Last month Wells Fargo announced a program to lower the interest rates for private student loan borrowers who are struggling to keep up on their loans. What Wells Fargo did not announce was who would qualify and how they would qualify. As a result, there is no link or simple form to apply for a lower interest rate.
This difficult can reasonably be expected, because Wells Fargo doesn’t want all of its borrowers getting a lower interest rate. That cuts their profits. However, Wells Fargo does want to help those who are in danger of defaulting. They would much rather get something… instead of having to deal with a borrower default. Hence, the creation of the program.
Because Sallie Mae has had a similar program for a number of years, we can apply the same tactics and strategies to Wells Fargo. The company standards are likely very similar.
The following seven steps have worked with Sallie Mae, and a similar approach should work with Wells Fargo:
Step #1: Get organized. Collect ALL of your monthly expenses. Know exactly how much you spend on rent, utilities, food, credit card bills/interest, and on your other student loans.
Step #2: Call Wells Fargo. Sometimes this can be the hardest part. Its easy to procrastinate on this until tomorrow, but each day you wait, each day your debt problems get worse.
Step #3: Talk to the right person. This part can be tricky. Often the Customer Service Representatives cannot assist you with these types of programs. Ask if they have the authority to lower your interest rate. If they don’t, ask to speak to somebody who can. If they have no idea how to help you, ask to be transferred to the collections department.
Step #4: Discuss your finances. A lower interest rate is only offered based upon financial need. Get the paperwork you put together before your call and be prepared to explain your expenses. They should do the math with you over the phone. Be prepared to discuss what you can pay and how you plan on doing it.
Step #5: If you get enrolled be sure to make your monthly payments. Wells Fargo is not under any obligation to put you on this program and if you are not making your payments your balance will grow and you may even get booted from the program.
Step #6: If you can, pay a little extra. The lower rate won’t last forever, while you do have a lower interest rate, take the opportunity to pay down a little extra on your principal, but verify in advance that you are allowed to under the terms of the lower interest rate plan. Anything extra you pay will help you in the long run, especially when your rate jumps up again. Just be sure that the extra money you are paying is going towards a reduction in principal… this may be worth an extra phone call.
Step #7: Don’t miss any renewal deadlines. The interest rate reduction will likely only be for a limited period of time. At the conclusion of this time you should apply again provided your finances are the same.
If your first call/attempt is not successful, be sure to give it a couple more tries. The people you talk to on the phone may not be aware of the program or might just be having a bad day. Talking to different people can result in different answers.
The Alternate Approach
If you strike out with the first approach, you can try a more blunt method via email or mail. The Consumer Financial Protection Bureau has generated a form letter for people who are looking to get a lower private loan interest rate from their lender. The CFPB suggests you send the following:
I am writing to you because I need to reduce my monthly private student loan payment due to a financial hardship. I am requesting a payment that allows me to meet my other necessary living expenses.
Please conduct a review of my account to determine whether I am eligible for an alternative repayment plan.
[This paragraph is optional] I believe I can afford to pay $____ per month toward my loan(s). If you require details on my monthly income and expenses, I have attached a worksheet which you can use to make an evaluation.
If you require additional authorization in order to reduce the amount of my monthly payment, please consider this letter a written request that you contact my lender or other authorized party to conduct a review of my account and provide a response within 15 days of receipt of this letter.
If you do not grant this request for a reduced payment plan, I will be at risk of default. If I receive a reduced payment plan, I may be able to avoid default, which is in the best interest of all parties.
If you determine that you are unwilling to provide a reduced payment plan, please provide the following information:
– What available reduced payment options do you offer other than forbearance?
– For what reason(s) am I ineligible for these repayment programs?
– If I am not eligible for these repayment programs, when will I become eligible?
– What steps do I need to take to qualify for these repayment programs?
– Do you anticipate modifying these repayment programs in the future?
– Where on your website can I find additional information on these alternative repayment programs?
– In addition, if you are unable to provide any of the information or documentation I have requested or otherwise cannot comply with this request, please provide an explanation.
I hope we will be able to agree upon an acceptable repayment plan.
Thank you for your cooperation.
The advantage of going with this route is that Wells Fargo has likely seen this exact letter many times. They should be prepared to respond to the exact letter and have a procedure in place.
If you do decide to send a letter or email, here is a word template to save you some time.
Readers: Be sure to share your experiences in the comments section so that others can learn from your successes or failures.