Valued Clients and Readers,
If you haven’t already seen the headline, the Biden administration again extended the student loan interest and payment halt, this time for an additional four months, through August 31st, 2022. All the same features will remain, such as time spent in this “administrative forbearance” will count towards both PSLF (we assume you know this acronym by now) and Income-Driven Repayment (IDR) plan forgiveness.
Another student loan update from today that isn’t being as widely covered but is likely good news to up to 8 million borrowers, is that those in default will be considered to have been “rehabilitated” by the payment pause… and assuming they enter one of the many available repayment plans today, they will be back in good standing! More communications will follow to affected borrowers as the end of the pause approaches, but this is great news for the millions who have struggled over the years to be able to start fresh.
Biden’s 2023 Budget Proposal is Telling
All of this said, we’ve heard no word on broad loan cancellation; we continue to expect loan relief to be targeted to those most in need of relief, and those in Public Service roles. Further to this, Biden’s 2023 budget proposal was released last week and contained no expectation of a payment and interest halt, or any broad cancellation. However, borrowers using Income-Driven plans will be excited to learn that the budget proposal does include a mandate for removing the dreaded “tax bomb” featured in these plans at the forgiveness period. This would be a game changer for many of those making 20 or 25-year IDR payments who are not PSLF-eligible. We’ll be keeping a sharp eye out, as always.
The Time for Refinancing Has Come
Finally, we mentioned in our last newsletter that the recent Fed rate hike would likely cause interest rates to climb. We were right! Most lenders have already increased their rates, some quite dramatically. We had one client who’s offer expired and when she reapplied with the same lender just two weeks later, the rate was .95% higher! Luckily, we work with many lenders and were able to find her a much better deal elsewhere. That’s the advantage of having and advocate in your corner who knows the marketplace! So, click the link below if you’d like us to meet with you at no cost and help you find a great deal also:
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.