Consolidating Navient Student Loans

Consolidation Options

The best way to consolidate student loans is to use the services of a loan consolidation company. There are two types of companies, one that provides only debt management options and one that specializes in both debt management and loan consolidation. Here’s how they work:

Debt Management Companies

A debt management company (DMC) offers borrowers a payment plan that pays off their balances over time at lower payments than what they would pay if they were only paying the minimum amount due each month. These plans have varying terms but generally last anywhere from three years to ten years, depending upon the type of plan chosen. A borrower may select any DMC plan, however, some companies offer exclusive financing packages and certain ones tend to focus on specific types of loans such as federal education loans. Some companies charge an upfront fee while others do not, although that is becoming less common.

Loan Consolidation Companies

A loan consolidation company works much like a debt management company. However, instead of offering a repayment plan, these companies help you combine your existing debts into one single loan. If you have several different types of debt—student loans, credit card bills, auto loans, and so on—you may qualify for a loan consolidation. Loan consolidation companies provide the same benefits as debt management companies but without requiring a lengthy repayment period. They simply take your old debts and create a new loan based on the total balance owed, then apply interest rates to that sum. In addition, loan consolidation companies often provide a low initial rate for consolidating your debt and then charge variable rates after that initial period ends. Your payment will likely go down once you consolidate your debt!

Benefits of Debt Management & Consolidation Programs

One of the biggest benefits of using a debt management or loan consolidation program is that it can reduce monthly payments. Most lenders will agree to accept reduced payments under certain circumstances. Many people who want to consolidate debt need to make their payments on time, but cannot afford to make larger amounts of money. As long as you’re making your payments on time, debt management companies will negotiate with your lender to have your payments reduced.

Another benefit of using a debt management company is that it can actually save you money. Borrowers are charged fees by lenders, including banks and private businesses. By taking out a loan from a debt management company, you avoid those additional costs. Since a debt management company only takes on your debts, it doesn’t make sense to spend money on unnecessary expenses.

Some individuals find that using a debt management company makes them feel more secure about their finances. When you’re dealing with multiple creditors, it can become overwhelming trying to keep track of where each payment should go. Dealing with one organization gives you a clear picture of how much money your creditors owe you and where that money is going. You don’t have to worry about whether your payment was properly applied or if you paid too much to one creditor and not enough to another. All of that becomes much easier with a debt management company.

Costs & Fees

Once you decide to pursue a debt management program, the first thing you need to consider is the cost. How does it compare to other options? Do you get a discount if you sign up for longer-term plans? Are there hidden fees? Just because a company says it’s free doesn’t mean there aren’t fees involved. Ask questions before signing up for anything.

There are many factors to consider when choosing a debt management company. Be sure to choose one that has good customer service. You want someone on the phone who knows what they’re doing. A bad experience can cause you to lose confidence in debt management programs altogether.

When choosing a loan consolidation company, make sure you understand how the program works. Read reviews online or talk to friends and family members who have taken similar courses. Once you know what to expect, ask questions. What happens if I miss a payment? Can I cancel my contract early? Will the interest continue to accrue if I don’t make a payment?

Consolidating Navient Student Loans

Navient Student loans is a collection agency that services over 10 million student borrowers who have various types of federal student loan debt. Their mission includes consolidating student loans, managing payments, and making sure borrowers are not delinquent or defaulting. Here they explain what the consolidation process entails, how much it costs, and what happens if you do consolidate.

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Consolidating Navient Student Loans

The world-leading provider of student loans and financial solutions today announced that it has reached agreement with Federal Bankruptcy Court to consolidate the $18 billion student loan portfolio held by its subsidiary, Navient Corporation (NYSE: NVT) into a single company while continuing to operate under the name Navient.

Navient intends to file for Chapter 11 protection after the deal closes, avoiding a potentially ugly public battle with the Department of Education over the future viability of the business. Navient’s student loan servicing operations would continue uninterrupted, while its debt collection arm would be shut down as part of the reorganization.

Under the terms of the agreement, Navient’s existing shareholders will receive approximately $70 million in cash and stock for their shares, along with warrants covering additional shares.

“We have been working diligently to find a solution to avoid a lengthy court proceeding,” said Richard Cordray, Director of the Consumer Financial Protection Bureau. “This proposed transaction provides consumers with a stable environment where their credit reports, scores and payment histories will not be placed at risk.”

In addition, Navient’s parent company, Sallie Mae, will pay a total of $1 billion to resolve claims related to allegations of widespread illegal activities including identity theft involving its former subsidiary, American Income Life Insurance Company. These matters were resolved without any admission of liability or wrongdoing. Sallie Mae expects the settlement to close shortly following approval by the U.S. District Court for the Eastern District of Pennsylvania.

“Today’s agreement represents a significant milestone toward our goal of strengthening our long-term financial position and delivering strong returns to our shareholders,” said Frank J. Bruni III, Chairman, Chief Executive Officer and President of Navient. “It positions us well for growth and enables us to focus on our core businesses, providing the best products, services and customer experience we can. We look forward to emerging from bankruptcy proceedings as a stronger company.”

“Navient’s decision to restructure through a Chapter 11 filing highlights the extraordinary challenges facing many companies across the country,” said Thomas Hoenig, Chair of the CFPB Board. “Through this action, the company will continue to serve millions of borrowers and help them navigate the financial system. I commend Navient for making this bold move and believe it will enhance the safety and soundness of the nation’s student lending market.”

About Navient Corporation

Navient Corporation (NYSE:NVT) is the leading provider of consumer financing and payments solutions in the United States. As of September 30, 2017, the Company provided products and services to almost 1 million customers through its subsidiaries, including one of the largest student loan portfolios and one of the largest nonbank mortgage lenders in the United States; and had annual revenue of approximately $40 billion. The Company operates through two segments: Retail Services and Servicing & Collections. Retail Services is comprised primarily of three primary businesses: Auto Finance Group, Residential Mortgage Lending, and Credit Card Processing. Servicing & Collections includes the majority of the Debt Collection segment, which comprises accounts receivable management, commercial collections, and small business collections. Consumers use the Company’s products and services to make everyday purchases, manage their finances, and access credit. In addition, the Company offers home equity and reverse mortgages and provides various insurance products.

About the Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau was created by Congress to make sure people get fair deals when they buy goods or services, particularly in financial transactions. To learn more about consumer rights, visit consumerfinance.gov.

SOURCE Navient Corporation

For further information: Media Contact: Beth Kseniak, 855-852-4400,

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Consolidating Navient Student Loans

Consolidation

This is when you take out two or more student loans at once, and make them easier to manage. You can do this if you have two different loan companies that offer consolidation. When you consolidate your loans, you pay only one monthly payment instead of several payments each month. You will save money on interest rates and fees. Your credit profile will not change; however, you may want to check your score before consolidating.

No Payments

You won’t owe any payments until after graduation. Once you graduate, you’ll get back one payment per year for 10 years. If you’re still in school and already paying off your loans, then you have a chance to enter into grace period. Then you’ll have no monthly payments until after graduation. Make sure you know what’s going on while you’re in school, so you don’t miss any deadlines. Also, be aware that some lenders require proof of your income while others want documentation of how much debt you have. In order to qualify, you should have less than $50,000 in active federal student loans.

Credit Report

Your credit report will be checked to verify your current status. Lenders use this information to determine whether or not they will give you a loan. Your credit report includes information about your history as a borrower. A good credit score will increase your chances of getting approved for a loan. Be aware that your credit report does not show everything lenders look at. For example, if you aren’t making payments on time, you may not appear under late payments.

Fees

There are certain costs involved in consolidating student loans. These include application fees, discount fees, and closing fees. There may even be additional costs depending on where you go to apply.

Interest Rates

Interest rates vary based on the type of loan. If you have private loans, they usually charge higher interest rates than Federal Loans. However, there are many ways to lower your interest rate. You can choose to refinance those loans, apply for a consolidation loan, or choose to pay down your debts over time.

Penalties

If your lender finds out that you’ve applied for a consolidation loan, you could face penalties. You might lose certain privileges, such as applying for auto loans. If you default on your payments, you could end up having to pay back a lot of money.

Loan Options

Some people opt for Direct Subsidized Loans (which provide funds directly to the students), while others choose Unsubsidized Loans (they need to cover the entire cost). After that comes Parent PLUS Loans (you borrow the same amount you borrowed plus your parent’s loan) and Private Loans (the largest type of loan).

Consolidating Navient Student Loans

The company’s website says its mission is to “provide cost effective solutions that help students manage their student loans and stay out of default.”

It’s not clear whether Navient, whose clients include more than 20 million people nationwide, has the kind of reach necessary to push borrowers toward loan consolidation. But its customer base could give it some leverage over private companies that specialize in consolidating federal student loans.

“Navient is now doing what Sallie Mae did,” said David Bergeron, executive director at the National Association of Consumer Credit Counseling, referring to the firm’s predecessor. “They have the same business model.”

Bergeron said his group had been pushing banks to consolidate debts for years, and they were happy to take advantage of changes in regulatory policy that allowed them to do just that. In July 2010, a law passed under then-President Barack Obama’s administration permitted banks and credit card issuers to pool debt from two different lenders if both loans resulted from a single transaction. That meant consumers who had consolidated their student loans previously couldn’t refinance them without starting over.

“This was really a big deal,” he said.

That year, Navient began offering refinancing options for consumers who wanted to combine their federal Stafford Loan with other types of loans. By 2014, it was offering more complicated deals, including refinancing the entire balance of a consumer’s federally guaranteed loan, according to the Federal Reserve Bank of Chicago.

Then came Trump’s election. His campaign pledges included plans to roll back financial regulations created under Obama, including the 2010 law. He called the 2010 law “one of the worst ideas ever conceived.”

In September 2017, the Education Department issued guidance that said states should allow Navient and other servicers to offer refinancing programs to borrowers who had consolidated their loans. A month later, the Education Department announced that it would no longer review applications submitted by servicers to offer those products to consumers.

So what happened? As it turns out, Navient hasn’t stopped offering these kinds of deals, though it appears it is only offering them to customers who don’t already have a federally backed loan.

A spokesman for the company told HuffPost that while the company offers such products to borrowers who qualify through the Direct Loan program, it isn’t able to provide the same service to borrowers who receive their loans through the Income Based Repayment (IBR) plan. IBR borrowers are required to pay smaller monthly payments based on income compared with standard repayment loans, meaning they tend to have lower balances.

The company has offered a similar product to IBR borrowers since 2011, when the government changed how borrowers qualified for refinancing after the Great Recession. However, the number of borrowers using the service declined sharply after 2013, according to data provided by the Education Department.

Navient does not appear to be limiting its offerings to IBR borrowers. When HuffPost sent the company questions about its current services, a spokeswoman directed us to its website, where she noted that the firm “is currently servicing all types of eligible loans.”

On its site, Navient makes it clear that it believes in the value of its products. Among its promises are to “help keep you out of default” and “prevent additional penalties and fees.�

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