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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:

Affiliate Disclosure and Integrity Pledge

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
  10. You know that saying “You’ve made your bed, now lie in it,” well this is what i’m experiencing now with my private student loan debt. I owe a little over $100,000 between Sallie Mae and Chase. I didn’t qualify for any financial aid because my parents supposedly made too much money and I had no luck with the seemingly endless amount of scholarships I applied for. So I took out an obscene amount of money in private loans to pay for my “dream education”. Well since then it’s converted into my nightmare. I’m bringing home $1,600 monthly and making $1,420 in student loan payments. I’ve contacted both lenders numerous times in the hopes of receiving some sort of relief but it’s been to no avail. Now the possibility of landing my dream job is slowly slipping away since they tend to refuse to hire individuals with such a large amount of debt. Forget living the “American Dream”. At this point it’ll take a miracle to just be able to live.

    Reply
    • Errr that really sucks πŸ™
      I owe 170k now… Lots and lots of interest there… And I don’t make
      Much more then you πŸ™

      All dreams are dead now.. We need to start a revolution

      This isn’t right

      Reply
  11. I have a qualified co-signer on my Sallie Mae loan and my offered rate is still close to the maximum rate allowed. What should I do, I know the co-signer has outstanding credit.

    Reply
  12. I’m enrolled in the rate reduction program and for a while it was great. Now they have withdrawn $701 from my account when my payment is $425 monthly. They stated they were unsure why this happened and agreed to refund the difference. They told me it would take 2-3 days. 3 weeks and several calls later I finally got my $276 refund. The next day the calls FROM sallie mae began. They stated I was delinquent and I explained I was not and actually got a refund because they took too much money. She stated I was refunded for the full amount. I told her I’d send her my bank statement because I was not. Plus she told me I was past due $304….random amount. She said she would look into it. Later I called back because I was uneasy about this. I talked to someone else who said she shows my account is current so there must be a processing issue. She said she would get it fixed but it takes about a week. My September payment is due on the 4th….hardly a week a way. I asked if she was sure only $425 would come out on 9/4. She said if this correction is processed yes. But she cannot guarantee it. She said since she shows $729 past due (what happened to the $304) they may withdraw that amount. HOW CAN SOMEONE WITHDRAW WHATEVER AMOUNT THEY WANT???????

    Sallie Mae is the worst company ever. From their poorly trained representatives to their random amounts they make up that are due.

    I am so angry!!!!

    Reply
  13. I went online looking for information on how to lower my husband’s 10.75% interest rate and I have been just appalled, reading all these stories about Sallie Mae. We are very lucky and only have one private loan with them that I wasn’t able to consolidate and it’s only $5500. We pay on time with automatic debit and our payments are very low – I feel very fortunate after seeing what many people are going through with repayments. When my husband called today, they told him the way to lower his interest rate was to pay more per month. Thanks SO MUCH for the helpful answer, Sallie Mae. We don’t qualify for income based rate reduction and really, I just had him call because I think that 10.75% is a ridiculous rate for a student loan, not because we are struggling with the payment. My loan with Sallie Mae is at 1.62% (started repayment in 2004) and has never budged. I just don’t understand how they are allowed to get away with this! I will definitely be writing letters to anyone and everyone that might be able to have any impact on this.
    I am truly sorry for all of you that have out of control loans. This company is predatory and needs to be regulated. I would love a response with a list of anyone I can write letters to about this, Sherpa! I’m glad I found this blog, but so saddened by the stories I have read on it. Best of luck to all of you in your struggle with loans.

    Reply
  14. They tried to do this with me however I wanted the fine print in writing since every time I talk to Sallie Mae what they say and then do is completely different . They refused to put anything in writing before I agreed to anything. It took 20 minutes on the phone for him to admit that the rate reduction would extend my loan to 25 years. So basically it would drop my interest to make it current then balloon back up for 25 years.

    Reply
  15. You have to call when your account 16 days past due in order to get help. I read this article and called and that’s what the rep told me and my payments and interest rate went down tremendously because that program is based on your income and monthly expenses… I hope this info helps

    Reply
  16. Sallie mae will be the death of me

    Graduated 5 years ago
    Degree was 90k dollars
    Was on forbearance for about 2 years because I couldn’t afford payments and couldn’t find a job
    Now my loan is 170k dollars
    Been paying interest only for almost 2 year
    I Don’t have a car, I have to walk 50
    Minutes to work everyday.
    I’m Married and live with my widow mother (rent? No … Only enough Pay sallie mae for the rest of my life)

    Called sallie mae, can’t get my interest reduced, already have 0.25 for direct deposit taken

    My interest is between 6 to 9%
    Interest only payment on private loan is 600 a month, but in payment that my loan keeps going up.

    Can’t contriube to the economy

    Can’t go to the doctor

    Can’t go to the dentist

    Can’t have a kid

    Can’t live πŸ™ πŸ™ πŸ™ πŸ™

    We need help !!!!!!!!!!

    Reply
  17. Last I heard, the number for the Customer Advocate line was 888-545-4199. I’ve also recently heard from people that got quick responses when they filed a complaint with the Consumer Financial Protection Bureau. Hopefully one of these routes will be of some assistance to you.

    Reply
  18. I just called Sallie Mae and they refused to provide a number for the Customer Advocate. I owe 80k in student loans, and 65k of which is private. I went the The School of Visual Arts for undergrad, it was the biggest mistake of my life. I drown in monthly payments that are over 700.00 a month.

    Reply
    • Last I heard, the number for the Customer Advocate line was 888-545-4199. I’ve also recently heard from people that got quick responses when they filed a complaint with the Consumer Financial Protection Bureau. Hopefully one of these routes will be of some assistance to you.

      Reply
  19. I owe Sallie Mae a lot of money. Last year I was able to get on the Rate Reduction Plan; it was to last through May 2014. In March I got a letter telling me that my plan was about to expire and I needed to call and extend it. So, I called during my lunch one day (the only time I have to call them in between my 12-14 hour work days) and I applied for an extension. I spent almost an hour going over my financial statement between what I owe in bills a month and what I make at my two jobs. She told me that I qualified and that unless I heard from them in a few days I was covered until May 2015. Well, I didn’t hear anything, but when April rolled around I noticed my online account seemed off, so I called the RRP office to make sure everything was fine. I was told, “Yes, you renewed your RRP and the rate is good until May 2015.” Imagine my surprise when I log into my account today, May 27, 2014, and see that my monthly payment went up by $600! I call the RRP office in between jobs only to be on hold for 30 minutes. Unfortunately I had to hang up because I had to work. After I got off work, I called again only to wait for an additional 20 minutes before someone talks to me. The guy tells me that he sees my RRP expired and that I am still eligible to renew for another year if I’d like. I told him I was confused and that I already renewed back in March and I didn’t understand. He then proceeds to tell me that I did not talk to anyone in the RRP office and that the only thing I can do is make the $1,500 payment or file for a gradual renewal. His new plan made all of my interests 6% (I had gotten them all lowered to 1.5-2% last year and was told back in March my new rate was 3%) and made my new payment just a little bit over $1,200 a month ($1,212.41). Between my government loans, rent, utilities, gas and groceries there is no way I make enough to pay $1,212.41 and my other bills. I guess I will just try calling again to see if I can talk to someone different, maybe a manager, to get this figured out. I just don’t understand how I can apply for renewal in March and get approved and have the terms read to me and then be told in May that it never happened. It’s so frustrating because I’m trying as hard as I can to pay back my loans and they just don’t care. It’s even more frustrating because my manager at my serving job graduated college in 2002 and hasn’t paid Sallie Mae a dime. They don’t even call her on a regular basis. And on the rare chance that they do call her, they tell her she doesn’t have to pay – her bills are only $250/month and she makes almost $40,000 a year! That is at least $5,000 more than I make a year – from BOTH of my jobs – and $600 less than my original RRP payment!!! Why does Sallie Mae crucify the people who are doing everything they can and then just ignore those who have absolutely no intention on ever paying them back.

    Reply
    • Meredith, I feel your pain. It is so frustrating being told one thing only to find out that what you were told is not what actually happened. If you can, next time you call back, I’d suggest asking about the things you were told on your previous calls. Whatever details you can remember, such as the day you called etc. should help. There is no reason for them to throw you around like this. If it continues, you might want to consider filing a report with the CFPB, Sallie Mae has gotten a lot of bad press from this particular government agency. Its possible they may try a little harder if they know you are willing to file that complaint.

      As for your manager, I wouldn’t worry about her finances or try and compare your situation to hers. It will only make things more frustrating. Its possible that they are in the process of suing her, or they may already be garnishing her wages. Either way, the only thing you can control is your situation.

      Good luck and keep us posted!

      Reply
  20. Meredith, I feel your pain. It is so frustrating being told one thing only to find out that what you were told is not what actually happened. If you can, next time you call back, I’d suggest asking about the things you were told on your previous calls. Whatever details you can remember, such as the day you called etc. should help. There is no reason for them to throw you around like this. If it continues, you might want to consider filing a report with the CFPB, Sallie Mae has gotten a lot of bad press from this particular government agency. Its possible they may try a little harder if they know you are willing to file that complaint.

    As for your manager, I wouldn’t worry about her finances or try and compare your situation to hers. It will only make things more frustrating. Its possible that they are in the process of suing her, or they may already be garnishing her wages. Either way, the only thing you can control is your situation.

    Good luck and keep us posted!

    Reply
  21. my brother was in the Interest rate reduction program (IRRP). I am co-signer. I wasnt notified when missed payments. he missed too many and they were going to kick him out of the IRRP. Thats when I was notified. I was told if I caught up his payments (3-4, almost $1200) he would be kept in it. I made the payment the same day. The next day, I called to verify and they said ‘sorry, we cant keep you in the program). Interest went from 4.25% back to 9.25%. They wont help. They gave me 4 different answers as to when we can get back into the program. They suggested we make HALF payments until we default. They also suggested we pay $100 every 3 months for a deferment, up to 12 months. Then we still have the 9.25% building and even larger payments due while we wait for IRRP eligibility.

    Spoke to OCA, and they cant do anything.

    What a racket.

    Reply
  22. my brother was in the Interest rate reduction program (IRRP). I am co-signer. I wasnt notified when missed payments. he missed too many and they were going to kick him out of the IRRP. Thats when I was notified. I was told if I caught up his payments (3-4, almost $1200) he would be kept in it. I made the payment the same day. The next day, I called to verify and they said ‘sorry, we cant keep you in the program). Interest went from 4.25% back to 9.25%. They wont help. They gave me 4 different answers as to when we can get back into the program. They suggested we make HALF payments until we default. They also suggested we pay $100 every 3 months for a deferment, up to 12 months. Then we still have the 9.25% building and even larger payments due while we wait for IRRP eligibility.

    Spoke to OCA, and they cant do anything.

    What a racket.

    Reply
  23. Citibank tells me I cannot refinance my private student loan which is at 16%. I have improved my credit score and never been in default and I have a job?
    I want to use a different lender.

    Reply
  24. I would like to point out that even if your cosigner doesn’t have a high income, if their credit is great and they have an unused credit line this is considered available income. I’m a freelancer and was on this program last year, worked great but once it ended I fell behind again on my payments (which skyrocketed). Now they won’t let me get back on this program because my father (cosigner), who lives off a measly disability check, has excellent credit and open credit cards that he doesn’t use since he’s not an irresponsible spender. Then the rep accused me of coaching him on what to say and that he could still be very capable of paying, because that’s totally an appropriate thing to say to someone who’s calling to try to make amends. And it’s not like I’ve completely neglected my loans- I’ve paid a minimum of $50,000 over the last 8 years and my total has gone down by $2000- my interest rates are out of control and it just keeps getting worse.

    Reply
  25. 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.

    Reply
  26. 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!

    Reply
  27. 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 !

    Reply
  28. 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.

    Reply
    • 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.

      Reply
      • 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 fiancΓ© 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

      • 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!

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