The Confessions of a
Student Loan Collector
There is only one positive thing about being in collections. Knowing that a settlement compromise (partial pay-off) exists is the only real optimistic thing. But, knowing that you have paid the lowest amount possible in this situation is the ultimate liberation. It is depressing knowing that our nation’s people do not do their homework, considering it is something that they should have grown accustomed to.
(Get the Exclusive Interview “Confessions of a Student Loan Collector”)
-Mr. Kay
The Rogue student loan collector
What exactly is a settlement agreement?
A settlement is basically a balance compromise on a defaulted student loan debt. For a settlement agreement to become formal it is necessary that the settlement amount is accepted by Dept. of Ed and the collection agencies. If you have a Federal student loan in default Dept. of Ed will typically accept a reduced payment for the complete satisfaction of your outstanding obligation. By understanding the process and the calculation method you will be able to negotiate the “Best” settlement agreement .
What is the main purpose of a student loan settlement?
The purpose of the settlement is to offer borrowers that have accounts in a defaulted status a solution to satisfy their outstanding student loan balance. If you do not have the ability to satisfy the balance in full, the collection agency or the Department of education should be willing to offer this student loan settlement.
The positive side of satisfying your student loan may include:
- Paying back an amount that is in the same range as the original amount borrowed.
- End harassing calls from the collection agency.
- No longer owe the obligation
- Administrative wage garnishment will stop and your tax return and other benefits will no longer be seized.
- Will give you the ability to receive additional Federal financial aid as a student.
What do I need to do to qualify?
- A settlement is available on FFEL loans, Direct loans, Pell grants, and Perkins loans of any balance.
- All settlements should be paid by a Certified method of payment. This includes cashiers check, Money orders and credit cards.
- Satisfy the settlement with in the approved time frame. (90 Days from approval)
- In rare cases an extension could be requested to extend this 90 day payment deadline.
What are the different types of settlements?
Standard settlement types:
- Satisfy only the principal and interest.
- Satisfy the principal and 50% of your interest
- Satisfy 90% of the principle and interest.
Removal of collection fees
You owe $5000 principal, $ 1500 interest, and $1600.00 in collection fees. They will offer you a partial pay-off of $6500.00 (principle & interest) to satisfy your balance. This settlement is the most basic settlement compromise.
Principal and 50% Interest
You owe $4000 Principal, $2000 interest and $1500.00 in collection fees. They will offer you a settlement of $5000 (principal & Half of your interest) to satisfy the balance. This settlement type will benefit those that have accumulated large amounts of interest due to being in default for a long period of time.
90% of the principal and interest
You owe $4000 Principal, $800 interest and $1200 in collection fees. The will offer you a settlement of $4320 (10% reduction of your principal & interest) to satisfy your balance. This settlement type will usually benefit those that had their student loan(s) in default for a shorter period of time.
