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CalAttorney2
CalAttorney2, Attorney
Category: Bankruptcy Law
Satisfied Customers: 10244
Experience:  Civil litigation attorney for individuals and businesses.
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I co-signed an education loan (Sallie Mae) for someone who

Customer Question

I co-signed an education loan (Sallie Mae) for someone who had got a chronic medical condition and dropped out of school, starting the repayment period. The total amount is $70K and interest is 8.375%. Is there any other lenders who can refinance this kind of loan for lower interest rate?
Submitted: 3 months ago.
Category: Bankruptcy Law
Expert:  CalAttorney2 replied 3 months ago.

Hello, My name is ***** ***** I will assist you today. Please give me a few minutes to write a response and identify any additional resources for you.

Expert:  CalAttorney2 replied 3 months ago.

Dear Customer,

Thank you for using the forum. I am sorry to learn of this situation.

There are a couple of possible options - The U.S. Dept. of Education does offer refinance options directly (so the student can attempt to refinance through the US Dept. of Education borrower website) usually at a better interest rate.

You may be able to find a way to refinance the entire loan at a lower interest rate (and without the restrictions of a student loan) through a traditional lender (such as a home equity line, a personal line of credit, or other loan - also at a lower interest rate.

If the student is permanently disabled, they may qualify for a discharge of their debt - to do this, they would need to both file for bankruptcy, then file what we call an "adversary proceeding" (a civil trial) against the lender in bankruptcy court. For this I highly recommend retaining a bankruptcy attorney as the procedure both moves very quickly and the standard for discharge is very high (not many student's qualify for this discharge, but the student you co-signed for may).

Customer: replied 3 months ago.
I do not know what means permanently disabled but I know that the person qualifies as person with disability. Is that the same? She has a chronic condition with unpredictable outcome.
Customer: replied 3 months ago.
What is that he U.S. Dept. of Education website?
Expert:  CalAttorney2 replied 3 months ago.

The standard for discharging student loans is very high (and it requires the student debtor to prove their disability in trial - not everyone with a disability qualifies), so I would recommend that the student speak to a local bankruptcy attorney (that has experience with these adversary proceedings) to discuss this option.

The Dept. of Ed link is: https://studentaid.ed.gov/sa/repay-loans/consolidation