[MUSIC] Andrew, we just finished up our
video series that was focused on dealing with government
backed federal loans. And the different income
contingent plans, IBR, repay, consolidation. All that’s great information,
but you’re also, and probably more now, focused and have a great deal more
experience that you can help people with in regards to
private student loans. So thanks for joining me again
on our YouTube channel DebtBytes. And so that viewers know
a little bit about your background, again, if you
don’t mind repeating it for this segment,
tell me a little bit about your experience helping
student loan borrowers.>>Sure, I’ve been a debt
negotiator since 2009. I got into the industry
completely by accident after I got laid off from my job at the
Palm Beach County Courthouse. Found out that I really loved
helping people with their debt problems and
negotiating especially and I just really kind of
evolved with that. I had my own federal loans and
my own private loans, and I kinda connected the career
side with my personal issues with my own private loans and
federal loans in 2011, 2012, right after I got certified
through the National Association of Certified Credit Counsellors. And I realized that there
was a lot of need for people to get help with their
federal loans and private loans. Back in 2012 it was
kind of as you said, before the iceberg really
was breaching a lot. There really was not much in
the media about student loans. It was kind of a hush,
hush thing. Then in 2013 it just kind
of exploded in the media as far as stories and
coverage and the realization that
this is a huge issue. And that was around the time
when student loan debt passed the total of credit
card or unsecured debt and that was the big
tipping point there. So I’ve been helping Barworks
with settling private student loans since 2013 and helping Barworks with federal
loans since 2012, although I mainly do focus on negotiating
private student loans right now. There just is not a lot of people that specialize in
private student loans. And I love negotiating,
I love getting a great deal for my clients, and that’s kinda
the reason why I decided to focus on private student loans. Although, as you mentioned, I still like to be involved in
the federal loan space as far as advising people or referring
them to legitimate experts and not student debt relief
companies and being involved and part of that broader
discussion there. But the private student
loans only make up about 8% of all student loan debt. So proportionally
it’s not a lot. But the people that do
have private student loans are really, really struggling because there
are not a lot of options. They’re just very inflexible
compared 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 was
syndicated in the USA Today college section, which discussed
some of the methods people can use to try to modify or
get different terms for their private loans
>>And out of all the methods that they mentioned, I mean
they’re all pretty much low probability options for
most people. I mean, we’ve tried to get
people onto the Navient payment modification program for
private loans, no luck. I’ve submitted several
Barworks on sheets and sheets of paperwork. Not a single one was approved. Discover and Wells Fargo both claim to have
a similar type of program. But, it may not be that broad of
a solution for a lot of people. Because it’s not something
I hear about very often, that people have actually gotten
onto these payment plans. I’m really not sure how much
of that is just a PR effort, by the private loan lenders,
who are experiencing significant pressure from the regulators
to do something and to make their loans
more flexible, or at least to make the
repayment terms more reasonable. I think that private student
loans should not be vehicles for investors to make profit. They should be designed to
eventually be paid down or repaid. I talk to a lot of people that
have been paying for years, and have no progress, or
they’ve paid, for example, a recent borrower I talked
to had paid $15,000 in the last several years, her
balance 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 feel
like they’re trapped and there’s no way out of their
private student loan debt. And the lenders are not offering
a lot of repayment plans at all to help people. I really would like to see
some kind of IDR equivalent established for
private student loans, but the lenders would have to pretty
much do that themselves, unless it was a government backed
program like a refinance or something like that. So, we may not see that happen. But another thing is that
private to student loans are except from bankruptcy in
many issues, or in many cases, and there are some instances
where they can be discharged and people should definitely
explore that. But the 2005 BAPCPA law made
sure that it was gonna be much more difficult for
people to discharge those loans. They have to go through an
adversary proceeding if they do try to file bankruptcy
on their private loans. And they’re gonna be in for
a fight, the lender’s gonna
put up a fight. One of the ways that I assist
borrowers with private student loans is negotiating
settlements, either lump sum or structured settlements on
their private student loans. And that can be one
of the fastest and least expensive ways to pay
off your private student loan. The caveat is that
lenders will not come to the negotiating table
unless the loans are in default. And for private loans
that’s 180 days for most private loan borrowers. So for
borrowers who already behind or in default it’s a great
option to consider. For borrowers who are current,
they really have to weigh whether sacrificing their credit
score for several years is worth reducing their private loan
balance by 50% or more. No counselor or advisor should
ever tell someone to default to do that, but some borrowers
do decide to do that on their own because they
have no other options. And in a way, the lenders have
kind of forced that on them. They have not given them any
other options as repayment plans, so they circle
back around to, well, this is the only way to really
get rid of this thing and not be paying on it for
the rest of my life.>>So my litany is all
long been, for gosh, for a couple of decades now is that,
look, I can’t tell you to
stop paying your bills. All I can do is inform you
of the opportunities and the drawbacks to doing so,
>>And so when you weight those you
make an informed decision, which is really cool about some
of the things I know you do and that whole informed, sincere,
let’s get you educated up.>>And figure out what’s
gonna work for you, your lifestyle, your age, moving
forward, your credit scores, are you gonna apply for a
mortgage 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 around
that negotiation element. Now in this way, because of
again some of the massive size of this student loan iceberg
more of it, more of it, being exposed. On the private student
loan side, I would say, at least in my experience, that
I’m seeing more flexibility on the settlement side in the last
couple 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 definitely
something that loan servicers or the private loan lenders
are realizing is good for them as well. If they didn’t want to do it,
then it wouldn’t exist. So, obviously their
creating the ways, that borrowers can do that. Although I have seen that they
really make it sound like, especially Navient the largest
private loan lender, they make it sound like
the apocalypse is coming. If you stop paying your bills,
you’re gonna die. Horrible things are gonnahappen. They’ll threaten
vague legal action. They may send a certified
letter, basic collection letter, to your work place,
to your house, and they do that to play on the idea
of wage garnishment, or a summons,
something that is important, that lenders can send to your
house by certified mail. And Naviant will plan on
that by using a basic, very generic, collection letter,
and send it by certified mail. So there are some things
like that to watch out for you if you do fall behind on
your Navient private loans and with other private loans. It’s in their best interest to
take a settlement, because they know that it’s better than not
getting anything over time. Or trying to pursue
extensive litigation, and maybe they just get
a judgement at that point and they have to try to
execute a judgement. There’s no guarantee they’re
gonna collect on that. Although some private
student 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 take
people to court within say 12 to 18 months
after non-payment. So if you have a National
Collegiate Trust private student loan, you want wanna work out a settlement
with them as soon as you can. But at the same time they’re not
going to come to the table for a good settlement percentage
until you’re significantly into the default or delinquency. So, the key thing with
negotiating private student loans that I found is negotiating when you’re far
enough behind on the loan where the lender is incentivized to
take a settlement, but not so far behind that you’re
risking legal action. And also, I mean, legal action
really is the last resort, even if it goes to a collection
attorney in your state, which is the only way they can actually
try to take you to court. Even if it goes to that type
of collection attorney, most often they’re still
gonna try to settle with you. They’re still going to
accept a settlement. They may not propose it, but they will accept a settlement
in those kinda cases. The most recent one I did was
with a Navient private loan. It was with a collection
attorney in my client’s state, so they got a little nervous,
understandably. But we were able to
negotiate a 40% settlement, split up over five
years of payments. With the downpayment as
the first payment and the thing is they’ll still
accept a good settlement at that stage even they have
a little bit more leverage. We also will encourage someone
to find a reputable consumer defense attorney in their state
if they are facing imminent legal action, although I’ve
never personally had a client get sued that’s been able
to sign on with me prior to getting someone to court. Sometimes people do find me
after they’ve already been summoned, maybe the worst case
scenario, they get a judgement. The private loan judgements
can still be settled, in a lot of cases.>>Yeah.
>>So, there are a lot of opportunities to
settle in the collection cycle.>>So we’ve got a ton of videos
up on our YouTube channel here, about settling. Most of the focus is dealing
with 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 some
loan amounts of certain size, in non student loan related
industry, in that space there’s sometimes where you have to do a
heavy documentation settlement, right? And so, it’s not something that
I typically DIY and educate on. In those areas it’s better
to work with a pro. And in the student loan space, sometimes this stuff can be
pretty heavily document intense in where they’re going through
financial worksheets, six pages, they wanna know high line
items about budget, expenses, how you’re living, what are you
paying, cuz they wanna see what your collectability
looks like long term. Are you gainfully employed? Can you make payments? Well, if you can
afford payments, why should they take a haircut
and get a settlement? So I do recommend people reach
out and talk to professionals, when it comes to settling their
private student loans, because it’s not necessarily gonna go
down just like a credit card. It is nice that we’re seeing
more and more payment options on those reductions, like you talk
about Navient taking five years, two years, three years on
these reduced amounts, that makes it something
that people can sign on to. Real quickly, what are some of
the obstacles that you think people run into
more than anything with dealing with private
student loans themselves?>>Well, as far as negotiating
the settlements, I think it’s probably a similar obstacle that
people run into with credit card debt, which is they just
don’t have the experience that a collector has on
the other end of the phone. They don’t know whether what
the collector is telling them is true or not. I hear about all these
arbitrary deadlines. You have until the 30th or
the account will be terminated. Or there are all these things. And it’s just
arbitrary deadlines. It goes to another office in the
same collection agency the next month or in the lender’s
office the next month. And being able to sort
fact from fiction based on previous experience. I think that is a major
reason why people look into hiring
a professional negotiator. So that’s one of the obstacles
they run into and then some of the other obstacles
are when it comes time to execute the settlement. And I’d really like to say a lot
that executing a settlement is just as important as
negotiating the settlement. If you get a great deal but it’s
not executed properly and you lose it or you make a payment
that goes to your balance and then you get a call from a
collection agency a month later and they have no recollection
of the settlement, and you don’t have the proper
documentation of it, then that great deal was
really not such a great deal. So we hear about that a lot. I mean, there’s a lot of horror
stories out there of people that thought they settled and find
out later that they didn’t or they don’t have
the documentation to dispute the settlement or the fact they
got the settlement afterwards. So I like pride myself on
the fact that we have never had an issue like that after
getting a settlement, because we keep documentation
on the payment method used, the settlement confirmation as
well as the settlement letter. And a lot of times, filing
certain types of complaints are gonna help people resolve
those issues afterwards, because making a debt collector,
and this is another obstacle,
does not take the borrower as seriously if they don’t
have a professional or an attorney on their side
that’s representing them. [CROSSTALK]
>>I wanna throw this in there, because you made the letter
reference, right? And it’s like this sense
of urgency whether it’s on the phone or in the mail. What people don’t
sometimes appreciate, and I know this to be true for
a fact. PhDs work on the color
of a collection notice. They work on the font. They work on the placement
of verbage on these letters. They’ve actually gone so far
as to sent these letters, and actually a roll out type of
experience in what gets me. So PhD level people work on
these collection efforts. And you’re on the phone with
a collector, a whole lot of very smart people have whittled this
down to a training process for the debt collector. The more experience they have
the better they are at it, the newer maybe just
a little bit more green, but you have to appreciate
the science. I do because I’m a debt geek. It goes that you are working
against sometimes, when you have to try and come up
against one of these behemoths, one of these Navients or
what have you, when you are trying to
come up with a solution. It matters. Working with a pro. Not let me ask you this. We talked about student
loan servicers. And being able to pick your
own when you’re dealing with consolidation on
your federal loans. But if you had to
pick somebody out, I have a suspicion I
already know the answer. But who’s the private
student loan servicer that you would caution people
as to taking too much, take what they say
with a grain of salt. Or don’t let them lead you
on because these aggressive practices are how they
mislead you down here. Or talk about how they can’t, they’re private student loans,
right? They’re willing to negotiate
the balance reduction and somehow they’re letting
the collection fees, that are ginormous, become part of
the dialogue and it’s misplaced. Who would you warn
people against?>>Well, obviously Navient,
as we discussed.>>Okay, surprise.>>Their federal loan practices
are similar to some of their private loan practices and I
mean, I see them flat out lying to people in the collection
process and threatening people. I just feel like maybe
they would do better if the did not try
to scare people so much and let them know
settlement was an option. They will not even mention
settlement until you are way into default and they are going
to 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 live
in North Korea, they can’t just go
take your house. We live in a country where you
can represent yourself in court, and defend yourself or
hire an attorney to do that, and not even that, there’s just
a very small amount of private loans that actually go
into legal collections. But its the favorite threat of
Navient’s internal recovery and internal debt collectors
to say that, and I’m shocked by how casually
they just throw it out there, we’re just going to
take your house. And it works, it scares people
into making a payment, or getting on to a payment plan. Which Navient does have some
payment plans when you’re in default. The problem is, those payment plans keep
you perpetually in default. They don’t bring
you back current. So, as far as the short term
option, maybe it makes sense, maybe it makes more sense to
just save for settlement. As far as a long term option, who would wanna have a charge
off on their credit report for the next seven years, or for as
long as they’re making payments? It’s not really fair
to the borrower for whatever credit decisions
they have coming up in life. So, yeah, Navient has some issues with
their collection process. They’re extremely aggressive. They try a lot of
different things when it’s still with
Navient internal recovery. And in some ways, the third party debt collectors
who become involved work from 6 to 12 months
after the charge off, they’re a little more controlled
because they have to be. They have more laws limiting
what they’re able to do and what they’re able to say. But it still can be
an issue with them. And the other lender that I
would caution people about is National Collegiate Trust
because they talk a big game. And they also will back it up,
unlike Navient in many cases. So I’ve seen a lot
of instances with National Collegiate Trust
where they will push for a 75% or 80% settlement for
months and months and months. And then there’s a brief window
in between when they send it to a collection attorney
in the client’s state, in the borrower’s state and
when it’s still with them, where they’re gonna authorize
a decent settlement, 50 or 60% settlement. Once it goes to
a collection attorney, they’re not gonna take less
than 65% of the balance. In most cases they’re gonna try
to push forward the lawsuit, because they get
default judgments and people don’t defend themselves. If they do hire an attorney
to defend themselves, they get somebody to court, lower settlements are possible
during that legal process. And then once the judgement is
obtained, if a judgement is obtained, lower settlements
are possible then. But they’re really
coming forward hard with a blitz of collection activity
up until about the twelfth to fourteenth month
after a non-payment, which is when they will try
to take a borrower to court. So National Collegiate Trust is
not a lender that most people have ever picked to
be their lender. They are a lender that bought up
a lot of these smaller private loans, as the market has
gotten consolidated as we mentioned earlier in
the last five to ten years. So they’re one of
the big players now. And it is an actual trust,
it’s not a company. The company is known as
Gold Structured Solutions, which not a lot of
people know about. They’re based out in California, that’s who owns
the National Collegiate Trust. And most people think that AES
is their private loan lender, if they have a National
Collegiate Trust account. That to National Trust works
with service and loans. So, you will never actually
deal with NCG directly. It’s gonna be either ADS,
[CROSSTALK], or one of the collectors like
TransWorld Systems incorporated after it goes into default.>>Weltman, Weinberg and Reis
collects 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 readers
questions on the website too.>>Sure.
>>And you talked about Weldman. And I’ve always found
them somewhat reasonable. So, I’m hearing the message, and
I’m hearing it pretty clear. And hopefully, viewers are
hearing it as well is that get involved in your own solution,
and stay aware, stay prepared, open all mail. Don’t ignore things just because
you don’t have a financial solution or
aware with all doesn’t mean you shouldn’t be aware of what’s
happening with your student loans specially as they
go in to default or if you’re dealing with
National Collegiate Trust. Because sometimes,
specially with federal loans, because we have the income
contingent plans, don’t ignore the situation. So listen, Andrew you help
people, you help people a lot. Your focus now is working
with people directly and bringing them all
in as customers and clients for
private student loans, but you help a ton of people online
with their federal stuff too. And people are able to engage,
obviously, anywhere on any of the videos on
the Debt Bites YouTube channel. And you’re committed to
responding to people if they post in the comments
here, underneath this video. So they’ve got an opportunity
to interact with you. What people may not
know is on the hotline. I’ve got a hotline on our video. It’s free, everybody connected
to that hotline is free to talk with,
to have an initial consultation. And you’re available there, they can press four and get
connected with you, talk with you about their situation with a
focus on private student loans. You have a great Ebook that you
published, it’s very concise, it’s not gonna take anybody
too long to read to really contemplate their options
with 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 I
put together really over several years and first published it,
I believe, in 2014. I just saw there really
was not a concise, as you mentioned,
source of information for people to really get a starting
point on federal student loans. And it’s when I started
noticing a lot of these debt relief companies popping
up that were using very, very deceptive tactics. I feel like if someone just read
the eBook they’re gonna be, hopefully, immune to that kind
of deceptive marketing strategy. Because it gives them their
options right there and lets them know the two main
ways to get out of default. And how to compare those two and
see what’s best for their situation. And it goes over just
federal loans in general. We are gonna be doing an update
this year with that and kinda revamping it. And there have been some changes
in the federal loan system recently. The new repay plan,
as we discussed, the change from the FAFSA pin to
the FSA ID, that’s a big change. And also some changes
with the way servicers process applications versus the
direct consolidation department, which no longer handles direct
consolidation applications. It all goes to the loan
servicers now. So we will be updating that,
probably within the next several months, so keep an eye out for
any new changes there. But yeah, it really is just
a tool for people to get a starting point with their
federal student loans. and hopefully on my website,
I’ve created resources where people can really read through
those and if they don’t have a super complex federal loan
issue, they should be able to figure it out on their own
through the difference steps. I even posted some of
the applications on that website in the federal loan section. We are not doing federal loan
counseling that much anymore but I did it for quite a while, and I really
just preferred negotiating. And I know there’s not a lot of
people that are specializing in private student loans. So that’s one of the reasons
I made that kind of my niche for now. It’s something that I
really enjoy doing as well. But there are some other
legitimate federal loan experts out there. There’s not that many, but
there are some other ones. So we can also connect
you with them as well if I’m not able to
help you directly. But a lot of the resources on
the website are gonna help you get through your federal
issues on your own. And the eBook is definitely
a good place to start for that.>>Awesome, cool. Yeah and
you’ve been helping out. I think I’m gonna publish your
first post on the CRN site which is really cool. So thanks again for
you sincerity and wanting to help people,
it’s unquestionable. And that’s what attracted me
to you in the first place. So I’m gonna be doing
an interview or another video similar to
this on student loans. But the focus, near the entire
focus, is going to be on borrower defense which is not
new per se, but it’s new to most people because only three
people ever applied for it. Or at least, three out of five,
five people applied for it, three people were actually granted loan forgiveness due to
this little known, little nugget in the 90s that Congress put
through on how to get your loans forgiven if you meet a very
certain Near unfair and deceptive act and practices type
of criteria at a state level. I’ll be talking
with Steve Rhode, a good friend of mine,
on that one. And I hope to be able to do
that in the next week or two. So folks,
if you’re watching the video and you wanna subscribe and you’re dealing with student loan
issues, we’re gonna have some more student loan types
of content come out especially with credit reporting
and different things like that. So, stay tuned. Thanks for tuning in to this
video and Andrew thank you so much for being here and for the participation within the
comments, going forward and for the help that you give
people on the CRN website. Thanks much.>>Yeah. Thanks for having me on,
I really appreciate it, too. [MUSIC]