Welcome to Student Loan News, a weekly summary of developments and events affecting college debt in the U.S. Join us each Friday for a look at goings-on that could impact your own student loan situation.
CFPB and student loan advice: How the helpful have fallen
Some student loan servicers have been accused of giving bad information — for example, steering borrowers toward forbearance (which pauses repayment but ends up costing you more) instead of income-driven repayment (which cuts your repayment amount and can lead to full student loan forgiveness). Among the groups pushing back and demanding accountability has been the Consumer Financial Protection Bureau (CFPB).
So you can imagine the concern when on Tuesday the CFPB seemed to tweet this exact piece of bad advice, telling borrowers: “If you’re having a hard time paying your student loans, you may qualify for loan forbearance.” To be fair, the tweet included a link to the agency’s page on the various repayment programs, but consumer advocates quoted in a MarketWatch report said the tweet was very misleading.
“It’s negligent or worse for the bureau to be tweeting that,” law professor and founding CFPB member Dalié Jiménez said in the report.
The outcry over the CFPB tweet comes just a little over a month after the bureau’s director, Kathy Kraninger, told Congress that her efforts to police student loan borrowers had been stymied by the Department of Education. Specifically, she said the department had told servicers to ignore the CFPB’s requests for information.
How it affects YOU: If you can’t trust the CFPB, who can you trust? Ever since the bureau’s student loan ombudsman resigned in protest against the Trump administration last summer, questions around its effectiveness have festered.
On the other hand, bad advice can’t hurt you if you already have a good idea what you’re doing. If you’re struggling with student loan repayment, know that you have more options beyond forbearance (which is more typically used as a short-term solution for sudden financial hardships). Check out our guide to repayment options, as well as some tips for getting solid answers to student loan problems.
Student loan system leaves Muslim students behind
With all the hassles and difficulties around student loans, it’s disheartening to find yet another. But if you’re a practicing Muslim, then you’re probably all too aware of this issue: Islam forbids the charging or paying of interest, while student loans depend on such interest charges.
In financial markets, Muslim investors have access to sukuk — a form of bond structured in a way that doesn’t violate Islamic law. But is there an equivalent for Muslim students who need to borrow for their education?
In a report Wednesday, Vice News looked at the conundrum of students such as 22-year-old Ahsana Islam, who is considering a graduate degree but worries about the religious implications of student loans. “Is your career worth a spot in hell? That is what keeps resonating with me,” the report quoted her as saying.
How it affects YOU: While there’s no direct student loan equivalent of sukuk bonds, there are other options available. Income-share agreements (ISAs) could be one possibility, although you would need to check with a religious authority to see if a particular ISA is permissible. You can also seek out alternatives to borrowing, including scholarships and grants geared specifically to Muslim students — try Fastweb and similar financial aid search engines to apply for relevant awards. Likewise, you can reach out to groups such as the Muslim Students Association to track down other sources of aid.
Also in the news …
- College enrollment is down: Spring 2019 enrollment numbers at postsecondary programs fell 1.7% from a year earlier, mainly on declines at four-year for-profit institutions, the National Student Clearinghouse reported Tuesday.
- Some defrauded student loan borrowers are getting their debt wiped away by the courts, finding relief amid criticism that the Department of Education is dragging its feet on the issue, Inside Higher Ed reported Thursday.
- Most of the attorneys general of the U.S. have signed on to a letter asking the Department of Education to automatically forgive student loan debt for disabled veterans, according to CNN and others. In fact, disabled vets already qualify for student loan discharge, but the letter called for making this automatic, rather than requiring an application.
News can be useful, but if you want some deeper advice, take a moment to sign up for the Student Loan Hero weekly digest email and get valuable financial knowledge sent straight to your inbox … for free!
Interested in refinancing student loans?Here are the top 7 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.45% APR (with Auto Pay) to 7.49% APR (with Auto Pay). Variable rate loan rates range from 2.14% APR (with Auto Pay) to 6.79% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of September 6, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 09/06/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Laurel Road.
Laurel Road Disclosures
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the fixed rate will decrease by 0.25%, and will increase back up to the regular fixed interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.19% effective August 10, 2019.
6 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
7 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 08/01/2019. Variable interest rates may increase after consummation.
|2.14% – 6.79%1||Undergrad & Graduate|
|2.14% – 7.84%2||Undergrad & Graduate|
|2.43% – 6.65%3||Undergrad & Graduate|
|2.43% – 7.60%4||Undergrad & Graduate|
|2.14% – 8.01%5||Undergrad & Graduate|
|2.06% – 8.93%6||Undergrad & Graduate|
|2.74% – 7.24%7||Undergrad & Graduate|