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Getting a Lower Rate from Sallie Mae

Helping a borrower who fell behind on his Sallie Mae payments lead to an unlikely discovery: Sallie Mae will lower interest rates for some borrowers.

Written By: Michael P. Lux, Esq.

Last Updated:

Getting a Lower Rate from Sallie Mae

Helping a borrower who fell behind on his Sallie Mae payments lead to an unlikely discovery: Sallie Mae will lower interest rates for some borrowers.

Written By: Michael P. Lux, Esq.

Last Updated:

Editor’s Note: I originally published this article in March of 2013. Over the years, Sallie Mae (and now Navient) has had different versions of “Rate Reduction” programs. While the name hasn’t changed, the rules seem to vary from borrower to borrower. The tactics mentioned below have helped numerous borrowers over the years. Going after the rate reduction program is an excellent way for borrowers 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.

Problem Background

If you’re like me, you’ve had some disappointing experiences trying to get assistance making your private loan payment more affordable. Fortunately, if you know exactly who to talk to and what to ask for, you might get Sallie Mae (and other private lenders) to lower your monthly payments and interest rate.

This article focuses on my experience getting Sallie Mae to lower interest rates. If you’re more interested in the steps to getting your rates lowered, check out our step-by-step guide to lower interest and payments from Sallie Mae. Also, it’s worth noting that this method applies only to private loans. If you want to lower payments on your federal loans, check out this article.

Finding the Rate Reduction Program

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

Fred had missed months’ worth of payments, with a back-due balance of thousands of dollars. I explained there was no way for Fred to afford the payments they were seeking.  The collections person at Sallie Mae was able to do two things for Fred. First, they addressed the monthly payment. They lowered his interest rate from almost 15% to 3%. Second, they addressed the sizeable outstanding balance. We agreed that Fred would make six monthly payments at the new low rate. If he did this, they would set his back-due amount to zero and inform the major credit bureaus that Fred’s account was current.

Rate Reduction Plan Terms

This new arrangement just saved Fred hundreds of dollars that year alone. Realizing this, I proceeded to ask the collections department representative all the questions I could about the arrangement. The following are some of the highlights of this discussion.

  • They call this program, the “rate reduction plan.”
  • They base enrollment upon income level.
  • Only the collections department can sign up borrowers into this program.
  • They require renewal every year to stay in the program.

She also told me that she had the authority to go as low as 3%, but her direct supervisor could go lower if necessary.

Getting Creative to Get a Lower Rate from Sallie Mae

Upon learning this information, I called Sallie Mae to see if they would lower the interest rate on my non-delinquent loan. I first spoke with a base-level customer service representative. She told me that all she could do was reduce my interest rate by .25% if I signed up for automatic bank withdrawals. She also said she could alternatively accept “interest only” payments at my current 13% rate. These were the same options Sallie Mae gave me in my prior interactions with them. These options aren’t helpful at making a meaningful dent in student loan debt, though.

So I then asked her about the “rate reduction plan.” She said she couldn’t do that and that I would have to talk to the collections department. I explained to collections that, although my payment was current, I feared I would become delinquent at its current interest rate. 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 unable to enroll in the program because I had a cosigner who exceeded the income level required to participate in the program. After sharing this advice with others, however, I can confirm that this approach can get your payment and interest rate lowered – even if you are current on your loan.

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 we can help as many people as possible.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

103 thoughts on “Getting a Lower Rate from Sallie Mae”

  1. I wanted to post a picture of the conversation I had with the agent.
    I asked him about a rate reduction program and he said “sallie mae does not reduce rates” and I asked him why and he said my account was ineligible. I asked him why my account was ineligible and he said “because it is” and I kept asking and he kept saying that sallie mae doesn’t offer rate reductions.

    Reply
    • That sounds really unhelpful. Also inconsistent. If your account is “ineligible” then it means that there are accounts that are eligible.

      Sometimes the best approach is to hang up and call again. Hopefully, the next agent you speak to will be more helpful.

      Reply
  2. I tried everything suggested in the article with no luck. I was just bounced around among customer care to collections (after much convincing) back to customer care when the collections woman decided she was done with my call. I asked about the rate reduction program but got the same dismissal (They only handle accounts that are past due). I shared that I would rather not allow my loans to get to the point of past due and that I am significantly struggling to meet my payments. Basically told me that I’m SOL.

    In my last ditch effort I asked if SM does anything to encourage their loan holders to stick with SM rather than refinancing to which the rep said his hands were tied.

    Guess I’ll just continue drowning in my debt while making 0 vertical life moves. Thanks Sallie Mae.

    Reply
    • Mary,

      I’m bummed to hear that it hasn’t worked out for you. I’d encourage you to file a complaint with the CFPB. If you are doing your best to work with your lender and they won’t help at all, a CFPB complaint might get you some results.

      If nothing else it will put your situation in front of someone else at Sallie Mae who might be more willing to help.

      Good Luck!

      Reply
  3. Can I get the interest rate reduced at the application stage? They have given my interest rate options, but I would like to negotiate them down. Is that possible?

    Reply
  4. Tina – I’m a few months into my second year in the rate reduction program, and I’ve talked to 2 reps who have told me that it can be renewed on a yearly basis with the interest rate increasing by 1% each year. So my 1st year was at 1%, this year is at 2%, and next year I’ll be able to renew at 3%. I’m not sure what the max is, or how many more years I’ll be able to do it, but never give up! If you talk to 1 person who isn’t cooperative, don’t be afraid to ask to speak to someone else! The absolute *last* case scenario is to stop paying altogether, which of course will hurt your credit, but as long as you have shown a good faith effort to repay (have at least 2 years or so of repayment history), and can prove that paying the full amount would be a hardship, you have a good chance of taking them to court & settling for *WAY* less than your outstanding balance. If I’m not allowed to renew after my 3rd year, I’ll just stop paying outright, & put the amount I would have paid SM into a high-yield savings account, so I’ll still be able to save up & purchase things that normally require credit. I say all this just to say don’t lose hope – you still have options!

    Reply
  5. 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.

    Reply
  6. 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. . .
    Also,
    My lawyer is currently looking at this –

    Reply
  7. Josie, I doubt that they will let you on the rate reduction program as it is designed for people who are struggling to keep up with their minimum payments, and you don’t technically even have a minimum.

    That being said, the fact that you are on top of things before you even graduate is awesome. Paying down the interest as it accrues is something that every student should be doing, but nobody does. Keep up the good work!

    Reply
  8. Can I qualify for the “rate reduction program” even if I’m in school paying the accrued interest, or is this program only available for graduates? I spoke to them in the past and didn’t know about this program and they didn’t mention it, except that there was nothing they could do to lower my payments while in school and my only other option was forbearance for a maximum of 6 months.

    Reply
    • Josie, I doubt that they will let you on the rate reduction program as it is designed for people who are struggling to keep up with their minimum payments, and you don’t technically even have a minimum.

      That being said, the fact that you are on top of things before you even graduate is awesome. Paying down the interest as it accrues is something that every student should be doing, but nobody does. Keep up the good work!

      Reply
  9. I called them in Feb 2015 and they did an income stmt with me, refused to assist me and so I had made my 1st monthly payment on 02/08/15 in full, $137.50 and I requested a Forbearance at that time. I was told by Alicia in customer service that my Forbearance was indeed processed and I had nothing to worry about, as it was for (3) months. A few days later, I started receiving calls from Sallie Mae stating that my payment was past due for March 2015. I called them and was told that There was never a forbearance placed on my account and that I would be going into collections if they didn’t receive another payment for $137.50. I advised that I couldn’t afford another payment and that was why I asked on the last call. They took a financial stmt from me and said there was nothing that could be done. I called back on 03/05/15 spoke to Jason #e3788 and advised of all my prior calls and issues, he stated that he got permission from a supervisor to override the $50 forbearance fee and process the forbearance through 04/09/15 and if I wanted to request another one, I’d have to call back prior to that date and pay another $50.00 to have it processed again. I called back that same day and spoke to David to re-confirm that the forbearance was in effect, David stated that it was and that he not only spoke to Jason, but that he looked at my acct and it was showing there. Today is 04/01/15, I started receiving calls from Sallie Mae stating that my acct was seriously past due and that I was headed to collections if they didn’t receive a payment of $275.00 before 04/14/15. I called today and spoke to a supervisor #e77106, she stated that none of the forbearance went through because I was past due in collections and had not paid the $50.00. I advised my entire situation and she said that there was nothing she could do.

    Reply

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