CFPB tweets ‘negligent’ advice to student-loan borrowers

 

Source: Jillian Berman, MarketWatch

The Consumer Financial Protection Bureau posted a tweet last week highlighting forbearance, an option borrowers struggling to repay their student loans can use to pause their payments. “If you’re having a hard time paying your student loans, you may qualify for loan forbearance,” the tweet read.

Experts generally advise borrowers consider forbearance only as a short-term last resort. When borrowers use forbearance, their payments pause, but interest continues to accrue on their debt and capitalizes—the unpaid interest on a debt is added to its principal—once the borrower exits forbearance. As a result, borrowers often see their debts balloon. What’s more, borrowers in forbearance are not earning credit towards having their debt discharged under Public Service Loan Forgiveness or other programs.

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