If you cannot afford to repay your Sallie Mae student loan, you have options to avoid default (non-payment). Before reading any further, stop and review your student loan contract(s) to learn if your loan is federally insured (the US government is guaranteeing repayment of the loan), or private. If your loan is FFEL, Perkins, or Direct, it is federal. If the Sallie Mae loan is federally insured, Sallie Mae must follow federal rules for student loan collections. See the Bills.com resource Default on Federal Student Loan to learn more about your rights, options, and liabilities as the borrower of a federal student loan.
If your loan is federal, Sallie Mae offers income-based repayment plan (IBR), for which you may qualify. Login to your account on the Sallie Mae Web site and find the IBR section. Bills.com readers have said that Sallie Mae customer service representatives (CSRs) try to discourage customers from applying for IBR. This does not seem to be a stated company policy, and is more likely poor training of CSRs who do not understand IBR, or have a negative incentive for recommending it.
If you are at an impasse with Sallie Mae regarding a federal student loan, contact the Federal Student Aid Ombudsman, who may be able to help you with your negotiations with Sallie Mae.
If you cannot afford your Sallie Mae private student loan payments and your situation is temporary, login to your Sallie Mae account, select the Postpone Payments section, and request a deferment. According to Sallie Mae, deferment is available for some private student loans. It lists the following reasons for granting a deferment:
Some Sallie Mae loans also allow forbearance. Forbearance allows the borrower to suspend payments up to one year at a time. Interest continues to accrue during forbearance, so you should apply for forbearance if your financial situation is dire.
If your income is reduced, Sallie Mae will also negotiate a reduced monthly payment. According to the Sallie Mae Web site, “Eligibility for Sallie Mae private student loan repayment plans may vary by loan type, loan balance, and disbursement date.” The Sallie Mae postponing payments page outlines these options. Also see the Sallie Mae graduated payment plan page, which outlines payment options for private student loans issued before June 1, 2009.
If the Sallie Mae loan is private, then Sallie Mae will follow the borrower’s state laws and the rules in the loan contract the borrower signed. Private student loans are similar to unsecured debt. If the borrower defaults on a private student loan, the creditor or collection agency must sue in civil court to collect. If it wins a judgment, the creditor or collection agency can garnish wages, place a lien against property, or a levy financial accounts. The only thing that separates a private student loan from other unsecured debt, such as credit card debt, is that private student loans are not dischargeable in a bankruptcy filing, generally speaking.
A student loan consolidation may help by increasing the term length, thereby lowering the monthly payment. There are basically two types of consolidation loans — unsecured and secured. To learn more about unsecured student loan consolidation, see the Bills.com Student Loan Consolidation page.
SLM Corp., also known as Sallie Mae, was the US’s largest originator of federal student loans until 2010 when the Dept. of Education started originating federal student loans itself. Sallie Mae now services federal student loans on behalf of the Dept. of Education, and originates private student loans. Sallie Mae employs 8,000 people, and manages more than $180 billion in debt for more than 10 million student loan borrowers. The company was originally created in 1972 as a government-sponsored enterprise (GSE) and privatized its operations in 2004. Sallie Mae also originates and services private student loans.