Forgoing forgiveness
Even though President Joe Biden’s ambitious plans to forgive student loans for tens of millions Americans have been severely hampered by litigation, there are still several ways for borrowers to get relief from federal student loans.
Public Service Loan Forgiveness is for full-time employees of U.S. government institutions including federal, state, local and tribal governments. Non-profit organizations’ staff and military personnel are also eligible for forgiveness. But employees of for-profit government-contracted companies, partisan political organizations, and labor unions do not qualify.
The Department of Education has a handy search tool that shows whether you’re eligible for this kind of debt relief.
There’s also the Teacher Loan Forgiveness Program, which requires you to teach for five years at a low-income school or educational service agency.
Another relief mechanism that would be voided in the event of refinancing is Income-Driven Repayment (IDR), which pegs your debt repayment to your income, so that between 5% and 10% of your income goes toward your debt balance for 20 to 25 years, beyond which time any outstanding balance is forgiven.
IDR is among the relief measures currently held up in Federal Court.
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Read MoreHow to decide whether to refinance
Before committing to a refinancing of your loan, take a look through the Department of Education’s website and have a conversation with a financial adviser who can help you compare refinancing and relief options, and help determine where the greater potential savings lies.
Look at a wide variety of refinancing options, as some lenders may offer better deals than others.
The CFPB report highlights that private lenders’ marketing materials may not fully disclose the full extent of the refinancing terms. So examine the contract closely to make sure you know what you’re signing up for, and even run it by your financial adviser.
U.S. News and World Report made a list of the best student loan refinancing options in the country, detailing their fixed and variable rates, which you can check out here.
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