Valued Clients and Readers,
We hope this posting finds you well and enjoying your summer. Student loan changes and headlines remain abundant this summer, and we know change is always scary. Like Oz, however, there’s actually nothing to fear. You just have to understand what’s going on behind the scenes. So we hope you find the below updates helpful.
Finally a glimpse of the “PSLF Overhaul”
When ED announced the PSLF waiver in October 2021 they said it would be part of a bigger, and permanent, “PSLF Overhaul”. Wednesday the Biden Administration gave a glimpse of what those changes could be…
- Allowing certain deferments/forbearances to count towards forgiveness (e.g. Military)
- Redefining the 30-hour per week requirement (primarily for non-tenured teachers)
- Counting lump-sum and partial payments
- Asking for suggestions for how doctors providing services at nonprofit hospitals in states that prohibit their direct employment can get PSLF (very exciting!)
Additional proposals include eliminating the interest capitalization which occurs after certain events, as well as streamlining borrower defense claims. Catch the announcement here. Some of these changes could be game changers for certain borrowers. Unfortunately, the devil is in the details (as always), and we just don’t have them yet. We will unpack this more as details are released in the coming weeks and continue to send updates. Note these are proposals, will not be finalized until November, and likely will not take effect until July 2023.
DeVry listed in major borrower defense settlement
You probably saw the headline two weeks ago about the major $6 Billion settlement which, if approved, will grant complete loan forgiveness to many borrowers who went to for-profit schools. Among them are certain borrowers who attended DeVry schools, including Ross Med & Vet and AUC Med. Click here to learn more about this case.
Extension of Limited PSLF Waiver
The PSLF Waiver has been an absolute game changer for many borrowers. In addition to giving borrowers credit for payments and loan types that normally don’t qualify, we’ve been able to help many borrowers strategically re-consolidate their loans to further maximize the savings. So we were thrilled to learn that the head of Federal Student Aid is lobbying hard to get the waiver extended so more borrowers have time to apply. Click here to learn more about the PSLF Limited Waiver.
If FedLoan is your servicer then hopefully you already got the memo that your loans will be transitioning to a new servicer this year. Most of those account transfers are taking place during the summer and have already begun. If you have ever submitted an employer certification for PSLF then your account should be flagged as a PSLF participant and Mohela should be the servicer they send you to. If you receive notice that you are being transferred to any other servicer then we recommend you contact FedLoan and try to get it switched to Mohela. For DWOQ clients, know that we have great contacts at Mohela and first-hand knowledge of their processes. We will be able to expertly advise you and strongly advocate for you with this servicer and see this change as a positive development. Heads-up, FedLoan may continue to do some PSLF-related work on your account until Mohela’s PLSF team is fully up and running later this year.
Refi rates hit new territory
We’ve been warning for months about rising interest rates and are a bit bummed to see that many lenders are now above 5% for fixed terms greater than 5 years. There are still some good deals out there, however, including rates which are not publicized. Luckily our advisors keep a great pulse on this marketplace and can work with you at no cost to help find the best deals. Click here to learn more.
On the horizon
Of course, we’re still anticipating the decision on both the $10k loan forgiveness and a possible CARES Act extension, which will likely be announced in tandem in the next few weeks. We are also expecting an announcement of a new IDR plan this summer. So, keep reading these emails to stay in the know. Better yet, follow us on social media to be the FIRST to know!
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.