Can I Consolidate a Sallie Mae Loan Into a Federal Direct Loan?

Consolidating your student loans can not only simplify your finances by allowing you to make just one payment each month, but it can also lower your monthly payment by lengthening your repayment term. When you have a Direct Loan issued by the federal government and a loan through Sallie Mae, you might be able to consolidate them depending on what type of Sallie Mae loan you have.

Sallie Mae loans come in two major varieties, and the type you have will affect whether you can consolidate your Sallie Mae loan with your federal Direct Loan. The first type of loan is the private student loan from Sallie Mae. This is not a Stafford Loan from the federal government, but rather a loan that you got from Sallie Mae on your own initiative. The second type of loan is a loan through the Federal Family Education Loan program. This is a Stafford or PLUS loan issued with funds from Sallie Mae but backed by the federal government. These loans were issued only until June 30, 2010.

You can only consolidate Sallie Mae loans issued through the FFEL program into a Direct loan. This is because the federal government only consolidates federal loans, not private loans. You can consolidate multiple Sallie Mae FFEL loans together or you can consolidate at least one Sallie Mae loan with at least one federal Direct Loan. After consolidating, you will make all of your payments directly to the federal government, not to Sallie Mae.

None of the loans that you are consolidating together, including your Sallie Mae FFEL loan and any federal Direct Loans, can have an in-school status. You must wait until after your graduation date to consolidate loans through the Direct consolidation program. The one exception to this rule is that between July 1, 2010, and July 1, 2011, borrowers could consolidate two or more loans if they fell into at least two of three major categories: Direct Loans, FFEL loans and FFEL loans bought by the federal government.

If your Sallie Mae loans are private student loans instead of FFEL loans issued by Sallie Mae, you must use consolidation options other than the federal Direct consolidation loan. You will need to apply for a consolidation loan with a private lender, which could be Sallie Mae or a different lender. Your interest rate for the consolidation loan will be based on your credit score and, if applicable, your co-signer's credit score. If you own a home, you could consolidate student loans by taking out a home equity loan, which generally has a low interest rate. However, this adds the risk of losing the home if you fail to repay your loan.

Why Sallie Mae and Navient Loans Are Terrible for Students

Sallie mae loan options

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

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.

Navient is Sallie Mae "rebranded": don't be fooled by this PR stunt.

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.

Sallie Mae, Navient, and the Most 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 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.

Sallie mae loan options

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 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:

Sallie mae loan options

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 in a better school than they would had 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 2-4 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.

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 rate 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 a 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 for 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.

Sallie mae loan options

Sallie mae loan options

Thousands of American's are seeking relief from their Sallie Mae loans. There are literally hundreds, even thousands of searches daily for forgiveness programs that help lower college debt. Not to fret, there are programs that help reduce payments, lower payoff and rid you off your Sallie Mae loans once and for all.

Sallie mae loan options

To find out why Sallie Mae loan forgiveness is in such demand let's look at a little history. Sallie Mae was founded in 1973 and began as a company to service federal student loans. In 1997 they started a mission to become mainly a non-government student loan lending institution. Why? There's more money to be made by making independent loans. Making these loans directly, and not just servicing government loans, was better for their bottom line.

- Will They Accept a Reduced Amount?

Sallie mae loan options

The short answer here is, yes. The federal government does not back private loans like they do federal loans. Therefore, Sallie Mae assumes the full risk of these loans, so they are unsecured. The difference when you are dealing with an unsecured loan versus a loan secured by the government is more wiggle room. Federal loans have more options on reduced payment plans but there is no option to get your payoff amount lowered. Private loans can be settled and negotiated for less. Sallie Mae loan forgiveness, as a result, is a very searched phrase from borrowers who have Sallie Mae loans that are trying to get fast relief from their loans.

Sallie mae loan options

Just like most everything, Sallie Mae forgiveness has its own factors to consider. Length of term would be one thing to consider. Often times student loan forgiveness doesn't offer much in the way of lowering payments. What it does offer, though, is getting the borrower an agreement for a lower payoff. This is why length of term is an important factor. You might not save much, if anything, monthly but you will save a lot on the total payoff.

Reducing Monthly Payment and Payoff

Sallie mae loan options

Achieving a substantially lower payoff agreement on your own can be hard to do. The one advantage a debt forgiveness service brings to the table is the power of numbers. They settle many debts at once with lenders. By settling debts in bulk, they get lower payoff agreements. A good and reputable company will pass this savings on to you. They can save you as much as 50% to 60% including their fee.

Choosing a Service and Program

When considering a company that provides forgiveness services for Sallie Mae loans, make sure they are reputable. Also, make sure they are easy to deal with. This is important because you will be dealing with them during the programs duration. The company you choose to settle your debt is the main factor that determines how soon you will get the relief you need and knock out your Sallie Mae Loans.

Avoiding the Need For Forgiveness

Sallie mae loan options

Why allow yourself to be in this situation in the first place? The best way to avoid needing forgiveness is by exploring and taking advantage of as many options as you can short of taking out non-government backed student loans. Taking advantage of options like scholarships, grants and work-study programs can greatly diminish the out-of-pocket cost of your education.

When trying to settle a debt on your own, the best starting place is to get insight from people who have done just that. One helpful article to start with would be 'How I negotiated with Sallie Mae/Navient to save $115K on my student loans'. In this article the author takes you through the process they went through directly with Sallie Mae to get, ultimately, $115,000 forgiven and settled off their debt. This is encouraging to anyone who has the time to try and come to settlement terms with them on their own.

It's not uncommon that Sallie Mae will make you a settlement offer once they know you are struggling, but it may be an offer that is too much in one or more ways. Lets say you are struggling to pay back a $100,000 loan. Let's say your payment is $750 a month and they offer you a settled payoff of $64,000 with $5,000 down and $700 a month for 84 months. This only helps if you can afford to pay $5,000 and a payment of only $50 less than your current payment after that. Sallie Mae loan forgiveness shouldn't only be a negotiation for a lower payoff, but it also needs to be something manageable for you.

Sallie mae loan options

Loan forgiveness and loan consolidation are similar in nature, but different in structure. They are both used for the purpose of lowering payments, payoff or both. Forgiveness, however, is designed for borrowers who are severely struggling to pay their loan/loans. Consolidation is for someone who can afford their payments; they may just want to pay less. They are struggling a little, but not so much that they need a relief or forgiveness program, just a lower interest rate and payment.

Although Sallie Mae forgiveness is one of our main areas of our focus, we do offer programs for other debt type as well as other private loan lenders. Debt Settlement Consumer offers credit card programs, unsecured bank loan relief, business debt relief, etc. Whether you have many different kinds of unsecured debts or you're struggling with just one, we can help.

Navient, Discover, SoFi, and Wells Fargo Forgiveness are Also a Real Need for Many Borrowers

Navient and Sallie Mae are not the same company, but are often mistaken as such. Sallie Mae started Navient in 2014 to be the management and servicing side of federal loans and Sallie Mae remained the management side and servicing entity of the private loans. Many people that had loans with Sallie Mae now find themselves dealing with Navient. As a result Navient loan forgiveness has become a popular search like its counterpart Sallie Mae loan forgiveness. Discover, SoFi and Wells Fargo are also highly searched when it comes to forgiveness. Although these companies are not as large as Sallie Mae, there are thousands of borrowers across the US struggling with loans from these lenders as well.

The need for Sallie Mae forgiveness is a real need for many hard working Americans. Chances are this need is not going away anytime soon.

Check out some of our other debt related posts

These are not loans based on your credit and they offer more repayment options than private loans. Gaining forgiveness for federal student loans is easier than getting relief from private ones. Federal loans are typically more flexible in many ways. It's best to only take out private student loans when you've exhausted all other options. Not a full proof plan but all of these options can help you need Sallie Mae loan forgiveness in the future.