Hi
I’ve been putting my student loans in deferment/ forbearance since covid. I thought it was covered by the federal deferment although I went on the website and requested it myself in case. I thought it’d be extended till January but they are not letting me renew the deferment or put it into forbearance now and are trying to resume my payments. I’d just like to get to the end of the year. The option they give me is IBR and I have to go to a Gov page to qualify I think.
The reason they say is that my loans aren’t owned by the Ed. Department… even though they are ffel ? whatever loans but I guess that’s not good enough?
Anyways, any advice? Is Navient bull shitting me?
After 11 years paying I’ve got about 10k left but my wife’s got 50k we haven’t even started on…
Some benefits of consolidation are that you will be covered by the payment pause for as long as it last (currently until Feb 1, 2022, and although they are advertising this as the “final extension” we will have to see if that turns out to be the case).
You also have more options about payment plans, some of which might reduce your payment to $0 depending on your situation.
Some risks of consolidation: any unpaid interest will be added to the principle of your new direct loan. So if you have a large amount of interest, this might not be a good idea.
It sounds like you might not currently be in IBR. If you aren’t then this doesn’t apply to you. But people who have been in IBR for a long time and are on track for eventual cancellation probably don’t want to consolidate because everything will start over when you do. Your new direct loan will have zero qualifying payments under any income-driven repayment plan.
Another big unknown, we have no way of predicting what reforms the Biden admin will eventually do. Some of them might only apply to direct loans, some might only apply to FFEL. There is no way to tell if consolidating will give you a better or worse chance at being covered by any of these future reforms. That is a shitty situation to be in, but that is where we are. We are all flying blind and forced to guess what might be in our best interest, and some of us will guess wrong.
Everyone who has outstanding FFELP student loan debt should consolidate into the FDLP, and take advantage of the CARES Act, and any future benefits enacting by congress or the executive branch.
The remaining FFELP infrastructure, e.g. guarantors, secondary markets, lenders, etc., are simply using the federal fees paid to them to administer the dwindling FFELP portfolio ($899 billion in 2009, less than $200 billion today) to pay themselves, endow new business ventures, etc. Consolidation would help borrowers and largely eliminate this practice, and the savings could be repurposed to more appropriate purposes.
But there are relatively rare circumstances like people who have been paying into IBR for 24 years then you definitely shouldn’t consolidate, because you are close to finally finishing IBR and getting the rest cancelled! But those circumstances are rare.
Dear. Mr. Gokey,
I currently have a private loan with Firstmark (a private company) which is around 900.00. I unfortunately had a loan with Wells Fargo (also considered a Private Loan)…I believe it was called a Connection Loan), and it was recently transferred to Firstmark since Wells Fargo doesn’t handle student loans anymore. I have 18,000 approx. with that loan. My brother is a co-signer as well. I graduated with a Graphic Design Degree (needed the private loan due to tuition fees and materials). In addition I have an Associates degree. I have a total of 80,000 with my federal loans (Perkins and such), while I attended Normandale Community College as a freshman.
The situation now is that I am unemployed ( prior job was a Daycare Teacher), and NOT a Graphic Designer. I graduated from Brown Institute, Brown College, Sanford Brown (yes, they changed the name so many times I have a hard time keeping track), I am not sure what to do. The school closed a few years ago, and I have tried in the past to bring the matter to the MN Attorney General, sent complaint forms to the Education Department and to other entities. I believe Brown had a few class-action lawsuits. NOTHING HAS BEEN DONE! I OWE CLOSE TO A $100,000. I do not have a Master’s Degree or a Bachelors Degree. I had heart surgery while I attended this for-profit school and received honors (a decent GPA) and graduated. Last year, I made approx. 30,000 with my daycare job. Any suggestions! My name is Melissa J.
I can be reached at this email Nightengale75@protonmail.com. Any suggestions would be appreciated. Thank you for your time.
Hi @nightengale75, I’m sorry that you are having to deal with all of this. Your situation is very different from the one above. These sound like private student loans, and not FFEL loans.
I am not a lawyer and I can’t give you legal or financial advice. I would highly recommend reaching out to a lawyer to go into more detail with them about your particular situation.
I would at least explore the option of bankruptcy to see if it is right for you. It may or may not be.
One complicating factor here is your co-signer. You should know that it is sometimes possible to release a co-signer. You can read the fine print on your master promissory note or ask the current lender what the policy is on that. Unfortunately there is a lot of paperwork involved, and they don’t make it easy, and it can often be difficult to force the lender to honor their own policy. It usually requires rehabilitating the loan and making a certain number of on time payments before you can release the co-signer. It might be worth it to your co-signer to help you make those payments if it results in being released from the loan. But that depends on your situations and relationship.
Another thing you should know is that it is possible to negotiate a settlement on a private student loan. Paradoxically you have more leverage to negotiate the longer you are in default, but defaulting also has its own consequences. The settlements can steep, so don’t be afraid of driving a hard bargain and offering to settle for only a tiny fraction of the current balance.
Another thing to know is that it is possible to be what is called “judgement-proof.” This means that your current income is so low that the courts will not allow the creditor to garnish your wages. If you are judgement proof it gives you even more leverage, and it also lessons one of the risks. This is something to discuss with a lawyer.
Lastly, if this private loan was taken out to attend a predatory for-profit, there is a way in theory that the loan can be challenged using something called the “holder rule.” But it gets tricky. Because of how the statute of limitations work it is unlikely that you would be able to sue the creditor and assert your rights under the holder rule. Instead you would need to default, wait for them to sue you, and then show up to court and assert your rights then. This means taking the hit of negative consequences that come with default. Again this is something to discuss with a lawyer.
I agree. BTW, the Administration’s budget submission zeroed out appropriations for the FFELP, including the half billion dollars for the account maintenance fee for guarantors, and repurposed the $$$ to the Pell grant. The money was restored by the House appropriations committee after heavy lobbying by the CBA and NCHER. We’ll see how this plays out.
If this issue were comprehensively reviewed through the long overdue reauthorization of the HEA, FFELP borrowers would be taken care of. The budget process is a lousy way to make policy.
How old is the IBR program? I was under the impression it was only 12 yrs old. If its older than that, then I have a complaint I need to file against my servicer.
Whew! Thanks for the clarification. 12 yrs in, plus like you said, not wanting to start over and the uncertainty of the whole thing prevents me from switching from FFEL to Direct, otherwise I would in a heartbeat. If Biden would just do as he promised with the $10K forgiveness that would indeed helped people like the OP and those with smaller balances would most likely be able to pay off those smaller amounts immediately, but he won’t even do that as a good faith gesture. If he can executive order the for-profits, he can executive order the $10K. Maybe not $50 or ALL but most definitely the $10K. He already knew that when he made the campaign promise, but for whatever reason he is now stonewalling…I am being optimistic that his stonewalling is for a damn good end result, but I am prepared to be disappointed.
