private student loan consolidation

[music] andrew, we just finished up ourvideo series that was focused on dealing with governmentbacked federal loans. and the different incomecontingent plans, ibr, repay, consolidation. all that's great information,but you're also, and probably more now, focused and have a great deal moreexperience that you can help people with in regards toprivate student loans.

so thanks for joining me againon our youtube channel debtbytes. and so that viewers knowa little bit about your background, again, if youdon't mind repeating it for this segment,tell me a little bit about your experience helpingstudent loan borrowers. >> sure, i've been a debtnegotiator since 2009. i got into the industrycompletely by accident after i got laid off from my job at thepalm beach county courthouse. found out that i really lovedhelping people with their debt

problems andnegotiating especially and i just really kind ofevolved with that. i had my own federal loans andmy own private loans, and i kinda connected the careerside with my personal issues with my own private loans andfederal loans in 2011, 2012, right after i got certifiedthrough the national association of certified credit counsellors. and i realized that therewas a lot of need for people to get help with theirfederal loans and private loans.

back in 2012 it waskind of as you said, before the iceberg reallywas breaching a lot. there really was not much inthe media about student loans. it was kind of a hush,hush thing. then in 2013 it just kindof exploded in the media as far as stories andcoverage and the realization thatthis is a huge issue. and that was around the timewhen student loan debt passed the total of creditcard or unsecured debt and

that was the bigtipping point there. so i've been helping barworkswith settling private student loans since 2013 and helping barworks with federalloans since 2012, although i mainly do focus on negotiatingprivate student loans right now. there just is not a lot of people that specialize inprivate student loans. and i love negotiating,i love getting a great deal for my clients, and that's kindathe reason why i decided to

focus on private student loans. although, as you mentioned, i still like to be involved inthe federal loan space as far as advising people or referringthem to legitimate experts and not student debt reliefcompanies and being involved and part of that broaderdiscussion there. but the private studentloans only make up about 8% of all student loan debt. so proportionallyit's not a lot.

but the people that dohave private student loans are really, really struggling because thereare not a lot of options. they're just very inflexiblecompared to federal loans. and i was recently->> and sometimes people have both,right? >> yeah, i was just gonna say,i was recently quoted in a nerdwallet article, which wassyndicated in the usa today college section, which discussedsome of the methods people can

use to try to modify orget different terms for their private loans>> and out of all the methods that they mentioned, i meanthey're all pretty much low probability options formost people. i mean, we've tried to getpeople onto the navient payment modification program forprivate loans, no luck. i've submitted severalbarworks on sheets and sheets of paperwork. not a single one was approved.

discover and wells fargo both claim to havea similar type of program. but, it may not be that broad ofa solution for a lot of people. because it's not somethingi hear about very often, that people have actually gottenonto these payment plans. i'm really not sure how muchof that is just a pr effort, by the private loan lenders,who are experiencing significant pressure from the regulatorsto do something and to make their loansmore flexible,

or at least to make therepayment terms more reasonable. i think that private studentloans should not be vehicles for investors to make profit. they should be designed toeventually be paid down or repaid. i talk to a lot of people thathave been paying for years, and have no progress, orthey've paid, for example, a recent borrower i talkedto had paid $15,000 in the last several years, herbalance increased by $14,000.

so it didn't go down at all,it increased by $14,000, but she had paid $15,000. so the high interest rates,the hidden fees, it really makes people feellike they're trapped and there's no way out of theirprivate student loan debt. and the lenders are not offeringa lot of repayment plans at all to help people. i really would like to seesome kind of idr equivalent established forprivate student loans, but

the lenders would have to prettymuch do that themselves, unless it was a government backedprogram like a refinance or something like that. so, we may not see that happen. but another thing is thatprivate to student loans are except from bankruptcy inmany issues, or in many cases, and there are some instanceswhere they can be discharged and people should definitelyexplore that. but the 2005 bapcpa law madesure that it was gonna be much

more difficult forpeople to discharge those loans. they have to go through anadversary proceeding if they do try to file bankruptcyon their private loans. and they're gonna be in fora fight, the lender's gonnaput up a fight. one of the ways that i assistborrowers with private student loans is negotiatingsettlements, either lump sum or structured settlements ontheir private student loans. and that can be oneof the fastest and

least expensive ways to payoff your private student loan. the caveat is thatlenders will not come to the negotiating tableunless the loans are in default. and for private loansthat's 180 days for most private loan borrowers. so forborrowers who already behind or in default it's a greatoption to consider. for borrowers who are current,they really have to weigh whether sacrificing their creditscore for several years is worth

reducing their private loanbalance by 50% or more. no counselor or advisor shouldever tell someone to default to do that, but some borrowersdo decide to do that on their own because theyhave no other options. and in a way, the lenders havekind of forced that on them. they have not given them anyother options as repayment plans, so they circleback around to, well, this is the only way to reallyget rid of this thing and not be paying on it forthe rest of my life.

>> so my litany is alllong been, for gosh, for a couple of decades now is that,look, i can't tell you tostop paying your bills. all i can do is inform youof the opportunities and the drawbacks to doing so,right? >> right.>> and so when you weight those youmake an informed decision, which is really cool about someof the things i know you do and that whole informed, sincere,let's get you educated up.

>> and figure out what'sgonna work for you, your lifestyle, your age, movingforward, your credit scores, are you gonna apply for amortgage in the next two years? probably not a good idea. are you gonna do this,this, and that? so there is a way to plan aroundthat negotiation element. now in this way, because ofagain some of the massive size of this student loan icebergmore of it, more of it, being exposed.

on the private studentloan side, i would say, at least in my experience, thati'm seeing more flexibility on the settlement side in the lastcouple of years because of this heightened awareness than i saw,say, just 2011 and longer. would you say the same thing? >> i think it's definitelysomething that loan servicers or the private loan lendersare realizing is good for them as well. if they didn't want to do it,then it wouldn't exist.

so, obviously theircreating the ways, that borrowers can do that. although i have seen that theyreally make it sound like, especially navient the largestprivate loan lender, they make it sound likethe apocalypse is coming. if you stop paying your bills,you're gonna die. horrible things are gonnahappen. they'll threatenvague legal action. they may send a certifiedletter, basic collection letter,

to your work place,to your house, and they do that to play on the ideaof wage garnishment, or a summons,something that is important, that lenders can send to yourhouse by certified mail. and naviant will plan onthat by using a basic, very generic, collection letter,and send it by certified mail. so there are some thingslike that to watch out for you if you do fall behind onyour navient private loans and with other private loans.

it's in their best interest totake a settlement, because they know that it's better than notgetting anything over time. or trying to pursueextensive litigation, and maybe they just geta judgement at that point and they have to try toexecute a judgement. there's no guarantee they'regonna collect on that. although some privatestudent loan lenders like the national collegiate trust,which is one of the other big ones, they're very,very aggressive.

i mean, they'll try to takepeople to court within say 12 to 18 monthsafter non-payment. so if you have a nationalcollegiate trust private student loan, you want wanna work out a settlementwith them as soon as you can. but at the same time they're notgoing to come to the table for a good settlement percentageuntil you're significantly into the default or delinquency. so, the key thing withnegotiating private student

loans that i found is negotiating when you're farenough behind on the loan where the lender is incentivized totake a settlement, but not so far behind that you'rerisking legal action. and also, i mean, legal actionreally is the last resort, even if it goes to a collectionattorney in your state, which is the only way they can actuallytry to take you to court. even if it goes to that typeof collection attorney, most often they're stillgonna try to settle with you.

they're still going toaccept a settlement. they may not propose it, but they will accept a settlementin those kinda cases. the most recent one i did waswith a navient private loan. it was with a collectionattorney in my client's state, so they got a little nervous,understandably. but we were able tonegotiate a 40% settlement, split up over fiveyears of payments. with the downpayment asthe first payment and

the thing is they'll stillaccept a good settlement at that stage even they havea little bit more leverage. we also will encourage someoneto find a reputable consumer defense attorney in their stateif they are facing imminent legal action, although i'venever personally had a client get sued that's been ableto sign on with me prior to getting someone to court. sometimes people do find meafter they've already been summoned, maybe the worst casescenario, they get a judgement.

the private loan judgementscan still be settled, in a lot of cases. >> yeah.>> so, there are a lot of opportunities tosettle in the collection cycle. >> so we've got a ton of videosup on our youtube channel here, about settling. most of the focus is dealingwith debt buyers that purchase up credit card receivables,or dealing with banks and settling yourself.

but it's different, right? so, with some lenders and someloan amounts of certain size, in non student loan relatedindustry, in that space there's sometimes where you have to do aheavy documentation settlement, right? and so, it's not something thati typically diy and educate on. in those areas it's betterto work with a pro. and in the student loan space, sometimes this stuff can bepretty heavily document intense

in where they're going throughfinancial worksheets, six pages, they wanna know high lineitems about budget, expenses, how you're living, what are youpaying, cuz they wanna see what your collectabilitylooks like long term. are you gainfully employed? can you make payments? well, if you canafford payments, why should they take a haircutand get a settlement? so i do recommend people reachout and talk to professionals,

when it comes to settling theirprivate student loans, because it's not necessarily gonna godown just like a credit card. it is nice that we're seeingmore and more payment options on those reductions, like you talkabout navient taking five years, two years, three years onthese reduced amounts, that makes it somethingthat people can sign on to. real quickly, what are some ofthe obstacles that you think people run intomore than anything with dealing with privatestudent loans themselves?

>> well, as far as negotiatingthe settlements, i think it's probably a similar obstacle thatpeople run into with credit card debt, which is they justdon't have the experience that a collector has onthe other end of the phone. they don't know whether whatthe collector is telling them is true or not. i hear about all thesearbitrary deadlines. you have until the 30th orthe account will be terminated. or there are all these things.

and it's justarbitrary deadlines. it goes to another office in thesame collection agency the next month or in the lender'soffice the next month. and being able to sortfact from fiction based on previous experience. i think that is a majorreason why people look into hiringa professional negotiator. so that's one of the obstaclesthey run into and then some of the other obstaclesare when it comes time to

execute the settlement. and i'd really like to say a lotthat executing a settlement is just as important asnegotiating the settlement. if you get a great deal but it'snot executed properly and you lose it or you make a paymentthat goes to your balance and then you get a call from acollection agency a month later and they have no recollectionof the settlement, and you don't have the properdocumentation of it, then that great deal wasreally not such a great deal.

so we hear about that a lot. i mean, there's a lot of horrorstories out there of people that thought they settled and findout later that they didn't or they don't havethe documentation to dispute the settlement or the fact theygot the settlement afterwards. so i like pride myself onthe fact that we have never had an issue like that aftergetting a settlement, because we keep documentationon the payment method used, the settlement confirmation aswell as the settlement letter.

and a lot of times, filingcertain types of complaints are gonna help people resolvethose issues afterwards, because making a debt collector,and this is another obstacle,does not take the borrower as seriously if they don'thave a professional or an attorney on their sidethat's representing them. [crosstalk]>> i wanna throw this in there, because you made the letterreference, right? and it's like this senseof urgency whether it's on

the phone or in the mail. what people don'tsometimes appreciate, and i know this to be true fora fact. phds work on the colorof a collection notice. they work on the font. they work on the placementof verbage on these letters. they've actually gone so faras to sent these letters, and actually a roll out type ofexperience in what gets me. so phd level people work onthese collection efforts.

and you're on the phone witha collector, a whole lot of very smart people have whittled thisdown to a training process for the debt collector. the more experience they havethe better they are at it, the newer maybe justa little bit more green, but you have to appreciatethe science. i do because i'm a debt geek. it goes that you are workingagainst sometimes, when you have to try and come upagainst one of these behemoths,

one of these navients orwhat have you, when you are trying tocome up with a solution. it matters. working with a pro. not let me ask you this. we talked about studentloan servicers. and being able to pick yourown when you're dealing with consolidation onyour federal loans. but if you had topick somebody out,

i have a suspicion ialready know the answer. but who's the privatestudent loan servicer that you would caution peopleas to taking too much, take what they saywith a grain of salt. or don't let them lead youon because these aggressive practices are how theymislead you down here. or talk about how they can't, they're private student loans,right? they're willing to negotiatethe balance reduction and

somehow they're lettingthe collection fees, that are ginormous, become part ofthe dialogue and it's misplaced. who would you warnpeople against? >> well, obviously navient,as we discussed. >> okay, surprise. >> their federal loan practicesare similar to some of their private loan practices and imean, i see them flat out lying to people in the collectionprocess and threatening people. i just feel like maybethey would do better

if the did not tryto scare people so much and let them knowsettlement was an option. they will not even mentionsettlement until you are way into default and they are goingto threaten you with a lot of other things before that. they will just casually say,we're gonna take your house, we're gonna do this. well we don't livein north korea, they can't just gotake your house.

we live in a country where youcan represent yourself in court, and defend yourself orhire an attorney to do that, and not even that, there's justa very small amount of private loans that actually gointo legal collections. but its the favorite threat ofnavient's internal recovery and internal debt collectorsto say that, and i'm shocked by how casuallythey just throw it out there, we're just going totake your house. and it works, it scares peopleinto making a payment, or

getting on to a payment plan. which navient does have somepayment plans when you're in default. the problem is, those payment plans keepyou perpetually in default. they don't bringyou back current. so, as far as the short termoption, maybe it makes sense, maybe it makes more sense tojust save for settlement. as far as a long term option,

who would wanna have a chargeoff on their credit report for the next seven years, or for aslong as they're making payments? it's not really fairto the borrower for whatever credit decisionsthey have coming up in life. so, yeah, navient has some issues withtheir collection process. they're extremely aggressive. they try a lot ofdifferent things when it's still withnavient internal recovery.

and in some ways, the third party debt collectorswho become involved work from 6 to 12 monthsafter the charge off, they're a little more controlledbecause they have to be. they have more laws limitingwhat they're able to do and what they're able to say. but it still can bean issue with them. and the other lender that iwould caution people about is national collegiate trustbecause they talk a big game.

and they also will back it up,unlike navient in many cases. so i've seen a lotof instances with national collegiate trustwhere they will push for a 75% or 80% settlement formonths and months and months. and then there's a brief windowin between when they send it to a collection attorneyin the client's state, in the borrower's state andwhen it's still with them, where they're gonna authorizea decent settlement, 50 or 60% settlement.

once it goes toa collection attorney, they're not gonna take lessthan 65% of the balance. in most cases they're gonna tryto push forward the lawsuit, because they getdefault judgments and people don't defend themselves. if they do hire an attorneyto defend themselves, they get somebody to court, lower settlements are possibleduring that legal process. and then once the judgement isobtained, if a judgement is

obtained, lower settlementsare possible then. but they're reallycoming forward hard with a blitz of collection activityup until about the twelfth to fourteenth monthafter a non-payment, which is when they will tryto take a borrower to court. so national collegiate trust isnot a lender that most people have ever picked tobe their lender. they are a lender that bought upa lot of these smaller private loans, as the market hasgotten consolidated as we

mentioned earlier inthe last five to ten years. so they're one ofthe big players now. and it is an actual trust,it's not a company. the company is known asgold structured solutions, which not a lot ofpeople know about. they're based out in california, that's who ownsthe national collegiate trust. and most people think that aesis their private loan lender, if they have a nationalcollegiate trust account.

that to national trust workswith service and loans. so, you will never actuallydeal with ncg directly. it's gonna be either ads,[crosstalk], or one of the collectors liketransworld systems incorporated after it goes into default. >> weltman, weinberg and reiscollects on a lot of nct debts. they collect,they do a lot of collection for and private loans. i saw you on the crn site.

actually, thank you for all your commitment to answering readersquestions on the website too. >> sure.>> and you talked about weldman. and i've always foundthem somewhat reasonable. so, i'm hearing the message, andi'm hearing it pretty clear. and hopefully, viewers arehearing it as well is that get involved in your own solution,and stay aware, stay prepared, open all mail. don't ignore things just becauseyou don't have a financial

solution oraware with all doesn't mean you shouldn't be aware of what'shappening with your student loans specially as theygo in to default or if you're dealing withnational collegiate trust. because sometimes,specially with federal loans, because we have the incomecontingent plans, don't ignore the situation. so listen, andrew you helppeople, you help people a lot. your focus now is workingwith people directly and

bringing them allin as customers and clients forprivate student loans, but you help a ton of people onlinewith their federal stuff too. and people are able to engage,obviously, anywhere on any of the videos onthe debt bites youtube channel. and you're committed toresponding to people if they post in the commentshere, underneath this video. so they've got an opportunityto interact with you. what people may notknow is on the hotline.

i've got a hotline on our video. it's free, everybody connectedto that hotline is free to talk with,to have an initial consultation. and you're available there, they can press four and getconnected with you, talk with you about their situation with afocus on private student loans. you have a great ebook that youpublished, it's very concise, it's not gonna take anybodytoo long to read to really contemplate their optionswith their student loans,

both private and federal. was that fun to put together? are you doing updates? do you have any planned updates? what's going on with that? >> yeah it was something that iput together really over several years and first published it,i believe, in 2014. i just saw there reallywas not a concise, as you mentioned,source of information for

people to really get a startingpoint on federal student loans. and it's when i startednoticing a lot of these debt relief companies poppingup that were using very, very deceptive tactics. i feel like if someone just readthe ebook they're gonna be, hopefully, immune to that kindof deceptive marketing strategy. because it gives them theiroptions right there and lets them know the two mainways to get out of default. and how to compare those two andsee what's best for

their situation. and it goes over justfederal loans in general. we are gonna be doing an updatethis year with that and kinda revamping it. and there have been some changesin the federal loan system recently. the new repay plan,as we discussed, the change from the fafsa pin tothe fsa id, that's a big change. and also some changeswith the way servicers

process applications versus thedirect consolidation department, which no longer handles directconsolidation applications. it all goes to the loanservicers now. so we will be updating that,probably within the next several months, so keep an eye out forany new changes there. but yeah, it really is justa tool for people to get a starting point with theirfederal student loans. and hopefully on my website,i've created resources where people can really read throughthose and if they don't have

a super complex federal loanissue, they should be able to figure it out on their ownthrough the difference steps. i even posted some ofthe applications on that website in the federal loan section. we are not doing federal loancounseling that much anymore but i did it for quite a while, and i reallyjust preferred negotiating. and i know there's not a lot ofpeople that are specializing in private student loans.

so that's one of the reasonsi made that kind of my niche for now. it's something that ireally enjoy doing as well. but there are some otherlegitimate federal loan experts out there. there's not that many, butthere are some other ones. so we can also connectyou with them as well if i'm not able tohelp you directly. but a lot of the resources onthe website are gonna help you

get through your federalissues on your own. and the ebook is definitelya good place to start for that. >> awesome, cool. yeah andyou've been helping out. i think i'm gonna publish yourfirst post on the crn site which is really cool. so thanks again foryou sincerity and wanting to help people,it's unquestionable. and that's what attracted meto you in the first place.

so i'm gonna be doingan interview or another video similar tothis on student loans. but the focus, near the entirefocus, is going to be on borrower defense which is notnew per se, but it's new to most people because only threepeople ever applied for it. or at least, three out of five,five people applied for it, three people were actually granted loan forgiveness due tothis little known, little nugget in the 90s that congress putthrough on how to get your loans

forgiven if you meet a verycertain near unfair and deceptive act and practices typeof criteria at a state level. i'll be talkingwith steve rhode, a good friend of mine,on that one. and i hope to be able to dothat in the next week or two. so folks,if you're watching the video and you wanna subscribe and you're dealing with student loanissues, we're gonna have some more student loan typesof content come out

especially with credit reportingand different things like that. so, stay tuned. thanks for tuning in to thisvideo and andrew thank you so much for being here and for the participation within thecomments, going forward and for the help that you givepeople on the crn website. thanks much. >> yeah. thanks for having me on,i really appreciate it, too.