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Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 117431
Experience:  Attorney experienced in commercial litigation.
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I have a Sallie Mae, now Navient personal/option loan that was

Customer Question

Hello. I have a Sallie Mae, now Navient personal/option loan that was approved for student loan purposes. I revieved it originally back in around 2007, approved for $6,000. I have paid almost $9,000 (or more, still trying to get my pay history), with a balance of $8,779, at a $12.9% interest rate. THey say another 119 payments. You can do the math, but this $6,000 loan is costing me almost $30,000 and another 8+ years to pay off when it's already been about 8. To me this is theft and it really makes me upset that I am unable to do anything. Is there anything that can be done to get out of this situation? I don't want to pay them anymore! I already have $60k in student loans to pay off even after $20k in GI Bill payments. Thanks for your help.
Erik ***@******.***
Submitted: 2 years ago.
Category: Consumer Protection Law
Expert:  Law Educator, Esq. replied 2 years ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
Have you sought to take a lower interest personal loan from a bank or credit union or even through a friend to pay off the balance of this loan in full, since it is less than $10,000?
Customer: replied 2 years ago.
I have not searched actively but due to my credit score getting below that interest rate has not been possible yet.But you can see I have paid for this loan already but still owe more than the face value of the loan.Any other suggestions?
Expert:  Law Educator, Esq. replied 2 years ago.
Thank you for your reply.
Unfortunately, student loans are the hardest thing to deal with legally, because they are loans that are federally backed and they cannot be extinguished in bankruptcy even.
So, typically the only thing that can be done is demand an itemized accounting from them, which shows your payment breakdown to principle and interest each month to determine if they are being applied properly in accordance with the terms of the loan. It is only where you can show that they have not applied your payments in accordance with the terms of the loan that you could seek to sue for the breach of the contract in not properly applying those payments.
Other than challenging their compliance with the terms of the contract, the only way out from under them is to find someone who will lend you the money to pay off what is due in full.
You can call and negotiate more with them to seek to reduce your payments, but that is only going to extend the loan longer and mean you end up paying more in interest.
The only way these loans can be extinguished is if you can prove a permanent disability will prevent you from working in any capacity at all I am afraid and that is the way the government has set this program up.
Customer: replied 2 years ago.
Please note this is a personal/option loan as stated in my original description, not a federal loan. Please adjust your reply to accommodate this information. Thank you.
Expert:  Law Educator, Esq. replied 2 years ago.
Thank you for your reply.
Over the last several years, the courts have a tendency to lump these personal option student loans in with all of the other student loans and they are not impossible to discharge, unlike subsidized loans, but they are still difficult. A personal loan unlike a subsidized loan can be discharged in bankruptcy, despite rumors to the contrary.
To receive a discharge for your debt, you’ll need to file a petition (called an “adversary proceeding”) that requests a court judgment (called a “determination”) on whether or not you will receive approval for having your private student loan debt discharged. The courts will consider undue hardship in extinguishing the loans. The test the courts use is your poverty level, employment, ability to get better employment, previous good faith payments, health of the person making payments. You would have to satisfy the court that based on these things the repayment would create an undue hardship on the debtor such it is good cause to discharge the loan.
It is not an easy burden of proof for the debtor to achieve, but it is possible if you want to try bankruptcy for a private loan.