How to Settle a School Debt

Settling any debt, whether it be credit card debt or educational debt, is a challenging process that requires legwork and attention to detail. When settling a debt, you can either attempt to settle the school debt on your own or work with an accredited credit management company. Because the school will lose money in accepting your settlement offer, you want to prepare the best case for your settlement request.

Instructions

1

Consider the best settlement offer. Evaluate how much money you can offer the school to settle the debt. To make your decision, consider any other debt that you owe including credit card debt, home and car loans, and personal debt. Determine what you can reasonably afford to pay as a one-time payment or in installments. Remember, once a settlement is made, failure to pay could impede future changes to the settlement agreement.

2

Provide documentation regarding your financial history. If you collect unemployment or have a significant financial hardship, you may have a stronger case for debt settlement. Not all schools accept debt settlement offers, so provide enough documentation to justify a financial need for your request. Bank statements, pay stubs, unemployment checks, and credit card statements are commonly used to show financial hardship.

3

Develop a debt elimination plan or offer the school a one-time settlement amount. On average, you can eliminate up to 60 percent of the original debt amount if you partner with a debt consolidation program. If you settle directly with the school or reach an agreement with a credit counseling company, the settlement will negatively impact your credit score.

4

Confirm the date(s) and amount(s) that will be paid. If you partner with a debt elimination company, confirm the address where the payment will be sent. Determine each payment amount and the date upon which is must be received.

5

Ask which forms of payment are acceptable. Common forms of payment include money order, major credit cards, and personal check.