Student Loan News for Jan 2025

Jan 24, 2025

Student Loan News for Jan 2025

January 2025 Newsletter

Happy New Year! To all our clients, readers, and partners, we wish you a bright and prosperous 2025. After the most eventful four years in student loan history, we’ve now entered a Lame Duck period for policymaking as the new administration prepares to step in. Big changes to Income-Driven Repayment (IDR) are on the horizon, though the timeline remains uncertain. In the meantime, here are a few important updates and tips to start your year on the right foot.

 

Refinancing Rates Drop Below 4%

Borrowers looking to refinance Federal or private student loans are seeing rates drop to record lows. Some lenders are even offering fixed rates below 4% for shorter repayment terms! With recent fluctuations in loan rates, there are significant savings opportunities for many borrowers. But how do you know if refinancing is right for you? You can crunch the numbers and explore the marketplace. Or, better yet, our team at Student Loan Professor can help you: for free, over Zoom, with no strings attached. Get started by registering here.

 

The Department of Education Officially Withdraws Forgiveness Plan B

Whether you agree with President Biden’s policies or not, we give him credit for putting up a very hard fight. As President Biden’s term ends, the Department of Education (DOE) announced it is formally withdrawing the “Plan B” student loan forgiveness proposal. While there were some wins for particular groups of borrowers, Biden’s first plan was struck down by the Supreme Court in June of 2023. The DOE stated that withdrawing the plan now was better than a potential court defeat and leaves the door open for future initiatives. Get the full story here.

 

PSLF Under the New Administration

One of the top questions we’ve been fielding post-election is whether PSLF (Public Service Loan Forgiveness) is at risk under the new administration or a Republican-led Congress. The answer, in short, is no.

PSLF was established in 2007. And unlike most things in Washington, it is not a partisan issue. Both sides strongly support it, and changes to it would require an act of Congress. While President Trump proposed ending PSLF during his first term, the backlash (even within his own party) was swift. If any changes are proposed, they’re more likely to impact future borrowers, not current ones.

 

PSLF Buyback: Pro Tip

The SAVE forbearance period continues, giving many borrowers a temporary payment break. However, this pause doesn’t count toward PSLF credit, leaving some borrowers understandably concerned. For most, the PSLF Buyback program will provide a solution, but there’s a crucial step you can take now to save yourself from future headaches.

When it’s time to settle your PSLF bill after completing your 120 months of qualifying service, the amount you owe will hinge on the payments you were required to make immediately before or after forbearance. If those payments were unusually low due to older tax returns, your servicer or FSA could face challenges reconstructing those amounts from years ago. Worse, they might request your old tax returns to verify the information.

Avoid the hassle by downloading your statements or billing change notices now. These documents show what your payments would have been during forbearance and will help protect your PSLF Buyback credit. Don’t rely on your servicer’s paperless inbox—most communications auto-delete after a year. By taking this simple step today, you could save yourself significant time and stress down the road. Read our full breakdown of the PSLF Buyback here.

 

Breaking News!

Many borrowers received an email from Federal Student Aid (FSA) this week with new guidance regarding the SAVE forbearance, available IDR plans, expected payment start dates, recertification dates, and PSLF Buyback. FSA also updated some of its guidance online with different updates. This has generated a ton of questions from our clients, and we know many of you are seeking guidance on how these changes may impact you. We will be sending out a special article early next week which specifically breaks down these updates.

 

A New Year’s Resolution Worth Keeping

As we all set goals for 2025, let this be the year you conquer your student loan debt. Unlike trips to the gym that fizzle out by February, we’ll help you build a strategy that keeps working all year long. Book a consultation with our experts today, and watch your financial worries shrink month after month. Peace of mind is the ultimate resolution, and we’re here to help you achieve it.

Here’s to a year of clarity, progress, and fewer student loan headaches. Cheers to 2025!

 

 

Brandon Barfield

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.

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