Hi Heather,

Hypothetically speaking - if the funds are available, is it possible to negotiate a settlement on loans that are currently in good standing and have never defaulted?

The numbers: Lets say, approx. 100K student loan debt between two lending agencies, Interest rates between 5 - 7%. 8 Federal Stafford Loans, 8 EDDLO direct undergrad and grad loans.

Thanks.

I actually was wondering about the possibilities of a lump settlement too. All the info I can find refers to settling when you are already in default and the borrower is dealing with a collection agency.

This article from Bankrate.com mentions a few lump sum options but this is dealing with collection agencies. Is it possible to approach your lender or the Dept of Ed and negotiate a similar settlement directly even if you haven’t gone into default etc?

Here’s what the article states:

“Do: Disclose assets accessible only through settlement
Don’t: Mention retirement investments

Settlement is usually possible only in cases where the borrower can offer a lump sum. According to FinAid.org, collection agencies are authorized to accept three settlement offers without getting approval from the Department of Education—the amount of the remaining loan principal plus accrued interest (but not collection charges), the principal plus half of unpaid interest or 90 percent of the current loan and interest balance. Settlements that don’t fit into one of these three categories are rarer, but possible, says Kantrowitz, though they may take longer to obtain since they will need to be reviewed by the Department of Education.”

Read more: http://www.bankrate.com/finance/debt/debt-settlement-on-student-loan-debt-1.aspx