Can I Negotiate a Settlement on My Defaulted Student Loan?
It is in your best interest to try to negotiate a settlement on your defaulted student loan. If you default, the maturity date accelerates, and this can lead to a downward spiral. If you cannot make the payments at that point, it could result in wage garnishment, funds from your income tax refunds held and losing your eligibility for other federal loans.
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Negotiate to Avoid Paying the Full Balance at Once
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On federal student loans, you are in default when you haven't made payments on a loan for 180 days if you are on a monthly installment plan. When you fall behind, you will be notified because your lender does have to try to get in touch with you for repayment. If the lender cannot contact you, then the loan will be considered in default. If you are having difficulty with your payments, do not avoid your lender. Instead, you should try to negotiate a settlement, otherwise she may file for payment of the entire balance all at once.
Support Through Federal Student Aid
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You may be able to negotiate a settlement on your defaulted student loan in affordable monthly payments by calling Federal Student Aid, Department of Education, at 1-800-621-3115. A customer service representative will discuss your options with you to try to work out an amount that works for both you and Federal Student Aid.
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Negotiate Through Private Companies
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You can also negotiate a settlement on your defaulted student loan through private companies that specialize in this. StudentLoanConsolidator.com can help you with consolidating all of your loans for a manageable monthly payment at a reduced interest rate (see Resources). This can help you through a troubling situation if you defaulted on your student loan.
Be Prepared Before You Negotiate
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You can negotiate a settlement on your defaulted student loan and you may have no choice but to try. Before you do make an offer, do your homework and find out for yourself what your balance is. Don't rely on the lender. Mistakes involving interest and collections fees can happen. Ask your lender for a copy of your payment history or if it is a federal loan, ask the National Student Loan Data System. Bring any mistakes to your lender's attention.
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References
Resources
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