Navient Says My Loan is Eligible for a Total and Permanent Disability Discharge But They Won’t Let My Cosigner Off the Loan

Question:

Dear Steve,

I have a private student loan from Navient (signature loan) since 2004. I have a cosigner on the loan. The loan qualifies for total and permanent disability discharge and Navient forward me the application for this private student loan after denying it exists for a while.

I have to physicians fill the TPD forms and I was also approved for social security with a monitoring period of three years.

Within three weeks Navient approved me TPD and sent me a letter indicating that they will remove me from the loan and transfer the responsibility to the cosigner.

Prior to that, the reps said if I was approved, the loan will just be discharged and no one owes anything. Then I talk to the Navient customer advocate, one rep says that it’s not an actual discharge, it’s a modification, where they set back to the original amount borrowed then they apply all payment of principal and interest to toward the original amount, which was okay with me, since it leaves for less than 10,000 from 42,000, and both I and the cosigner can stay on the loan.

I asked for this information in writing. Two days later, I received a call from Navient customer advocate telling that since I have a cosigner, I don’t qualify for the loan modification since I have a cosigner. All I can do is chose to be removed from the loan and the cosigner has to pay the 42,000 dollars.

They also always gave a hard time releasing the cosigner. Their reason was always that I had high federal student debt of $350,000.

Even after showing that my income based payment on the federal loans is $350 a month, they still denied it while I was working two years ago with $80,000 income. Now they tell that I have to start making 12 payment of principal plus interest before I can be considered for cosigner release.

I have made 24 payments with at least 12 consecutive payment of such in the past, and they always said I satisfied this requirement and I was able to apply multiple time for cosigner release.

Now that I qualify for TPD, they are playing games, removing my 12 payment qualification and want me to start from scratch. I was under financial review for a month which caused my payment to be late for the first time in June 2018 for less than three weeks. They are using that against me, even though the adjustment department said it should not count against me.

My income is now $52,000 from social security and LTD (company benefit) and I own no federal loans (under three-year monitoring) and I have a mortgage of about $1000 and no credit card debt.

Navient is not consistent with their information and seems to be playing the game of sticking the full loan to me.

Based on all the above in the background information, how should I approach Navient. They have mislead me and thousands of borrowers about cosigner release and many other things.

I do not believe bankruptcy is an option as I have a home with at least $50,000 in equity. My cosigner works on and off.

How can I make Navient honor the 12 payments I made before for the cosigner release requirements?

I already complained over the phone and the claim they will investigate but they seem to set on their decision. I’m writing a letter to contest and petition for cosigner release based on the fact above.

I also requested the letters that prove that I was denied cosigner release based on income to debt and not having not met the 12 payment requirement for cosigner release.

Do Navient have the right to deny me the modification described above even with having a cosigner on the private student loan?

Thank you.

Falasttyn

Answer:

Dear Falasttyn,

I’m going under the assumption here this is a federal student loan which Navient is servicing. It’s the only way a TPD discharge would apply. But even then, are you sure the person is a cosigner on a federal student loan or is it really a Navient private student loan?

Navient private student loans are not eligible for a TPD elimination.

Nelnet is the agency that manages the TPD process for the Department of Education on federal student loans.

I think what we need here is a bit more clarity. Can you please login to the National Student Loan Data System for Students and confirm the specific loan you believe you have a cosigner for is listed here. That will confirm it is a federal student loan.

The issue surrounding a private student loan cosigner release is a technical one. According to Navient, “[your] request will only be considered if I have demonstrated a satisfactory history of making 12 consecutive, scheduled principal and interest payments immediately preceding my cosigner release application submission and in accordance with the requirements of my loan(s).” Navient also says the account must be current at the time of the request and only the account holder can request this. However, it is not clear if you are still on the account if your obligation has been truly discharged. – Source

There is clearly more to this story and more details need to be gathered.

So login to NSLDS and get the details on your outstanding federal student loans. Then see if the loan you think has a cosigner is in that list. If it is not then this may be a private student loan.

Let me know in the comments section below.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

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This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.