Home > Students > How I Beat Sallie Mae in Court … 4 Times

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One of the worst things that can happen to a new graduate is to leave school with no job and tens of thousands of dollars in private student loan debt. Stefanie Gray knows this from firsthand experience, which she recounted in a blistering column for The Guardian.

The subject of her ire? Sallie Mae. In her column, Gray says the company “sold me predatory loans — and tried to ruin my entire future in the process of collecting them,” because she finished her master’s degree facing unemployment, and she had no way of adjusting her payments, and Sallie Mae required a $150 fee every three months to put her loan in forbearance, which wouldn’t go toward the interest or principal balance. She called it an “unemployment penalty fee,” and in 2012 started a Change.org petition to reverse it. As a result, the company started applying the fee to borrowers’ balances, Gray wrote. A Navient spokeswoman (student loans made through Sallie Mae are now serviced by Navient, a separate company created in October) said she could not comment on an individual customer, for privacy reasons. She sent the following statement from Navient to Credit.com:

“When our private education loan customers fall on difficult times, we work with them to understand their financial circumstances and offer customized assistance using a variety of tools, such as temporarily suspending the requirement to make payments, offering a payment catch-up program, or reducing the interest rate and extending the term. We began offering a private education loan modification option in 2009, and currently have more than $2.1 billion in private loans enrolled.”

Gray said she had no way to lower her monthly payments, so she defaulted on her $36,000 of student loans, which had grown to $77,000 within three years of graduating. She said Sallie Mae filed four lawsuits against her, in an attempt to collect the unpaid sum. Gray fought back, and in a somewhat bizarre twist, the judge dismissed the lawsuits, because in three of the cases, the entity suing her wasn’t registered to do business in the state of New York, and the fourth case was brought by an entity that seemingly didn’t exist.

If Sallie Mae had won a judgment against her, she would have faced wage garnishment and a dismal credit rating (though defaulting likely already hurt it, considerably). Gray wrote she was relieved it didn’t end up that way, but the fact that her misfortune unfolded as it did frustrated her: Before she defaulted, she said she tried to negotiate with Sallie Mae to pay what she could, but the lender was rigid. It’s a huge downside to borrowing from private lenders.

Federal student loan borrowers may qualify for programs like income-based repayment, loan forgiveness, forbearance or deferment, sometimes making it easier for borrowers to move through hardship without defaulting on their education debt. Missing any kind of loan payment seriously hurts credit scores, and student loans are particularly problematic because they’re rarely dischargeable in bankruptcy. To monitor how your student loans affect your credit standing, you can see two of your credit scores for free, with updates every 30 days, on Credit.com.

As soon as you feel you’re unable to make your student loan payments, research your options and reach out to your loan servicer to see if there’s any way to make your payments more affordable. Unfortunately, you may end up in a situation like Gray’s, but it’s worth the effort to try and avoid the grave financial consequences of default.

More on Student Loans:

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  • Hate Navient

    I hate Sallie Mae/Navient! I have an issue w/ them too… I’m having fear to pay them online because they charged me twice! For example, I paid $500 them via Navient. Next day, I saw they charged me $500 twice on my bank account! Their website is really tricky. It’s unlike other websites where you made a payment. It’ll normally show “Payment Received.” or “Thank you for your payment”…etc. It’ll not show anything when you click once. Most people would click again & it’ll show you made a payment. However, it’ll show 2 payments next day on your bank account! I’m planning to sue them too because I’ve contacted their supervisor & problem still unsolved… Also, you’ll find lots of complaints about this student loan company online! Beware of this ripoff company!!!

  • Duayne Howard

    I was supposed to renew my deferment in October, but called late (December) and got my deferment. Now I’ve been getting harassed by “Heather” because they somehow “lost” the fact that I was in deferment already.

    Nice…

  • http://www.edenhealingarts.net Tereaz Scholze

    I just realized after paying on my student loans for almost 10 years (the loan was only for $10,000) and paying $100 to $200 per month when the payment required was only $84.00, that Navient (originally owned by Sallie Mae) has been doing a VERY UNDERHANDED thing to INCREASE THE INTEREST I pay on my loans. After going up 3 tiers of management I FINALLY talked to “Brian” who’s last name I couldn’t seem to get. I just got his ID number.
    What NAVIENT has been doing is, instead of applying the extra money I sent each month to the PRINCIPAL of my loan, they put that money toward to NEXT month payment (so more interest is accured). My bill said I didn’t owe another payment until FEB, 2016. This is when I caught onto their SCAM. I AM MORE THAN FURIOUS. I STILL OWE over $3,000 and I am SURE if NAVIENT, the thieves, hadn’t been doing this GREEDY thing (they blame it on the computer system being set up this way…SO ridiulous) I’d have these loans paid off!!
    I’m so concerned for these young people coming out of college.
    PLEASE NEVER USE NAVIENT. DO NOT make the same mistake I’ve made. I’ve now learned that NAVIENT is NOTORIOUS for being the LOW LIFES of the STUDENT LOAN companies.
    If anyone knows of a CLASS ACTION LAW SUIT going on, I’D LOVE TO KNOW ABOUT IT! Please help!

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