Can You Settle Private Student Loan Debt?

Student loan debt is the second most abundant type of debt in the United States, behind only mortgage loans. In fact, 70 percent of all college seniors who graduate have some form of student loan debt, with the average indebted student carrying nearly $29,000 according to 2015 data. And to make matters even more difficult for many borrowers: most student loan debt is public, which means it’s almost impossible to reduce without qualifying for a forgiveness program or unique and exceedingly rare circumstances.

However, private student loan debt is an entirely separate story. Because these loans come from private lenders, consumers have a more options when it comes to debt reduction that they can pursue. On this blog, we’ll offer a few tips on how to beast pursue a student loan settlement including giving you a few valuable negotiation tips to keep in mind.

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Expect Pushback from Lenders

Lenders on private student loans are likely going to be hesitant to negotiate on a student loan unless the loan is already in default. If you can avoid going into default, it’s strongly advised you do so in order to prevent possibly being sued and damage to your credit rating. However, for some people, they have no other choice given their circumstances, and the benefit of being able to negotiate a better settlement and payoff plan could be beneficial in the long run. But keep in mind “strategically defaulting” is risky—you could accrue fees and interest, and you could wind up being even worse-off after litigation is pursued against you.

However, lenders know that getting something back on a loan that’s in default is far better than getting nothing back at all, and many are willing to negotiate on delinquent loans when the debtor has been affected by serious hardship. As such, it's imperative that your hardship and financial information be presented in a manner conducive to negotiations. Our lawyers have years of experience in identifying client's that are strong candidates for settling their student loans, and conveying their situation accordingly to the debt collectors.

Know Your Rights

Private student loans are significantly different from public ones in that public lenders such as the U.S. Department of Education have the ability to go after things like tax refunds, Social Security benefits, and garnish wages without first bringing a lawsuit and proving their case in court. Private lenders have no ability to offset tax refunds, or social security, and can only garnish wages and seize bank accounts) upon obtaining a court-ordered judgment. Keep in mind that although collection agents are prohibited from providing false information, they are not your lawyers, and do not need to advise you as to your legal rights and options.

The other big difference with privately-funded student loans is that there is a statute of limitations attached to them. What this means is that an institution has up to a certain amount of time in order to begin litigation against you in order to collect the outstanding balance on your loans, which is six years in the state of New York. Once this six-year period passes, your lender can’t legally maintain a lawsuit against the borrower, and as such, lenders may be willing to negotiate and settle student loans with you.

Work With an Attorney

If you’re facing debt and need to find relief, it’s strongly advised you speak about your options with either one of our highly reputed student loan lawyers in New York or our New Jersey student loan lawyer. Having a legal representative on your side can help you make sure that your rights are protected and you aren’t victimized by illegal actions that violate your rights as a borrower.

We've achieved substantial settlement reductions on accounts owed to most major lenders and collectors including Navient, Citibank, National Collegiate, Transworld Systems, United Guarantee, and many more... Contact us today to learn what we can do for you.