The CFPB warns that refinancing federal student loans into private loans could lead borrowers to forfeit access to valuable federal forgiveness programs.
With the Federal Reserve's recent cuts to interest rates, more federal student loan borrowers are wondering if they should refinance. 'We are already seeing more borrowers tempted to refinance their federal loans,' said Betsy Mayotte, president of The Institute of Student Loan Advisors. Refinancing your federal student loans turns them into a private student loan and transfers the debt from the government to a private company. Borrowers usually refinance in search of a lower interest rate.
published Monday, the CFPB said that private lenders use 'deceptive' practices in their marketing and disclosure materials, misleading student borrowers about a key pitfall of refinancing: Those who do so lose access to federal student loan forgiveness options. Nvidia CEO scrubbed floors to pay for table tennis tournaments in high school—now he's worth $115 billion 'Companies break the law when they mislead student borrowers about their protections or deny borrowers their rightful benefits,' said CFPB Director Rohit Chopra.'Student loan companies should not profit by violating the law.'Some private lenders give the wrong impression'that refinancing federal loans might not result in forfeiting access to federal forgiveness programs, when, in fact, it was a certainty,' the CFPB report says. PSLF allows certain not-for-profit and government employees to have their federal student loans cleared after 10 years of on-time payments. Under TLF, those who teach full-time for five consecutive academic years in a low-income school or educational service agency can be eligible for loan forgiveness of up to $17,500. These options are not available to private student loan borrowers. Borrowers refinancing would also not be eligible for one-off forgiveness efforts like President Joe Biden's Plan B. IDR plans allow federal student borrowers to pay just a share of their discretionary income toward their debt each month. The plans also lead to debt forgiveness after a certain perio
Student Loans Refinancing Federal Loan Forgiveness CFPB Private Loans
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CFPB Warns Against 'Deceptive' Student Loan Refinancing PracticesThe Consumer Financial Protection Bureau (CFPB) is warning student loan borrowers against refinancing federal loans into private loans, citing deceptive practices by some private lenders regarding the loss of federal loan forgiveness options. The CFPB report states that borrowers misled about the consequences of refinancing, potentially forfeiting access to programs like Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF).
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Student Loan Refinancing: CFPB Warns of Deceptive PracticesThe Consumer Financial Protection Bureau (CFPB) has issued a warning about deceptive practices used by private student loan lenders who market refinancing of federal student loans. The CFPB states that these lenders mislead borrowers about the loss of access to federal student loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF), when refinancing.
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Student Loan Refinancing Risks Exposed by CFPBThe Consumer Financial Protection Bureau (CFPB) has issued a report highlighting deceptive practices by some private lenders in the student loan refinancing market. The report warns borrowers that refinancing federal student loans results in the loss of access to federal forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF).
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Federal student loan forgiveness opportunities lost to those who refinance, CFPB warnsWith the Federal Reserve’s recent cuts to interest rates, more federal student loan borrowers are wondering if they should refinance. The CFPB has…
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Student Loan Refinancing: Private Lenders Accused of Deceptive PracticesThe Consumer Financial Protection Bureau (CFPB) accuses private student loan companies of misleading borrowers about the consequences of refinancing federal loans. Refinancing forfeits access to federal forgiveness programs like PSLF and TLF, which are not available to private loan borrowers.
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Private Student Loan Refinancing Practices Under ScrutinyThe Consumer Financial Protection Bureau (CFPB) has flagged deceptive marketing practices by some private lenders regarding federal student loan refinancing. The CFPB warns that borrowers who refinance lose access to federal loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF), as well as one-off forgiveness efforts like President Biden's Plan B.
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