A Balancing Act

When a 40-something-year-old woman working as an administrative assistant decided to pursue her dream of law school, she turned to student loans to help foot the bill. Unfortunately things didn’t go as planned and she was unable to pass the bar exam to practice law as a profession—but she still had those hefty student loan bills. She defaulted, and a bad situation was made worse when additional collection fees were tacked on to the balance owed.

Still working in her original administrative capacity, the borrower faithfully made payments to the loan’s guarantor, American Student Assistance^®, for nearly 10 years. As she approached retirement age, she was naturally apprehensive about living on a fixed income and continuing monthly payments. She approached ASA about a settlement and, after some negotiation, the two sides were eventually able to come to an equitable agreement that waived the additional fees.

“In this particular situation, a traditional payment solution like a Federal Direct Consolidation Loan was not an option because payments would have lasted for 25 years, when the borrower would be in her 80s,” points out Tom Reardon, who supervises ASA’s relationships with its external collection agencies. “The resolution has to fit the circumstances, and we do give consideration for the borrower’s overall repayment effort as we examine all payment solutions. The fact that this borrower had made such a good faith attempt to live up to her responsibility made a settlement a more viable option.”

By balancing fairness with compassion, this case was able to be resolved to the mutual benefit of all involved.