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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:

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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. 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.

    • Errr that really sucks ๐Ÿ™
      I owe 170k now… Lots and lots of interest there… And I don’t make
      Much more then you ๐Ÿ™

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

      This isn’t right

  2. 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.

  3. 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!!!!

  4. 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.

  5. 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.

  6. 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

  7. 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 ๐Ÿ™ ๐Ÿ™ ๐Ÿ™ ๐Ÿ™

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

  8. 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.

  9. 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.

    • 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.

  10. 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.

    • 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!


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