Getting a Lower Rate from Sallie Mae

If you are like me, you’ve had some disappointing phone calls with your private loan lender when you tried to get some assistance making your payment.  Fortunately, if you know exactly who to talk to and exactly what to ask for, you can get Sallie Mae (and other private lenders) to lower your monthly payments and your interest rate.

This article will focus on my experience in getting interest rates lowered with Sallie Mae. If you are less interested in how I got my rates lowered and more interested in getting your rates lowered here is my quick and easy step by step guide to lower interest and payments from Sallie May.  Also, its worth noting that this applies only to private loans, if you want to lower your payments on your federal loans, click here.

I stumbled upon this approach while helping another borrower whose private loan was in a delinquent status.  Sallie Mae was calling daily and this borrower, lets call him Fred, could not afford his payments.  When I called Sallie Mae on behalf of Fred, I was transferred immediately to their collections department.  I quickly learned that these are the people you want to talk to in order to get actual help.  They have far more authority to help than the typical customer service person.

Fred had missed months worth of payments and had a back due balance of thousands.  I explained that there was no way for Fred to make this payment anytime soon.  The collections person at Sallie Mae was able to do two things for Fred.  First, they lowered his interest rate from almost 15% to 3%.  Second, to address the large outstanding balance issue, we agreed that if Fred made 6 monthly payments at the new low rate, hs back due amount would be set to zero and they would inform all the major credit bureaus that Fred was current.

[Further Reading from the Sherpa: SoFi refinances student loans and drops rates to 2.81%]

Realizing that this new arrangement just saved Fred hundreds of dollars this year alone, I proceeded to ask all the questions I could to learn everything there was to know about this program.  She informed me that it was called the “rate reduction plan.”  Enrollment was based upon income level, you need to renew every year to stay in the program and that only collections people could sign you up.  She also told me that she only had the authority to go as low as 3% but that her direct supervisor could go lower if necessary.

Upon learning all of this information I called Sallie Mae to see if I could get the interest rate lowered on my loan that was not delinquent.  I spoke with a customer service rep who told me that all she could to was lower my interest rate by .25% if I signed up for automatic bank withdrawals.  She also said she would accept payments of interest only at my current 13%.  This was what I had been told before and it really isn’t helpful at making a meaningful dent in student loan debt.

Then I asked her about the “rate reduction plan.”  She said she couldn’t do that and that I would have to talk with the collections people.  I explained to collections that though my payment was current, at its current rate I feared I would become delinquent. I said I wanted to enroll in the “rate reduction program” and be proactive  to avoid delinquency.  They accepted this rationale and proceeded to start my enrollment in the program.  Ultimately, I was unsuccessful because I had a co-signer on that loan who exceeded the income level to participate.  However, after sharing this advice with others, I can confirm that even if you are current on your loan, using this approach as I did, you can get your payment and interest rate lowered.

Please use the comments section below to share your successes and failures using this method.  Please also include the lender you were working with so that we can help as many people as possible.

SPREAD THE WORD! Student loans are a huge problem for everyone and what you don't know can hurt you.
  • Jessica Gongora

    After reading this method, I was so excited to get out of work and to get on the phone with Sallie Mae to try it out. I currently have 2 separate loans with interest rates at 9% and 10%. I spoke to Customer Service and sure enough, the rep said that all he could do is put my loan on temporary forbearance if I couldn’t make my payments. I told him that going into forbearance isn’t solving anything because that’s just adding to my principle. He said, “Yeah, yeah. You’re right.” Talk about trying to help you out when they are just making your situation worst in the long run. So I remembered what you said and asked to be transferred to Collections. I explained to her that I was unable to continue making my monthly payments and even threatened that I was considering consolidating my private loans with my bank but that I wanted to check with Sallie Mae about the Rate Reduction Program. She gathered some information about me and my co-signer (who is making less than I am). She was honest enough to tell me that I qualified for the program but that she could *temporarily* reduce my rate to 3% for one year, and that this would only be factored into my interest payments- so really, it would still be increasing my principle. This is definitely NOT solving the problem to my long-term debt. She was also nice enough to inform me that after a year of enrolling in this 3% Reduction Program, my original (already high) interest rate could potentially increase above the 9/10%. Yikes! I was disappointed that this is not a long-term solution but glad that she was honest with me about how it worked. My problem is that when I did consider consolidating my private loans with my bank (Wells Fargo), the application process involved getting a co-signer. My parents absolutely refuse to cosign, not because I’m financially irresponsible- I’m not, but because they don’t want their credit reflecting my debt and they read articles on the web instructing parents not to do so. So as you can see, this rate reduction method was my last resort and sadly it’s not the right solution :(

    Does anyone have any suggestions for us Sallie Mae Slaves like myself who cannot get a cosigner to consolidate our private loans? Do you know of any private loan consolidation companies that do not require cosigners while offering low rates? Thanks for reading.

    • The Sherpa


      Thank you so much for sharing your experiences. I’m bummed that this approach didn’t work out for you like you hoped. I’m constantly amazed by the fact that it seems everyone gets different answers to the same questions from their lender.

      Do you know if there is a prepayment penalty on your loans? I’m thinking that even if the minimum payment under the rate reduction plan doesn’t reduce your principal, perhaps if you can pay a little extra each month, that will reduce your principal and save you some money.

      You are definitely right about one thing. The rate reduction plan is a temporary fix that has to be reapplied for after 12 months. I guess where i would disagree with you is that if you have an opportunity to lower your interest rate, even if its for a little bit, its worth doing. The money you save in reduced payments and lower interest can be applied to your principal, which will help you in the long run.

      As for your last question, I don’t personally know of an private loan consolidation companies that would be willing to consolidate without a cosigner and give you a low rate unless you have excellent credit. I’ll keep you posted if I hear anything. Hopefully someone will read your comment and be able to share how they were able to refinance their private loans.

      One thing that you should definitely keep an eye on is the progress of H.R. 1330, the Student Loan Fairness Act. Under this proposed legislation, you could consolidate your private loans with the federal government at a much lower interest rate. My impression is that this legislation has little chance of passing, but it might be worth writing your representatives and getting people you know involved in the cause. People like us would really benefit.


      The Sherpa

      • Eve

        Hi! Read your site information. I have Sallie Mae consolidated loan with an interest rate of 8%. I really need to lower the amount owed and the interest rate. I have had a foreclosure and bankruptcy. Sallie has informed me that come December 2013 I will be required to make payments of $261 a month. This will be a really great hardship for me. Do you know of any resources, attorneys that can help me – lower the amount owed and lower the interest rate. Appreciate any assistance.

        • The Sherpa

          Hi Eve,

          I’m sorry to hear about your difficulty with Sallie Mae. I have a few questions for you. Is your loan a private loan or a federal loan? Do you know why the amount you owe will be increasing in December? Are you on a forbearance right now?

          Before you reach out to an attorney, I’d suggest that you make numerous phone calls to Sallie Mae and explain your situation. Talk with customer service people and talk with collections people (I think the collections people are the most useful). It seems with every phone call you will get a different answer. Call until you get one you like, and be sure to get proof of the positive answer. I’d be surprised if they lowered the total amount you owed, but hopefully you can get them to lower your interest rates. This should be your goal. By lowering your interest rates you can reduce what you owe and lower your monthly payments. (Note: this advice does not apply to federal loans with sallie mae… in that case you want to get on IBR or PAYE as soon as possible)

          As for as attorney suggestions, I haven’t really worked closely enough with any to feel comfortable with making a suggestion. I have prepared some advice for helping you find a bankruptcy attorney to help with your student loans.

          I applaud your efforts to get this problem resolved. The longer you wait to address these issues the worse they become.

          Best wishes,

          The Sherpa

          PS If you wish to send me a personal email, feel free to use my contact page.

          • Pete

            For years now, I have had a Sallie Mae account which I paid under one account number. I was going about my business the past few months and paying Sallie Mae with my online bill pay when suddenly Sallie Mae starts blowing up my phone. My payments had been about $100 monthly and as far as I know, i did not miss one. But I paid another $100. Sallie Mae continued the calls. I paid yet another $100. Still the calls continued. Finally, I talk to a customer service rep. She tells me I have $300 due. I say, that is impossible. I just paid $200 this week. Come to find out, back in July Sallie Mae Federal split from Sallie Mae Private. But no one was ever nice enough to tell me sir, you will now be making two payments. One will go to Sallie Mae Federal and one to Sallie Mae Private. That is what I really needed to hear. And all I got were vague statements which did not explain the implications. The worst part is Sallie Mae private will not give me an account number to do online bill pay. What kind of company won’t give you an account number? Does anyone know of other companies who will buy these loans?

          • The Student Loan Sherpa

            I heard about Sallie Mae splitting into different companies (I wrote an article about it when they first announced it) It is really terrible that their restructuring of their business has had such a negative impact on you. It doesn’t seem right. Did they explain why your payments increased? That seems strange.


    This post has been amazingly informative. My Sallie Mae loans for the last 5 yrs have included very low intersect rates (1-3%) along w 8-9% rates for my final year of school in ’06-07. Every time I’ve tried to get the latter lowered to the rest I’ve received the same answers re .25% reduction for auto pay and that’s it – no other suggestions or departments to assist. I will now attempt the aforementioned approach seeking the “rate reduction plan” via the collections department. However, the last person to post has scared me. I’m fearful a temporary year long interest rate reduction will conclude and re-set to a rate higher than the current rates I pay between 8-9%. Has anyone out there had their interest rates reduced and also, when the reduction year ran, had the original rates (rather than increases) set for the next year?

    • The Sherpa

      I’d like to say that I’m sure Sallie Mae won’t try to increase your rate at the end of one year, but after all the things I’ve seen these companies do, I wouldn’t be surprised.

      When you talk to them be sure to ask about the rates at the end of the one year. I’d also suggest you see about getting what they say in writing, just in case.

      Be sure to let us know how it goes! Good luck!

  • Dianna

    I’ve tried any number of pleasant methods to try and make headway on my loan, including attempting to send in extra money each month, but they just applied it to interest every time, when I asked them how I could make my monthly payment and any extra payments to the principal they said “it wasn’t POSSIBLE” each time I sent in a check for the principal they applied it to interest. I’ve been paying the loan for years with no change in the principal. I’ve just resigned myself to a lifetime of payments until or if I can ever just pay the entire loan off, though to be honest, I’m leary of sending them anything beyond my monthly payment they always seem to find a way to keep the money and never reduce the principal. As someone who barely understands much of this to begin with, I feel the fight is futile. I’ve utterly forbidden my children, soon heading for college to take out loans, I feel it’s akin to making a deal with the devil, it all sounds so simple and good and helpful when you’re young and then by the time you figure out what a raging mistake you’ve made it’s completely and irrevocably too late. Payments….FOREVER……..

    • The Sherpa

      Did they say why none of your payment was applied to principal? Simply saying it wasn’t possible does not make sense.

      Next time you call them, I would suggest you ask how much you would have to pay for it to even reduce the principal by $1. I’d also ask them how long they say it will take for you to pay off your loan on the current schedule. What you describe does not sound right.

      Hopefully next time you call you will get to speak with someone more helpful. It can be really hit and miss.

    • Douglas

      A few suggestions and notes. First and foremost log into your Sallie Mae account and see what payment plan you are on. If you have a graduated payment plan, I would strongly recommend that you request that they change it to a standard payment plan. However be prepared for your monthly payment to increase significantly.

      A graduated payment plan is a 30 year loan. The first 5 years of payments ONLY pay interest. So for example (all values are approximate): a $10,000 loan at 8%, would accrue about $66.67 in interest each month. They will set your minimum payment for the first 5 years to $66.67. you will in essence pay over $4000 in the first five years and never touch your principle. Then in year 6 you finally start to pay principle + interest and your payment will increase to roughly $77. With this payment plan you will pay over $17,000 in interest on a $10,000 loan. If Sallie Mae will not convert the loan to a standard payment plan, then make your own plan. Go online and find any of the free amortization calculators. Plug in your current account balance, interest rate and number of payments remaining (all located on your account page) and start paying the amount suggested by the calculator each month.

      So this brings me to your second question. They are somewhat correct about how your payments are applied but they certainly are not forthcoming with their information. First off, any time you make a payment it will go to late fees/penalties first, then it will pay interest and always last is the principle. Secondly item of importance is that your interest accrues daily. Sallie Mae has a calculator on their site that will tell you how you how much interest you accrue on a daily basis. With that in mind here are two scenarios. Let’s use the $10000 8% loan for example. You accrue $66.67 of interest every month or $2.19 per day. Your due date is the 1st of the month

      Scenario 1
      On the first you pay the minimum payment of $66.67 – You just paid off all of last month’s interest so the account has $10,000 in principle remaining and $0 in interest.
      On the 2nd of the month, you start accruing interest again.
      You decide on the 15th of the month that you want to pay an extra $20 but you want it to go to principle
      Well now on the 15th you have accrued $33 of interest already for the month, so a payment of $20 would go straight to interest.
      However and this is the part they don’t make clear, come the 1st of the month you make your standard payment of $66.67
      But this time $46.67 of it goes to interest and $20 goes to principle.

      Scenario 2
      This option is much simpler, on your payment date pay an extra $20, the $66.67 will go to interest and the $20 will go to principle.

      I know loans can be difficult and confusing but you have to pay close attention to what is actually going on, because the lenders are only concerned with getting their maximum return.

      So in summary if the majority of what I said above made no sense just remember these two key points.

      1. Graduated payment plans are a horrible idea and will cost you greatly over the life of the loan. If yours has this payment plan change it immediately but be prepared for a higher monthly payment.
      2. No matter how they try to spin it, paying anything above your minimum is a good idea, particularly on high interest loans.

      • The Sherpa

        Great examples Douglas! Lenders love the interest only payments. Every dime they get is pure profit!

        If anyone is considering making an interest only payment, it should be as short term as possible, and you should pay extra whenever you can.


        YOU are great Douglass – thanks for the info!!! Thanks to you too Sherpa..

    • LUIS DONADO (@luisdonado)

      If these were private loans, I would default on it and live happily ever after. That’s what I did. No way in hell one can pay down these scammers. I was able to work out my fed loan. The fed loan is one loan you don’t want to default. Tell SM to shove it or work it out like the fed loan. Tell them that you are in command, not them.

      • The Sherpa

        I’m glad to see you were able to resolve things with myfedloan, but I worry about your situation with SM. I hope things work out for you because default can be a nasty business.

  • Karen

    I am frustrated with sallie mae customer service

    My son has no income at this time, is currently in out of the country on a research program that will help him get in to his PhD program for 2014 This program provides no income
    We have contacted Sallie Mae several times as co -signers of these loans we are try to make payments but cannot afford the full amount I have spoken to three different representatives , have been told three different answers
    I finally was able to have a representative agree to $125 a month , this would prevent collection agencies being involved as I was making a payment Yet a month later I received multiple phone calls being behind in payments
    I called again was told the previous information I had been given was incorrect and I needed to pay I again explained my situation Was given three options pay the full amount , pay $50 a month to prevent collection… why would I do that that is just creating more money due per month or pay $21 no this would prevent collection
    Was very confusing/frustrating
    I just want to make payments on the loan even though not the full amount to show good faith How can I make this happen

    • The Sherpa

      Karen, this sounds like a really rough situation. Unfortunately, Sallie Mae has very little incentive to help you in any way because they know as the interest continues to grow you will be forced to pay back this even larger debt. Since there is almost no chance of bankruptcy, they actually make more money by doing this.

      One thing that might yield better results would be to make sure you talk to a collections specialist rather than a customer service representative. If you reach any sort of agreement with them, do your best to get it in writing. Maybe you could also look into recording the conversation if they are not willing to document it? When you talk with them, explain what you are able to do and explain that by doing this PHD program your son will be better able to afford his loans.

      I know that things seem bleak right now, but if you are persistent but polite, you will have the best odds of getting a successful resolution. Congratulations to you and your son for realizing that this situation needs to be addressed right away. Waiting only makes these things worse.

      Good Luck!

      • Karen

        I will try to get through to the collection department see if this is helpful It is so frustrating
        Try to be up front but the help is not there

        • The Sherpa

          Good luck Karen! Keep us posted on how it goes for you!

  • carissa

    i just tried calling sallie mae about the rate reduction plan for the interest rates and failed. They told me i could only get the 0.25% for automatic debit that i am currently already enrolled it. I was so hopeful i was going to finally catch a break but once again Sallie Mae dissapoints. Welp i guess i just keep shelling out the money to Ms. Mae.

    • The Sherpa

      That is terrible! I kept running into the .25% wall as well. My luck didn’t change until I stopped talking with customer service people and spoke with people in the collections department. They have far more authority to help.

  • Karen

    Sallie Mae does not seem to have a set rule to what the company tell its clients Several phone calls several different answers One head way made I am paying as agreed just the interest See how this all works out
    Its better than nothing at all
    I tried talking to the collection department and was told that there was not one to talk to ?

    • The Sherpa

      I feel your pain Karen. Each time I talk with Sallie Mae, I seem to get different answers. It is very frustrating. Its especially frustrating when they give you inaccurate information. Unless they have eliminated the collections department within the past month, I can tell you for certain that there is a collections department at Sallie Mae and that they are the most helpful Sallie Mae employees. It is just difficult getting your call directed to them.

  • Anna

    As frustrated as I am with Sallie Mae, I did speak to their Consumer Advocate Unit and they were amazing and in no rush to get me off the phone. 888-545-4199.

    They cleared up some questions I had from previous Sallie Mae encounters and were honest with the information.

    I’m intrigued with the approach via the collections department and since I’m already paying the highest interest (8.25%) I honestly feel I have nothing to loose at this point.

    • The Sherpa

      Fantastic tip Anna! Thank you so much for sharing. Keep us posted on if you have any luck getting your rates lowered.

  • Jeier

    I apologize upfront – this is going to be long.
    I am currently enrolled in Sallie Mae’s rate reduction plan for the second year in a row. I practically had to default on my loan in order to get a monthly payment I could “afford”. I’ve been working full time since graduation but making at least half of what I anticipated and as a result my credit will never recover. If you can afford the payments, even at a higher interest rate – stay where you are.
    My first year on the rate reduction plan was relatively smooth – the payment they wanted was higher than I expected (I have Federal Loans in an income based repayment plan and if you multiply that monthly payment by 10 you get Sallie Mae’s expected payment.) but I just had changed jobs and was making a little more money. I was sick of the phone calls and ready to get on track so I agreed to pay $425 per month (about half) at 2% interest. As long as my payments were made on time and in full I would be in good standing and qualify for an extension of the plan next year. I would not be able to afford my payment otherwise so I made sure I stuck to the program. I had zero issues, my payment was automatically debited on a predetermined date.

    As that plan year came to a close I received correspondence from Sallie Mae that I qualified for an extension of the rate reduction plan – call to set everything up. I chose a day I was off during the week – was on hold for 20 minutes – but once I finally got a person it was relatively painless. Knowing the drill from last year I had my budget and expenses ready to go. We went over numbers, I was put on hold for another 20 minutes or so and the rep returned with my new numbers – $500 per month at 3% interest. I expressed my concern about the payment increasing, I’m paid bi-weekly and having that much come out of one check makes it difficult. The rep suggested a split payment using my set paydays as guides – $250 per pay was much easier to commit to. She even said they could change my due dates to accommodate the 2 payments – my account would never be in jeopardy of becoming delinquent. This was all set up first week in July with my first payment due August 12th – a little over a month in advance – and I was assured the changes would be processed and was given confirmation numbers for each transaction for the upcoming year.

    August 12th comes and nothing happens – no money is removed from my checking, no payment posts to my account. Failure to pay can result in termination of enrollment so panicked I attempted email contact (don’t bother) and ended up having to call while at work. I was on hold for 45 minutes and passed between 3 people before a rep confirmed they could see the payment on their end, my account was in good standing and that I should see the change in my checking account within 48 hours. The charge posted the next day, all is good – Until August 19th. I receive an email stating I have a new document to view and to log in to my account. Assuming it’s a “thanks for your payment”, I still log in and to my complete horror in big orange letters: “ACCOUNT IS 11 DAYS DELINQUENT – MAKE PAYMENT TO AVOID REMOVAL FROM PROGRAM”. I’m so confused, panicked and at work. I try the stupid email again and after no response I decide to call on my lunch break. Again with 45 minute wait, passing game and finally I end up with the rep that helped me set up the program in July. I was optimistic, I shouldn’t have been.

    She begins to explain that my request to change due date(s) never went through which is why I’m seeing past due balances. It didn’t go through because in July they updated some software or server – whatever is responsible for processing these types of things – and that they are back logged about 20,000 accounts because of it. I’m kinda pissed, why wasn’t I notified about this especially if my account is affected. I ask, “how do we resolve this?” – She proceeds to tell me that there is nothing she can do today for me, my options are change my payment dates to reflect the current due dates (which don’t line up with my paychecks hence the moving of the dates to begin with) OR she can resubmit the request and SHOULD go through by September. SHOULD? Not acceptable.

    At this point, I’m furious. She’s telling me to ignore the delinquency notices, not worry about my credit – it won’t hit until 45 days of delinquency and this SHOULD be resolved before then, oh, and the late fees already posting – I won’t have to pay those. I ask to receive that in writing, she tells me not possible. I make it clear this needs resolved immediately at this point, her response – “I can’t wave a magic wand” THAT’S IT – I NEED A SUPERVISOR. Another mistake..

    The female that picks up next sounds about 16, I can hear giggling in the background and I feel like I’m getting the run around. She only sticks to the script, “I’m sorry you’re upset, I understand, how do you want to proceed?” Again I’m told there is absolutely no one that can manually override a payment date in the computer, it HAS to go through this system so I have to wait it out or change my payment dates. Watch my account sit delinquent and accrue late fees after I worked so hard to start repairing my credit – and I just had to take their word that they would not allow anything to negatively impact me as a result of this. After an exhausting hour and twenty minutes going nowhere I hang up, still no resolution. Still pissed, still feeling like they are trying to screw me.

    Stay far far away from this company – borrowing money from them was the BIGGEST mistake of my life. There is zero customer service, you’re forced to sit on hold for half your day just to make contact with some snotty rep that can’t help you. Being told to ignore delinquency notices is outrageous – I’ve been down this road with them before and I DO NOT TRUST THEM.

    • The Sherpa

      No apologies necessary for your long comment. Thank you so much for sharing your story! I hope many people are able to benefit from your experience.

  • Callie

    Sallie Mae is the devil and borrowing money from them was the worst mistake I have ever made!

    With no choice but to file for private loans I was forced to borrow from Sallie Mae to pay for undergrad and grad school. I have been out of school for 5 years and in the beginning they wanted me to pay $1300 a month. Crying, I called them to tell them there was no way I could afford that so they lowered my payments to $900 – not a huge relief. After a couple of years of that payment they called again to tell me my payments were going back up – at this point I had just lost my job and was waiting tables, plus I had just paid for my wedding and a new house. Again, I begged and pleaded with them to lower my payments they finally agreed to lower them. Now, another couple of years later I was just informed my payments will be going up to $2100 a month. That is more than my current mortgage…significantly more!! Every time I hear the name Sallie Mae I get sick to my stomach…literally! I even went so far as to write my congressman about this, hoping to shed some light on the predatory practices that are happening for kids that won’t qualify for federal loans. My congressman sent Sallie Mae a copy of my letter and a letter asking Sallie Mae to review my options….Sallie Mae responded with “sorry you have no options but thanks for writing.”
    At this point I have no idea what to do, $2000 a month is insane and I am not sure how my husband and I will make it work. I’m interested to see if the legislation for consolidating with a federal loan has gone through. I was thinking about sending the president a copy of my correspondence with my congressman and Sallie Mae, not sure if that will do any good! There has to be something that can be done for people in this situation!

  • Erin

    This is one of the clearest, most honest blogs I’ve come across. Kudos to you, Sherpa, for providing people an honest forum to communicate their student loan frustrations.
    My personal story is, I went to an out-of-state, for-profit school and was naive. I had no knowledge of the difference between private and federal loans, and now I’m stuck with 100K in student loans. I blame my own stupidity. I graduated in 2008, which nicely corresponded with the economic bust. I was unemployed for a solid year and half, and my original loan amount went from 80k to 100k in a flash. I live in CT aka one of thee most expensive states to live in, so right now my fiance and I are staying with his parents to save up some money for our wedding, and eventually a house, although I’m petrified to even attempt because of my student loans. My fiance doesn’t have any student loans, so that is the only positive thing in all of this horrible student loan mess. I make 60K a year, of which I’m incredibly proud, but right now I’m only paying interest-only, which is still $600/month. If I could pay the full amount, it would be 1,235 or ~25% of my monthly income. Just in student loans.
    I know my options are few and far between, other than defaulting, I have none, but again, thank you.

    • The Sherpa

      Thank you Erin! I’m glad you find the information useful. It is no fun to deal with student loans, but it sounds like you have a great support network in place. Congrats on your hard work leading to you finding a great job. Paying off this debt is a long journey, but you really seem to be headed in the right direction.

      Thanks for sharing your story!

  • Mike E

    Sallie Mae original loan balance 18k upon graduation interest had driven this amount to 27k also I was charged a 575$ loan repayment fee when i started repaying my loans which seems like bs. With 9.5% interest rates on my SM student loans, 75% of my monthly payments go to interest. At the minimum payment I will pay almost 60k after 15 years.

    I want to pay off this loan quickly and reduce the interest charges. After reading this blog I tried to get the interest rate reduction with Sallie Mae. My goal was to get the 3% interest rate and double/triple my monthly payments for 3 years and pay it off.

    Unfortunately, I was informed that since my account is current and since I am able to afford the payments, I am not eligible for the rate reduction. I was only able to get the 0.25% rate reduction for signing up for auto bill pay. However, it doesn’t show anywhere on my statement that I actually receive this rate discount. It also seems backwards that since I make my payments every month on time in full I a disqualified candidate for a reduced rate.

    I would appreciate any recommendations.

    • The Sherpa

      This is a great point Mike, it seems absurd to penalize you for not falling behind on your loans. Are these loans private loans? If they are Federal, you should look into IBR or PAYE.

      Have you talked with the collection department? The customer service representatives will not be able to help.

      You could explain to them that you want to avoid your loan becoming delinquent and you don’t think it is fair to exclude you from a program just because you haven’t fallen behind on your payments.

  • Flicker24

    I was told today that because my loan wasn’t private with Sallie Mae they could not do anything for me.

    • The Student Loan Sherpa

      This is good news! Your loan being a Federal loan means that you qualify for Income Based Repayment as well as student loan forgiveness programs. These are far better than the programs that Sallie Mae has for its private lenders.

      • Nathan

        I signed up for IBR (owing 200K for doctoral program). When I signed up to consolidate, DirectLoans said I’d be paying about $700/mo given my income, loan amt, and interest rate. SM is now saying I owe $2300/mo. Its as if I’m not really signed up for income based repayment at all. I am absolutely horrified. Information on this site is extremely helpful. I’ll try to check back here when I make what progress I can. It had better be a lot! Thanks for all the tips.

        • The Student Loan Sherpa

          If you just now consolidated, SM may not have received your IBR info yet. I had a similar issue when I consolidated my loans. If you check back in a week or two, they should have all of the information.

  • Fading_Shadow

    I had an income based repayment plan in which all the payments went to interest, nothing went to principle; I called them and expressed my disgust at this giving them free money, while doing nothing to reduce my debt; finally after I sent multiple angry, pointed emails I talked to a very nice lady, Michelle who told me she was in the ‘elevated accounts department’ or something like that; she and I agreed to a short term forbearance which she assured me that would be retroactive, they would take off my interest that had been charged for the missed payments, and all would be well for a couple of months. What she didn’t tell me until I asked, was all this ‘happiness’ cost another $10000.00 for a short 4 – 5 month forbearance; and then even after I agreed to that; a week later, on the same day I received 2 emails; first one stated that ‘due to receiving more information, we have changed the terms of your forbearance to only June and July past’ and second email, stating that since I hadn’t paid anything since June, I was now receiving my first delinquency notice.
    After sending another pointed email to Sallie Mae, pointing out that I had not agreed to any new changes in the terms of my loan, they can’t arbitrarily do that, they admitted they had screwed up, and apologized for ‘any confusion their error had caused me.’
    So, they erred (twice actually), they admitted their error, but refuse to adhere to their original forbearance agreement, and immediately have charged me interest again, etc…I received an actual monthly mailing in which they suggested I set up an automatic payment plan of almost $500 monthly for my convenience of course.
    My view is they want my money, I want a reasonable hope of paying off my loan with an affordable payment; they keep quoting their company policies, without any negotiating, or thinking – I’m tired of jumping through hoops – they want my money, they do it my way – I’m self-employed; so it’s going to be a little bit harder for them to garner my wages I think. . .
    My lawyer is currently looking at this -

    • The Student Loan Sherpa

      Sounds like a nightmare! Do they service your Federal Loans or do you have private loans with them?

      The income based repayment applies only to federal loans and the program described in this article is for private loans.

      Good luck with your situation!

  • Dan

    I need help. I owe 75K in loas to Sallie Mae. They will not lower my interest, but I have not called the Customer Advocate line yet. Would you know how I can get my interest lowered past 7.9% when I only make 23k a year?

  • Mimoza

    Hello, very helpful blog, thank you. My question is: can a variable rate be changed to a fixed rate during the life of the loan?

    • The Student Loan Sherpa

      Great question. I’d first suggest that you reach out to your lender to see if you can lock in a lower interest rate. If they will not work with you, your next step is to investigate refinancing/loan consolidation. Essentially you would have to find someone who will loan you the money at a fixed rate and have them pay off your existing loan on your behalf. If you have decent credit or a co-signer it can be done pretty easily.

  • Mina

    I just googled this because my constant battle with SallieMaeIsuckyourblood took a drastic turn this afternoon. I was basically in the same stressful hole your friend was, and received daily phone calls. When I occasionally did answer I was always met with a “Can you make a payment of a $600,000 right now to bring your account current?” Obviously that is a stretch, but the silly question was very real. Every time. And every time I would respond with, “What do you think?” No one ever offered any solutions. Today, I saw the phone ringing and decided I would try to set up another withdrawal from my bank account at the end of the month that I knew I couldn’t afford, but knew it was the only way to curb their calls. Before I got a word in, a friendly woman answered me, got my specifics, and went on to ask if I needed help. What? Uh. Yeah. She says, well you qualify for our rate reduction program to bring your interest rate from 9.5% to 3%. I thought she was bullpooping. She was not. So, baffled, I asked her why no one would have offered me that as an option months prior when I had Significant loss in income and would have avoided my delinquency? She responded, “I can’t tell you why my coworkers would not have offered that, I have been here for 5 years and we have had this option for 4 years…I can’t speak for them. But I am here to help you.”
    Wow. Well. Long story short, in about 20 short minutes I was able to lower my monthly payments to a much more affordable set rate. The fact that they could have offered me this months, if not years ago, but didn’t, speaks volumes about their business. I was completely floored. So anyone dealing with Sallie Mae stress, look further into other options, because they may not be openly apparent. And may, in fact, be intentionally and maliciously hidden.

  • duo_viper

    Thanks for writing this, as I’m currently enrolled in their rate reduction plan.

    I couldn’t afford a $725 monthly payment on approximately $60,000 worth of private loans, so I took advantage of their hardship forbearance option. It’s ridiculous that you had to pay $150 per three months to choose this option, but that was far more affordable in the short term than the full amount they requested. Unfortunately, I didn’t really look into what this meant, so my $60K ballooned to $85K in about a year. (my interest rates were sky high because I refused to bring on a cosigner)

    When my forbearance ran out, I called customer service, asked for an extension, was rejected, so I had no idea what to do. The monthly payment had shot up to $800/month, and if I couldn’t afford $725 per month, I sure couldn’t afford $800 (despite finding a better paying job).

    I stopped paying altogether, and got a bright and shiny red letter in the mail from Sallie Mae approximately 60 days later, saying I had 7 days to call collections and work out a payment plan, or they would report my delinquency to the credit reporting agencies.

    I got on the phone, asked to be transferred DIRECTLY to collections (Sallie Mae outsources their customer service agents, but the collections dept. is here in the US), and spoke on the phone for about an hour with an agent, who reviewed every aspect of my finances. My monthly pay after taxes, my expenses (rent, food, internet access, medical), and after crunching some numbers, I was told that I was approved for the year-long Rate Reduction Program, and would be required to make 3 on-time payments via automatic debit to be officially enrolled.

    This was a big relief, my payments went from $800/month at upwards of 12% interest to $330 at 1% interest. I believe the interest rate they assign you during the program depends on who you speak to, and how dire your financial situation is.

    Some things are considered “red flags”. If you disclose info about non-essential (in their eyes) finances, you’ll be likely rejected.

    To sum that up, to get into the program, you’ll need to speak with someone in collections, be delinquent on your loan, be willing to disclose financial info, and be able to make fifteen on-time payments via auto debit.

    Sadly, my enrollment in the program ends in less than 2 months, and even though i’ve found yet ANOTHER higher paying job (i’m in IT), I still can’t afford the $900/month they are requesting (not sure why the amount keeps jumping up).

    I wish they would come up with more flexible payment options, but if I get rejected for an extension, I’m going to stop paying, and take them to court. I’m more than willing to pay, but if I only have $50 in my wallet, I can’t pay $100. Asking grads to pay more than they are able is doing nothing but hurting the economy, for how can we ever purchase homes and contribute to society if we’re forking over our livelihoods in indentured servitude?

    In addition, I’m writing my local reps. It’s no secret that Sallie Mae is inflexible, so let’s all do our part to write letters to our representatives to change the laws. Private loans should have the same protections under the law as federal loans.

  • oldadmark

    This is a bit different in terms of monthly payments. I am 68 yrs old and have been paying my son’s college loan off since he graduated in 2004. My income is high enough to be able to afford larger monthly payments to lessen the length of this loan. I still owe about 11k with a 2.8% interest rate. I’ve checked the Sallie Mae site but don’t see how I can adjust the monthly payment plan to increase the amount. Any suggestions?

  • Melissa

    Excellent blog. I’m also struggling to make payments on my SallieMae private loans. I took 6 months of forbearance to buy some time to figure things out. Trying to be responsible and plan ahead, I called the collections department to see what options they could offer me. They said they could offer NO options until my account was delinquent (ridiculous!). So I asked them for “hypothetical” help, but they said they would “hypothetically” only be able to lower my payments by a tiny amount. I’m definitely going to be calling back after reading this blog post and everyone’s comments.

    I also HIGHLY recommend that everyone check their credit score from time to time. Before I did the forbearance my account had been delinquent for about forty days. Sallie Mae reported this and my credit score went down significantly. The trouble was that they had reported my delinquency prematurely (if I recall, the reporting occurs after either 60 or 90 days)–meaning my credit score was lowered for no reason. I spent hours on the phone with different people at Sallie Mae (who all gave me different information on how to handle this) before I was finally transferred to a higher up who was able to help.

    • The Student Loan Sherpa

      Great tips on the credit score Melissa. Staying on top of the credit score is critical, especially if you are ever interested in consolidating your loans.

  • Borrower X

    The temporary rate reduction program is frankly the only reason I am able to make payments to Sallie Mae (and believe me- my monthly payment on that front is higher than most people’s mortgages). A bachelor’s and master’s degree from an Ivy League school meant big bucks (and really wasn’t worth it), and Sallie Mae wanted well over $2,000/month from me (we’re talking closer to 3K- who has that?!?). After utilizing the forbearance as long as I possibly could, I called SM to have a realistic discussion about my options before my payment was past due. I was literally advised to call them after I was past due so that I could be considered for anything (silly me, I thought I was being responsible!). I feared the consequences I might face, as my co-signer for a substantial portion of these loans is my ex-husband, and I could see WWIII stirring if he thought I was even a nanosecond late on my obligations. But alas, I had to call a day after my payment was due, and begin the process of enrollment in rate reduction. As much as I loathe Sallie Mae (and boy do I ever), I am thankful for this program. I have loans with interest rates as high as 14%, so when all of my private loans were brought down to 4%, it was heaven. My monthly payment was still a whopping $1,500, but I knew this was the best I could do, so I just had to plug away to meet it every month (not an easy task, as I’m sure many of you can relate), to keep SM and the ex at bay. Unfortunately, the experience hasn’t been without heartache. SM underwent a “systems change” in the midst of my program, which created a huge issue for me. The general folk over at SM have no idea what’s going on over at the rate reduction side of things. The disconnect in this corporation is astonishing. Although SM was cashing their huge electronic checks every month, and getting their money indeed, their system wouldn’t reflect that on my account. So not only was I just throwing money away, but the calls for my supposed delinquency were endless. And naturally, my ex had something to say about it. I couldn’t even blame the guy- my story that they were cashing my checks but not properly registering it was pretty hard to believe. Every time I took SM’s call, and they’d ask me how I’d like to clear up my delinquency, I’d simply say, “Can you please just actually look at your computer and see that payment that you automatically processed?” and after about 3 minutes of looking, they would apologize, and swear to me that the calls would stop, and all would be right again- but it wasn’t. It took months and months of this, countless letters to consumer protection agencies, and phone calls to SM where I pleaded and cried for this madness to end. One rep finally agreed to call my ex while I waited and explain to him that I wasn’t lying about everything. Thankfully he did, and my ex acknowledged that he was informed of the issue on their end. Eventually they sorted it out (not completely- my balance doesn’t wholly reflect my payments, but the calls have stopped). I have one more month before my program time is up, and I just pray that I will be readmitted, because I just can’t handle anymore than $1,500/month. I didn’t miss a single payment in the program, but without this plan, I just couldn’t keep my account current. So fingers crossed that I extend it another year (and some years after that!). You know, that, or just win the Mega Millions tonight or something. Oh how nice that would be. Good luck, guys. I know none of us ever imagined in college that a sweet-sounding old lady named Sallie Mae who just wanted to see you achieve your dreams, would someday rear her ugly head and shake you down like the nasty thug of a loan shark she is. Hang in there. -Borrower X

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  • Kelly N

    After read through this blog and all the comments everyone shared, I feel that it’s not just me got penalized for loaned with SallieMae. I’ve been through deferments, forbearances, Income Based Sensitive and etc… after many years battlings, appeals and maintaining my on time payments, my rates were reduced to finally 1.5, but then after I guess the promotional period ran out and the new repayment plan application was not processed on time, my rate goes up to 12%. Is this possible to have the current interest increased, even this is the fixed rate loans when I consolidated with SallieMae?

  • LB

    I need help. My sister who is in the hospital needs to pay oon her private school loans. The consumer advocate unit is very nice, but want 282 a month, which is something g we can’t afford. I can afford 125 a month, but they won’t take that. They said I can pay one out of the three for the amount (she owes 87k total), and let the other two go to collections. That to me is crazy. Please help me. Even when she is out she teachers (subs) and with rent and cost of living 282 is not possible. Please help me

  • Cierra

    So I graduated nursing school in may with my BSN and have been working full time as a RN since July but recently had to quit my job since my husband is in the army and we are about to move. Sallie Mae wants me to pay $700 a month which won’t be possible on one income, my question is can they lower rates on smart option student loans? I called today and since my payment is being processed they said to call back in 2 days and they will see what they can do for me….Really?

  • Erica

    I just signed up for auto-pay to at least get the .25 reduction… and then they only applied it to my smallest of three loans! When I called to complain/find out what was wrong, I got this big runaround about how my other loans weren’t eligible… I have yet to see writing anywhere that says only certain loans apply, and I was told this info was on my promissory note, which they did not have online, and I had to find the original copy that was mailed when my loan was first dispersed 10+ years ago. Anyone else have an issue with this??

  • Gregory

    I current owe $113,000 (from a 25k loan) and I’m struggling to get them to work with me.

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  • Brandon

    Thank you everyone, especially Michael for reccomending this course of action. I spoke with a rep in collections and once my balance was past due two months it turns out I’m eligible for the rate reduction program due to my income. My interest rates are down to 3% for the next 12 months as long as I make payments down from 9.25% (the highest) and others at 8%.

    1.) Has anyone ever been able to enroll for a second year in the rate reduction program?

    2.) what kind of consequences could this program potentially have? on the long term repayment of my loans?

    3.) Will over paying or making additional payments hurt my chances at being enrolled a second year even if I have the same income? (was going to throw my entire income tax refund at my loans.)

    Thank you everyone for sharing your experiences. I know how uncomfortable it can be but the comments on this blog and the articles posted by The Sherpa have helped me tremendously. I wish you all the best. If anyone wants to talk further please respond I check this page regularly.

    • Jessica

      1. I am currently almost finished with my second year in the program. My interest rate went up to 4% and my payment went up by $94, to $445 (this is 25% of my monthly income and exactly 10x’s the amount I pay each month for my Federal loan on the Income Based Repayment Plan…) Interestlingy enough when I viewed my account online it kept saying the amount due each month was $378 so for that reason DON’T set up auto pay with the rep or online. I could never get a straight answer as to what I owed and I sure as hell wasn’t going to over pay so I cancelled all my pre-setup payments, printed everything for my records and only paid the $378 it showed due online. So far, so good.. at least that I know of. Also, you can push your due date back to the 25th at the latest I believe – that was helpful for me because I get paid twice a month so I wasn’t taking a huge hit out of one check. My first year went super smooth – I set up payments with the rep over the phone and had zero issues, I don’t know what’s up this time.

      2. I honestly never received any “formal” paperwork about the program – when I asked I was pretty much told I couldn’t get anything in print.. I get a statement online but it doesn’t have any specifics to the program. I’m assuming they don’t put anything in print because they don’t want people to know about the program. I was 5 days away from defaulting before they offered me this option last year – I wouldn’t be surprised if it extended repayment – Ill never pay mine off while I’m alive so I wasn’t too concerned I guess. I have heard that they can basically kick you out at any time – in particular if you fall behind or even take on new debt.
      3. I’m not sure about that – I never have anything extra for them. I will warn you that you need to call in any additional payment on top of what you owe monthly. Online payment will not let you pick which loan you would like to apply it to AND it will still hit you with a payment due for the next month so you won’t be “ahead”.
      Just don’t trust them or take their word for anything, I’ve had several issues over the years and honestly they’ve damaged my credit so badly by not offering this option to me until the last minute – I’m half tempted to let it default
      Good Luck !

      • Brandon

        thank you so much for your response. I was told the only way to enroll in the program was to allow automatic withdraw…. they took out $400 two weeks in a row mistakenly. Incredible.

        And you’re right. No formal paper work about the program. Had it not been for this site I wouldn’t have known it existed.

        I was thinking of just saving any extra I have and just paying it whenever they kick me out but truly idk if I can afford to even do that.

        lastly, I agree, I’m honestly tempted to just default and try to negotiate a cash settlement with my 401K. Its been 5 years and my balance hasn’t moved smh.

        May I ask how you enrolled the second year? was it as simple as calling and explaining your expenses once again?

        thank you again for your response it cleared up a lot for me.

        • Jessica

          Believe it or not they mailed me a letter (which I’ve just pulled out for reference) letting me know my enrollment in the program was about to expire and that my payments and interest rate would go back up after whatever date. It also says, “if you are still experiencing financial difficulties please contact us before your enrollment ends to discuss options including a rate reduction plan extension opportunity”. **THIS IS THE GOLDEN NUMBER THAT GETS YOU DIRECTLY TO THEIR RATE REDUCTION TEAM: 1-877-809-8531 **Hold on tight to this number, you will be dealing with this department for everything related to your loan while it’s in rate reduction – this will save you some time being transferred. If you need to cancel or change or payment you set up previously (which I’ve done multiple times with no issue surprisingly) or have any issues with your account these are your people. IF YOU ARE NOT CURRENTLY ENROLLED IN RATE REDUCTION AND YOU CALL THIS NUMBER THEY WILL TRANSFER YOU BACK TO THE GENERAL CUSTOMER SERVICE POOL – just FYI
          Make sure you have some time and also have your monthly budget ready and handy, they will want to go over every detail and cent with you. Don’t include “luxuries” like gym memberships, just add whatever that cost is to an essential cost like rent, and make your figures tight (if they aren’t). I had my budget pretty much account for every single dollar brought in and they still insisted on squeezing another $94 a month out of me even though my income had not changed. I had a feeling they would jump on any “extra” money not accounted for, so plan ahead. I didn’t have to send any tax info for income verification (which is required for federal loan payment plans) so I guess technically you can say whatever you want – just know IF they let you have an extension your interest rate and payment will go up so be prepared.
          I’m glad to be of help – and please ASK AWAY!! it’s completely ridiculous the lender wont offer up any of this info willingly unless you’ve damn near defaulted. My loans accrued over $10k in interest and fees and other b/s and sadly you will pay well over the $2,500 in interest you are able to claim on your taxes for next year – I believe I paid close to $7k in interest to them last year, which is frustrating.. and why I’m at my crossroads with them.
          I have a couple months left in this go-round of the rate reduction and I just can’t decide what the next best move is. Payment and interest will go up (if I’m even aloud back in) and again my income is not increasing so how much longer will I be able to even afford payments on this plan, permitting its offered. Then we start the cycle of delinquency, credit reporting and the phone calls.
          I’ve spent 2 years trying to improve my credit, unfortunately the 48 delinquencies they reported (I have 4 loan installments, they will report EACH ONE SEPERATELY FOR EACH MONTH ITS BEHIND – so be very careful) will not fall off for another 5 years at best, my debt to income ratio is still garbage and even though my score has made a bit of a climb, it’s still mid 500s. My fiancé had to co-sign on an auto loan for me, 12% interest and I was required to put cash down – I will definitely not be able to help with any mortgage loan so homeownership is just a dream. We’ve already decided to keep our finances completely separate after we get married so I may just let it ride and see what default is all about. I would hate to spend another year rebuilding and then they yank it away and I’m back where I was – Frankly, not knowing when and if its going to end makes me uneasy and I think I would rather be in control. Sorry for the life story – glad to know I’m not alone and enjoy being able to pass along helpful insight they wont just come out and tell you

          • Brandon

            Thank you again for sharing. You are definitely not alone Jessica! hang in there hopefully we can all dig out of these holes. I wish you the best and thanks again! I may write again with any questions!

  • las

    Sally Mae is a joke….I am a cosigner and because I pay my bills, they overcharge me on interest rate. I also spoke to S.M. as you did and they offered, which I took as an insult, the whopper of a “.25%” reduction for automatic payments….whoopee! I am taking the loans through Sally Mae so I can defer payment until my son is out of school. I will then refinance through my bank at a much lower rate….Sally Mae doesn’t realize they are probably losing thousands in interest rate, because I cannot believe for a second that other co-signers aren’t going to do the same as I am!

  • KG

    I am on the rate-reduction plan, and just completed the third of my first three qualifying payments. the issue i’ve run into is that the automatic payments never seem to go through (even though my credit card has no balance, and is a visa from chase). this happened all three times, and luckily i knew to look out for it this last time. so when the payment didnt post to my account on the day it was supposed to, i called the VERY NEXT MORNING, and asked them to run it again, and of course it went through. same card. i didn’t even give them the card info again, just verified the zip.

    i got an email from a credit monitoring service today that i had a new delinquent account on my credit report – Sallie Mae. because i was one day late (my previous balance was delinquent but i was told that while i was in the trial period of the rate-reduction program, there would be a hold). I paid the very next day after the card (for some odd, unknown reason) did not go through.

    I called Chase (at the request of the rude SM rep), and they confirmed that i have no daily spending limit and that the card does not have a problem with post-dated transactions (which is what SM said the transaction was). SM also told me that they use Western Union as the payment processor – and when I told my Chase rep that, he said that Western Union usually processes as a cash-advance, and that he could see no declined cash advance or other transactions on my account.

    I am curious if anyone else has had this issue with SM? I’ve literally never had a problem with anyone else charging this card, and have used this card for a long time.

    Now I’m stuck with this on my credit report EVEN THOUGH THEY HAVE MY MONEY. Needless to say, I am going to dispute it, but I’m afraid it will be denied because, as SM told me, I was technically delinquent since that payment didnt go through.

    Thanks so much – good luck to everyone here. Something has to change.