Recent college graduates face a number of barriers after getting their diplomas – finding a job, moving out on their own and paying back thousands of dollars in student loans. But now consumers struggling to pay back private student loans might find a bit of relief in new refinancing options from banks.
Charter One announced on Tuesday its new Education Refinance Loan. As advertised it provides borrowers with rates as low as 5.24% and a variable rate of 2.84%. The lowest rates are reserved for those borrowers with better credit, the Plain Dealer reports.
Charter One joins other instiutions, such as Wells Fargo and Chase, that reward borrowers for cultivating good credit and responsibly handling credit cards.
The new refinancing option from Charter One comes after the Consumer Finance Protection Bureau encouraged big banks to create more programs for graduates overwhelmed with private student loan debt.
Private student loans, which often come with a low variable rate that later dramatically increases, do not have the same forgiveness and flexible repayment options that federal student loans carry.
The CFPB estimates that more than 850,000 private student loans are in default. In December, Consumerist reported that 71% of students leave college with an average of $29,400 in student loan debt.
New refinancing programs are just the latest development in helping students with private student loans.
Last month, four U.S. Senators introduced legislation to reform disclosure and servicing standards for both Federal and private student loans. The Student Loan Borrow Bill of Rights includes giving borrowers the right to have options for alternative payment plans and the right to consistency in how monthly payments are applied.
Even with more protections and refinancing options, private student loan borrowers face an uphill battle when it comes to getting out of debt.
Consumerist reported last month on a company making sure student loan debt is as permanent as possible. The Educational Credit Management Corporation, a nonprofit, mounts legal challenges to borrowers trying to have student loans discharged in bankruptcy.
Borrowers begin to see refinance options for private student loans [The Plain Dealer]