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Step-by-Step Guide to Lowering Sallie Mae Interest Rate and Payments

Sallie Mae doesn’t advertise the rate reduction program. However, borrowers that are truly struggling may qualify for temporarily reduced interest rates.

Written By: Michael P. Lux, Esq.

Last Updated:

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Step-by-Step Guide to Lowering Sallie Mae Interest Rate and Payments

Sallie Mae doesn’t advertise the rate reduction program. However, borrowers that are truly struggling may qualify for temporarily reduced interest rates.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

Sallie Mae has a Rate Reduction Program that can help you get a lower Sallie Mae interest rate and, as a result, lower your monthly payments. The following eight steps provide a framework for enrolling in this program.

Before jumping into the steps, however, please take note of these essential details.

  1. Sallie Mae created the Rate Reduction Program to help borrowers struggling with their private loans. People in a solid financial position will probably need to use other methods as outlined below.
  2. This program applies only to private student loans. Federal loan borrowers will need to explore alternative ways to get lower interest rates.

Also, for those interested, here is the story of how I stumbled upon this method.

Eight Steps for Enrollment in the Rate Reduction Program

Step #1: Get organized.

Write down ALL of your monthly expenses. Know exactly how much you spend on them. Such expenses include rent, utilities, food, credit card bills, car payments and maintenance, gas, cable, phone, and your other student loans.

Then, write down all of your income sources and amounts.

Step #2: Call Sallie Mae.

Sometimes this can be the hardest part. We’ve all been there. It’s easy to procrastinate on this until tomorrow. But remember, each day you wait, your debt problems get a little worse.

Step #3: Talk to the right person.

In my experience, the base-level customer service department isn’t helpful in this endeavor. They can offer to lower your payment by .25% if you sign up for auto-debit, but that is it. Ask to be transferred to the collections department.

Step #4: Ask for the Rate Reduction Plan.

Under the Rate Reduction Program, Sallie Mae may lower your interest rate to as little as 3%. In extreme circumstances, they might reduce the rate even further.

Step #5: Discuss your finances.

Sallie Mae only offers the Rate Reduction Program based upon financial need. Before your call, make sure you have all the paperwork you assembled in Step #1. Be prepared to explain your expenses. They will do the math with you over the phone. Be ready to discuss what you can pay and how you plan on doing it.

Step #6: Make your monthly payments.

Sallie Mae is not under any obligation to put you on this program. If you’re not making your payments, your balance will grow, and you may even get booted from the program.

Step #7: If you can, pay a little extra.

The lower rate does not last forever. While you have the lower interest rate, take the opportunity to pay down a little extra on your principal. These extra payments 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. It may be worth an additional phone call to verify that Sallie Mae is correctly applying the extra payments.

Step #8: Renew your application as needed.

The rate reduction program lasts only six months. After six months, you can apply again. According to the Sallie Mae employee I spoke with, borrowers can renew for a maximum of 3 years.

Advantages of the Rate Reduction Plan:

  • It lowers your interest rate with Sallie Mae.
  • Lower interest rates mean lower monthly payments.
  • If your loan is delinquent and you make payments for six months, your overdue balance will go to zero. Sallie Mae will also report that you are current to the credit bureaus. This means your credit score will go up.

Sherpa Tip #1: This is a temporary fix. It lowers your payment and interest rate for a short time. Take advantage of this, but know that it does not last forever.

Sherpa Tip #2: This is not a term to your original loan agreement. Therefore, Sallie Mae is under no obligation to put you on the rate reduction plan. Be nice when dealing with your lender. If you are a jerk or rude on the phone, they will be much less inclined to help. It’s tempting to yell and sometimes nearly impossible to be civil, but it is in your best interests.

Things to Know About This Strategy to Lower Sallie Mae Interest Rates

I first discovered this program back in 2013 while helping a borrower. The rules and contact information have changed over the years, but the Rate Reduction Program still exists.

Sallie Mae does not advertise the Rate Reduction Program. It exists entirely to help borrowers who are in severe financial trouble.

Sallie Mae could discontinue the program at any point in time. Borrowers should plan accordingly.

Lower Interest Rates for Borrowers Who Are Not Struggling

Getting a better deal is much easier for borrowers who have a job and a decent credit score. Rather than working directly with Sallie Mae, consider taking your business elsewhere.

The process is called student loan refinancing. Popular refinance companies include SoFi, Splash Financial, and ELFI. If a borrower refinances with SoFi, the borrower gets a new loan with new terms from SoFi. The money from the new loan pays off old student loans, like the ones with Sallie Mae.

The idea behind the refinance process is that someone with a college degree and a job is less of a credit risk than a college student. As a result, graduates can get much better interest rates than they could when they were students.

Check out our page that tracks the national lenders and the current refinance promotions.

Please share your experiences, successes, and failures in the comments section to help future readers.

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.

59 thoughts on “Step-by-Step Guide to Lowering Sallie Mae Interest Rate and Payments”

  1. Just called. EIGHT YEARS AGO I was 17 days late on a payment and that disqualies me for rate reduction. And yet others are being told that they have to be late or delinquent?

  2. I have 2 private loans with Navient, one of which has a 9.75% interest rate. I make less than $2400/yr so you can imagine how that works out, especially since I also have state and federal education loans. So I read this article, got my information together, waited on hold for 20 minutes … for nothing. The rep really wanted me to just extend my loan terms (tack on another 20 years??? NO.) which coincidentally would also ensure that I could never touch the interest rate. I convinced her to take my statement but she was very discouraging about the whole thing and I still have to get my cosigners to give financial statements to even be considered for the reduction plan. I want to know who you people spoke to that got everything worked out in a single phone call!

  3. Just wanted to include my experience. When I graduated school, sallie Mae had expected me to pay near $1000 per month. Absurd! How could anybody ever afford this..? I ultimately ended up forbearing my loans for 3 months at a time and at some point, I ran out of forbearance uses and had no choice but to pay. I sent them what I could afford to send, which was about $400. Obviously as this wasn’t enough, I started to receive phone calls multiple times a day. I ignored them for a week, but as seeing the number made my stomach churn each time it popped up, I finally answered and tried to talk it out with them. I explained there was absolutely no way that I could afford to make such high payments every month. Since my parents had consigned a couple loans for me, they told me that I needed to ask them for the money since they were also liable. I told them that my parents chose to no longer support me and had cut all communications with me for a personal issue (true or not, it took that option off the table) they put me through to collections and I was offered the rate reduction plan. I was fortunate enough for my private loans to be set at 1% for 15 months on the condition that I set up automatic withdrawal. I ended up paying $550 a month. After the period ended I called back and asked to be put in the program again. I was informed that this was a ladder or step-up program so I was ineligible for the 1% again, but I was able to be put in for 2%. Apparently around the same time, a few of my smaller private loans were bought out by the dept of education, so my private loan payments increased to only a few dollars more, even at the 2%. Unfortunately I also had dept of education loans to pay now too which didn’t qualify and came out to about $120, so overall I have been paying about $670. It was still very high but atleast it wasn’t $1000 and I was lucky enough to get a pretty good job with the year with a small raise and I could afford to pay that amount and just barely get by with my other monthly payments. November 2014 marked the last month of my loans sitting at 2%. I have been dreading and putting off logging on to navient to see what this months loans will have gone up to now they are back to their original interest rate ranging from 6% all the way up to 10%. I logged in today, and to my surprise, my entire loan payment for both my private AND dept of education loans are only $500… I checked my loans individually and they are all in fact at their original interests rates, but what I found was that pretty much every single loan had almost no interest amount. This is what led me to google how the IRR plan works, because as it appears to me, they plan is also designed to help significantly pay off almost all of the interest I had accrued on the loans.. (it also made payments towards my principle amounts so I wasn’t paying off only interest) Again I’m not sure how this worked but it seems to have really been in my benefit as now my payments at original interest rates are lower than they have ever been, and with all of the interest that I have been paying off over the past year, I will be able to claim the maximum deduction for student loan interest on my 2014 taxes, further increasing my refund next year!

    For comparison, when I graduated college I had amounted a soul crushing $160k worth of student loans. As of writing this today, I have brought it down to just over $140k. I can only hope that I become more successful in my future and can continue to increase the amount I send Navient. Hopefully I will be able to continue this trend and pay off about $8-10k per year, resulting in full repayment in the next 15 years. I can live with that!

  4. I stumbled upon this page a week ago and followed the procedure and was luckily met with success. I called the 877-905-4527 number and requested to do the rate reduction program. I was super polite and congenial and I’m sure that helped.

    I went over my finances including rent, car payments, other student loans, credit cards, etc. The woman said she could lower my interest to 3% for 15 months which would help some, but she also mentioned she could lengthen the terms of the loan. She was upfront about being cautious in doing this since it makes the numbers look good but I’d end up paying more in the long run. But given my current situation and the fact that I’ll most likely be able to pay down more in the future, I accepted it.

    Overall the call took 34 minutes and my payment went from $680 to 420 a month, at least for the next year. Certainly worth the effort and I’d recommend this to anyone. She never mentioned forbearance or other options. Maybe my situation is more dire than others?

    Background: I’ve been paying about $1200/month in student loans (about 80% of that to Navient) for the past 4 years and it’s very demotivating and stressful living paycheck to paycheck, constantly overdrafting my bank accounts, and having nothing to show for my otherwise good salary. And to know that some of my loans won’t be gone until 2035 is even more soul-crushing. Who knows if I’ll ever be able to save up for a house or will be able to afford a kid?

    Hopefully at some point the government recognizes the spending (or lack thereof) pattern of the latest generation of college grads and comes up with some kind of relief/forgiveness plan. The rising cost of education and loans has for me, removed the prestige of a college education. Sure you may get a higher-paying job, but what does it matter if you’re indebted for most of your career?

    • Forgot to mention, I was *not* delinquent on my loan when I called to apply. The lady didn’t even mention it, even though I was prepared to give the “I want to be proactive and not go delinquent” spiel. Maybe the whole delinquency aspect depends more on the person taking your call than being an outright policy?

  5. What would your advice be to a student who cannot afford the payments? My son owes SallieMae 700.00 per month and is under employed due to a poor working economy. He lives at home, pays his car payment and insurance, has very little social life due to lack of funds and cannot make his student loan payments. He brings home about 300.00 per week and has offered to pay what he can afford but Sallie Mae insists on full payments. Sadly, his 84 year old grandmother cosigned for him in good faith and they are making her life miserable with daily calls and threaten to take her to court if he or she does not pay in full. She in turn calls her grandson and the cycle continues. My son insists it is most important for him to pay his other bills and save to get out on his owm. He is 26 and truly distressed over student loan issues that will haunt him for a lifetime. What can you offer in the way of wisdom? Please and thank you!

    • Hi Jodioski – That sounds like a horrible situation. I can definitely relate. When I graduated my minimum payments on all my student loans were around $900/month. Insane! Luckily I did land a good job after about a year but that was only a small part of what I think will be my resolution. I took Dave Ramsey’s Financial Peace University class offered at a church nearby and it helped me learn some basics about personal finance and budgeting. I would recommend he do this if he can. It might be a good way to meet some other people focused on the same goal of getting rid of debt (maybe even give him connections for a job?). One whole lesson goes over debt collection and how to respond. It sounds like that one might be really good for him. There is a cost (around $90 for 9 weeks) but I really feel like it’s worth it.

      As personal advice – do not ever ever give up. Debt doesn’t define him and it wont unless he lets it. He’ll need your help to keep the right frame of mind. Stay persistent with that job search! There ARE good jobs out there despite what it feels like and what the news may say. They are hard to find but someone will find them and he’s no less qualified than the next person. A resource that helped me with my job search was a book called What Color is your Parachute. It’s a job search manual. Like the bible of job searching. He should absolutely pick it up and it’ll be in any bookstore or on Amazon. Keep your spirits up and pushing forward! He has his whole life ahead of him and freedom from debt IS possible. There are more of us out here finding our way too. Best wishes and prayers for you all on the journey!

    • Oh Jodioski…it sounds like you wrote my son’s story! Mine (age 25) moved to an apartment with a friend but is hanging on by a thread. He has private loans with Wells Fargo and Genesis Lending totaling nearly 700 per month and SallieMae at 178 per month. We cosigned for the other 2 private loans so that pressures him to keep them current. The funny thing is, this SM loan just “popped” up this past year and he has been out of school (a for-profit nightmare…whole other story) for over 2 years. He tried to do an Income Based refinance with SM, due to his rent, car pymt, gas, insurance, utilities, private loans, groceries…etc., but they turned him down! Like your son, they are relentless in calling and do not care what his story is. He fully takes responsibility for these loans….but why of why will these people not work with these kids?! Like my son says, wouldn’t they rather receive reduced payments (more interest for them) than deal with collections? Like your son, he has very little social life and feels he will never be able to marry and have a family with all of his debt. My heart breaks for him…..and the fact that this hangs over his head every day. I feel for you and your son!

  6. Kristen I am so happy to hear about your success with Sallie Mae! Comments like this really make my day.

    Be sure to give yourself a pat on the back too. They definitely don’t make it easy, but when you are persistent, like you clearly were, good things happen. Congrats!

  7. I just got my rate reduced from 9.25% to 3%. When I called Sallie Mae customer service I was given the number to the Collection Rate Reduction Workout Plan(1-877-905-4527) but told they couldn’t help me until I was delinquent. I called anyway and explained I didn’t want to become delinquent. The representative Melissa was very nice and helpful. The phone call lasted 15 min and I was enrolled for a 3 month probation period and 12months lowered interest rate. She said at the end they would re-evaluate my situation. Thanks so much, this will save me thousands of dollars. And literally took no time at all. I can’t thank you enough. I would never have know to ask about this. They certainly don’t let you know this option is available.

    • Kristen I am so happy to hear about your success with Sallie Mae! Comments like this really make my day.

      Be sure to give yourself a pat on the back too. They definitely don’t make it easy, but when you are persistent, like you clearly were, good things happen. Congrats!

  8. I wanted to share that I was able to enroll in the rate reduction program today without having to go into default first. My wife and I are expecting our next child in November. I was able to explain this to the collections department at Sallie Mae and they enrolled me in the program. I’m not sure if the new child was a deciding factor to be enrolled in the program, but I am current on my payments and the representative I spoke to seemed very willing to look for a program after providing financial information as described in the article.

  9. Great question. Because this is a program that was entirely created by Sallie Mae and not a part of any contract or federal term, how they handle it will be up to them.

    When you do find out, could you please let us know so that I can update the article? Thanks!


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