How to Make a Settlement Offer to Navient

You can negotiate a settlement with Navient over your student loan. No guarantee they’ll accept, but it’s always worth trying. You’ll learn everything about making a settlement offer to Navient.

Navient only settles private student loans, not federal loans. Confirm your loan type before discussing settlement.

What Kinds of Settlements Does Navient Offer?

Navient may accept settlements for charged-off loans. These include loans in default or extremely delinquent. They won’t settle loans in deferment, repayment, or forbearance. The same applies to loans with interest-rate only repayment plans.

How to Negotiate a Settlement with Navient

Follow these tips to negotiate a settlement offer with Navient.

Review Your Loan

Check the number of loans under your name. Note the balance for each. You’ll need this information to estimate the potential settlement amount.

Once you confirm your loan meets the criteria above, contact Navient. Call their customer service number at 888-272-5543. Inform them about your intention to settle the loan.

Check Your Financial Status

You need money to make a settlement offer. Evaluate your financial status carefully. Check your bank checking and savings accounts. Review your 401k accounts and other assets.

Discuss finances with your partner, friends, or family. See if they can lend a helping hand.

Figure out how much you’ll have within 30 days. Determine the amount you can pay monthly as settlement.

Pro Tip: Lump sum payments get better settlement offers than monthly payment plans.

Talk to Your Cosigner

Defaulting on your student loan drops your credit score. Your cosigner’s score drops too. Ensure you and your cosigner are on the same page.

Consider other options like student loan refinancing. Talk to your cosigner and find what’s best for both.

Another option is releasing the cosigner before you default. The challenge? Cosigner release takes one to two years typically.

A cosigner can’t sue you once removed from the account. However, they can sue to recover money they paid toward the loan.

Default Your Loan

You can’t negotiate a settlement with Navient before defaulting. Lenders won’t negotiate with consumers whose accounts are in good standing. Defaulting damages your credit score and marks up your credit history.

Settle Your Debt Outside of Court

If you’re behind on payments and Navient sues you, our partner Solo can help you resolve the lawsuit quickly.

You can send and receive settlement offers to Navient until you reach an agreement. Settling outside of court lets you pay less than the face value. More realistic than trying to win and pay nothing.

The Settlement Agreement Process Explained

After defaulting, Navient sends your loan account to a collection agency. The collection agency buys the account and tries to reach you. They’ll contact you about paying what you supposedly owe.

The collection agency could be in-house at Navient or independent. Either way, expect a call about the defaulted loan.

The most important thing? Let Navient make the first offer.

The settlement offer could be a lump sum or payment plan. Payment plans typically last up to 36 months. If the offer sounds right, you may accept it. Have any concerns addressed before signing any agreement.

You can make a counteroffer if the initial offer doesn’t work. The worst they can do is decline. Throughout negotiation, avoid making any payments to the loan.

If approved, you’ll receive a settlement agreement letter. The letter confirms the terms between you and Navient. Read carefully and confirm everything is accurate.

The settlement agreement letter should contain:

• Your name and contact information
• Your account number
• Loan number and balance
• Details of the settlement agreement

You’ll then process the payment via the proposed method.

What Happens After Settling with Navient?

When you settle a student loan with Navient, you’ll receive a debt clearance letter. Expect it approximately six weeks after your final payment. The letter states you no longer owe that loan.

The IRS will send you a 1099-C at year’s end. A 1099-C is a Cancellation of Debt notice. It states the unpaid portion of your student loan. That unpaid portion is considered taxable income.

When you file taxes, you’ll include this portion as income. However, you can talk to the IRS about excluding it. They may offer options to help.

Request copies of all agreements when negotiating with Navient. Such copies prove useful when you need documentation later. For example, if you mistakenly get sued for the same loan, you’ll have receipts. You can prove you don’t owe the debt collector anything.

How Settlement Affects Your Credit

Settling your Navient loan impacts your credit report. The account will show as “settled” rather than “paid in full.” Settled accounts stay on your credit report for seven years. Your credit score will take a hit initially.

Despite the credit impact, settlement is often better than judgment. A court judgment has more severe consequences. It can lead to wage garnishment and bank account levies.

Alternatives to Settlement with Navient

Settlement isn’t your only option. Consider these alternatives before defaulting on your loan.

Loan Rehabilitation

Loan rehabilitation removes the default status from your credit report. You make nine voluntary payments within 10 months. The payment amount is typically 15% of your income. After completion, your loan returns to good standing.

Consolidation

Federal loan consolidation combines multiple loans into one. You can consolidate defaulted federal loans. However, Navient private loans don’t qualify for federal consolidation.

Refinancing

Private loan refinancing replaces your current loan with a new one. You’ll need good credit and stable income to qualify. Refinancing can lower your interest rate and monthly payment.

When Navient Sues You

If debt collection agencies fail to recover the amount owed, Navient might sue. You’ll receive a debt collection summons. You must answer to prevent default judgment against you.

Our partner Solo helps you respond to a debt lawsuit. Answer the summons properly to protect your rights. Fighting the lawsuit gives you leverage to negotiate a better settlement.

Negotiating a settlement is the best way to resolve a debt lawsuit. You can settle even after being sued. Courts prefer when parties resolve disputes outside of court.

Tax Implications of Settling Your Navient Loan

The IRS treats forgiven debt as taxable income. If Navient forgives $5,000 of your debt, you’ll owe taxes on that amount. The tax you pay depends on your income bracket.

Some exceptions exist to the forgiven debt tax rule. You may qualify for insolvency exclusion. Insolvency means your debts exceed your assets. A tax professional can help determine if you qualify.

Plan for the tax consequences before settling. Set aside money to cover the additional tax liability. Don’t let a surprise tax bill catch you off guard.

Tips for Successful Negotiation with Navient

Get everything in writing before making any payment. Never agree to terms over the phone only. Request written confirmation of all settlement terms.

Start with a low offer, around 40-50% of the balance. Navient will likely counter with a higher amount. You can negotiate from there.

Document every conversation with Navient. Note the date, time, and name of the representative. Keep records of all letters and emails.

Never give Navient access to your bank account. They may take more than you authorized. Use money orders or checks instead.

Don’t restart the statute of limitations. Making a payment or acknowledging the debt resets the clock. Know your state’s statute of limitations before negotiating.