Financial Fairness

Financial Fairness

Hidden costs, conflicts of interest, small-print “gotchas,” predatory and discriminatory practices—they all make it hard for consumers to protect the money they earn and to make informed spending decisions. Consumer Reports fights these problems by pushing for a fair and just marketplace.

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Specifically, we are working towards a marketplace in which:
1

Credit and lending decisions about individuals are based on fair and reasonable factors, never on discrimination.

2

Loan terms are fair and affordable, and provide for a reasonable path to repayment.

3

Digital financial tools enhance financial well-being and do not create costly risks or undermine our privacy.

4

Consumers can choose products and services based on their true cost and quality, and are not charged prices distorted by unfair or hidden algorithmic schemes.

 

Student Debt: FAQ

Consumer Reports has been collecting questions about student loan debt. Here are answers to some of the most common ones we’ve received. If you have a question we haven’t addressed, visit the full FAQ page.

Maybe. The federal CARES Act, passed in March 2020, contains provisions to help some student borrowers who are struggling to pay back student loans because of COVID-19. The President issued an Executive Order in August that extended CARES Act relief, but this relief only applies only to some loans. It affects only those borrowers with federally-held loans—that is, loans owned by the US Education Department (ED).

If you aren’t sure whether your loans are federally held, there are several ways to figure it out. First, try looking up your loan in the Department of Ed’s database by logging into studentaid.gov. If you see loans labeled "direct" then they're definitely covered by the CARES Act.

If you see loans labeled "FFEL" (shorthand for a Federal Family Education Loan) then you’ll have to dig a little further because, while those loans were originated by private lenders (and ensured by the federal government), the Department of Ed bought some FFEL loans in 2008. So you may have to contact your loan servicer—the company listed on your monthly bill—to find out if you are covered.

If your loans are federally held, payments between March 13 and December 31, 2020, should be suspended automatically, and interest should not accrue during that period. Your loan servicer is supposed to contact you before the pause on payments ends to alert you when your next payment will be due.

Keep in mind, however, that this temporary pause of payments and interest accrual—known in the financial world as “forbearance”—does not eliminate any of your debt, which will likely have to be paid in full later.

Also note that, while the payment pause is designed to kick in automatically, you should check to make sure that your account is not being debited electronically and that interest is not accruing.

If you have private loans, there is help available, but it is not automatic - you need to seek it out and ask for it. Many private lenders have forbearance options that allow borrowers to postpone monthly payments, some for up to 90 days. Some private lenders also are waiving late fees and will not file negative reports to consumer reporting agencies. To find out what is available to you, contact your student loan servicer.

Maybe. Student loans not covered by the CARES Act include FFELs held by banks and other financial institutions, Perkins loans (which are issued by colleges), and private loans.

your educational debt falls into one of these categories, your options will vary by lender—some are being more flexible than others. So your first step should be contacting your lender or servicer to ask about your options.

Depending on your situation, you may qualify for what’s known as an economic hardship or unemployment deferral, which would enable you to pause payments without accruing interest. If your lender gives you that option, note that a deferral is better than forbearance, which temporarily suspends payments but typically does not stop interest from accruing.

You may have rights based on where you live. The District of Columbia plus 10 states—California, Colorado, Connecticut, Illinois, Massachusetts, New Jersey, New York, Vermont, Virginia, and Washington—recently negotiated agreements with major loan servicers to accommodate borrowers with non-federally held FFEL and private loans by providing a 90-day forbearance. Some of the servicers included in many of these states’ programs are:

  • Aspire Resources, Inc.
  • College Ave Student Loan Servicing, LLC
  • Earnest Operations
  • Edfinancial
  • Figure Lending
  • Kentucky Higher Education Student Loan Corporation
  • Lendkey Technologies
  • MOHELA
  • Navient
  • nelnet
  • Rhode Island Student Loan Authority
  • Scratch Services
  • SoFi Lending Group
  • TFC Credit Corporation
  • Tuition Options
  • United Guaranty Services
  • Upstart Network, Inc.
  • Utah Higher Education Assistance Authority
  • Vermont Student Assistance Corporation

You must opt in to help by contacting your servicer. Check the website for links to coronavirus assistance, or call and ask.

Before you accept any help, make sure you understand what relief you will get, how long it will last, and what your options are when that relief ends.

Finally, borrowers with a mix of federal loans may be able to take advantage of federal forbearance by consolidating their loans under the federal direct loan program. There are downsides to this as well, and borrowers should consider the pros and cons carefully. You can find out more here: https://studentaid.gov/manage-loans/consolidation

If you can start paying...

Forbearance for federal student loans ends Dec. 31, 2020. Your servicer will contact you ahead of time to remind you that you will need to start making payments again. Borrowers should make sure their contact information is up to date with their servicer.

If you can pay some but not full payment...

It depends on your current situation.

If you’re currently on an income-driven-repayment plan (IDR) - a repayment plan that sets your monthly student loan payment at an amount that is intended to be affordable based on your income and family size - and you’ve lost income, you should apply to have your payment recalculated. To do so, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application by clicking on the button next to “Recalculate my monthly payment.” After the administrative forbearance ends on Dec. 31, 2020, your monthly payments will resume at the new amount.

If your income dropped, you have federal student loans, and you would like to have your payments calculated based on your income, you can apply to enroll in an income-driven-repayment plan. Visit StudentAid.gov/idr, click on “Apply Now,” to start your application.

If you can’t pay anything...

You need to seek help. If you have a loan that is owned or insured by the federal government, and are in an income-driven repayment plan, you can have your payment recalculated, potentially as low as zero. To do so, visit StudentAid.gov/idr, click on “Apply Now,” and then start the application by clicking on the button next to “Recalculate my monthly payment.” If you are not currently in an income-driven-repayment plan, apply for one by visiting StudentAid.gov/idr, and clicking “Apply Now.”

If you have loans covered by the CARES Act and are enrolled in an income-driven repayment (IDR) plan or are making payments toward Public Service Loan Forgiveness (PSLF), you should get credit during the forbearance period as if you were making payments. In other words, your progress toward completing an IDR plan or PSLF should not be delayed as a result of the forbearance.

Be sure to check your account to make sure you are getting credit. You can find out how many qualifying payments you’ve made by logging in to your account at FedLoan Servicing and viewing your loan details or by looking on your most recent billing statement.

Yes. If you would like to keep making payments on a CARES Act-covered loan during the forbearance period, you are free to do so. And because interest should not be accruing, payments made during the forbearance period will go entirely to reducing the principal balance.

But remember, you do not need to make payments in order to sustain your progress toward the required number of payments on an income-driven repayment plan or for Public Service Loan Forgiveness: The CARES Act will give covered borrowers credit toward progress as if they were making payments.

Latest news on financial fairness

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Victory Case Study
COVID-19 Mortgage Relief: A CR Success Story
Case Study

The issue

The federal CARES Act, passed in the early days of the COVID crisis, guaranteed that anyone struggling to pay bills could delay their mortgage payments for up to a year without any extra fees or charges. But when consumers contacted their mortgage companies, many were told they’d have to make up any skipped payments, in full, as soon as the "forbearance" period was up.  

What CR did

Our advocates called on consumers to tell their stories; and wrote to top mortgage servicers, imploring them to give all borrowers reasonable repayment options.

The result

More than 80 consumers wrote in. The outpouring helped persuade federal regulators to clarify: No lump-sum repayments are required.

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