majority of the borrowers that we have seen end up getting approved for rates on the high end of the spectrum.  At around 12%, these rates look more like onerous credit card rates. Lenders like Discover and PNC have slightly more appealing bar study offerings.

In many cases avoiding a bar study loan can be the best option. Many people like to avoid working while studying for the bar, but a distraction from a job can be a healthy break from studying. Plus, the income generated can help avoid a really expensive loan.

Another option is to look into a more traditional personal loan. As an example, SoFi currently offers fixed-rate personal loans starting below 6%. Because the personal loan marketplace is far more crowded than the bar study marketplace, the competition is more fierce, and borrowers may be able to score a better rate.

Borrowers who only qualify for the high interest rate loans may also consider paying their living expenses on a credit card with a 0% introductory APR rate. This route is extremely risky because the interest rate jumps considerably after the intro period, but for people who need the cash to cover food and bar study classes, it might be a reasonable option.

Final Thoughts

Sallie Mae seems to do an excellent job advertising their bar study loan to aspiring lawyers. They also emphasize a quick application process.

The Sallie Mae approach appears to be predicated on getting the applicants who will not shop around and consider other options.  

Sallie Mae is normally the first bar study loan that law students are exposed to, but it is unlikely that it will be the best choice. Law students who are willing to shop around and/or be creative will likely find better options elsewhere.

Even though we are not fans of the Sallie Mae bar study loan, or bar study loans in general, there is no harm in checking your rate with Sallie Mae. For some students, it might be a lousy option, but still the best option available.

Click here to check your rate with Sallie Mae.

Click here to check your rate for a traditional personal loan with SoFi.

The post Sallie Mae Bar Study Loan Review appeared first on The Student Loan Sherpa.

Katie writes:

Dear Loan Sherpa,

I am a co-signer of my daughter’s student loans that we took out about a decade ago (she has a Ph.D. now, at least), and initially, they were Sallie Mae. Then they went to Navient, I guess. We had always assumed they were eligible for forgiveness for working in certain sectors — public loan forgiveness, I guess it is called. However, we were told that Navient loans are private, and therefore not eligible. Is there any way to convert them?

Thanks for any advice here!

Katie

Before Doing Anything: Verify the Loan Status

The tricky part about Katie’s question is that both Navient and Sallie Mae have managed private and federal student loans.

The only way to know the status of your loans for certain is to visit the Department of Education’s Federal Student Loan Database. If the loans show up on this database, they are federal loans. If you can’t find your loans in the database, they are likely private loans.

Can I Convert Private Student Loans into Federal Student Loans?

If your loan is private, it isn’t eligible for programs like Public Service Loan Forgiveness or income-driven repayment plans. Furthermore, there is no procedure or mechanism to convert a private loan into a federal student loan. Although some in Congress have made relevant proposals to resolve the issue, these proposals have received limited support.

Borrowers with Sallie Mae and Navient private loans can slowly convert them into eligible federal debt via creative repayment. However, this approach won’t provide the immediate fix that Katie seeks.

Fortunately, even if you are stuck with private loans, there are a couple of ways to make your payments go further.

Option 1: Take Your Business Elsewhere

One of the biggest developments in student loans over the past five years has been the private student loan refinancing market’s growth. There are now many companies that will refinance old high-interest loans at a lower interest rate. The catch is that you have to be a good credit risk for a new lender to take on your debt. That means a high credit score and sufficient income to pay all of your bills comfortably.

If Katie’s daughter fits the above description, she could refinance without having Katie co-sign. That means the loans fall off of Katie’s credit report, and her daughter potentially gets a lower interest rate and/or lower monthly payments. One benefit of this approach is that it would provide Katie with a cosigner release.

Option 2: See if Navient can help out

If Katie and her daughter are facing payments that are not affordable, they might be able to convince Navient to temporarily lower the interest rate on their loans due to their hardship. This could result in smaller monthly payments and a larger portion of the payment actually reducing the principal balance. Navient offers this relief through a program called the Navient Rate Reduction Program. The program exists to help borrowers who didn’t have the money to keep up with their student loans.

The problem with the program is that it isn’t a borrower’s right under the student loan contract. Accordingly, Navient can approve or deny you for the program at their sole discretion.

Final Thoughts on Converting Navient or Sallie Mae Private Debt into Federal Loans

Unfortunately, there is no method in place to turn a private loan into a federal loan. For private student loan borrowers, that means no income-based repayment plans or student loan forgiveness.

Fortunately, even if you’re stuck with a private loan, there are at least a couple of ways you can make your monthly payments go a little bit further.

Next Steps

• Visit the federal student loan database to investigate whether your debt is private or federal.
• For private loans, reach out to the lenders offering the best refinance rates.
• For federal loans, make sure your employer is eligible for Public Service Loan Forgiveness.

The post Can I Convert Navient/Sallie Mae Private Loans Into a Federal Loan? appeared first on The Student Loan Sherpa.

Before jumping into the steps, however, please take note of these essential details.

1. Sallie Mae created the Rate Reduction Program to help borrowers struggling with their private loans. People in a solid financial position will probably need to use other methods as outlined below.
2. This program applies only to private student loans. Federal loan borrowers will need to explore alternative ways to get lower interest rates.

Also, for those interested, here is the story of how I stumbled upon this method.

Eight Steps for Enrollment in the Rate Reduction Program

Step #1: Get organized.

Write down ALL of your monthly expenses. Know exactly how much you spend on them. Such expenses include rent, utilities, food, credit card bills, car payments and maintenance, gas, cable, phone, and your other student loans.

Then, write down all of your income sources and amounts.

Step #2: Call Sallie Mae.

Sometimes this can be the hardest part. We’ve all been there. It’s easy to procrastinate on this until tomorrow. But remember, each day you wait, your debt problems get a little worse.

Step #3: Talk to the right person.

In my experience, the base-level customer service department isn’t helpful in this endeavor. They can offer to lower your payment by .25% if you sign up for auto-debit, but that is it. Ask to be transferred to the collections department.

Step #4: Ask for the Rate Reduction Plan.

Under the Rate Reduction Program, Sallie Mae may lower your interest rate to as little as 3%. In extreme circumstances, they might reduce the rate even further.

Step #5: Discuss your finances.

Sallie Mae only offers the Rate Reduction Program based upon financial need. Before your call, make sure you have all the paperwork you assembled in Step #1. Be prepared to explain your expenses. They will do the math with you over the phone. Be ready to discuss what you can pay and how you plan on doing it.

Step #6: Make your monthly payments.

Sallie Mae is not under any obligation to put you on this program. If you’re not making your payments, your balance will grow, and you may even get booted from the program.

Step #7: If you can, pay a little extra.

The lower rate does not last forever. While you have the lower interest rate, take the opportunity to pay down a little extra on your principal. These extra payments will help you in the long run, especially when your rate jumps up again. Just be sure that the extra money you are paying is going towards a reduction in principal. It may be worth an additional phone call to verify that Sallie Mae is correctly applying the extra payments.

Step #8: Renew your application as needed.

The rate reduction program lasts only six months. After six months, you can apply again. According to the Sallie Mae employee I spoke with, borrowers can renew for a maximum of 3 years.

Advantages of the Rate Reduction Plan:

• It lowers your interest rate with Sallie Mae.
• Lower interest rates mean lower monthly payments.
• If your loan is delinquent and you make payments for six months, your overdue balance will go to zero. Sallie Mae will also report that you are current to the credit bureaus. This means your credit score will go up.

Sherpa Tip #1: This is a temporary fix. It lowers your payment and interest rate for a short time. Take advantage of this, but know that it does not last forever.

Sherpa Tip #2: This is not a term to your original loan agreement. Therefore, Sallie Mae is under no obligation to put you on the rate reduction plan. Be nice when dealing with your lender. If you are a jerk or rude on the phone, they will be much less inclined to help. It’s tempting to yell and sometimes nearly impossible to be civil, but it is in your best interests.

Things to Know About This Strategy to Lower Sallie Mae Interest Rates

I first discovered this program back in 2013 while helping a borrower. The rules and contact information have changed over the years, but the Rate Reduction Program still exists.

Sallie Mae does not advertise the Rate Reduction Program. It exists entirely to help borrowers who are in severe financial trouble.

Sallie Mae could discontinue the program at any point in time. Borrowers should plan accordingly.

Lower Interest Rates for Borrowers Who Are Not Struggling

Getting a better deal is much easier for borrowers who have a job and a decent credit score. Rather than working directly with Sallie Mae, consider taking your business elsewhere.

The process is called student loan refinancing. Popular refinance companies include SoFi, Splash Financial, and ELFI. If a borrower refinances with SoFi, the borrower gets a new loan with new terms from SoFi. The money from the new loan pays off old student loans, like the ones with Sallie Mae.

The idea behind the refinance process is that someone with a college degree and a job is less of a credit risk than a college student. As a result, graduates can get much better interest rates than they could when they were students.

Check out our page that tracks the national lenders and the current refinance promotions.

Please share your experiences, successes, and failures in the comments section to help future readers.

The post Step-by-Step Guide to Lowering Sallie Mae Interest Rate and Payments appeared first on The Student Loan Sherpa.

Problem Background

If you’re like me, you’ve had some disappointing experiences trying to get assistance making your private loan payment more affordable. Fortunately, if you know exactly who to talk to and what to ask for, you might get Sallie Mae (and other private lenders) to lower your monthly payments and interest rate.

This article focuses on my experience getting Sallie Mae to lower interest rates. If you’re more interested in the steps to getting your rates lowered, check out our step-by-step guide to lower interest and payments from Sallie Mae. Also, it’s worth noting that this method applies only to private loans. If you want to lower payments on your federal loans, check out this article.

Finding the Rate Reduction Program

I stumbled upon this approach while helping another borrower whose private loan was delinquent. Sallie Mae was calling daily. This borrower, let’s call him Fred, could not afford his payments, however. When I called Sallie Mae on Fred’s behalf, they immediately transferred me to their collections department. I quickly learned that these are the people you want to talk to in order to get real help. They have far more authority to help than the typical customer service person.

Fred had missed months’ worth of payments, with a back-due balance of thousands of dollars. I explained there was no way for Fred to afford the payments they were seeking.  The collections person at Sallie Mae was able to do two things for Fred. First, they addressed the monthly payment. They lowered his interest rate from almost 15% to 3%. Second, they addressed the sizeable outstanding balance. We agreed that Fred would make six monthly payments at the new low rate. If he did this, they would set his back-due amount to zero and inform the major credit bureaus that Fred’s account was current.

Rate Reduction Plan Terms

This new arrangement just saved Fred hundreds of dollars that year alone. Realizing this, I proceeded to ask the collections department representative all the questions I could about the arrangement. The following are some of the highlights of this discussion.

• They call this program, the “rate reduction plan.”
• They base enrollment upon income level.
• Only the collections department can sign up borrowers into this program.
• They require renewal every year to stay in the program.

She also told me that she had the authority to go as low as 3%, but her direct supervisor could go lower if necessary.

Getting Creative to Get a Lower Rate from Sallie Mae

Upon learning this information, I called Sallie Mae to see if they would lower the interest rate on my non-delinquent loan. I first spoke with a base-level customer service representative. She told me that all she could do was reduce my interest rate by .25% if I signed up for automatic bank withdrawals. She also said she could alternatively accept “interest only” payments at my current 13% rate. These were the same options Sallie Mae gave me in my prior interactions with them. These options aren’t helpful at making a meaningful dent in student loan debt, though.

So I then asked her about the “rate reduction plan.” She said she couldn’t do that and that I would have to talk to the collections department. I explained to collections that, although my payment was current, I feared I would become delinquent at its current interest rate. I said I wanted to enroll in the “rate reduction program” and be proactive to avoid delinquency. They accepted this rationale and proceeded to start my enrollment in the program.

Ultimately, I was unable to enroll in the program because I had a cosigner who exceeded the income level required to participate in the program. After sharing this advice with others, however, I can confirm that this approach can get your payment and interest rate lowered – even if you are current on your loan.

Please use the comments section below to share your successes and failures using this method. Please also include the lender you were working with so we can help as many people as possible.

The post Getting a Lower Rate from Sallie Mae appeared first on The Student Loan Sherpa.