I'm Disabled and Sallie Mae Won't Discharge My Student Loans

10/29/2013 01:12 pm 13:12:35 | Updated Dec 29, 2013

Dear Steve,

I am totally and permanently disabled (medically documented). I have had my stafford fed student loan discharged due to my condition and documentation.

I also hold a private student loan with the dreaded Sallie Mae. I have been trying to negotiate with them for over three years to work with me on an income based repay plan. They refuse and they refuse to put in writing WHY they refuse.

I cannot find any legal representative willing to sue them, on my behalf, with an adversarial proceeding for undue hardship - which I qualify for and would win.

Since I want to show that I am trying to continue to work with them and repay in good faith, I am voluntarily paying them 15% of my Social Security income (aprox. $150.00). They say regardless of the payment I am making they will, at some point, put my loan in default. They are asking for more $ in monthly payments than I receive in income.

Can Sallie Mae succeed in getting Social Security to offset my income based on what they say I owe them in private student loan debt? Do I have any consumer or legal protection or recourse in my special case?


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Dear Laurie,

I wish I could tell you the situation is uncommon, but that would be a lie. However there are two issues you may want to look at.

First, just because the loans are with Sallie Mae does not mean they may not be eligible for some federal loan benefits. Sallie Mae does deal with some federal loans. If you have not checked the status of your loans on the National Student Loan Data System (NSLDS), you should. More information on that is here.

Second, you are correct that your loans may be discharged in full but I would look at an effort in bankruptcy rather than a straight suit. In bankruptcy, and with an adversarial proceeding as you mentioned, many have been able to eliminate their student loans completely. See my research on this here.

If you need to try to find a bankruptcy attorney that might tackle this for you, click here.

While Sallie Mae says they offer a total and permanent disability options, as far as I'm aware it is generally in the form of a deferment, and not a discharge. You can find their form here.

The reason they can refuse your request is because if these are truly private only loans there is no requirement for them to modify your payment. If these were federal loans there would be all sorts of good income based options.

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