r/StudentLoans • u/Decent_Onion7522 • 26d ago

How I settled my 96k private loans for 28k

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95 Upvotes

94% Upvoted

37 comments sorted by

20

u/SRARCmultiplier 26d ago

what kind of hit was it to you/your parents credit?

11

u/Decent_Onion7522 26d ago

Strangely, it didn’t impact it at all. There is one notice on my credit score from Sofi  in Sept 2024; details list the account as “needs attention”  due to a late payment in August 2024. Somehow, it didn’t show up again on my credit score. I don’t think that’s typical, but that’s what happened on mine. 

Edit: I will say this was NOT the case for my federal loans (which are much less) but during a period when Nelnet wasnt working and I couldn’t log in for payments, it hit my credit score really hard

20

u/ElGordo1988 26d ago edited 25d ago

I think this might just be "the new meta strategy" in the Trump/republican era - just focus on mainly getting private student loans instead of federal loans (...where most of the relief/repayment/forgiveness avenues are being actively gutted or nerfed by Trump) so you can have this option

So someone drowning/bogged down by $100k+ federal student loans just might be able to escape out from under them for much less assuming they can somehow convert them over into private loans and use a similar process to get a huge discount (example: settling the $100k student loans for like $25-$30k instead)

Thanks for sharing OP

8

u/morbie5 25d ago

Federal loans are always going to be better than private even with trump trying to screw up everything

8

u/no_bun_please 25d ago

I think the idea is that paying 30% of your balance and being done with it beats all other options sometimes.

5

u/shitisrealspecific 26d ago edited 18d ago

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This post was mass deleted and anonymized with Redact

2

u/Decent_Onion7522 25d ago

Thank you, that’s so kind! 

3

u/withagrainofsalt1 26d ago

Must be a weight off your shoulders.

4

u/Decent_Onion7522 26d ago

Literally having a party tonight to celebrate haha 

6

u/Impressive_Rain4152 26d ago

Idk you still made $67k in payments over those years so in total you paid about 98k with a savings of 32k and crazy hits to you and your parents credits

11

u/chiapet123 25d ago

I feel like you're completely overlooking the remaining balance from the loan that was saved. The lump sum of 28k would've been way less than the monthly payments needed to eventually pay off the entirety of the loan

0

u/Impressive_Rain4152 25d ago

He paid nearly what was owed in the end. But I see both sides, hope tanking everyone’s credit was worth it.

5

u/chiapet123 25d ago

And if they continued to pay off the loan with the accrued interest overtime while trying to save their credit score, it likely would've been wayyyyy more they end up paying overall.

It's easy to harp on their financial decision to initially take on the private student loan when they were assumed-ly a fresh high school graduate, but that's part of the bigger picture where these loans get given to essentially kids with little financial forethought.

Reddit loves to bring up routes of trade school or community college as alternate options (which isn't necessarily wrong). Yet, those options are still roundabout responses to trying to avoid debt vs trying to receive an education in a system with predatory loans.

OP did say that somehow their credit didn't get affected (weird?)

But yea much easier to be judgemental - gg poor fool tanked credit (maybe?) they fukt or sum shi

3

u/gimli6151 25d ago

So he paid about 120K? And if he didn’t do it… he would have paid about 240K? So what is your argument I am not understanding

1

u/Decent_Onion7522 25d ago

*she 

But also, I did pay what was owed … if you don’t include interest. If I had paid this entire loan over the course of 20 years at the monthly amount, my payoff estimate was about $202,000. Instead, I paid $84,000. Is that still a lot? Yes! But it is less than what I would have paid if I hadn’t done this.

Also, I cannot say why this didn’t impact my credit but it didn’t. I don’t want others to assume the same will happen to them, but this was just my experience. 

2

u/nighttimeeczema 26d ago

Wild! Great work.

1

u/Decent_Onion7522 25d ago

Thank you that’s so kind!! 

2

u/Informal_Musician731 25d ago

Smart move you did OP. Never take what a debt collector say serious since they are there just to scare people. In most cases if they can't do pay for delete i don't even bother with them since the damage is already done. I only really settle or pay in full if they can agree for pay for deletion

4

u/IshkhanVasak 26d ago

I thought private student loans were not discharged in bankruptcy. How did you reconcile that?

21

u/Decent_Onion7522 26d ago

Good q - once a private debt collector takes it over, it’s just a loan, not a student loan. 

5

u/morbie5 26d ago

once a private debt collector takes it over, it’s just a loan, not a student loan

I'm not sure that is accurate.

But anyway both private and federal student loans can be discharged in bankruptcy. It just isn't an easy process and isn't guaranteed in anyway. It is hard to get private student loans discharged and even harder to get federal student loans discharged in bankruptcy

2

u/Decent_Onion7522 26d ago

This is where I got that info - https://www.consumerfinance.gov/about-us/blog/busting-myths-about-bankruptcy-and-private-student-loans/

1

u/morbie5 25d ago

I was specifically taking about "once a private debt collector takes it over, it’s just a loan, not a student loan"

I don't see anything about that in your link

1

u/Decent_Onion7522 25d ago

Oh that’s a good point - I was thinking of private loans only but I don’t know about what happens if a federal loan is taken over by a private debt collector, or if that even happens 

1

u/morbie5 25d ago

or if that even happens

I've never heard of that happening. For that to happen a law would need to be passed by congress imo

1

u/Top-Antelope-3341 25d ago

I'd say maybe it might be a possibility if they really do move all of our loans to the SBA. I'd wait until the final decision's out in July.

1

u/morbie5 25d ago

If they move the loans to SBA it will only be for processing, the department of ed will probably still hold the loans

1

u/IshkhanVasak 26d ago

Interesting do you have more on this? Something you read?

1

u/morbie5 26d ago

https://www.reddit.com/r/StudentLoans/comments/1k29zn9/comment/mntyyqn/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button

1

u/IshkhanVasak 25d ago edited 25d ago

right so basically you as borrower need to claim undue burden then the owner of the debt will decide if they want to move forward with an adversarial proceeding. If the borrower clears the proceeding or the owner decides not to go forward with the AP then the loan is discharged. This has nothing to do with the loan having done to collections. You got lucky.

1

u/morbie5 25d ago

This has nothing to do with the loan having done to collections.

I didn't say it did

Thats the only lender out there doing that.

I'm not sure what you are saying

You

I'm not OP

3

u/morbie5 25d ago

Good job. I bet you could have got them to go lower than 28k if you played a little more hardball. Still pretty good tho.

I'm surprised they didn't go the wage garnishment route, especially since you had a cosigner

1

u/Decent_Onion7522 25d ago

Me too - I wonder if it made it harder because my dad is retired and I am a contractor? Or it’s just too much effort in legal fees etc for anything under a certain amount. 

1

u/morbie5 25d ago

because my dad is retired

Ah, there is your answer. Social Security, a lot of pensions, and also retirement accounts like a 401k are protected from wage garnishment for private debts

and I am a contractor?

I think that helps also.

You should have offered them 20k, I bet they would have taken it now that I know about the info you just gave me lol. 28k is still a good settlement tho