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But converting federal student loans into private debt can lead to the loss of a number of consumer protections, experts warn. Federal loans have more safeguardsThe most important thing to keep in mind when considering refinancing your federal student loans is that, should you move forward, your debt will be transferred to a private company, and become a private student loan. "Private student loans don't have the same benefits as federal student loans," Kantrowitz said. While federal student loan rates reset annually for new loans, they're fixed once disbursed. Federal student loan borrowers don't need to refinance to get a slightly better rate, Kantrowitz pointed out: Most student loan servicers will offer a 0.25% interest rate deduction when you sign up for automatic payments.
Persons: haven't, Mark Kantrowitz, Kantrowitz, Scott Buchanan, Buchanan, Betsy Mayotte, I've, servicers Organizations: Student Loan, Alliance, Finance, cryptocurrency, U.S . Department of Education, Federal Reserve, The, Student Loan Advisors, Federal Locations: U.S, Mayotte
U.S. President Joe Biden speaks about administration plans to forgive federal student loan debt during remarks in the Roosevelt Room at the White House in Washington, U.S., August 24, 2022. Leah Millis | ReutersPresident Joe Biden's new plan to forgive student debt is likely to look much different than his first. His administration has already started that process, and established a "Student Loan Debt Relief Committee" — including Wisdom Cole at the NAACP, Kyra Taylor at the National Consumer Law Center and several student loan borrowers — to hash out the details. Reach of relief could drop to 10% of borrowersNearly 40 million Americans stood to benefit from Biden's original student loan forgiveness plan. Less than 10% of federal student loan borrowers are likely to qualify this round, Kantrowitz said.
Persons: Joe Biden, Leah Millis, Joe Biden's, Wisdom Cole, Kyra Taylor, Mark Kantrowitz, John Roberts, Kantrowitz, Luke Herrine, Herrine Organizations: White, Debt, NAACP, National Consumer Law Center, Finance, Biden, . Nebraska, University of Alabama, CNBC Locations: Washington , U.S, .
Richard Levine | Corbis News | Getty ImagesFor decades, it was nearly impossible for student loan borrowers to walk away from their debt in bankruptcy court. Congress has set a high bar for discharging student loan debt in bankruptcy. Under the new process, student loan borrowers complete a form to assist the government in evaluating their discharge request. "It makes it easier for student loan borrowers to qualify for bankruptcy discharge by clearly setting out the policy," said higher education expert Mark Kantrowitz. Federal student loan borrowers have several ways to reduce their debt burden, including payment plans with $0 monthly payments and economic hardship and unemployment deferments.
Persons: Richard Levine, That's, Biden, , Mark Kantrowitz, Kantrowitz Organizations: United State Bankruptcy Court Southern District of NY, Corbis, U.S . Department of Justice, U.S . Department of Education, American Bar Association, Consumer, Federal
After the Supreme Court rejected President Joe Biden's sweeping forgiveness plan earlier this year, the president announced a series of other relief measures for student loan borrowers. Already, Biden has managed to erase $127 billion in education debt for more than 3.5 million borrowers, largely through Public Service Loan Forgiveness and income-driven repayment plans. The most beneficial so far has been the new Saving on a Valuable Education repayment plan, which aims to get federal student loan borrowers the lowest monthly payment possible — even zero dollars. Yet parents who took out loans on behalf of their children are ineligible for all income-driven repayment plans, including SAVE. "Many of these provisions do not apply to parent borrowers," said Kalman Chany, a financial aid consultant and author of "Paying for College" from The Princeton Review.
Persons: Joe Biden's, Biden, Mark Kantrowitz, Kalman Chany Organizations: Public, Finance, Princeton
As student loan bills restarted in October for tens of millions of Americans, the companies that service those loans made errors that potentially violate federal and state consumer protection laws. "The restart of repayment has caused pure chaos for nearly 3 million borrowers," said higher education expert Mark Kantrowitz, who reviewed the memo at CNBC's request. That plan, which was touted as the "most affordable repayment plan ever," was meant to ease the transition back to payments for borrowers. Federal student loan payments had been on pause for more than three years until they resumed last month. Yet one woman who signed up for the SAVE plan got a bill for $355, the memo says, when she was only supposed to owe $58.
Persons: Mark Kantrowitz Organizations: U.S . Department of Education's, Federal, Aid, Finance, Department, Biden, Valuable Education, SAVE
The U.S. Department of Education will penalize student loan servicer Mohela, or the Missouri Higher Education Loan Authority, for its failure to send timely billing statements to 2.5 million borrowers. As a result of Mohela's errors, more than 800,000 borrowers were delinquent on their loans, the Education Department said in a statement Monday. Higher education expert Mark Kantrowitz said he believed this was one of the first instances of the government withholding payment from a student loan servicer. "It is only fair for the loan servicer to be penalized for mailing late statements." Federal student loan payments were on pause since March 2020, due to the Covid pandemic, but resumed this month.
Persons: servicer Mohela, Rich Cordray, Mark Kantrowitz, servicer, Kantrowitz, Mohela, servicers, Sen, Elizabeth Warren, Braxton Brewington, Brewington, Biden Organizations: U.S . Department of Education, Washington , D.C, U.S . Department, Education, Missouri Higher Education Loan Authority, Education Department, Finance, Federal, Mohela, CNBC Locations: Washington ,, Missouri, forbearance
President Joe Biden delivers remarks on new efforts to cancel student loan debt at the White House on Oct. 4, 2023. watch nowThe Biden administration has evaluated millions of borrowers' loan accounts to see if they should have had their debt cleared. Paul Morigi | Getty ImagesThe Biden administration has tried to reverse the trend of borrowers being excluded from the relief on technicalities. Total and Permanent Disability dischargeThe Biden administration has also forgiven the student debt of more than 500,000 disabled borrowers. The $11.7 billion in aid was delivered under the Total and Permanent Disability discharge.
Persons: Joe Biden, Kevin Dietsch, Mark Kantrowitz, Kantrowitz, Biden, George W, Bush, Paul Morigi Organizations: White, Getty, Public, Consumer Financial, Bureau, Studentaid.gov, U.S . Department of Education, Social Security Administration, The Department of Veterans Affairs
Borrowers do not need to enroll in the on-ramp period, the U.S. Department of Education says. Loans that don't qualify include private student loans and commercially held Federal Family Education Loans. Forgoing payments or making only partial payments during the on-ramp period means you'll likely have a larger bill in a year. For that reason, Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said he hoped borrowers weren't thinking this is just another payment pause. If you can afford to make your student loan payments, most experts recommend that you do so to avoid ending up with a larger bill when the on-ramp period ends.
Persons: they'll, Scott Buchanan, servicers, Buchanan, didn't, Mark Kantrowitz, Joe Biden's, Braxton Brewington, Biden Organizations: U.S . Department of Education, Family, Student Loan, Alliance, CNBC, Department of Education, Supreme
Nearly 40 million Americans stood to benefit from President Joe Biden's original student loan forgiveness plan, which the Supreme Court ultimately blocked over the summer. Though the Biden administration is now trying to cancel education debt another way, experts have warned that borrowers should temper their expectations. Given the legal challenges of passing sweeping debt forgiveness, they say the president's Plan B for relief is likely to be narrower in its reach. More from Personal Finance:Workers rights amid a 'summer of strikes'Couples leverage 'something borrowed' to cut wedding costs'Soft landing, no recession,' Bank of America predictsIndeed, Kantrowitz estimates that less than 10% of federal student loan borrowers will qualify this round. On the campaign trail, Biden promised to cancel at least $10,000 of student debt per person.
Persons: Joe Biden, Education Secretary Miguel Cardona, Joe Biden's, Biden, Mark Kantrowitz, Astra Taylor Organizations: Education Secretary, White, Washington , D.C, Finance, Workers, Bank of America, U.S . Department of Education, Consumer, CNBC Locations: Washington ,
Charlie Javice says JP Morgan is withholding thousands of documents that could help her case. Javice is facing federal charges after JP Morgan claimed she defrauded them out of $175 million. Now, the 31-year-old claims JP Morgan has failed to produce "likely thousands" of documents that could help her defense. In April, the federal prosecutors charged Javice with making false claims and submitting false data to JP Morgan after the bank acquired Frank for $175 million. AdvertisementAdvertisementProsecutors said Javice lied to JP Morgan about the number of people relying on her company.
Persons: Charlie Javice, Morgan, Javice, JP Morgan, , Frank, Slack, Damian Williams, Prosecutors, Mark Kantrowitz, Kantrowitz Organizations: Service, Department of Justice, JP, Federal Student Aid, Justice
"These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans," said Education Department Undersecretary James Kvaal said in a court filing last year. Former President Donald Trump first announced the stay on federal student loan bills and the accrual of interest in March 2020, when the coronavirus pandemic hit the U.S. and crippled the economy. New SAVE payment plan leads to billing errorsTo ease the transition for borrowers, the Biden administration worked quickly to implement a new payment plan option, which it describes as the "most affordable repayment plan ever." Yet many borrowers who've signed up for the Saving on a Valuable Education, or SAVE, plan, complain they've gotten incorrect bills. According to Kantrowitz, student loan servicers seem, in some cases, to be using the 2022 poverty line to calculate borrowers' payments instead of the current 2023 figure.
Persons: Joe Biden's, James Kvaal, Kvaal, Donald Trump, Biden, who've, they've, Mark Kantrowitz, he's, Kantrowitz, servicers, Ella Azoulay, Buchanan Organizations: Creatas, Getty, U.S . Department, Valuable Education, U.S . Department of Education Locations: U.S
Our experts answer readers' student loan questions and write unbiased product reviews (here's how we assess student loans). AdvertisementAdvertisementAs of October 2023, student loans payments are back, but there are options if you can't afford them. As of October 2023, monthly payments are once again due on federal student loans after being paused since March 2020. Fortunately, there are solutions for people who can't afford student loan payments now. Borrowers who don't want to pay the payment on a standard 10-year repayment plan should look into income-driven repayment plans (including Biden's new SAVE repayment plan).
Persons: , Jared Costigan, Costigan, Robert Farrington, Farrington, Danny Cieniewicz, you'll, Kantrowitz, Ben Markley Organizations: Service, White, The College Investor, Hyperion, Public, More College Financial
President Joe Biden announced Wednesday that he approved $9 billion in student loan forgiveness for 125,000 Americans. "Biden has forgiven more student loan debt than any previous president," said higher education expert Mark Kantrowitz. Federal student loan payments resumed Oct. 1 after being on pause for more than three years. Before the Supreme Court verdict, Education Department Undersecretary James Kvaal had warned that if the administration was unable to deliver on Biden's sweeping student loan forgiveness plan, delinquency and default rates could skyrocket. More recently, the Consumer Financial Protection Bureau estimated that 1 in 5 student loan borrowers could struggle with the resumption of payments.
Persons: who've, Joe Biden, Biden, Mark Kantrowitz, Taylor Swift, he'd, Astra Taylor, Taylor, James Kvaal Organizations: Public, Finance, Biden, Department, Education, Federal, Consumer Financial, Bureau
White non-Hispanic families in the U.S. have a median wealth of $188,200, compared with $36,100 for Hispanic families, according to data analyzed by the Brookings Institution. In 2016, about half of Hispanic families weren't able to contribute anything to the costs of their children's higher education, UnidosUS, an advocacy organization, found. Overall, Latinos borrow less than their white peers to pay for college, but "they face challenges repaying student loans when they do borrow," said higher education expert Mark Kantrowitz. Most Latinos at institutions of higher education are the first in their families to go to college. Elizabeth Zamudio vice president of education at UnidosUS
Persons: Ana Paula Cortes, David Ferreira, Inequity, Cortes, Elizabeth Zamudio, Mark Kantrowitz Organizations: Center for, Brookings Institution, UnidosUS, Gallup Locations: Mexico, U.S
Many people made their usual student loan payment in March 2020, before former president Donald Trump first announced the pause on federal student loan bills and interest accrual, he explained. Depending on when their loan servicer received those funds, it may have been considered an extra payment that has now pushed back their due date. You can contact your loan servicer or log in to StudentAid.gov to learn your exact due date, said higher education expert Mark Kantrowitz. The typical federal student loan bill is $350 a month. If you were enrolled in the standard 10-year repayment plan prior to Covid and still are, your monthly payment should not have changed.
Persons: Buchanan, Donald Trump, servicer, Mark Kantrowitz, they're, Kantrowitz, Grace Locations: StudentAid.gov
However, a new report by the Consumer Financial Protection Bureau warns of a number of risks associated with these payment plans, including snowballing charges and aggressive collection practices. Nearly 4 million students use payment plansNearly all colleges offer some sort of tuition payment plan, the CFPB found. Under the plans, tuition and other education expenses are typically spread out into several payments over a semester or academic year. Most college payment plans are interest-free, but there can be enrollment fees and other charges involved, the CFPB found. "If the family misses a payment, some tuition payment plans may be converted into private student loans with unfavorable terms," he said.
Persons: Rohit Chopra, they're, Elaine Rubin, Rubin, Mark Kantrowitz, delinquencies Organizations: Istock, Consumer Financial, Finance, Money, Homeowners Locations: Edvisors
The interest rates on federal student loans are fixed once disbursed, but vary depending on when they're taken out. "Millions of federal student loan borrowers are starting to adjust to the reality of having to figure out how to bake their student loan payments into their budget once again," said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit. The typical monthly student loan bill is around $350. As a result of the policy, the average borrower likely saved around $15,000 in student loan payments during the pause, including around $5,000 in interest charges. Student loan borrowers can check their interest rate at Studentaid.gov or with their servicer.
Persons: they're, Betsy Mayotte, Mark Kantrowitz Organizations: The, Student Loan Advisors, Finance
A new servicer, for someMillions of federal student loan borrowers will have a different servicer when payments resume in October. Impacted borrowers should get emails about the change, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. Borrowers previously with FedLoan should be transferred to MOHELA, or the Missouri Higher Education Loan Authority, he said. Another repayment optionFederal student loan borrowers can now sign up for the Biden administration's new loan repayment plan, and they could be enrolled in it by the time the bills resume. If your student loan servicer can't process your application for the SAVE plan by the time payments resume, it should place you in a temporary forbearance.
Persons: Julia Amaral, they'll, Granite State —, Scott Buchanan, Buchanan, FAFSA, Mark Kantrowitz, Kantrowitz, servicer, Biden, they're, Joe Biden Organizations: Istock, Pennsylvania Higher Education Assistance Agency, Student Loan, Alliance, Finance, Missouri Higher Education Loan Authority, EdFinancial Services, Lakes Higher, Federal Services, Biden, Valuable Education, Public, Education Department Locations: That's, Pennsylvania, Granite State, MOHELA, Missouri, StudentAid.gov
Drazen Zigic | Istock | Getty ImagesNavigating the Public Service Loan Forgiveness Program has been famously difficult. Fortunately, student loan borrowers may find that the process is getting a little easier. watch nowOnce the process is complete, the form should automatically be delivered to the Missouri Higher Education Loan Authority (MOHELA). That's the student loan servicer that currently handles PSLF borrowers (previously FedLoan did so). Try to fill out this form at least once a year, Kantrowitz added, and keep records of your confirmed qualifying payments.
Persons: Drazen Zigic, Mark Kantrowitz, George W, Bush, you've, servicer, Kantrowitz Organizations: Istock, Getty, Public, U.S . Department of Education, Consumer Financial, Bureau, Missouri Higher Education Loan Authority, Education Department Locations: Missouri
The Massachusetts Executive Office of Health and Human Services announced this week that it would be awarding about $140 million in student loan relief to more than 2,900 workers in the state. The aid comes from the MA Repay Program, which the state launched last November to provide financial support to health-care workers, including psychiatrists, psychologists, nurses and social workers. The student loan awards range between $12,500 and $300,000 per borrower. The Massachusetts program is one of the many state efforts to reduce people's education debt burden. "There are many other opportunities for loan forgiveness that often go unknown because there is no global database of all student loan forgiveness options," said higher education expert Mark Kantrowitz.
Persons: Maura Healey, Joe Biden's, Mark Kantrowitz Organizations: of Health, Human Services, Finance, U.S, Supreme Locations: Massachusetts
Mementojpeg | Moment | Getty ImagesLook out for notices about the changeScott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers, said impacted borrowers should get emails about the change. Higher education expert Mark Kantrowitz has been tracking the transfers. Borrowers previously with FedLoan should be transferred to MOHELA, or the Missouri Higher Education Loan Authority, he said. Accounts with Great Lakes Higher Education, Kantrowitz said, should be managed by Nelnet going forward. Also, Kantrowitz said, "whenever there is a change of loan servicer, there can be problems transferring borrower data."
Persons: Scott Buchanan, servicers, Buchanan, Mark Kantrowitz, Kantrowitz, You'll Organizations: Student Loan, Alliance, Missouri Higher Education Loan Authority, EdFinancial Services, Lakes Higher, Federal Services Locations: MOHELA, Missouri, Granite State, StudentAid.gov
The average sticker price for college, or published costs for tuition and fees, has been rising — but most families don't pay full price. Here are three strategies that can help you pay for college now and save for rising costs in the future. Last year, about 30% of parents used college savings plans such as 529 plans to pay for about $7,800 of college costs, on average, according to the Sallie Mae report. For families who remain concerned about making ends meet based on the financial aid award they've received, it is possible to ask the college financial aid office for more aid. If your circumstances are now different, that should be brought to the financial aid office's attention.
Persons: Sallie Mae, Adam Nguyen, Ivy Link, Roth IRAs, Ivy, Nguyen, Rob Franek, Mark Kantrowitz, they've, you've Organizations: College Board, Istock, Getty, Ivy, The Princeton, ACT, College
The Biden administration released new guidance Monday on how colleges can "lawfully achieve a diverse student body" in the wake of the Supreme Court's ruling striking down affirmative action. Experts predicted the Supreme Court's ruling would encourage colleges to put more weight on students' household income and their regional background to diversify their student bodies. Schools may also rely less on standardized test scores or even eliminate SAT and ACT requirements, which have reinforced race gaps, other studies show. Colleges are likely to add questions along these lines to their admissions applications, according to higher education expert Mark Kantrowitz, and more may also end the policy of giving preferential treatment to legacy students, which is increasingly under fire after the ruling on affirmative action. Subscribe to CNBC on YouTube.
Persons: Harris, Education Miguel Cardona, John Roberts, Mark Kantrowitz Organizations: Biden, U.S . Department of Education, Supreme, Constitution, Civil, Harris Administration, Education, Finance, ACT, Education Department, CNBC, YouTube Locations: U.S
Jacob Wackerhausen | Istock | Getty ImagesWith other household debt on the rise, the restart of student loan payments in less than two months may cause financial hardship for many Americans. The pause on federal student loan payments is one of the last Covid pandemic-era relief measures still in effect, but the bills are expected to finally resume in October. If you're unemployed when student loan payments resume, you can request an unemployment deferment with your servicer. The maximum amount of time you can use an unemployment or hardship deferment is usually three years, per type. Kantrowitz provided an example: A $30,000 student loan with a 5% interest rate would increase by $1,500 a year under a forbearance.
Persons: Jacob Wackerhausen, Mark Kantrowitz, Kantrowitz, Betsy Mayotte, Biden Organizations: Istock, Deferments, Peace Corps, The, Student Loan Advisors Locations: Mayotte
Tayfun Coskun | Anadolu Agency | Getty ImagesHow student loan aid works as an employee benefitStudent loan assistance programs come in a number of forms, and the benefit's value can vary widely. So it's worth digging into the terms before you make it a deciding factor in your job hunt, experts say. Total outstanding student loan debt is estimated to be over $1.7 trillion. "With very low unemployment rates, employers will be more willing to offer student loan assistance to attract and retain qualified employees," said higher education expert Mark Kantrowitz. Although, he noted, a higher salary does allow workers to pay off their debt at a faster pace on their own.
Persons: ABT, Tayfun, Mark Kantrowitz Organizations: Anadolu Agency, Getty, Fidelity Locations: View , California, United States
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