Banking, Loan, Financial, Negotiator Gurus...Help Me out

[KevDen2005]

Long story short my wife has large amounts of student loans. The majority of those loans are private from Wells Fargo. The rest are federal. We still owe around $85,000 on these loans, total. That is after over two years of on time and additional payments (I realize that this isn't a long time). Oh and believe it or not my wife got $50,000 in grant money, so hey, at least that is a little savings.

Now, I know that sometimes banks or credit card companies will make deals for the pay off amount, especially if the credit card is from someone who passed away so the bank will still get some kind of payment.

My wife's grandparents want to give us (not exactly but it's a long story) a significant amount of cash to help pay this off, however it would not be the full amount of what is owed.

I want to know if there is a way that that I can offer the bank or federal student loan less but will send them a check for the entire amount that we agree on? Does this make sense? I am typing this quickly as I am on the phone with the bank trying to get current exact payoff amounts.

[Fentonite]

I'm not sure, but I think they will not settle for less than they are owed unless the loan has gone into default. I have a buddy who paid less than originally agreed, but only after he defaulted and ruined his credit. Then the loan was sold to a collections company, and they are the ones who agreed to accept less. The collections companies buy bad loans for pennies on the dollar, so they are able to negotiate to accept less than you originally borrowed and promised to repay, but your credit is already trashed. In addition to damaging her credit, if your wife doesn't repay the money she borrowed (like my buddy), the expense gets passed to the rest of us in some fashion.

[hunterhawk]

I don't think so but that's still awesome! At least put a good lump sum down and possibly get lower payments! I'm paying $640 something a month! GRRR so help a brother out! :-) you know if they offer you more money

[Mtn.man]

School loans are treated differently, they can and will come after you forever.
Most won't take a lesser amount even if in default.

Got family back east that thought otherwise till they started garnishment.

[Great-Kazoo]

School loans are treated differently, they can and will come after you forever.
Most won't take a lesser amount even if in default.

Got family back east that thought otherwise till they started garnishment.

it is also considered income and outside defaulting on the loan, you now are being taxed on it. We knew a professional student who blatantly blew off his student loan. He thought is was funny how they sent him notices and ignored them. TILL the IRS hit got him.

[Cylinder Head]

Lenders actually HATE it when you pay early because you're "screwing" them out of interest payments. They will not give you a deal.

[newracer]

They will not consider less until the loans are defaulted on and as Mtn.man said the federal ones will never go away or accept less. Take the extra cash and put it towards the principal on the ones with the highest interest, likely the Wells Fargo loans.

Also be careful how the paperwork is handled with the cash gift (not exactly but it's a long story) or you might have to pay a whole bunch of taxes on it.

[Sawin]

If it were me and I didn't have time to look up the tax implications, I'd use 85-90% of the sum that her grandparents give you to pay down whichever loan you have with the highest interest rate. If they are only giving it to you to pay down the student loan, then so be it. That's awesome. However, I'd keep a 10-15% portion available in savings in case tax time comes around and they want their cut. Just a thought, without any more insight into the loans and gifting laws.

[Irving]

Why can't the grandparents just make a direct payment to the loan and avoid the tax issue altogether?

[ChunkyMonkey]

Long story short my wife has large amounts of student loans. The majority of those loans are private from Wells Fargo. The rest are federal. We still owe around $85,000 on these loans, total. That is after over two years of on time and additional payments (I realize that this isn't a long time). Oh and believe it or not my wife got $50,000 in grant money, so hey, at least that is a little savings.

Now, I know that sometimes banks or credit card companies will make deals for the pay off amount, especially if the credit card is from someone who passed away so the bank will still get some kind of payment.

My wife's grandparents want to give us (not exactly but it's a long story) a significant amount of cash to help pay this off, however it would not be the full amount of what is owed.

I want to know if there is a way that that I can offer the bank or federal student loan less but will send them a check for the entire amount that we agree on? Does this make sense? I am typing this quickly as I am on the phone with the bank trying to get current exact payoff amounts.

Yes you can, but it will show as settled account and you will get 1099 for the write off. It's negative in your credit. You may end up paying more tax.

It also takes long to negotiate. You must show hardship with your DTI etc.

I don't recommend it. Pay your obligation, you'll save in the long term in interest and terms on other loans by keeping your credit perfect.