Settling a Student Loan

If you settle on a student loan that had originally defaulted, make sure you get the offer agreement in writing.

QUESTION: Mike had a student loan that defaulted. The original amount was $10,000 and he’s got it down to $1,000. The collectors said they would settle for $750. Should he pull that money out of savings and pay the debt off? Yes, says Dave ... with some stipulations.

ANSWER: Yes, you should take that offer. Make sure to get it in writing. Once you have it in writing, then staple a copy of your check or cashier’s check to the copy of that offer letter, and keep both of them for the rest of your life.