Intro
Well, I can’t gloat about my Georgia Bulldogs like I did in our 2023 January newsletter. Oh well. At least it wasn’t Bama taking the College Football Playoff title. If you can’t win, at least you can relish your archrivals losing! Anyway, we’ve got several important student loan updates for you which are way more important than football. Let’s dive in.
SAVE Forgiveness Feature Kicking In 5 Months Early
Breaking news! We know most of you who follow our blog have graduate-level degrees, so this update may not impact you directly. But chances are you know someone with a small amount of undergrad debt. If so, do them a HUGE favor and share this with them. As we’ve been reporting, some provisions of the new SAVE plan went into effect back in July 2023, while other features will go live in July of 2024. One of those upcoming features is that borrowers on the SAVE plan with $12k or less in undergraduate debt will qualify for forgiveness after only ten years in repayment. However, the White House just announced that feature will now go live in February instead, and those who have already been in repayment 10 or more years will be granted forgiveness. They simply need to get onto a SAVE plan to receive credit retroactively. Click here to read the fine print.
Continuing Servicer and Payment Issues
Servicers are still struggling to straighten out borrowers’ accounts, often billing erroneous payment amounts or putting people in wrong payment plans. Luckily the Department of Education is really holding their feet to the fire to provide relief for borrowers. After withholding $7M in payments from MOHELA in the fall, they’ve now issued monetary penalties to other servicers as well. If you are experiencing any issues regarding your payment plan or amount, the Department of Education has mandated that your servicer give you three months of forbearance. This period will count toward forgiveness, and you will not accumulate interest. In most cases, this should be offered to you automatically. But if you think you deserve it, and haven’t been offered it, contact your servicer and demand it!
Income-Driven Repayment One Time Account Adjustment Extended
It’s the gift that keeps on giving! And while it doesn’t impact everyone, the Income-Driven Repayment (IDR) One-Time Account Adjustment has been extended again, this time through April 1st. If you’re not familiar with this program, it allows you to get PSLF or IDR forgiveness credit for past periods where you may not have met all the specific requirements for qualified payments toward forgiveness. Find our extensive reporting on it here.
IDR Recertification Notices: Too Soon?
Many clients have reached out to us in the past few weeks expressing concern and confusion after receiving IDR recertification notices from their loan servicers. As we’ve reported in the past, borrowers who have an IDR anniversary date within six months of the end of the CARES forbearance (8/30/23) will have their recertifications pushed back 12 months. In other words, no one’s current payment should change before March 1st! So why the notices? Well, in some cases borrowers are within 90 days of needing to recertify. In other instances, servicers are simply going off bad data and need to get their act together. Read our detailed article to learn everything you need to know about how IDR recertifications are supposed to work, and let us know if your notification looks suspicious!
New Public Service Loan Forgiveness Buyback Program
While the free credit towards forgiveness will end eventually, a new program has just been rolled out. The Public Service Loan Forgiveness (PSLF) Buyback Program provides borrowers with an ongoing opportunity to ensure their forgiveness timeline is as short as possible, even if they’ve made a few mistakes along the way. This is very similar to the Account Adjustment. However, the primary difference is you will have to go back and make appropriate payments for the periods that you missed, such as forbearance periods. The program is currently live for PSLF, and a version of it for IDR forgiveness is set to go live July 1st. We’ll dive deeper into this once the Account Adjustment ends. Find the details here if you’re curious.
Self-Reporting of Income Ends Feb 29th
Because servicers have been so overwhelmed with the return to payment (debacle), a feature called “Self-Certification” has been in place since last summer. This means that servicers do not force you to submit the typical income documentation when enrolling in, or changing, an IDR plan, (although they still link your tax returns if you allow them to). Instead, borrowers have been allowed to “attest” what their income is. We won’t get into details with the pros and cons of self-certifying, as it can promote some (ahem) dishonest practices. It ends February 29th, so if you have some complex issues with your income and don’t want to use your tax returns to recertify, you may want to take advantage of this before the window closes.
Use Caution with Online Payment Calculators
We’ve noticed a few questionable payment amounts being produced by the payment estimator on the Federal Student Aid (FSA) site. For instance, PAYE payments come out cheaper than SAVE. While there are a few circumstances where this could happen, in most cases, the numbers are just plain wrong. We’ve never been a fan of that calculator anyway because your true payment amount can often be reduced significantly if you incorporate some strategy into the process. And this is why we use our own proprietary calculator, allowing us to compute the best possible payment each year and derive the best possible outcome for forgiveness and payoff amounts. If you want to get a realistic and optimal projection of what it will cost to retire your student debt, sign up for a comprehensive consultation. Often, the savings we capture for you covers our fee.
That’s enough news for now. Tax season is upon us, so stay tuned for some great tips we’ll publish over the next few weeks! And I suppose I can say congrats to the Michigan Wolverines on winning the CFP (sigh). 😉
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.
