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After missing a student loan payment, your account will be considered delinquent. Once you miss payments for a certain period of time — 270 days for most federal loans and 120 days for most private student loans — your loan will enter default.
There are a few ways to get a student loan out of default. One potential strategy to consider is negotiating a student loan settlement with your loan holder to clear your balance.
Here’s what you should know about student loan settlement:
What is student loan settlement?
A student loan settlement is when you negotiate with a loan holder to settle the debt — sometimes for less than what you owe. If the loan holder agrees to a settlement, you’ll typically have to make a lump-sum payment to resolve the debt.
However, not all lenders or collections agencies are willing to negotiate settlements, especially if you’re not too far behind on your bills. But if you have a student loan in default, a debt collector might be willing to cut their losses and accept a lesser sum to clear the account.
