The Federal Reserve's 25-basis-point rate cut will impact private student loan borrowers more than federal loan borrowers, but those with private student loans could see interest rates on their existing loans drop due to a fixed rate. Betsy Mayotte, the Institute of Student Loan Advisors president and founder, joins Wealth host Brad Smith to talk about private loan borrowers considering refinancing for lower rates.
A strong majority of the time, "borrowers with federal student loans are advised that it's a terrible idea to refinance a federal student loan into a private," Mayotte explains. As for federal loan borrowers, Mayotte advises them to avoid refinancing into private loans because they will lose unique safety nets and protection that private loan students don't have.
The Consumer Financial Protection Bureau (CFPB) noted borrowers are misinformed about losing federal loan protections when refinancing, while private lenders are wrongly denied benefits.
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This post was written by Josh Lynch.