Articles Posted in Student loans

The processing of PSLF was turned over by Mohela to ED during the three months preceding July 1 and all work was paused during the transfer.  Starting July 1, ED would have re-started reviews as it was doing the calculations from that point forward.  Then the whole system paused July 1 with the pending SAVE litigation and injunctions against it and the 400 pages of regulations that were to take place July 1.  There is nothing delaying PSLF calculations and forgiveness, but ED has not restarted those for some reason.  There is a hearing Oct 24, where there may be some clarification on what ED can continue to do, but the circuit court refused to clarify its ruling about two weeks ago.  I feel that ED is not processing PSLF right now as a pollical move to throw more of the educational system into chaos.  Either way, we can’t do anything about it.

Eventually, PSLF will restart its calculations.

If you are short just a few months time, you could choose to do the 10 year standard payment which counts toward PSLF and then submit an application for PSLF discharge.  Make sure you are using the 10 year standard, not 20-30 years.  It will be higher at 10 years, but it’s the only standard payment that counts for PSLF.  If that payment is too high, and they begin re-processing IDR applications (they are paused right now), you could file a request for another IDR plan other than SAVE – such as IBR.  Finish the 120, then file the PSLF discharge application.  We were finding that paper IDR applications were being processed, but they too seem to have stopped.  Do nothing online, the entire online portals are paused.  When sending a paper application, be sure to send certified mail with tracking information.

Some details about the current status of PSLF – Public Service Loan Forgiveness:

• PSLF processing and tracking is no longer handled by MOHELA —  You can get much more specific information on your PSLF progress, including a month-by-month breakdown of qualifying PSLF payments, through your account at StudentAid.gov, which is now where PSLF tracking is located.
• Long-term forbearances can count toward PSLF under the IDR Account Adjustment. The Dept. of Ed is still in the process of implementing this — details here: studentaid.gov/announcements-events/….

An email went out to federal student loan borrowers today that was rather vague.  It basically said to stay tuned.  None of us know exactly what the Biden administration is up too, other than confusing all of us, but it’s possible that they could be talking about this:

A new student loan forgiveness plan that will be geared toward four broad categories of borrowers:

• Borrowers who have accumulated large amounts of interest.

PAYE and ICR for non-Parent Plus borrowers was supposed to be phased out under the SAVE regulations as of July 1. But those regulations are now blocked following the 8th Circuit’s order. So PAYE (and ICR) are available for borrowers to enroll, at least for now. But, the online IDR app is down for the foreseeable future; borrowers can apply on paper, but no IDR apps are being processed right now and borrowers should expect very long processing delays. Details here: https://www.ed.gov/save.

So if you’re having problems getting your IDR approved, this is why.  In the meantime, your loans will be placed into forbearance (which doesn’t count for IDR or PSLF).

The IDR audit or recount is still underway – but will likely be pushed back again until sometime this fall.  My guess is that the Biden administration would want that done before the elections if at all possible.

Lots of fighting over student loan forgiveness right now.

One of the big things we were (and still are) looking forward to is a change of law allowing bankruptcy debtors to obtain IDR credit for their plan payments.  Previously, many debtors did not receive such credit because the Department of Education automatically placed student loans in forbearance.  We called that the “False Start” instead of Fresh Start because while a bankruptcy could offer solutions for car loans, foreclosures, and credit card debt, there was not much available for those with student loans.  Instead the balance owed was often much larger after the bankruptcy was over.  That has now changed!!

A new bankruptcy forbearance provision was included as part of a set of regulations that were to implement the SAVE plan.  On June 24, judges in two separate cases involving the SAVE IDR plan, entered preliminary injunctions enjoining some of the regulations from going into effect.