Editor’s Note: This article was originally published in March of 2013. Over the years Sallie Mae (and now Navient) has had a variety of “Rate Reduction” programs. While the name hasn’t changed, the rules seem to vary from borrower to borrower. The tactics outlined below have helped numerous borrowers over the years and are still effective to this day. Going after the rate reduction program is a great way for borrowers who are struggling to get a much lower interest rate. Borrowers who have stronger finances, such as a decent income and credit score, will likely do better if they refinance their student loans with another lender.
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.
Finding the Rate Reduction Program
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, his back due amount would be set to zero and they would inform all the major credit bureaus that Fred was current.
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.
Getting Creative to Get a Lower Interest Rate
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.