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Why Sallie Mae and Navient Loans Are Terrible for Students

I am a college graduate with a passion for student loan reform. Lenders bank on students being under informed -- prove them wrong!

Sallie Mae/Navient and other private lenders only care about one thing: making money.

Sallie Mae/Navient and other private lenders only care about one thing: making money.

The Problem With Sallie Mae or Navient Loans

  1. Student loans that originate from Sallie Mae or Navient are not federal loans. They are private loans. Sallie Mae and Navient offer few to no options for repayment and do not offer any kind of income-based repayment plans.
  2. Navient is Sallie Mae "rebranded": don't be fooled by this PR stunt.
  3. No student loan is protected by bankruptcy—not private loans, not federal loans, none of them. If you attempt to discharge your loans in bankruptcy, there is a very high chance that your efforts will be unsuccessful.

Common Student Loan Misconceptions

I would wager that the bulk of our population assumes that Sallie Mae is a government-controlled financial institution. By this logic, most people must also assume that Sallie Mae provides federal student loans, which come with reasonable interest rates, income-based repayment plans, and public service student loan repayment programs. That most people are confused about this is not surprising.

While Sallie Mae was founded by the government in the early '70s, it was fully privatized in 2004. To add to this confusion, Sallie has done two things:

  1. Sallie Mae services some federal loans, so you can have a federal loan but pay bills to Sallie Mae.
  2. In 2014, Sallie Mae split into two companies, creating a new company called "Navient." This was a calculated PR move—an attempt by Sallie Mae to distance themselves from their tarnished name. The name is virtually the only difference between Navient and Sallie Mae.

If your loan originated from Sallie Mae/Navient and is not federally guaranteed, that loan is private. Sallie Mae/Navient does not offer income-based repayment plans or public service programs for any of their loans. Additionally, Sallie Mae spearheaded the (successful) campaign to make private student loans non-dischargeable in bankruptcy in 2005.

If you want to thank anyone for the private student loan problem in the US, thank Sallie Mae/Navient.

If you want to thank anyone for the private student loan problem in the US, thank Sallie Mae/Navient.

If you want to thank anyone for the private student loan problem in the US, thank Sallie Mae/Navient.

Why the Student Loan System Is Broken

The lack of consumer protection for student borrowers is appalling. Every time I write something about student loans or research information online, I am overwhelmed by all the stories about students in over their heads. Total student loan debt has exceeded credit card debt in the United States. Students are defaulting at record levels because they have run out of options.

Why is it that a person with a gambling addiction can rack up debt in the five- or six-figure range, declare bankruptcy, and have their debt wiped out, but a student cannot? Why is it that someone who has been living beyond their means for years with a credit card in hand is protected under bankruptcy law, but someone who is trying to better themselves with a college education is not? Why can Heidi Fleiss, a felon convicted of running an illegal prostitution ring, use bankruptcy to start over with a clean slate, while a student whose sole mistake was borrowing money for college cannot?

What is wrong with this picture?

What we've created for student lenders is the modern-day equivalent of a debtor's prison. Without a sudden influx of a large amount of money or a VERY well-paying job, many students will be strapped to their student loan debt, be hounded by collectors, have their wages (and later their social security) garnished and have abysmal credit for the rest of their lives.

I've said it before, and I'll say it again: Student loans are too easy to get and too hard to pay off. A huge chunk of people who take out student loans are young people. These young people have big dreams, and getting a college education is the first step toward pursuing what they have been told their whole lives: You can be anything you want to be if you try hard enough. Do what you love, and the money will follow. How does this jive with the thought that students struggling with debt should just suck it up and get a job that pays really, really well? So, you can do what you love and follow your talents, but only if you don't have student loan debt? Hmm . . . maybe those students should have made smarter choices before they borrowed the money to begin with.

Unfortunately, a lot of people have limited financial knowledge or foresight to understand what it means to pay off a student loan. Why would Sallie Mae continue to lend such a large amount of money to these people? Do they have a real passion for helping out lower-income students? Don't be fooled. Their insane interest rates, inability to negotiate and predatory lending practices make this next point a no-brainer:

Best Options for Students Who Need Loans or Financial Assistance

If you're trying to figure out how you are going to pay for college, consider the following options:

  1. Question whether a four-year college is truly the right choice for you. If you can pursue a career without going to college, by all means, do it.
  2. Consider trade school. If you are considering a career that does not require a college education but does require some sort of training, consider trade school. They are much less expensive and tend to be better at placing you in a job once your training is complete.
  3. Consider community college. This is a good option for anyone that wants to go to college, but especially good for those who don't have a clear idea of what their career aspirations are. You can go to community college for two years, keeping costs low, and then transfer to a university. Many states (like California) have programs in place that make it easier for community college students to get into a better school than they would have if they applied straight out of high school.
  4. Compare private to public schools. Unless you are having your education paid for by a parent or relative, it is often financially irresponsible to go to a private college rather than a public one. Private school tuition can be two to four times more expensive than their public counterparts. For-profit private colleges are even worse.
  5. Apply for every grant and scholarship that you qualify for. This money is for your education and never has to be paid back. This is a great place to start your search for Scholarships. Grants and Federal aid are applied for together with a FAFSA (see the next point).
  6. Apply for federal student loans. After grants/scholarships, these are the best options for students because they have the most repayment options. The process starts with filling out a FAFSA.
  7. Avoid Sallie Mae, Navient, and other private loans at all costs. You are better off borrowing the money from a relative than taking out a private student loan. If you have absolutely no other options, do your best to keep your private student loan debt as low as possible by graduating as quickly as possible and working while going to school to minimize the amount that needs to be taken out.
  8. Consider risks to co-signers. Many loans require co-signers, but it can be a serious problem if the loan becomes delinquent. Co-signers are just as responsible for the debt as the student is, so be prepared for this when considering any loan.

Advice for Students in Debt

Your situation may seem impossible, but I hope (that for some of you at least) there are options. My best advice for students in debt is as follows:

  1. If you have federal student loan debt, get yourself into an income-based repayment plan ASAP.
  2. If you have private loans that you cannot afford to pay on, do your best to negotiate down your payment. If this is unsuccessful, file a complaint with the Student Loan Ombudsman. This used to be only open for federal student loan borrowers but has now been opened up to private student loan borrowers as well.
  3. If possible, consolidate your private student loans with a borrower that offers the best terms and interest rates for your situation. DO NOT consolidate a federal student loan with a private bank or non-federal institution, as it will remove the income-based repayment options you might be eligible for.
  4. Write a letter to your state's senator and your area's representative. Explain your situation and ask for the return of bankruptcy protection for student borrowers and an overhaul of the student loan system.
  5. VOTE -- Vote for candidates who make student loan reform a real priority. It is so important to vote in every election, including midterm, primaries, and local elections. The mess of laws we have now is due, in part, to young people not voting in the smaller elections. Local officials can become senators and representatives years from now. Your senators and representatives are forming policies that will affect us now and in the future. Go to to find your polling place and important dates & deadlines for your area.
  6. Any time you read an article online or see a news story on TV that portrays student loans inaccurately, write a letter to the editor. In my experience, engaging in comment sections is more trouble than it's worth.
  7. If you are at risk of being sued by Sallie Mae, Navient, or any other private lender, consider meeting with a lawyer. In many areas, free legal advice is available for those with moderate to low income. (Note: Many lawyers are uninformed, or worse, misinformed, when it comes to student loan law. If you are getting advice from a lawyer who is not explicitly experienced in student loan litigation, cover your butt and do your own research as well.)
  8. If you ARE being sued, do not ignore it. Lenders and collection agencies bank on you not showing up in court— they can and will garnish your wages if you do nothing. I highly recommend seeking legal representation as there are all kinds of nuances to this area of the law that vary depending on the state you live in. Find a lawyer familiar with student loan law in your home state. This is a great place to start your search. Many lawyers—even student loan experts—offer a free or low-cost initial consultation of some kind.

I realize that a lot of the above choices may seem futile, but with the system we have right now, these options are all we have. Let's squawk so loud that people start taking notice.

More Reading

  • The Student Loan Crisis
    I wrote this article about student loans a few years back. If you would like more detailed information on the student loan system, or need clarification on specific terms, take a look.
  • "Selling Out Students" (
    This is an excellent article about Sallie Mae and what is at the core of their business practices. The article paints an ugly, but very accurate, picture of the Sallie Mae that Sallie Mae does not want you to see.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

Questions & Answers

Question: I'm a cosigner on a private student loan. It seems like I've paid on this loan forever. Is there some advise on possibly refinancing or help?

Answer: I know how bleak it can feel to be saddled with a private student loan and thinking there's no end in sight. I'm sorry you have to experience this. I recommend speaking to a lawyer that specializes in student loans. That's what we did. The consultation was not free, but getting advice specific to our situation -- and knowing it was coming from a reputable source -- was invaluable. We found a lawyer to speak to via this website: -- the lawyer that runs that site is licensed in CT & VT, and may be able to offer some general information, but he also has a list of lawyers that can provide consultations in other states: (the lawyer we spoke to is licensed in CA: Jay S. Fleischman)


Kevin on December 26, 2016:

Its also important that borrowers report Sallie Mae/Navient to the CFPB when they are unfairly, unethically, or illegally treated. The CFPB is well positioned to start providing appropriate governmental oversight of these predatory student lenders/servicers.

Shay Marie (author) from California on June 17, 2013:

Thank you for your thoughtful comment wheelinallover. I think that the idea of the almighty "college education" has been pushed on young people for so long that it has lost a lot of meaning. A college education is not an automatic guarantee of success and I think that a lot of students and their parents forget (or are not aware at all) of this.

Dennis Thorgesen from Beatrice, Nebraska U.S. on June 17, 2013:

What little college I had was paid for in cash. Every penny was paid to me by the company I left college for to help form. What I found is although I didn't know dates and a few names they were teaching me nothing.

What people in my profession go to school for, is to learn how to find the information they need to do their job. This was already part of my knowledge base.

I have had many people tell me I am a "know it all." This is not true, what is true is I know how to find information and I retain what I find.

Due to this I have been offered teaching positions just like my mother.

She taught ESL for a major school district without proof of even high school graduation. In her case it was a combination of what she knew and who she knew.

I have no degree, just a knowledge of how to design businesses. It seems natural to me because I have been doing all but nine years for myself and others since I was 17 years old.

Shay Marie (author) from California on June 17, 2013:

Many thanks, sholland10!

Susan Holland from Southwest Missouri on June 16, 2013:

Great hub!! I shared it on my hub! Thanks for the information!

Votes and shares! :-)