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When you’re shopping for a student loan, there’s a lot to consider.
Is it right for you? How much money will you be able to borrow? What kind of interest rate will you pay?
These questions are critical, but they’re not the only ones that matter. In fact, one of the most important things to consider when choosing a student loan is who you’re borrowing from.
At Wells Fargo Student Loans, we work hard to make sure our customers are taken care of—and part of that is being transparent about how we do business. We want you to know that each step along the way, from application to repayment and beyond, we’ll be there with you every step of the way.
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What Wells Fargo exiting the student loans business means for you
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In January 2021, Wells Fargo stopped accepting applications for new student loans. The company will still offer credit cards, home equity loans, bank accounts and all of the other financial products it is known for, but private student loans will no longer be available.
Not only that, but current Wells Fargo student loan customers will soon find their loans handled by a different service provider. If you are a current Wells Fargo customer who has relied on the bank to borrow money for school, keep reading to learn what you can expect moving forward.
Wells Fargo student loans overview
Before this change was announced, Wells Fargo offered private student loans and private consolidation loans. Loan terms and rates varied based on the amount borrowed, consumer credit scores and other eligibility criteria. Generally speaking, however, Wells Fargo was known for offering student loans with competitive rates and loan terms — especially for those with good or excellent credit.
According to the bank, it is currently “selling and transferring” its student loans. This means that current Wells Fargo private student loans will be transitioned to a new loan holder. This new servicer will handle all payments once the transition is completed.
Who services my Wells Fargo student loan now?
Wells Fargo has chosen one company to take over its student loan business: Firstmark, a division of Nelnet.
Since this announcement is recent, it’s possible that you haven’t received any updated information on your Wells Fargo student loan account. However, Wells Fargo has made it clear that it will deliver more information directly to its current student loan customers as details become available. You should expect communication from the lender before your loan officially transfers.
What should I do with my Wells Fargo student loan?
Keep in mind that your Wells Fargo student loans will maintain the same terms once they are transitioned to Firstmark as the loan servicer. This means that if you’re happy with your current student loan interest rates and loan terms, you don’t have to do anything other than begin making payments to Firstmark once your loans have been fully transitioned.
In the meantime, continue making payments on your Wells Fargo student loans as you normally would.
Refinancing Wells Fargo student loans
If you’re not thrilled about having to change loan servicers or you feel that you might be eligible for a new student loan with better rates or terms, you can refinance your loans and move to a new lender of your choosing. Private student loan rates are incredibly competitive right now, and you may be able to shorten (or lengthen) your new loan term to get a monthly payment that works better for your goals.
New private Wells Fargo student loans
If you recently applied or co-signed for a new Wells Fargo loan and your loan application is in process, you can call the company at 1-800-378-5526 to inquire about the status. You can also check your application status or sign loan documents on the Wells Fargo website.
What if I missed the deadline for Wells Fargo applications?
Borrowers interested in Wells Fargo student loans still have plenty of excellent student loan companies for new loans or refinance loans.
If you want to compare multiple student loan interest rates across multiple issuers, you may want to start your search with a company like Credible. This loan platform lets you enter your information once, then see multiple loan offers from different lenders. You may also choose to do your own research and get quotes from top-rated companies like Sallie Mae, SoFi and Discover.
Where can I go for help with my Wells Fargo student loan?
Borrowers who are worried about this announcement may want to sit tight for a while. Wells Fargo notes that the transition is going to take some time and that all you have to do is continue making payments on your loans as you normally would.
However, the company does have a hotline set up for customers who have questions or concerns. Current Wells Fargo customers can reach Wells Fargo at 1-800-658-3567 Monday through Friday from 7 a.m. to 8 p.m. CT.
who benefits from student loans
What You Should Know About Student Loans
Once you’ve decided to go to college, understanding how student loans work is the next big step.
Student loans help students pay for college, filling financial gaps and providing essential funds to cover educational expenses. It’s important to fully understand the application process, disbursement, and repayment requirements associated with student loans, to ensure that you make responsible, effective decisions about funding your education.
Degree-seekers at public colleges and universities can apply for federal financial aid and student loans through the free application for federal student aid — more commonly called the FAFSA. Students can apply for private loans as well, but the terms and conditions for those vary significantly.
Not all student loans are alike, and it can be confusing to figure out which types of loans best meet your needs. This guide provides information on available forms of student aid, how you can benefit from them, and other options for financial assistance.
What Is a Student Loan?
A student loan is a lump sum of money that a student receives from the federal government, their state government, or a private company, which they can use toward tuition or other school expenses. However, they must pay that money back after graduation, plus interest.
In addition to scholarships, grants, and work-study programs, many learners use student loans to fund their education. Student loans can be a helpful tool if you use them responsibly. Student Loan Hero reports that 69% of students in the class of 2019 took out loans to cover college expenses.
Student Loan Hero’s data also indicates that students in 2019 graduated with an average debt of $29,000. It’s best to try to borrow as little as possible to minimize the long-term costs; before committing to a large loan, research starting salaries in your field to determine your ability to pay them back after graduation.
Pros of Student Loans
Student loans offer financial support for students who would otherwise be unable to attend college.
You do not need a credit history to receive a student loan.
Student loans often have lower interest rates than private loans.
Fixed interest rates prevent the terms of a loan from changing over time.
Many student loans do not require repayment until after graduation, and they have additional options for deferment or loan forgiveness, when applicable.
Student loans often provide flexible repayment plans that adjust to accommodate the borrower’s income and cost-of-living expenses.
Cons of Student Loans
There are limits to the amount of federal aid an individual can receive.
If you leave an academic program without finishing, you have to pay back the loan immediately.
Private student loans may require a cosigner.
Student loans can be expensive, depending on how much money you borrow and what your interest rate is.
Defaulting on student loans can result in a decreased credit score.
Interest rates on private student loans may fluctuate.
Depending on financial need, students may not qualify for some loans.
What’s New in 2021-2022?
As always, current and future students should complete FAFSA forms as accurately as possible and update any information regarding their financial situations, especially in light of the COVID-19 pandemic.
In early 2020, the Office of Federal Student Aid suspended student loan payments, paused collections on defaulted student loans, and eliminated interest rates. These actions were repeated throughout the year, and in January 2021, loan payments were pushed back to September 30, 2021. These measures only apply to federal student loans, however — not private student loans.
In 2020, President-Elect Biden proposed a student loan program that would allow for forgiveness of up to $10,000 of student loan debts. While monthly loan payments have remained suspended during the COVID-19 pandemic under his presidency, the forgiveness plan remains in limbo.
Meanwhile, individuals who can repay their loans are encouraged to keep doing so. When repayments begin again, automatic payments will resume through traditional or income-driven repayment plans.
Types of Student Loans
There are two primary student loan types: private and federal. Both types can help reduce financial anxieties and build your credit score, but differ in a few distinct ways.
Federal Student Loans
Student loans from the federal government offer many advantages, such as fixed interest rates. Federal student loans also offer more flexible repayment plans and access to loan forgiveness programs under certain conditions.
Typically, the amount you can borrow each year depends on your education level and status as a dependent or independent student. Yearly loan limits can vary from $5,500-$12,500 for undergraduates. Loan limits for graduate students can reach up to $20,000.
Direct Subsidized Loans
Direct Unsubsidized Loans
Direct PLUS Loans
Direct Consolidation Loans
Private Student Loans
Private loans usually come from banks or other private companies and often end up costing more than federal loans due to interest rates. They can also require students to start making repayments while still in school. Most students only apply for private loans after maxing out their federal financial aid.
Before committing to one, consider the costs associated with private student loans. You will need to pay a lender fee to the vendor, who may not allow you much freedom in choosing a loan repayment plan, and the terms for repayment vary by vendor.
Additionally, private loans are often unsubsidized and may come with an annual cap, limiting the amount of aid available. Interest rates for private loans are also variable. Your credit history, along with your cosigner’s, can affect all of these factors — especially the interest rate.Are Private Student Loans Too Risky?
How Are Student Loans Paid Back?
Degree-seekers have many options when it comes to federal and private student loan repayment programs. Common repayment formats include:
Income-Based Repayment: The borrower pays 15% of their income monthly for up to 25 years.
Standard Repayment Plans: The recipient pays a fixed amount monthly for up to 10 years. Payment rates vary based on the loan amount and interest rate.
Graduated Repayment Plans: Over 10 years, a student makes monthly payments that start out low and gradually increase every two years.
Extended Repayment Plans: The borrower makes very low monthly payments over the course of 25 years.
Revised Pay-as-You-Earn Repayment Plans: You pay 10% of your income each month over 20-25 years.
Income-Contingent Repayment Plans: Students make very low monthly payments adjusted to low-income work for over 25 years.
Federal student loans typically allow for a six-month grace period after graduation before requiring repayments. Once the grace period ends, you must begin making payments monthly and on time. Interest is added to your payment each month, usually at a fixed rate.
When taking out multiple federal loans, you may want to consider a direct loan consolidation program. These programs combine federal loans from different lenders into a single loan that you can repay using a standard, extended, or income-based plan.
It typically takes 10 years to repay a federal student loan, while private student loans usually take 5-15 years.
There are some situations where borrowers can access student loan forgiveness, including:
Public Service and Teacher Loan Forgiveness: This option forgives remaining loans for public service workers and teachers who work in high-need areas for a minimum period of time.
Closed School Discharge: Students whose schools close before they can earn a degree often receive loan forgiveness.
Total and Permanent Disability Discharge: This option forgives all loans for students who have permanent disabilities.
Death or Bankruptcy: These two cases result in forgiveness of most loans, though in the case of bankruptcy, you must apply for student loan forgiveness separately.
If you miss payments, your loan can go into default. Federal loans allow nine months of missed payments before you default on a loan, but some private loans only allow one missed payment.
Loan default can damage your credit score, and it allows the federal government to use your tax refunds to offset your debt.
Given these risks, you should carefully choose your repayment plan to ensure that you can meet your monthly payments. You can potentially escape loan default by applying for loan rehabilitation or loan consolidation, both of which allow you to negotiate with your lender for lower monthly payments.
If you do miss a payment, there are a few ways you can mitigate the damage. First, applying for loan forbearance or deferment suspends payments for a short period. Unfortunately, interest may still accrue during this period, increasing the amount you owe and halting progress toward loan repayment or forgiveness. Deferment and forbearance also give you time to change your repayment plan to an income-driven pathway that aligns better with your earnings.
Student Loan Forgiveness: New Research Shows Who Would Get the Largest Benefits
Wide-spread student loan forgiveness would predominantly benefit younger Americans living in high-income areas, according to a recent study by the Federal Reserve Bank of New York. But adding an income cap to any forgiveness policy would help to target a larger share of the benefits to borrowers in lower-income areas.
The Fed study comes two years into an interest-free forbearance period that the Education Department recently extended. Now, most federal student loan borrowers won’t be required to make payments until September at the earliest.
Advocates of student loan forgiveness have taken the latest extension of the payment pause as a chance to double down on calls for sweeping loan cancellation, saying the Biden administration ought to wipe out millions in debt before turning payments back on.
President Biden, who’s said that he supports forgiving $10,000 of student debt through legislation, hasn’t come out in favor of using executive authority to cancel large amounts of debt. But his officials aren’t shutting down the notion entirely. Earlier this month, Jen Psaki, White House press secretary, said on an interview with the liberal podcast Pod Save America that using executive action to cancel some student loan debt was “still on the table.”AdRefinancing your student loan could allow you to payoff your student debt early.Click on your state to get a free quote and refinance your student loans while rates are competitive.
To measure who would benefit if forgiveness becomes a reality, the Fed authors looked at two popular proposals — canceling $10,000 and canceling $50,000. Under a policy of $50,000 worth of forgiveness, 29.9 million borrowers would see their full balance wiped out, and it would cost $904 billion. Meanwhile, forgiveness of $10,000 per borrower would cost $321 billion and eliminate the entire balance for 11.8 million borrowers, the study found.
Under either model, implementing an income cap of $75,000 would not only drop the cost of forgiveness by almost 45%, but it would also more directly target forgiveness to borrowers facing greater struggles with repayment.
This is not the first analysis of who would benefit most from student loan forgiveness. But the Fed says its new study is different because it fuses data from anonymized credit reports, which give more precise information about who has student loans and how much they owe.
How student loan forgiveness would affect people in different income levels
The Fed’s study found that under both forgiveness policies without income caps, borrowers residing in high-income neighborhoods would receive about 30% of debt forgiveness. Those in low-income areas would get about 25%. High-income neighborhoods were defined as those where the median annual income was $78,303 or higher, while low-income neighborhoods were those where the median annual income was below $46,310.
The Fed found that under the $50,000 forgiveness policy, the average federal student loan borrower living in a high-income neighborhood would receive $25,054 in loan forgiveness, while the average borrower living in a low-income neighborhood would get $22,512. This suggests that a bigger forgiveness amount would benefit higher earners.
Introducing an income eligibility cap of $75,000 — in other words, only granting loan forgiveness to borrowers who earned less than that — would shift the share of forgiven dollars away from higher-income neighborhoods. Under the model of $50,000 forgiveness with an income cap of $75,000, borrowers in high-income areas would receive about 18% of the benefit, down from around 30%. Borrowers in low-income neighborhoods would see their share of loan forgiveness jump from about 25% to 34%. The results are similar under the $10,000 forgiveness policy: an income cap would increase the share of benefits for people in low-income areas from about 25% to 35%.AdBegin refinancing your student loan today!See how much you can save while rates are low.START NOW
Younger people would benefit the most from student loan forgiveness
Under each of the four policies examined, more than 60% of forgiven loan dollars would benefit borrowers under the age of 40. Those 60 and older would receive about 6% of forgiven dollars in each of the four proposals.
Most student loan borrowers (67%) are under 40. But younger borrowers also tend to have smaller balances, likely because larger balances come from borrowing for graduate school and graduate school attendees are older, on average.
Borrowers with lower credit scores would benefit most from forgiveness
As a group, student loan borrowers tend to have lower credit scores than the population at large. According to the Fed’s study, about 34% of all credit scores are greater than 760, which it considers super prime. However, only 11% of student loan borrowers have credit scores above 760. Credit score vary across generations, with older Americans having higher scores overall. This may explain why borrowers, who tend to be younger, have lower credit scores than the wider population.
As a result, forgiveness tends to help people with comparatively low credit score. Under all four proposals, more than half of forgiven debt would go to borrowers with credit scores under 660. That means most of the debt forgiven would go to borrowers with below-average credit scores. (The national average credit score is 690, according to the credit reporting bureau Equifax.)
Restricting forgiveness based on a borrower’s income would further benefit those with the lowest credit scores: Under both amounts of loan forgiveness with a $75,000 income cap, the share of benefits that go to borrowers with credit scores below 620 is about 42%. Without the income cap, those borrowers receive only about 37% of dollars forgiven.