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Biden announced up to $20,000 in student loan forgiveness for some federal borrowers.
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However, some student loan companies offer borrowers the option of refinancing to private loans.
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Doing so could prevent borrowers from receiving federal relief, which the CFPB said raises “serious concerns.”
While many may be happy about President Joe Biden’s announcement of student loan forgiveness, borrowers should be extra careful when dealing with their current debt.
In late August, Biden announced debt relief of up to $20,000 for Pell Grant recipients making less than $125,000 a year, and up to $10,000 in relief for federal borrowers under the same income cap. did. It was a long-awaited announcement, given that Mr. Biden has promised bailout in the election, but there is a growing dissatisfaction among millions of federal borrowers regarding eligibility, how to apply, and the timeline for this bailout. It caused confusion.
Many of the student loan servicer sites where borrowers access their balances were down hours after Biden’s announcement. Large service providers such as Nelnet and Navient urged borrowers to stop asking questions over the phone, saying they knew nothing beyond what the Ministry of Education made public.
In addition to confusion Email from the loan companies, following Biden’s announcement to offer borrowers the option to refinance their federal student loans to private loans. Insider has reviewed multiple emails sent to borrowers by Navient, analyzing the differences between federal and private student loans, and offering refinancing tools to borrowers offering lower interest rates.
A Navient spokesperson pointed to the fine print in the email to Insider, explaining that borrowers risk losing federal benefits like Biden’s student loan forgiveness if they refinance. “For years, we have been reaching out to prospective borrowers about the option of refinancing to lower interest rates using NaviRefi, a refinancing tool,” the spokesperson added.
Still, at a critical time for federal student loan borrowers, refinancing could lead to borrowers missing out on extensive debt forgiveness. Consumer Financial Protection Bureau (CFPB) chief adviser Andrea Matthews told Insider: tangible. “
“This raises serious concerns about whether student lenders are fairly representing the trade-offs of refinancing to private loans,” she said.
The Ministry of Education did not respond to an insider’s request for comment.
As the White House has clarified, all federally held student loans are eligible for debt forgiveness. This includes federal undergraduate loans, spousal loans, graduate loans, and PLUS loans for graduate students and parents. Loans that are Federal Family Education Program (FFEL) borrowers and transferred to the Department of Education are also eligible. Federal borrowers who are in need should keep that in mind.
Ahead of Mr. Biden’s announcement, some lenders sparked confusion by telling borrowers that payments are due in September, even though the government has instructed them to postpone messages about resuming payments. The companies themselves have even said it may take some time to fully explain the changes Biden has announced, so borrowers could expect a longer-than-expected timeline for bailouts. It should be noted that there is
Read the original article on Business Insider
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