Settling Student Loans Post Discharge

[corrin69]

I have two relatively small student loans (~$9000 combined) held by AES/Key Bank. They were in default when I filed last October. I have been paying on them. But I have not received a statement and I do not have the ability to check their status online. Basically, I've been sending money to them hoping that it is actually getting applied to my loans. I did this because I did not want the lender to go after my tax refunds.

I called last week and was told that they do not send out statements after a bankruptcy filing because it would be illegal to do so. That makes no sense to me. During the call I asked about settling out with them and whether they would discount the amount owed if I paid in full. I was told that they do this and given another number to call. I was on hold for a half hour before I was cut off.

I am going to call back today. My question is, how aggressive should I be in proposing to pay the loans off? Should I offer 50%? Also, are there any ramifications of doing this vis-à-vis my credit?

[chicagoannie]

Many years ago I negotiated on one student loan that was in default. I don't know if things have changed since then (and maybe it was my sense of what was "right" thing to do) but I offered only what I had borrowed...no fees or interest, and it was accepted.

If you settle, make absolutely sure you have their agreement in writing and save everything as you'll likely need proof the loans were paid off at some future point in time (mine was 9 years later when purchasing a house!)

[corrin69]

Thanks Chicagoannie. I guess for me, the problem would be I owe less than I originally borrowed. But maybe they will compromise what's left.

[HHM]

If you have been making payments and are still current, they probably won't really talk to you about settlement

It is certainly possible to settle student loans, but it is not as common as you think. A lot depends on the nature of the underlying student loan, is it truly private, is it guaranteed. If its a guaranteed loan it is hard to settle with the servicing agency because they always have the option to send the loan back to the guarantor agency and the guarantor agency pays the servicer.

[nc73]

If it is private, it is negotiable and they will settle. I settled with sallie mae and saved 4k.

[mathom1]

This is good to hear. I'm in a Chap 13 right now and I have school loans (Key bank General unsecured ~60,000. The trustee is making payments to them...so by the time I'm done they should be whittled down somewhat.

If I can't settle....not sure what I'll do because I can't make it (even with a 2nd job and no car payments)
I wish the law would have made private education loans dischargable