The student loan crisis in America is a complicated problem. To make matters worse, there are a number of confusing and contradictory things being said about student loans in the media and online. Below are some common student loan myths that have been debunked.
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Common Student Loan Myths
MYTH: Only young people have student loan debt.
FACT: Student loans impact people of all ages, and the number of older Americans with student loan debt is growing dramatically.
MYTH: You can’t discharge your student loans in bankruptcy.
FACT: Although it is difficult, you may be able to discharge your student loans in bankruptcy. See our Bankruptcy page for more information.
MYTH: Those ads I see offering to help me lower my federal student loan payments and get my loans forgiven are legitimate and worth the money.
FACT: You do not ever need to pay a company to help you with your student loan payments. There are a lot of scams out there that try to charge people for services that are free, or lie about what relief they’ll get you. Protect yourself from scams by watching this video.
MYTH: People with student loan debt have degrees that will help them get high-paying jobs to pay off their debt.
FACT: One-third of borrowers with student loan debt never got a degree. Many students are forced to leave school due to a medical, financial, or family situation. Parents who take out Parent PLUS Loans to help pay for their children’s education may have never been to college at all. Many people borrow for short term job-training programs that train Americans for jobs that are important but do not pay highly. And some people who went to for-profit schools may have finished their program but can’t get a job in their field; schools too often lie about their value to get students to enroll.
MYTH: Refinancing federal loans into a private loan will save you money and be better for you overall.
FACT: Refinancing your federal loans into a private loan is risky. Although you may be able to get a better interest rate by refinancing (depending on your income and credit history), you will lose all of the benefits that come with federal loans, including eligibility for Public Service Loan Forgiveness and other loan cancellation programs, access to affordable monthly payments based on your current income, and help if you struggle with making payments in the future. See our page on refinancing for more information.