Can You Negotiate Private Student Loan Debt

Can you negotiate private student loan debt? Defaulting on your student loan can be very costly. The act alone can damage your credit score and therefore will lead to delays in future loan applications, legal issues as well as wage garnishment. So the question here is can you negotiate student loan debt that is already in collections?

Can You Negotiate Private Student Loan Debt

Can You Negotiate Private Student Loan Debt

When it comes to paying off your student loan, there are several options available at your disposal. Student loan settlement as you should know is the process of renegotiating or settling your student loan debt. And in a bit, I will be covering how to find your settlement options, which get to qualify for settlement as well as the pros and cons of settlement in regards to your student loan.

It is very much possible to negotiate student loan payoffs regardless of the type of your loan. You just may be able to negotiate both private and federal student loans, but you however should know that the process is not as easy as you think.

Private Student Loans

It is possible to negotiate for a reduced payoff amount in regards to your private student loan debt, but at most times only in the event that the loan is in default. Several private loan defaults if payment has not been made in 90 days or more.

Certain lenders in the market may however be willing to accept a negotiated settlement even if your loan has not entered default, but one thing you should know is that they may request for immediate payment in the event the loan is current.

Pros and Cons of Negotiating a Settlement for Student Loans

Before you make the decision on whether or not a settlement is the right option for you, you should first consider the pros and cons that come with it.


  • Save your credit score
  • Avoid bankruptcy
  • Settle for an amount that is way less than what you originally owed
  • Stop the collections process


  • You very much will pay high fees
  • There are tax implications
  • Your credit at the end of the day may still be affected

That’s it.

How to Negotiate A Student Loan Payoff

The process of negotiating a student loan payoff can be long and hectic.  It can also be a complex process in general. And to get this running, you will go through the following steps;

Put Together All the Documents That Are Related To Your Student Loan

Gathering said documents that are related to your loan is the initial step that is needed in negotiating a student loan payoff. You will need to know the exact amount you owe when the loan originated, your interest rate, and the payments that you have already made.

You also may have to provide other financial documents and they include;

  • Pay stubs
  • Tax returns
  • Medical bills
  • Child care expenses
  • Rent or mortgage payments
  • Other needed documents that show financial hardship.

Contact Your Loan Servicer

Once you have all of the relevant documents with you, do well to contact your loan servicer. Explain everything that’s going on, and then ask whether you can speak to someone that is willing to negotiate the debt. You just might not make much headway, but one thing you should know is that inquiring about your options is a good place to kick things off.

However, since you may already be in default with your loans, you just might have to reach out to the collections agency to that your lender sold the debt to. Collections agencies as you should know are often difficult to negotiate with, and they might not even be interested in negotiating at all, but it never hurts to ask, as you don’t just know about the outcome.

Research Your Negotiation Options

The options that will be available to you will differ depending on whether your loan is private or federal. But either way, you just may have to consider getting help with the process. There are lawyers for nearly everything these days, student loans included.

Student loan lawyers are very helpful for those persons that are defaulting on private student loans. You have fewer options in regard to negotiation, so a lawyer can easily and effectively advocate on your behalf. Lawyers also can help you to avoid aggressive collection tactics.

Cost of Attorney Vs. Debt Settlement

Many debt settlement companies charge up to 15% to 25% of the settled debt. The charges of lawyers often work differently.

Your cost depends solely on where you live and the lawyer that you choose to work with. Lawyer’s flat fees in general, can range from $500 to $5,000, depending on the complexity of your case.  Per-hour costs on the other hand can range from $125 to $350.

Prepare and Then Submit Your Negotiation Plan

Once you have decided on the right loan program or repayment plan, it is now time to start preparing your negotiation plan. You should ensure to research all the details of your loan agreement and then create a plan that outlines the desired outcome.

This is one place you might want to work with a lawyer or debt Settlement Company that can effectively handle the difficult calls and calculations.

Make Your Payment

After all of your negotiations, you will have to pay in full the final settlement amount. You should request paperwork demonstrating the proof of payment. And in that way, if collections companies continue to try to make contact with you, then you can show them the document in question.



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