Additional Details on Loan Cancellation; Servicer and Refinancing Strategies

As our Advisory team continues to navigate the ever-evolving student loan marketplace for our clients, we’ve got some helpful updates for you regarding loan cancellation, servicer changes, and action items to prepare for the January 1 (purported) end of the student loan payment and interest halt.

President Biden’s Loan Cancellation Plan

FSA has added more information to their original announcement page to clear up some unanswered questions. Most notably, they shared a timeline for when the application would be ready (early October) and who will likely get forgiveness automatically (hint: those enrolled in IDR plans with recent tax filings on hand). They also clarified exactly which loans are eligible, how they choose which loans to cancel within a portfolio, and what happens with any remaining debt. Read the details for yourself here. And if you missed our initial summary of the Biden Student Loan Plan you can check that out here. As the new IDR plan still leaves some remaining questions and concerns, we’ll share a summary and expectations later this year; the expectation is that it won’t be available until 7/1/23.

Is It Finally Time To Refinance?

We know many of you have been riding out this 0% interest and no payments period (and hopefully paying some of the debt down) for as long as you can. We’re not expecting another extension of CARES, so with interest rates rising at a record pace, and the FED expected to announce another rate hike very soon, we highly recommend revisiting the marketplace if refinancing is suitable for you. Our partners at Sofi have announced a great promo for DWOQ readers who apply between Sep 1^st and Oct 31^st: .5% interest rate reduction for doctors and dentists, plus another .25% for loans over $150k. You must use this link to get the discount. Of course our team is always happy to connect at no cost to discuss the pros and cons of refinancing and help you shop out multiple lenders to get the best bang for your buck. Click here to learn more and get started.

PSLF Form Issues and Help Tool Strategies (also referred to as Employer Certification Form, or ECF)

If you didn’t know this already, MOHELA officially took over loan servicing for all 1.3 million PSLF participants this summer. Our sources tell us that in addition to the 400k backlogged PSLF forms they received from Fedloan, they’re getting thousands more daily. Needless to say, this has created a backlog in processing for most applicants. Additionally, we’ve seen some forms being approved, but payment counts not being updated, especially for the PSLF waiver count. Calling the servicer yields no results and the only remedy, for now, seems to be submitting yet another PSLF form. We’re working hard on this one to get a better remedy for you and hope to have an update soon. Until then, and in light of the PSLF waiver expiring next month, we do recommend that all PSLF candidates get a PSLF form on file with MOHELA between July 1^st and October 31^st.

The PSLF Trophy

It’s not a term ED uses, but trophies appear once a PSLF candidate hits 120 payments (and therefore isn’t required to make further payments) and until there’s a zero balance. If you’re in this status, congratulations… loan forgiveness is close. Remember that you still need to use the PSLF form to apply for forgiveness, and also, if FedLoan is still your servicer and you see a zero balance, it could be that the PSLF review is still pending and your loans were transferred to MOHELA.

IDR Recertifications Pushed to July 2023 or Later

Due to the final extension of the CARES Act no one will be required to recertify their IDR plan before July 2023. If your recertification date (from way back when CARES started) falls between January and June, it will be pushed out one full year. If it is July or later (2023), it will stay the same. You may still see a recertification date that is earlier than July 2023 on your account Aid Summary. ED is working to get those updated.

Latest on Sweet v. Cardona Settlement

For our Ross, AUC (DeVry/Adtalem) readers, this case took a step forward in August with a judge granting preliminary approval of the proposed settlement. But the schools are starting to push back. Catch the latest developments here.

Nelnet Data Breach

If Nelnet is or was your servicer, your SS and other data may have been compromised over the summer. Letters were sent out to those who were impacted. Click here to learn more and see what action steps may be necessary.

Alright, that’s all for now. Besides…it’s football season, which means the student loan payments aren’t the only thing being punted!

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.