Category Archives: Personal

How I negotiated with Sallie Mae/Navient to save $115K on my student loans

March 22, 2015

This article is for people who have defaulted on their Sallie Mae/Navient student loans. If you haven’t defaulted, or if you’re paying traditional subsidized or unsubsidized federal loans, this won’t work for you. For those of you that ARE in this position, this post is for you. You can get your life back.

I’m sharing all of my actual numbers, because it makes the conversation more useful.

Managing the chaos

Like many people, I was unemployed in 2009-2010. I had the bad fortune of graduating in the middle of the recession, and had quite a bit of difficulty finding a “big kid” job, i.e. one that would let me pay my bills–including my student loans. Also like many people who are struggling with debt they can’t pay, I was plagued by phone calls, and they were universally unproductive, because stones don’t have much blood to give. The first step to getting your feet under you is to create mental space, and the biggest thing is to stop the unwanted calls.

In addition to sending letters, I did this:

  1. Get a Google Voice number
  2. Log into your delinquent accounts, and use the Google Voice number as your only phone number
  3. Don’t answer numbers you don’t recognize
  4. Take down each collection agency’s contact information (phone number, debt they’re collecting on, etc.) when they leave you a voicemail
  5. Block each caller one by one

This builds a strategic rolodex for tackling your debts when you’ve got your feet under you. If getting back on your feet takes a while–it took me 2 years–you’ll notice that debt gets resold fairly often, and as it gets resold, the settlement offers get better and better. This is particularly true for unsecured, consumer debt, and less true with student debt.

Negotiating with Sallie Mae/Navient and FMS

Sallie Mae stops trying to collect debts themselves fairly quickly, and they tend to outsource this to other agencies. Unlike consumer debt, Sallie Mae does not sell the debt to the servicing organization. Instead they retain ownership of the debt, as well as the terms and conditions under which that debt may be settled. (In fact, if you try to call Sallie Mae directly, you will be redirected to the servicing agency without ever having talked to a human being.) The debt collector is just a proxy, but they’re the ones you’ll be dealing with.

My debt was serviced by an organization called FMS. You can Google them; there are many horror stories, but my experience was pretty good, barring a few incidents. I had settled a couple of smaller credit card debts to this point, so I made sure to unblock their phone number only when I had a small lump of money available to make a down payment. I knew I wasn’t going to be able to discuss a full settlement, but maybe I could do something to move the needle in the right direction. This ended up being a good move, though the benefits weren’t obvious until much later.

Default settlements

I’m going to use the term “default settlement” below. I don’t know for sure, but I believe that Sallie Mae’s proxies are authorized to offer some percentage (65-70% or so) as a settlement amount, without phoning the Sallie Mae mothership. The reason I believe this is true, is because they would periodically offer me settlements on the spot which didn’t require them to phone home. This was in contrast to my counteroffers which required a ~24-48 hour turnaround time where they had to talk to someone with more authority.

The reduced-interest plan

June 2011 balance: $144,586.

I brought my account up to date on July 25, 2011 with a $1,493.38 payment, and set up a recurring payment every two weeks for $372.56. This was their “reduced interest plan”, where the interest rate dropped to 0.01%. There was no discussion of a settlement at this point that I can recall. If there had been, it would have been WAY more money than I had, so it didn’t matter.

I made bi-weekly payments from July 2011 to May 2012.

The first settlement offer: the first $80K

In May 2012, I got a phone call from FMS to re-up my recurring payments. (They can only schedule 12 at a time.) At this time, the rep I had been dealing with all along offered me a settlement that was still too large for me to take advantage of in one shot. I told her as much, and if I recall correctly, she conferred with her manager and the Sallie Mae mothership, and they made me a counter-offer: an $80,000 reduction if I:

  1. Made a $7000 down payment by the end of the month
  2. Paid $800/month for 45 months
  3. At the 0.01% interest rate

This dropped the loan term from 155 months to 45 months, a 9+ year reduction. BUT, if I broke the terms, the full balance came back at the original interest rate, minus whatever I’d paid. I went for it, because saving $80,000 and 9 years was too good to leave on the table.

  • Settlement starting balance: $45,375
  • Made the $7000 down-payment (with my dad’s help) in May 2012, which
  • Reduced the amount left to pay to $36,375 (or so I thought, more on that below)

I set up a $400 recurring payment every 2 weeks, including months with 3 weeks to ensure I’d make the deadline with some headroom.

A bump in the road

Unfortunately, FMS wouldn’t send me paperwork stating the terms of the settlement, which (as I suspected) came back to bite me. I also hadn’t recorded our phone conversations, because until this point, there was no reason to think that I would need to.

December 2013 rolled around, and I received a phone call telling me that I was almost out of time, and that I owed like $45,442 by ~February 2014, which didn’t sound right. Unfortunately, I was dealing with a new representative, and she couldn’t decipher the notes of the previous representative. It was my notes against theirs… and when you’re in this position, the other party holds all the cards; you’re just along for the ride, hoping they don’t fuck anything up too badly. (That said, I’m very confident that my notes were more accurate. Not that it mattered then, and I can’t imagine it would have mattered in a courtroom.)

There was about a week of back-and-forth, but the takeaway was that I owed the $45.4K, but that the terms were extended until September 20, 2018. That was a big relief–there was no way my pre-wife and I could have come up with the money in that time.

I made sure to record that conversation should things go awry again. Check the laws in your state… my state is a two-party state which means that I needed the rep’s permission to record the conversation.

The final $20K

Because FMS can’t schedule more than 12 payments at a time, I end up talking to them about once a year. While re-upping my payments for this year, the rep mentioned that for whatever reason, Sallie Mae was accepting settlements “for pennies on the dollar this month”. That’s just a figure of speech, so I didn’t know if that was literally pennies or what, but she asked if I was interested in seeing if they would re-negotiate the settlement, because I’d basically paid $35K already, and was a model citizen. Of course I said yes, and they offered me their default settlement of $24K on the $35K owed on the spot, which is 68 cents on the dollar. I told them I couldn’t do more than $10K–a true statement–fully expecting a counteroffer for somewhere between $10-20K, whereupon we’d have to borrow some money from my wife’s parents. They said they’d have to call SLMA to see if they’d approve it.

The next morning, I got a call back: Sallie Mae had approved the $10K for the remaining $35K. The rep was shocked. The manager was shocked. They told me no one in the office had thought it would go through, which I believe. I get the feeling I’m going to be an office legend for the foreseeable future.


  • $144,586 original balance
  • $45,898 paid over 3.25 years
  • $98,688 saved
  • 68% discount (or 32 cents on the dollar) when all was said and done

FMS payments

Here’s a Google spreadsheet that shows all the debits over that time. Alternatively, you can download the Excel version.

FMS payments 2011 to 2015

Total student loans paid during this time

I have more traditional subsidized and unsubsidized student loans that actually had interest rates, so I focused on overpaying those during this time.

All student loans between 2011 and 2015

Conclusions and tax implications

Once you wrap up your settlement, you’ll have taxes to pay. In my case, my income tax burden for 2015 is now my salary + $98,600, which is… a lot. Depending on where you are financially, you may be able to reduce the canceled debt “income” by whatever your net worth is, if it’s negative by filing a Form 982. To determine if this is available to you, you can fill out the worksheet on page 8 of this IRS form. If the sum you come up with is negative, you can subtract that amount from your paper “income”. (I suggest you talk to an accountant if this applies to you, though.)

Other options include maxing our your pre-tax retirement contributions (401k/403b), and/or using your FSA plan to do something expensive like getting the LASIK you always wanted. Unfortunately, doing this latter thing requires knowledge ahead of time that you’ll be settling during this particular FSA year.

Otherwise you’ll want to adjust your tax withholding, because you’ll pay an underpayment penalty in addition to the tax on this “income” if you don’t pay enough tax throughout the year.

So I settled on a settlement saving my wife and I about $100,000 and ten years. This will let us buy a house and start a family years earlier than we had thought we’d be able to. I think my situation may be unusual, but I don’t believe for a moment that I am a beautiful and unique snowflake. Three and a half years ago, my Sallie Mae situation seemed hopeless, and now… it’s over. It took a lot of hard work, and an unwavering focus to get here, but it can be done.

If I can do it, so can others.

Addendum – June 1, 2015

I wrote this article back on March 22 — 3.5 months ago. I had expected to be able to publish this much earlier, when I got the statement that our business was concluded. During this period, a few things happened

  • I never received the paperwork stating that I had fulfilled my side of the deal
  • Sallie Mae/Navient and FMS parted ways as business partners, which made it harder for me to get information from either one of them
  • I had to fight with Sallie Mae/Navient in an attempt to get them to send me paperwork. They never did. When I talked to them on the phone, they stopped allowing me to record our conversations for some reason

Until today, I had no idea whether this was really done or not. I pull my credit report every year, and was expecting to wait until the summer in order to see if the status of my Sallie Mae/Navient loans were changed. But I bought a new car last week, and part of the financing involved the dealership pulling my credit report, which I was able to take a picture of. It indicated that the loans were settled for less than the balanced owed.

I feel reasonably confident that this is the end. Finally.

Leave a comment

  • If it’s your first comment on my blog, it will probably go into the moderation queue. Don’t worry, it’s not lost; I just need to approve it. It could be a few minutes, hours, or days. I will get to it, though.
  • Try to explain how your situation is different than people that have commented before you. Questions that amount to “I owe money, but can’t afford payments. What should I do?” aren’t constructive.
  • I will assume all questions are about private loans only. Federal loans are a completely different kettle of fish.

1099-C update – Feb 2, 2016

I received ten(!) 1099-C forms from Navient on Jan 28. When I reported them on my taxes, I collapsed them down into a single entry for the total amount. I also filled out insolvency Form 982. I was deeply insolvent at the time of the discharge, so instead of paying income tax on an extra $115,282, I only paid income tax on $32,313, because I was underwater by $82,969.

I used TaxAct, which made the process very straightforward. I collapsed the ten forms into a single line item because TaxAct cannot handle more than five 1099-C forms, and their Form 982 worksheet can only be applied against a single line item. We’ll see if the IRS complains. (I don’t know why they would:- the numbers are identical whether they’re reported across ten line items or one.)

Settlement amounts from other readers

An experiment in finishing stuff

One area I’ve struggled with consistently as far back as I can remember has been finishing things. I’ve always been good at having good ideas, and–just as often–not carrying them out. IOW, really good at the R part of R&D, not so great at the D. This is something I’ve resolved to change about myself, and tomorrow (Friday) marks the end of four weeks of a focus on finishing things. Some stuff was important, a lot of it wasn’t. At work, I tried to finish the highest-value tasks, or things I’d promised others, and at home, I tried to finish the most important things, and the things that brought me happiness or satisifaction.

  • Finished two books, on my way to finishing a third
  • Finished 3 different long-term projects that I’d had on my back burner for months
  • Started and finished some high-value policy guidance, from development through socialization
  • A bunch of housekeeping on my Linode backend (more than six months overdue!)
  • My SO and I restructured our finances to better plan for the future
  • Got numerous things with external gating factors back on track

Anyway, this hasn’t been a month where I’ve worked harder. It’s been a month where I’ve worked smarter. I’ve never been an adherent of any particular productivity school, but I do borrow from several (GTD, kanban). Here are a couple of things I did:

  • Didn’t even try to start new things if I could avoid it; I simply added them and added them to my backlog
  • Eliminated some low-value stuff entirely (why do low-value stuff at all?)
  • Carved out calendar time in my day for next steps, immediately after completing pre-requisites. (This ensures adequate time, and a regular delivery cadence.)
  • I’ve always been an inbox zero kind of guy. That didn’t change, and it remained a producitivity (and happiness) multiplier.

It’s not all sunshine and daisies, however. Balancing the reactive, “operational” side of my job with the planful, inside-your-own-head development stuff that provides the real, long-term organizational value remains a challenge.

Here’s a good talk by Adam Savage–of Mythbusters fame–that really resonated with me. I feel like I’m good at (and regularly do) all the stuff, except for maybe the last three minutes. That I saw this video while working on finishing stuff was purely coincidental.

Slow carb: week 2

This past Saturday marked my second cheat day on the slow carb diet. This will be a much shorter post, with the addition of Recipes section.

This week we decided we wanted to eat more savory foods, as the diet can be quite bland. We tried spaghetti squash with home made marinara and turkey meatballs with almond flour. It was OK… the squash wasn’t cooked enough, and the marinara recipe we used wasn’t very good, either (it was essentially tomatoes with onions, and not much “sauce” ugh). Next time we’d bake the squash longer, and use a better marinara recipe.

We also made chili with black beans, kidney beans, and garbanzo beans (chickpeas). We added WAY more veggies: mushrooms, broccoli, red peppers, and we also threw in one ear of raw corn cut off the cob. (Yes, we “cheated”, if you could call < 1/8 of an ear of corn per serving “cheating”.)

It was amazing. So. Bloody. Good. Best food we’ve eaten since being on the diet.


  • Weight: 222.5 (down ~1lb)
  • Waist: 40″ (no change)
  • Hips: 40″ (no change)

I spent first 3 days after my cheat day above my weigh-in weight. I suspect I may have weighed in at the perfect time: just evacuated everything, slightly dehydrated, didn’t eat much the day before. (All of these things were unintentional.)


  • Energy levels are still higher and smoother than what I’ve been used to (more on that below)
  • Weight loss was much less than the first week. I believe my assertion that most of the weight was water weight in the first 3 days was incorrect, and that I continued to shed water weight for most of the week.
  • I’m really at a “new normal” now as far as preparing food, making lunches, eating food, etc is concerned. It’s easy to say no to most foods, and I cook without thinking.
  • My allergies seem to be gone. (Weird!) I don’t breathe heavily, nor have I been congested. This doesn’t seem connected to the air quality, so I don’t have any idea why this is true.

The most illustrative thing, though, is the bike ride I went on. I hadn’t been on a bike in a month, and I decided to go on one about 2 hours after lunch. Up until that point, I’d had breakfast (two eggs, lentils, half a thick sausage patty) and lunch (cereal-bowl-sized bowl of chili with melted cheddar). I knew I’d be hungry by the end, so I brought some carrots with me to eat when I was done.

About halfway through, I got hungry. In the past, this would have meant I would have hit the wall, unable to bike with any appreciable energy. I did not have this problem. I had no problem sustaining 18-20mph, and when I turned back, I was sustaining 20-22mph, despite being hungry. In fact, these are the fastest speeds I have ever sustained on this course… even though I hadn’t been on a bike in a month, and my weight loss wasn’t much as a percentage of my starting weight.

It was very strange to have my energy levels largely decoupled from my hunger. Similarly, my leg strength was the limiting factor, not my cardiovascular system. This hasn’t been the case since I was in high school, so this is A Very Good Thing.

Slow carb week 1 foods

I’ve been asked what I ate during week 1. The answer: pretty boring stuff, mostly. I actually took pictures of most of the food I was eating to send to Laurel, because she was planning on doing the diet, but was away in Israel when I started.

The trick is to cook more than one serving at a time, even for things like cooked vegetables. I don’t like frozen veggies, so I generally buy fresh and make 2-4 servings at a time because it saves time and energy. Hooray for dishwashers.

Things cooked in bulk:

  • Lentils: one package tends to last me about a week. I like them a little softer, so I boil them for close to 30 minutes.
  • Bacon: one package of center cut bacon at a time. I save the bacon rendering for later. Haven’t used it for anything yet.

Breakfast tends to be the same thing every day:

  • Lentils (often fried in some oil; the texture is nicer)
  • 3 scrambled eggs, Gordon Ramsay style
  • 3 strips of bacon (microwave them for 20 seconds, and they taste like they’re right out of the pan!)
  • 1 serving (8oz) of V8 juice. This was my savior at the beginning, as it the thing with the “loudest” flavor, and until I adjusted to the subtleties of the other things I was eating, it was the most interesting thing on a daily basis
  • 2 cups coffee with 1 tablespoon of cream per cup

Lunches and dinners are generally a meat with a legume and vegetables–often 2 or more. Sometimes cooked, sometimes raw. If you need rubs for your meats, I recommend Penzeys market (online or retail).


  • Steak spiced with a rub or seasoning
  • Chicken spiced with a rub
  • Boneless pork chops spiced with a rub
  • Breadless cheeseburger, using aged swiss cheese, and often topped with salsa
  • Tuna (usually wrapped in lettuce like a lettuce+tuna roll)
  • Chicken sausage (grilled or broiled)


  • Black beans or lentils
  • Raw cucumbers and carrots
  • Nathan’s dill pickles


  • Asparagus (sauteed in olive oil with spices, or steamed)
  • Green beans (steam a bunch, and eat them over the next 2-3 days)

Other dishes I make regularly or would make again:

  • Spaghetti squash + slow carb tomato sauce + turkey meatballs, and shredded parmesan on top. Surprisingly good. Make the turkey meatballs with almond meal instead of breadcrumbs.
  • Two slices of Thin n trim chicken from the deli with a slice of aged swiss in between. Brown it up in a pan (no oil needed!), which melts the cheese. Top with salsa, and eat with a knife and fork like a thick slice of ham.
  • Lentils mixed with salsa.

Things I’d like to try:

  • Grilled kabobs with meat and veggies
  • A cooked black bean salad/stir fry thing with meat and veggies and beans
  • A stir fry over lentils or beans.

I eat the same things over and over again, which is what most people do (and certainly what I did before the diet). The only real difference is that I’ve changed the things that I repeat.

Slow carb: week 1

Last Saturday, I sat down in the morning, and planned out my strategy for eating for the weekend. I knew I’d essentially be by myself, so if I was going to be miserable, I wouldn’t be bothering anyone. Ideally I need to lose about 40lbs; I’m at 230lbs now and 190lbs would put me at about 5lbs more than my high school weight.

My initial goals for the weekend experiment were modest:

  • Eating entirely slow carb, where the biggest change was replacing starches with beans and lentils
  • Seeing how I would feel during my first two days: how bad would the transition be?
  • Putting together some slow carb meals to see if they were palatable

Knowing that I’d be doing at least a full month of it at some point, I figured I would just stick with the diet if:

  • The transition was miserable, but I got through it in the two days (why repeat it?)
  • I was satisfied with the meals I’d created

This is how I approached the experiment:

  • I didn’t treat “Tim’s word” as received wisdom, which is fairly unusual in the slow carb world where explanations are often prefaced with “Well, Tim says…” whenever a newbie asks a question.
    • I haven’t read 4 Hour Body (and probably won’t)
    • I skipped the supplements; “toxins being released” and “flushing the body” and other pseudosciency hand-waving is nothing but woo and appeals to magical thinking
    • When in doubt, I looked at the glycemic index of the food before eating
    • I deferred to Gary Taubes more often than Tim Ferriss, as Gary’s work is incredibly well sourced
    • I followed the diet pretty strictly, though I did add a slice of aged swiss cheese to make breadless cheeseburgers and tuna melts
  • I ate any time I felt hungry
  • I did not count calories
  • I deferred to sustainability if I was particularly unhappy with something (adding in cheese, for example)
  • I didn’t exercise any more than usual

To make it easy, I planned out all of my meals for the next two days, and made enough inputs to more than last for that time. (I batch cooked all of my legumes, because cooking them is time consuming and generally sucky.) I also bought a bunch of vegetables to have as snacks, as most of my normal snack foods aren’t allowed.

Yesterday (Saturday) was my cheat day. Now for the results…


  • Down 7lbs (230 -> 223)
  • Two inches off my waist (42″ -> 40″)
  • I spent about $40 on food this week, way less than normal


  • I got a headache the first day, but 800mg ibuprofen cleared it up
  • I felt a little light headed and dizzy on the first day; this may’ve been psychosomatic.
  • Day 2 was substantially better, and I didn’t need to approach my routine in a “defensive” fashion; I just went about my life as normal
  • It was going so well by the end of day 2, I decided to just roll with it indefinitely
  • I was pissing like a racehorse for the first couple of days (most of the weight loss occurred after this period, oddly enough)
  • I could not wait for my cheat day for the first 3 days. This urge disappeared almost completely by day 5, and when I added in aged swiss cheese and made a breadless cheeseburger, the results were even better
  • I stopped getting hungry after 2-3 days. (Not that I don’t get hungry, but if you were to graph hunger over time, it’d look like a slow wave with no sharp spikes. Except on cheat day(!).
  • I did not get tired in the afternoons the way I normally do. This happened around day 3; I didn’t notice until day 6. Even trying to take a nap was useless; I couldn’t stay asleep for more than 15 minutes.
  • My energy was quite high this whole week, even after playing frisbee. Normally I’m depleted afterwards, but not this week.

Cheat day
My cheat day was not nearly as excellent as I thought it imagined it would be during the first few days. By the end, I was anxious to get back to the slow carb eating. My energy was lower; I had severe hunger spikes.

The strangest thing I noticed?

Unhealthy food is very loud. The tastes are overpowering, and there isn’t much subtlety. It’s like a food version of the loudness war: there’s not a lot of dynamic range in processed foods. Even “boring” foods like honey bunches of oats are incredibly sweet. The foods I ended up enjoying the most were fruits, and apple pie. I ate 1/4 of a 12″ pie for dinner last night, and I have no regrets for having done so.

I also thoroughly enjoyed the small Hawaiian pizza I ordered, and my normal grape fizzies (grape juice + seltzer). On my next cheat day, I will probably eat a buttload of fruit: strawberries, blueberries, pineapples, apples, and apple pie. Maybe another pizza. That’s about it.

How does this compare to counting calories?
I dieted the “normal” way back in 2010, for about 3 months; eating balanced meals, maintaining a calorie deficit of at least 500 under maintenance load every day except one cheat day per week. I lost 3lbs during that time. On the slow carb diet, I never felt hungry or deprived–which is more than I can say for my experience in 2010.

There’s an argument to be made that my weight loss is purely do to with releasing water weight by depleting the glycogen stores in my liver–which theoretically happens whenever you restrict caloric intake. That said, I did not lose any water weight when I was counting calories, and most of my weight loss occurred after the first three days.

Open questions
How sustainable is this? I don’t know. I don’t have an end game right now, and I’m just going with it. I’ve spent a little bit of time thinking about “What comes after”, and I think a longer-term diet plan might look less slow carb and a little more paleo. One thing it won’t be is full of white carbs like it has been; I feel so much better eating this way. My breathing isn’t labored, I don’t get tired during the day, and generally have more energy. As a random aside: I wrote a fair bit of code this week, and it’s the best code I’ve ever written, and my thinking has felt clearer, but it could be placebo.

I’ve also been toying with the idea of going ketogenic, just to see what it’s like (but I probably won’t).


Heh, I was out to lunch with my dad today, and a car pulled into the parking lot as we were about to leave. I informed the driver that his license plate was probably the coolest plate I’d ever seen. He was like “Thanks. It’s nice you know what it means.”

Heh. I snapped this pic with my camera phone: (Click for larger image.)