How To Get Out Of Student Loan Default
How To Get Out Of Student Loan Default
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Can You Settle Student Loan Debt For Less Than You Owe?
Key Points
- Settling federal student loans for less than you owe is rare and usually happens only after default.
- Private student loan settlements are more common but can severely damage your credit and carry tax consequences.
- Most borrowers are better off exploring income-driven repayment or forgiveness programs before attempting settlement.
Settling a student loan means negotiating with your lender or servicer to accept a lump-sum payment that is less than the current balance owed. In other words, you pay part of your debt in exchange for the lender agreeing to forgive the rest.
This can sound appealing, especially if your balance has ballooned from years of interest or collection fees. But settlements are extremely limited (especially for federal loans) and often come with long-term costs.
Here’s what to know about settling your student loans.
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Can You Settle Federal Loans For Less Than You Owe?
While you can technically settle your federal loans — whether they are FFEL or Direct Loans that are in default — it’s highly unlikely that you will be able to. Why? Federal loans are money owed to the U.S. Taxpayer. As such, Congress sets the rules by which you can settle, and there are just too many ways the US government can collect from you once you’re in default.
They can garnish your wages, take your tax refunds, garnish your Social Security, or go after other federal benefits. They don’t need court approval to begin wage garnishment, either, like private loan owners do.
In fact, the Department of Education issues no public guidelines on settling federal loans because they do not want to encourage anyone to do so.
However, the Education Department does issue internal guidelines to their contracted collection agencies and guaranty agencies. (Guaranty agencies are organizations that guarantee FFELP loans against default and often service them as well, like AES.)
This Department of Education guideline memo to guaranty agencies from 1993 states that guaranty agencies are permitted to “compromise” or settle the loan under certain conditions and up to certain amounts.
Those allowable settlement or compromise offers are:
- Waiver of debt collection fees
- 50% waiver of interest and fees
- 90% of principal and interest
But say you do decide to go this route, you have to be ready with a good offer to negotiate with the collection or guaranty agency. And realize, this is all based on your current loan balance – notice how none of the offers really lower what you actually borrowed.
Can You Settle Private Student Loans?
Private student loans, however, are a different story. These loans operate more like credit card debt – if you stop paying, the lender or a collection agency may be willing to negotiate.
When settlement might be possible:
- The loan is in default or has been charged off.
- The lender believes collecting the full amount is unlikely.
- You can make a lump-sum payment (often 40–70% of the total balance).
Example:
A borrower with a $20,000 private loan in collections might offer $10,000 in cash to close the account. The lender agrees, marks the debt as “settled,” and stops further collection.
While this can end the debt, it comes with downsides:
- Credit damage: A settled account remains on your credit report for up to seven years.
- Tax liability: The forgiven balance is typically considered taxable income.
- Lump-sum payment requirement: You’ll need to pay quickly, often within 90 days.
Strategic Default To Get A Settlement
Some people consider defaulting strategically for the purpose of settling their loan. While this may be a strategy towards success if everything goes right, you could easily wreck your credit, open yourself up for litigation from your lender, and not even get want you want out of your settlement deal.
You could accrue fees and interest along the way. And you may still be stuck with the loan in the end. This is definitely more of an option for private loans, but certainly not one we recommend.
How To Start Negotiating A Student Loan Settlement
We don’t recommend most people try to negotiate this themselves – this is where you want to get a student loan lawyer involved. But if you’re set on it, here’s some basic steps to get started:
- Confirm loan type. Use your Federal Student Aid dashboard (studentaid.gov) to verify whether your loans are federal or private.
- Contact your servicer or collection agency. Ask if they’re authorized to negotiate and what settlement terms might apply.
- Request all offers in writing. Never rely on a verbal agreement – ensure terms include payment amount, due date, and language that your balance will be satisfied.
- Consult a student loan attorney or certified financial counselor. Settlements can have major legal and tax consequences.
- Get proof of payment and closure. Keep records indefinitely in case the debt resurfaces.
Alternatives (That Are Likely Better)
For most borrowers, settlement should be a last resort. Other options can provide long-term relief without wrecking your credit.
Federal loans:
- Income-Driven Repayment (IDR): Caps payments at 10–20% of discretionary income and can lead to forgiveness after 20–25 years.
Private loans:
- Ask about temporary forbearance, hardship programs, or refinancing options before considering settlement.
These programs often reduce or pause payments without requiring default, helping protect your credit and long-term financial stability.
What To Watch Out For
Borrowers in default are some of the most heavily preyed on for student loan scams. Make sure you are watching out for these key things:
- Debt settlement companies: Many advertise that they can “erase your student loans for pennies.” Most cannot. Avoid anyone asking for upfront fees or guarantees.
- Tax surprises: The IRS generally treats forgiven debt as taxable income, unless you qualify for an exclusion such as insolvency. Run the tax bomb calculator to understand the impact.
- Default risks: Once you stop paying to pursue settlement, your credit score can plummet, and collection actions may escalate.
Always verify offers through your loan servicer or directly with the Department of Education.
FAQ
Can you settle federal student loans without defaulting?
No. Federal settlements are only considered after default, once the loan enters collections.
Is forgiven or settled debt taxable?
Yes. The canceled portion of a private loan is generally taxable as income, though insolvency exceptions may apply. Federal settlements may or may not trigger taxes depending on terms.
Can I negotiate a payment plan instead of a lump sum?
Occasionally, collection agencies may accept short-term installment settlements, but lump-sum offers are preferred.
How does settlement affect my credit?
The loan will be reported as “settled for less than the full balance,” which can lower your credit score for up to seven years.
Bottom Line
Settling student loan debt for less than you owe is possible, but it’s rare, risky, and often unnecessary. For most borrowers (especially those with federal loans) income-driven repayment, forgiveness programs, or rehabilitation offer better paths to long-term relief.
If you’re in default or overwhelmed by private loans, speak with your loan servicer or a student loan attorney before negotiating any settlement.
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Editor: Clint Proctor
Reviewed by: Chris Muller
The post Can You Settle Student Loan Debt For Less Than You Owe? appeared first on The College Investor.
Shadow AI Data Breaches Cost $670K More: Nexos.ai
According to the latest IBM report, organizations experiencing data breaches that involve shadow AI — unauthorized AI tools used by employees — face additional costs averaging $670,000 per incident, compared to standard breaches.
These findings align with a recent Cybernews survey, which shows 59% of employees use unapproved AI tools at work. Additionally, 75% of these employees share sensitive company and customer data with these unauthorized applications, creating a perfect storm of financial risk.
“Shadow AI isn’t just a security problem but a hidden financial liability waiting to materialize,” said Emanuelis Norbutas, chief technology officer at nexos.ai. “As many as 93% of executives use unapproved AI tools, making leadership, not rank-and-file employees, the biggest source of risk. What makes this situation particularly insidious is that the people responsible for preventing security risks are often the ones introducing them.
“Companies keep approaching this problem as a compliance issue when it’s actually a capability gap. When your approved tools create more friction than value, employees will inevitably choose productivity over policy, and your security framework becomes irrelevant. The real question isn’t whether employees will use AI — it’s whether they’ll use yours.”
Why shadow AI breaches become more expensive
The financial impact of shadow AI extends far beyond traditional security threats. IBM research reveals that 97% of organizations experiencing AI-related incidents lacked proper access controls. Organizations effectively using AI in their security operations identified and contained breaches 80 days faster than those not using these technologies, demonstrating that strategic AI adoption delivers measurable security benefits while uncontrolled shadow AI creates costly blind spots.
When shadow AI is involved, the damage spreads further and deeper than in typical breaches: 65% of these incidents result in the exposure of personally identifiable information, and 40% compromise intellectual property, often spreading across multiple environments and complicating forensic investigations.
“Shadow AI is not a tool problem, it’s a governance crisis,” Norbutas added. “We are talking about autonomous agents operating inside enterprise walls with no oversight. These systems plan and execute actions independently, but current AI is far from ready for direct deployment in such settings. Even consumer AI chat tools like ChatGPT or Gemini, which are commonplace in workplaces, can lead to leaks of sensitive data when employees paste proprietary information into them. Every action these systems take creates a new, unmonitored attack surface.”
Shadow AI incidents also lead to increased regulatory scrutiny, with fines more frequently targeting organizations lacking proper AI governance. Organizations with high levels of shadow AI faced average breach costs of $4.74 million, while those effectively integrating AI into their security operations saw costs decrease to $3.62 million. Organizations heavily utilizing security AI saved $1.9 million compared to those not using these technologies.
“The contrast couldn’t be clearer,” Norbutas added. “Strategic AI adoption reduces breach costs, while uncontrolled shadow AI drives them up. Companies that succeed don’t just block unsanctioned tools. They provide secure alternatives that employees actually prefer to use. You can’t policy your way out of this problem. You have to out-compete it with better options.”
Practical steps to eliminate the shadow AI tax
According to Norbutas, organizations can mitigate this risk and turn a liability into a competitive advantage by adopting a strategic, user-centric approach to AI governance.
Frame the risk in financial terms, not just security policy. Start by building a clear business case that moves beyond abstract security rules. When employees use unapproved AI, they risk exposing sensitive company data and valuable intellectual property. This reframes the conversation from a compliance issue to a direct threat to the bottom line.
Hold managers to account. Shadow AI thrives when managers quietly approve of unapproved tools, directly undermining top-down security policies. Leadership must close this gap by making it clear that productivity goals cannot come at the cost of security.
Offer a secure alternative that beats the rogue tool in effectiveness and applicability. Blocking unapproved tools doesn’t work. The only winning strategy is to offer a secure “sandbox” with powerful AI that employees prefer to use, turning a security risk into a managed asset.
Make governance a living system with clear ROI metrics. Move beyond static policies that quickly become irrelevant. A modern AI governance framework must be a “living” system, one that evolves with employee feedback and is tied directly to business value and return on investment.
Why Hope Is a Leadership Strategy
Overview
On this episode of the Duct Tape Marketing Podcast, John Jantsch interviews Dr. Julia Garcia, psychologist, speaker, and author of “The Five Habits of Hope.” Julia shares how hope isn’t just a feeling—it’s a set of practical habits that anyone can build to move from survival to thriving. Drawing on research, client stories, and her own journey overcoming adversity, Dr. Garcia explains how reframing adversity, processing emotions, and building real community can turn even the darkest moments into sources of strength and innovation.
About the Guest
Dr. Julia Garcia is a psychologist, speaker, and author dedicated to making hope a practical tool for transformation. Through her Five Habits of Hope framework, she helps organizations, leaders, and individuals build resilience, process adversity, and foster cultures of belonging and growth.
Actionable Insights
- Hope is not just a mindset or emotion—it’s a set of learnable, repeatable habits that can be built by anyone, even in adversity.
- The Five Habits of Hope blend emotional processing, reframing adversity, building community, taking emotional risks, learning to release, and repurposing pain into purpose.
- Reframing adversity starts with replacing negative language and identities (“I’m worthless”) with healthier narratives (“I’m worth more” or “I’m also courageous”).
- Emotional risk isn’t about adrenaline—it’s about opening up, expressing emotion (even joy), and connecting with others despite the risk of rejection.
- Community and belonging are essential—loneliness can strike anyone, but habits of hope help build genuine connection and support.
- Release is essential: Letting go of what you’re holding—stress, pain, pressure—creates space for growth and new stories.
- Hope is built by going inward, not through outward achievement; it’s about aligning your inner narrative with your real values.
- In business and teams, hope habits boost collaboration, creativity, retention, and create environments where people contribute—not just consume—culture.
- Measuring hope is less about “getting better every day” and more about having a repeatable process for returning to hope when you feel lost.
Great Moments (with Timestamps)
- 01:02 – Hope as a Habit, Not Just a Feeling
Why hope is a learnable process, not just a fleeting emotion. - 02:47 – The Dark Side of Hopelessness
Julia’s personal journey and the universal struggle with despair. - 04:22 – The Five Habits of Hope (Overview)
From owning your story to repurposing pain into purpose. - 06:13 – Reframing Adversity with Language
How changing your self-talk can reshape your identity and outcomes. - 07:35 – Emotional Risk and Real Connection
Why being vulnerable is the key to breaking loneliness and building community. - 10:24 – Measuring Progress with Hope
Why inward alignment is more important than outward achievement. - 12:35 – Hope in Business and Teams
How leaders can build cultures of hope, collaboration, and innovation. - 14:47 – The Power of Release (Exercise)
A hands-on exercise to let go of stress and create space for hope. - 18:05 – Realistic vs. Unrealistic Hope
Why hope starts with honesty, not false positivity. - 19:09 – Hope as a Practical Strategy
How habits of hope drive innovation, leadership, and culture change.
Insights
“Hope is a habit, not just a feeling—there’s always a way back to it, no matter how lost you feel.”
“You can’t have hope without honesty. The first step is to face your feelings and own your story.”
“Release isn’t weakness—it’s how we make space for growth, change, and new beginnings.”
“In business, hope drives creativity, collaboration, and real contribution—not just survival.”
Dogecoin Price In A Do or Die Situation, Will DOGE Bulls Charge Back? – Investorempires.com
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Remax’s mortgage biz shows $1.3M non-GAAP 3Q25 loss
In the time since Vic Lombardo became president of mortgage services at Remax Holdings over two months ago, the company has “taken a new view of the mortgage opportunity,” Eric Carlson, CEO, said in the third quarter earnings call.
Among the units under Lombardo’s purview are Motto Mortgage, which offers mortgage broker franchises, and
“In
He promised to share more details on Remax’s mortgage strategy in February.
“There’s opportunities there to do a little bit about what we’ve done in real estate, quite honestly, and change the model to be a little bit less fixed and more variable,” Carlson said later in the call. “We’ve got to be in a position to help our network and our LOs really find business and capitalize on business, which not only helps the profitability of their business, but the value of owning a Motto franchise and our value proposition, quite frankly.”
Adjusted EBITDA for the mortgage segment, a non-GAAP measurement, was a loss of $1.3 million, compared with a $1.52 million loss in the second quarter and
The total number of open Motto offices fell to 210 from 219 at the end of the second quarter.
Revenue at the parent company (minus marketing fees) fell by 5.5%, to $165.2 million.
Remax’s year-over-year change in organic revenue included lower mortgage segment revenue and franchise sales.
Total mortgage revenue of $3.39 million included continuing franchise fees of $2.47 million and franchise sales and other revenue of $914,000. This compared with $3.74 million for the third quarter of 2024, with $2.67 million of continuing franchise fees and $1.07 million from franchise sales and other revenue.
For the quarter, Remax Holdings had net income attributable to the company of just under $4 million, compared with $4.7 million in the second quarter and approximately $1 million for the third quarter of 2024.
Deloitte: Banks need overarching vision for AI adoption
Banks in the United States are continuing their investment in AI, which will have both short- and long-term effects on their efficiency ratios. Publicly held banks are expected to experience a slight increase in their average efficiency ratio — from 56.3% in 2025 to 56.9% in 2026 and 57.1% in 2027, according to Deloitte’s 2026 […]
Airline Shopping Portals: Earn Up to 18,500 Bonus Miles with Southwest, United, Delta, American & Alaska
Earn Bonus Miles with Airline Shopping Portals
Alaska, Southwest, United, American and Delta all have launched shopping portal bonuses. You can earn additional miles during the promotion period, up to a total of 18,500 for all five offers. Check out the details of each portal bonus below.
Alaska Atmos Rewards Shopping
- Earn Up to 1,500 Bonus Miles:
- 300 miles for qualifying purchases of at least $100, OR
- 750 miles for qualifying purchases of at least $350, OR
- 1,500 miles for qualifying purchases of $650 or more
- Offer valid through 11/19/2025 at 11:59:59 pm ET.
- LINK TO OFFER
Southwest Rapid Rewards Shopping
- Earn Up to 4,000 Bonus Miles:
- 400 miles for qualifying purchases of at least $100, OR
- 1,600 miles for qualifying purchases of at least $400, OR
- 4,000 miles for qualifying purchases of $900 or more
- Offer valid through 11/24/2025 at 11:59:59 pm ET.
- LINK TO OFFER
United MileagePlus Shopping
- Earn Up to 5,000 Bonus Miles:
- 500 miles for qualifying purchases of at least $150, OR
- 2,000 miles for qualifying purchases of at least $500, OR
- 5,00 miles for qualifying purchases of $1,100 or more
- Offer valid through 11/22/2025 at 11:59:59 pm ET.
- LINK TO OFFER
Delta SkyMiles Shopping
- Earn Up to 4,000 Bonus Miles:
- 400 miles for qualifying purchases of at least $200, OR
- 1,000 miles for qualifying purchases of at least $500, OR
- 4,000 miles for qualifying purchases of $1,500 or more
- Offer valid through 11/21/2025 at 11:59:59 pm ET.
- LINK TO OFFER
American Airlines AAdvantage eShopping
- Earn Up to 4,000 Bonus Miles:
- 500 miles for qualifying purchases of at least $200, OR
- 1,500 miles for qualifying purchases of at least $700, OR
- 4,000 miles for qualifying purchases of $1,600 or more
- Offer valid through 11/17/2025 at 11:59:59 pm ET.
- LINK TO OFFER
Guru’s Wrap-up
Airline shopping portals are useful because they let you earn frequent flyer miles or points on everyday purchases without flying and without spending anything extra.
When you start your shopping trip through a portal, the airline tracks your purchase with the retailer and rewards you with bonus miles as outlined above. For portals that have in-store offers, you just have to use a linked card.
These miles can stack with rewards from your credit card, helping you accumulate points faster for future flights, upgrades, or travel perks. However, it’s always a good idea to check cash back rate from other portals as well.
Cattle faces a growing threat from a protected vulture spreading north amid climate change
Allan Bryant scans the sky as he watches over a minutes-old calf huddled under a tree line with its mother. After a few failed tries, the calf stands on wobbly legs for the first time, looking to nurse.
Above, a pair of birds circle in the distance. Bryant, hoping they’re not black vultures, is relieved to see they’re only turkey vultures — red-headed and not aggressive.
“Honestly, the black vulture is one of the ugliest things I’ve ever seen,” he said. “They’re easy to hate.”
Black vultures, scavengers that sometimes attack and kill sick or newborn animals, didn’t used to be a problem here. But now Bryant frequently sees the birds following a birth. He hasn’t lost a calf in several years, but they’ve killed his animals before. So now he takes measures to stop them.
In some of his fields, he erects a scarecrow of sorts — a dead black vulture — aimed at scaring off the birds. It’s a requirement of his depredation permit through the Kentucky Farm Bureau, which allows him to shoot a few birds a year. The dead bird keeps the live birds away for about a week, but they eventually come back, he said.
It’s a problem that may grow worse for cattle farmers as the scavenging birds’ range expands northward, in part due to climate change. Lobbying groups have been pushing for legislation that would allow landowners to kill more of these birds, which are protected but not endangered. But experts say more research is needed to better understand how the birds impact livestock and how their removal could affect ecosystems.
Warmer winters and changing habitats expanding birds’ range
Black vultures used to mainly live in the southeastern U.S. and farther south in Latin and South America, but over the past century they’ve started to rapidly stretch northward and also west into the desert Southwest, said Andrew Farnsworth, a visiting scientist at Cornell Lab of Ornithology who studies bird migration.
Warmer winters on average, fueled by climate change, are making it easier for the birds to stay in places that used to be too cold for them. What’s more, the human footprint in suburban and rural areas is enriching their habitat: development means cars, and cars mean roadkill. Cattle farms can also offer a buffet of vulnerable animals for vultures that learn the seasonal calving schedule.
“If there’s one thing we’ve learned from a lot of different studies of birds, it’s that they are very good at taking advantage of food resources and remembering where those things are,” Farnsworth said.
Although black vultures are protected by the Migratory Bird Treaty Act, they aren’t really a migratory species, he said. Instead, they breed, and some disperse to new areas and settle there.
How farmers have been dealing with it
After losing a calf to a black vulture a decade ago, Tom Karr, who raises cattle near Pomeroy, Ohio, tried to move his fall calving season later in the year in hopes the vultures would be gone by then. But that didn’t help — the birds stay all year, he said.
Until newborn calves are a few days old, “we try to keep them up closer to the barns,” said Joanie Grimes, the owner of a 350-head calf-cow operation in Hillsboro, Ohio. She said they’ve been dealing with the birds for 15 years, but keeping them out of remote fields has helped improve matters.
Annette Ericksen has noticed the black vultures for several years on her property, Twin Maples Farm in Milton, West Virginia, but they haven’t yet lost any animals to them. When they expect calves and lambs, they move the livestock into a barn, and they also use dogs — Great Pyrenees — trained to patrol the fields and the barnyard for raptors that might hurt the animals.
The size of their operation makes it easier to account for every animal, but “any loss would be severely detrimental to our small business,” she wrote in an email.
Local cattlemen’s associations and state farm bureaus often work together to help producers get depredation permits, which allow them to shoot a few birds each year, as long as they keep track of it on paper.
“The difficulty with that is, if the birds show up, by the time you can get your permit, get all that taken care of, the damage is done,” said Brian Shuter, executive vice president of the Indiana Beef Cattle Association. Farmers said calves can be worth hundreds of dollars or upward of $1,000 or $2,000, depending on the breed.
A new bill would let farmers shoot the protected birds with less paperwork
In March, lawmakers in Congress introduced a bill that would let farmers capture or kill any black vulture “in order to prevent death, injury, or destruction to livestock.” Many farmers and others in the cattle industry have supported the move, and the National Cattlemen’s Beef Association in July commended the House Natural Resources Committee for advancing the bill.
Farnsworth, of the Cornell lab, said it’s not necessarily a good thing to make it easier to kill black vultures, which he said fill “a super important role” in cleaning up “dead stuff.”
Simply killing the birds, Farnsworth said, may make room for more bothersome predators or scavengers. He said though black vultures can leave behind gory damage, current research doesn’t show that they account for an outsize proportion of livestock deaths.
But many farmers are unwilling to do nothing.
“They just basically eat them alive,” Karr said. “It is so disgusting.”