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Rebecca Finch couldn’t imagine a better gift for her 86th birthday.
In early September, she received a notice from Navient that the lender would cancel the private student loan she was a cosigner for.
“We have forgiven the remaining balance of your private student loan in the amount of $31,730.76,” the Aug. 29 letter reads in part.
Navient had determined that Rebecca was eligible for disability discharge. Rebecca received the news from the lender shortly after CNBC wrote about the situation of the Finch family.
Rebecca Finch
Courtesy of Rebecca Finch
But the road to that relief was long, confusing and extremely stressful, said Rebecca’s daughter, Sabrina Finch.
“Discovering the option of forgiveness was very difficult,” said Sabrina, 53.
“Transparency is sorely lacking”
As the cost of higher education is increasingTHE A $130 billion private education lending sector grew rapidly. But private student loans offer few protections for those who experience repayment problems, including those who become disabled, consumer advocates say.
Only about half of private lenders offer student loan borrowers the option to discharge their loans if they become severely disabled and unable to work, according to an analysis by higher education expert Mark Kantrowitz.
In comparison, all federal student loans have this option.
Even when a private student lender grants a disability waiver, the information often isn’t widely disseminated, advocates say.
“Transparency is sorely lacking,” said Carolina Rodriguez, director of the New York-based Education Debt Consumer Assistance Program, or EDCAP.
“It is often difficult for borrowers to even reach a representative who is familiar with the disability discharge option,” Rodriguez said.
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Anna Anderson, an attorney at the National Consumer Law Center, has also witnessed this situation.
“Even for borrowers who claim to have access, it’s still very, very difficult for them to apply for and obtain a discharge,” Anderson said.
On September 9, during a report on the Finch family story, CNBC asked Navient if it had a link to a disability discharge application on its website.
“No,” said Paul Hartwick, vice president of corporate communications at Navientwrote in an email the same day.
He sent a link to a page on the lender’s website which encourages struggling borrowers to learn about their options. At the time of publication, this link no longer worked. Hartwick said that was because another company, Mohela, or the Missouri Higher Education Loan Authority, began servicing private student debt held by Navient in October. This portfolio includes approximately 2.5 million borrowers.
Hartwick directed CNBC to Mohela’s website, which contained equally limited information on loan release possibilities for disabled people.
In response to a request for comment, a spokesperson for Mohela referred CNBC to Navient.
“MOHELA is a service provider for private loans and does not determine the benefits offered by lenders,” the spokesperson wrote in an email. “Program attributes and terms are defined by each lender/loan holder.”
For comparison, the US Department of Education has an easy-to-access disability application for federal student loan borrowers, and detailed information on its website about documentation and eligibility requirements.
About 13% of Americans report having a disability, according to at the Pew Research Center. People with disabilities are much less likely to have jobs than those without them, and unemployment rates are much higher for people with disabilities, according to the U.S. Department of Labor. find.
Disabled mother and daughter with $31,000 in debt
Most private student lenders require a cosigner who is also legally and financially responsible for the debt. This is because student borrowers tend to have thin or no credit history.
Sabrina was originally the primary borrower on the Navient private student loan, and her mother, Rebecca, was the co-signer. Rebecca co-signed the loan in 2007 while Sabrina, then in her 30s, was studying to become a nurse.
Over the next 20 years, both women developed serious health problems.
In 2023, Sabrina received Social Security disability benefits due to her bipolar disorder, she said. Even though she could no longer work, she assumed she was still responsible for the Navient loan. She searched for her relief options but found no information.
Sabrina said she kept describing her situation to several Navient customer service representatives. For weeks, those conversations went nowhere – until one day an agent mentioned the disability option.
The next puzzle was finding the evidence she would need to gather, Sabrina said.
She only learned what the requirements were a few weeks later, when Navient mailed her documents describing the necessary equipment. In the end, Sabrina said, she sent as much information as possible to the lender, including evidence from her doctors.
In May, Navient excused Sabrina from her private student loan.
But this news was bittersweet. Almost immediately, the lender transferred the loan to his then 85-year-old mother.
Sabrina said she told Navient that Rebecca suffered from serious health problems herself, including cardiovascular disease and constant pain from a broken hip. Multiple strokes left Rebecca with speech problems and cognitive problems, Sabrina said. Sabrina spoke with CNBC on her mother’s behalf, given Rebecca’s many medical issues.
Even so, Sabrina said, a Navient customer service agent told her it would be difficult for Rebecca to get a loan discharge.
“Navient said she probably wouldn’t be excused no matter what (documents) were submitted,” Sabrina said.
On October 25, Hartwick declined to comment on this conversation, but said the private student loan was “fully discharged for Rebecca once her disability information was processed.”
But there’s no doubt that it’s incredibly difficult for cosigners to get private student loan forgiveness, consumer advocates say. The Consumer Financial Protection Bureau find in 2015, private student lenders rejected 90% of cosigner release requests.
Advocates say those odds haven’t improved.
“In my experience, releasing cosigners is virtually nonexistent in practice,” Rodriguez told CNBC in August.
Navient’s attempts earlier this year to collect the debt left Rebecca seriously upset, Sabrina said.
The women were very afraid that the lender would sue Rebecca and obtain a lien on her house in Troutville, Virginia. Sabrina said one of Navient’s callers mentioned the possibility to her mother.
A Navient spokesperson told CNBC on Aug. 8 that he couldn’t say whether the lender had discussed the possibility of a lien on Rebecca’s home.
“But I can say that in general, private student loans are only recovered after a period of default,” he said. “And, as with other loans, there is a process, often lengthy, for taking legal action to have it repaid.”
On July 26, Sabrina emailed Navient as much information as she could about her mother’s physical condition, sending copies to CNBC.
About two weeks later CNBC published an article about the family’s experienceNavient informed Rebecca that the lender would release her from her debt.
It was a huge relief for her and her mother, Sabrina said.
But she remains angry because it was difficult for her to even learn about the disability discharge option.
“There must be a large number of disabled people struggling to stay afloat on these loans,” Sabrina said. “And I assure you that lenders do not offer loan forgiveness options to those who ask them for help.”
