Ibrahim Gardner
If you're struggling to pay off your Sallie Mae student loan, there are several options to consider. Firstly, refinancing your loan with another lender could be an option, especially if you have built good credit and a steady income since taking out the original loan. If you're experiencing financial difficulties, you can also contact Sallie Mae to discuss potential alternatives, such as temporary loan forbearance or deferment. In-school payment assistance and the graduated repayment period are also options to help you manage your loan repayments. It's important to understand the consequences of delinquency and default on your loan and to be aware of the challenges associated with discharging your loan through bankruptcy.
| Characteristics | Values |
|---|---|
| Repayment options | Deferred repayment, fixed repayment, interest repayment, Graduated Repayment Period (GRP), forbearance, income-based repayment plan |
| Delinquency | Late fees, negative impact on credit report, loss of interest rate reduction programs |
| Default | Entire current balance becomes due, reported to consumer reporting agencies, serious consequences |
| Bankruptcy | Automatic stay imposed, online access and communications suspended, interest accrues during bankruptcy case |
| Refinancing | Lower interest rate, faster repayment, no prepayment penalty, special protections |
| Customer service | Poor ratings, complaints about billing and collection issues, inconsistent advice |
| Temporary postponement | Returning to college, graduate school, internship, law clerkship, fellowship, residency |
| Death or disability | Remaining balance may be waived |
| Lowering total loan cost | Making extra payments, paying ahead, reducing current amount due |
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What You'll Learn
Refinancing with another lender
If you're looking to change your loan terms or lender, you can refinance your Sallie Mae loans through another lender. This works like a transfer, where the new lender pays off your Sallie Mae balance and issues you a new loan. You can then pay the new lender at a potentially lower rate or better terms.
When refinancing, you may want to consider the following:
Interest rates
If your interest rate feels too high, refinancing could be a good option. Many borrowers qualify for better rates after graduation, especially if they've built good credit and a steady income. If you've improved your credit score since taking out your Sallie Mae loan, you might qualify for a much lower interest rate by refinancing with another lender. A lower rate can help you save money over time and possibly pay off your loans faster.
Customer service
Sallie Mae has been criticised for its customer service, with complaints centring on billing and collection issues, as well as inconsistent advice from customer service representatives. If you've had a negative experience, you may want to consider refinancing with a lender that has a better reputation for customer service.
Loan term
If you want to change your repayment term, refinancing could be a good option. For example, you may want to extend your loan term to reduce your monthly payments.
Protections and benefits
Private loans often lack the protections and benefits that come with federal student loans, such as income-driven repayment plans and loan forgiveness programs. When refinancing, you may lose any benefits tied to your existing loan. Sallie Mae, for example, offers payment postponements and a Graduated Repayment Period that lets you make interest-only payments for 12 months. If you plan to take advantage of any of these features, make sure your new lender offers similar benefits.
Co-signer release
If your Sallie Mae loan has a co-signer, you can release them from their obligation after making 12 on-time payments. This timeframe is shorter than what other refinance lenders offer. If you plan to release your co-signer, you may want to wait to refinance your loan or make sure your new lender offers a similar option.
Bankruptcy
If you're considering bankruptcy, be aware that it's unlikely to result in your Sallie Mae loans being forgiven. Qualified education loans are not dischargeable through bankruptcy unless you can show undue hardship. Even in the case of bankruptcy, you'll most likely be required to repay your student loans.
Other options
Before refinancing, it's worth exploring other options to manage your loan repayments. For example, Sallie Mae offers a Graduated Repayment Period that lets you make interest-only payments for 12 months after your separation period. You can also apply for temporary loan forbearance if you're having trouble making payments.
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Requesting a deferment
If you're having trouble making payments on your Sallie Mae student loan, you can request a deferment to temporarily reduce or postpone payments. Deferment is available in special circumstances, such as when you're headed back to school or starting an eligible internship, clerkship, fellowship, or residency program.
There are different types of deferment available, depending on your situation. If you're returning to school, you can request a deferment of up to 48 months for an undergraduate student loan or a graduate student loan as long as you're enrolled at least half-time. Your school will need to verify your enrollment, which can be done electronically if your school is listed at studentclearinghouse.org. If not, or if you'd prefer not to wait, you can request the deferment period yourself by submitting an In-School Deferment Request Form.
For internship, law clerkship, fellowship, or residency deferments, you can apply in increments of up to 12 months, up to a maximum of 60 months for undergraduate student loans and up to 48 months for certain graduate school loans. To be considered for this type of deferment, the program you're enrolled in must require you to have a bachelor's degree as a prerequisite and be a supervised training program that leads to a degree, certificate, or professional certification. Approval of these deferment requests is at the discretion of Sallie Mae, and you'll need to download and submit the relevant form.
It's important to note that you should continue making your loan payments until you receive confirmation that your deferment request has been approved. You can also request to have the deferment period removed at any time if you wish to resume making principal and interest payments.
If you're experiencing financial difficulties, it's recommended to contact Sallie Mae to discuss your options, as there may be other alternatives to deferment, such as forbearance or refinancing.
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Applying for forbearance
If you're having trouble paying off your Sallie Mae student loans, forbearance lets you temporarily postpone your payments. This can help you avoid delinquency and default. Delinquency occurs when you fail to pay all or part of your monthly student loan payment, which can have a negative impact on your credit report.
To apply for forbearance, you can start by contacting Sallie Mae to discuss your options. You can do this by chatting with them online or giving them a call. It is recommended that you do this before your student loan becomes delinquent.
If you are a servicemember, you can fill out the SCRA benefit form online. If you have another type of Sallie Mae loan, refer to your Promissory Note or contact Sallie Mae to see if these deferments are available.
If you are returning to college, going to graduate school, or entering an internship, law clerkship, fellowship, or residency, you can request a deferment of up to 48 months for a Sallie Mae undergraduate or graduate student loan. To request a deferment, you will need your school to verify your enrollment. If your school is listed at studentclearinghouse.org, they will automatically verify it electronically. If not, or if you don't want to wait, you'll need to request the deferment period yourself by submitting an In-School Deferment Request Form.
If your internship, law clerkship, fellowship, or residency program is approved, you and an official from the program must complete the Internship, Law Clerkship, Fellowship, or Residency Deferment Form before submitting it to Sallie Mae.
It's important to note that interest is charged during the deferment period, which will increase your Total Loan Cost.
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Discharging loans through bankruptcy
While it is difficult, it is not impossible to discharge student loan debt through bankruptcy. Bankruptcy is often considered a last resort because of the impact it can have on your credit score, as well as the costs and time involved in filing. However, if you are struggling with debt, it may be worth consulting an experienced bankruptcy attorney to discuss your options.
If you file for bankruptcy, any collections and payments on your student loans and other debts will be automatically paused until the case is over or a judge orders payments to restart. To discharge your student loans, you will need to take specific steps to request that the judge discharge your student loans. This is done by filing a petition for an adversary proceeding.
During the adversary proceeding, the judge will ask whether you are experiencing an undue hardship. The Department of Justice (DOJ) will ask you to fill out an attestation of undue hardship, which outlines your income, expenses, and payment history. The factors the DOJ and the court consider when deciding whether you meet the undue hardship standard include:
- Present Ability to Pay: If your expenses equal or exceed your income, the DOJ will determine that you lack the current ability to pay.
- Future Ability to Pay: You must show that your hardship will continue for a significant amount of the time left for repaying your loans. The DOJ will assume you do not have the ability to pay in the future if you are retired, have a disability, have a long history of unemployment, or do not have a degree.
- Good Faith Effort to Repay: You must demonstrate that you have made good faith efforts to repay your student loans before filing for bankruptcy.
If the DOJ agrees that you are experiencing undue hardship, it will recommend to the judge that your student loans be fully or partially discharged.
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Making extra payments
Understand Your Loan Terms
Firstly, it's important to understand the terms of your Sallie Mae student loan. Log in to your Sallie Mae account to find out the repayment term and the specific options available for your loan. Federal student loans, for example, typically don't require payments during school and offer different repayment plans than private student loans. Knowing the terms of your loan will help you make informed decisions about extra payments.
Evaluate Your Budget
Before making extra payments, evaluate your budget to determine how much extra you can afford to pay each month. Consider your income, essential expenses, and any other financial commitments you may have. This will help you set a realistic and sustainable amount for your extra payments.
Make Extra Payments When Possible
When your budget allows, make extra payments along with your regular monthly payments. You can easily make one-time extra payments online, by phone, or by mail. Paying extra will reduce the Current Amount Due on your next billing statements and help you pay off your loan faster. Remember that interest accrues daily, so making extra payments can save you money in the long run.
Enroll in Autopay
Consider enrolling in autopay to receive a 0.25% rate reduction on your loan. While this may not seem significant, it adds up over time and can help you save on interest. Additionally, autopay ensures that your payments are made on time, avoiding late fees and maintaining a good credit report.
Explore Deferment or Forbearance Options
If you're unable to make extra payments consistently, explore deferment or forbearance options offered by Sallie Mae. These options allow you to temporarily postpone or reduce your payments if you're facing financial hardship. Keep in mind that interest will continue to accrue during deferment, increasing your Total Loan Cost. However, making extra interest payments during this period can help offset this cost.
Refinance Your Loan
If you have built good credit and improved your financial situation since taking out your Sallie Mae loan, consider refinancing with another lender. Refinancing can help you secure a lower interest rate, resulting in more manageable monthly payments or a shorter repayment term. Remember that refinancing involves replacing your Sallie Mae loan with a new one, so be sure to compare rates and terms before making a decision.
By following these strategies and making extra payments whenever possible, you can accelerate your progress toward becoming free from Sallie Mae student loans.
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Frequently asked questions
You cannot avoid paying Sallie Mae student loans unless they are discharged due to bankruptcy or the death/disability of the student. However, there are several options for postponing or reducing payments, including:
- In-School Payment Assistance
- The Graduated Repayment Period (GRP)
- Deferment
- Forbearance
- Refinancing
Both forbearance and deferment allow you to temporarily postpone your payments. However, interest will continue to accrue during deferment, increasing your total loan cost.
To refinance your Sallie Mae student loans, you can compare your loan with those offered by other lenders and apply for a loan with a better interest rate or repayment term.
