student loan debt negotiation

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During negotiation, two or more parties discuss some mutually satisfactory terms to resolve a certain issue. Students can also negotiate with their lenders about loans they have difficulty repaying. Loan negotiation may not result in complete elimination of the loan, but the student may get a reduction in the interest rate or a longer repayment period or any other such concession.

Debt negotiations are carried out by a third, mutually neutral party. There are negotiating agencies that study the case of the student who has taken the loan and then discuss with the lenders, trying to get as much benefit as possible for the student. Negotiators work on behalf of both the lender and the borrower, and a successful negotiation is one in which both parties are satisfied with the agreed terms.

Usually, when a student decides to enter into negotiation, payment is already in abeyance. But the act of entering into negotiations shows that the student is willing to pay off some debt. However, a student should only resort to negotiation as a last resort. Lending agencies have no desire to engage in negotiations, as there is no logical reason to settle for less than what they have.

Debt negotiators don’t come cheap. The biggest qualification of a loan negotiator is that they have some clout and are experienced in matters of loan financing. Most loan negotiators charge their fees upfront, or at least 60% upfront. This is a huge blow to student borrowers who are already deep in debt and really defeats the whole purpose of negotiating. Negotiators are not very transparent in their dealings and only let student debtors know what they need to know. These are dangerous issues and may result in unsettled dues to the negotiators even after the debt has been settled for a long time.

Students can conduct their own conversations, thus eliminating the need for interlocutors. A negotiating agency will not do much more than what the students themselves can do. If a guarantor was involved during the loan process (which is now mandatory under federal family education loan programs), loan negotiation becomes easier. Students can negotiate any loan amount, but the decision to accept negotiation rests with the lenders.

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