Student Loan Marketplace Update for June
As the temps heat up, so does student loan activity! In this month’s marketplace update we’ll share how to navigate the multiple servicer changes currently underway, introduce you to a Public Service Loan Forgiveness (PSLF) strategy you may not have known about, and provide a couple updates on a few lawsuits we’re keeping an eye on. Grab your sunscreen and let’s get into it!
New Servicer Logins
As part of ongoing efforts to improve the borrower experience, Federal Student Aid (FSA) has implemented the first step of its Unified Servicing and Data Solution. All Federal loan servicers now offer a new website where borrowers can (and should) go to access their student loan information. These new portals have a studentaid.gov domain and will allow borrowers to have the same user experience, regardless of which company is servicing their loans. To save you time, here are the new sites for each servicer:
- https://mohela.studentaid.gov/
- https://nelnet.studentaid.gov/
- https://aidvantage.studentaid.gov/
- https://edfinancial.studentaid.gov/home
- https://borrowerefpls.ed.gov/
Make sure to bookmark the new URL for your servicer in addition to creating a new login to access your information.
Mohela Transfers
A quick follow-up from our story last month about Mohela voluntarily unloading over 1M accounts to other servicers: those transfers are well underway. It seems all impacted borrowers should receive a letter stating their loans are being put into administrative forbearance through the end of July. While administrative forbearance DOES qualify for PSLF if initiated by the servicer, these letters also state that interest will accrue during this time and will likely capitalize at the end. This is causing concerns for those earning substantial interest savings through the SAVE plan. While we understand these concerns, the Biden administration has generally taken a “hold harmless” approach with all servicer-related transfers and forbearances. If you were on the SAVE plan prior to this transfer and forbearance, we strongly suspect any interest which may populate on your account will be removed once everything has settled.
When NOT To Use an IDR Plan for PSLF
For those of you pursuing PSLF, chances are you’re enrolled in an Income-Driven Repayment (IDR) plan to keep your payments as low as possible as you count down those 120 credits towards forgiveness. That is basically the strategy, after all. But as your income rises, an IDR plan may not always be the best option. Believe it or not, a 10-year repayment plan may actually result in lower payments than certain IDR plans if income levels are high relative to the debt. However, many loan portfolios don’t offer a 10-year repayment option, so there are a few steps you need to take to lock that payment amount in. This can also impact other areas of your finances, such as the MFS tax strategy. We’ve posted a dedicated article on our blog breaking it down. If you’re pursuing PSLF you’ll definitely want to check it out!
Democrats Urging Biden to Finalize Plan B
We recently reported on the 18 Attorneys General from GOP-led states suing to block the SAVE plan through two different lawsuits. So, we found it rather funny (and fitting) that 18 Democratic-led states (plus Washington D.C.) recently published a letter to Secretary Cardona urging him to implement Biden’s Plan B for loan forgiveness as soon as possible. While most of the details for Biden’s Plan B have been publicized for several months, we still don’t have a clear timeline as to when they will be finalized or implemented. If you haven’t read the proposal for yourself, check out our summary here. I will note that when Plan B is formally introduced, we anticipate another GOP-led lawsuit will be filed shortly thereafter to try and block it.
Lawsuit Updates
Speaking of lawsuits, we have a couple updates for you. First, there was a lawsuit filed last year to block the IDR One -Time Account Adjustment. We knew it was a weak case, so we didn’t cover it much. Well, it’s been shot down, twice. If you’ve benefitted from the IDR waiver, we think you’re pretty safe from anyone trying to reclaim those benefits.
Second, several news outlets are running stories touting a “win” for Biden as one of the two lawsuits attempting to block the SAVE plan was given some shade by a federal judge last week. In the case brought by Kansas, the judge said 8 of the 11 states listed in the lawsuit (including Kansas) had no standing to sue and dismissed them from the case. Of the three states which did have standing, he said it was “just barely”. He also said the case was generally weak and went on to pick apart the various complaints. While this was a good sign for SAVE advocates and borrowers, it is far from a win. The case is still moving forward with three state sponsors. And at the end of the day, I think there is a strong chance that one (or even both) of these lawsuits will end up in front of the Supreme Court. We’ll keep you posted as these cases develop…which will likely go into 2025. You can find our dedicated coverage here.
That’s it for this month but keep that sunscreen handy. July and August are always hotter than June, and we expect some scorching student loan announcements and developments coming later this summer.
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.
