Certification of income is coming back into focus now for repayment of federal student loans. What if you are self-employed and taking social security and don’t have a paystub?
You can self certify by sending a self-certification letter for income driven plans including:
So what better time to expound upon the benefits of the Student Loan Management Program (“SLMP”) here in a Florida bankruptcy. I am sure that many of you are thinking if this is so great, why hasn’t it been utilized much to date?
Well, mostly it’s due to timing. The SLMP began in the Middle District of Florida October 1, 2019 to address the $1.5 trillion student loan debt owed by forty-four million Americans. Only a few months after the ink dried on the SLMP administrative order, the COVID pause for student loans occurred in March 2020. Thereafter, there were many extensions, and finally a soft start to loan repayment began on September 30, 2023. However, for those who were unable to pay, for the first year until October 2024, there was no negative credit reporting or debt collection. Finally, over the past couple of years, the Biden administration tried to get as many borrowers as possible enrolled in SAVE which offered forbearance once SAVE came under question and an injunction imposed on July 1, 2024. Re-certification of income under various Income Driven Repayment Plans (“IDR”) kept getting pushed forward, with many borrowers having deadlines of 2026 or even after 2030. Bottom line, student loan debt repayment was not a priority for many Americans.
However, we believe that consumer borrowers will need to address their student loan debt rapidly beginning this Fall. Using the SLMP portal is necessary in bankruptcy for those with student loans in order to obtain relief in an IDR plan, partial or full discharge of student debt, or otherwise address what is usually a mountain of debt. Applications for programs can be submitted via the portal when ordinarily they are rejected upon the filing of a bankruptcy. See “Why Do We Need the Student Loan Management Program? Court Connection Vol. No. 8 – Issue No. 4, October 2019
If you are concerned or have questions about how many months you have in IDR credit from past federal student loan payments or even forbearances under the IDR Recount, you can check online here: (this applies to those with counts toward PSLF as well). In our opinion, this is a better avenue for an accurate assessment than trying the ombudsman office right now or your servicer.
Step 1) Log in to studentaid.gov
Step 2) Open another browser tab and go to https://studentaid.gov/app/api/nslds/payment-counter/summary
So 7.7 million borrowers are in a SAVE forbearance. That means no payment, no interest since the courts applied the SAVE injunction last July (2024).
Lots of questions about what borrowers should do now. We just did an interview with ABC Action News this a.m. that will run tonight. Here’s the link to that story.
If you can’t afford to make any payment now, then stay on the SAVE forbearance as long as you can. Servicers are beginning to shift people off SAVE forbearance but it may be another month or two before they can get to you. It’s incredibly unlikely that someone can just stay on a SAVE forbearance long term. SAVE has ended. No doubt about that.
If you are encountering collections calls or even a collection lawsuit, sometimes taking the offense is the better route. For instance, we are seeing usury violations where the rate of interest being charged on its face is 90% APR. The lawsuit may be filed by a smaller player who you’ve never heard of, who we call debt buyers.
In Florida, the maximum simple interest rate is 18% per year for loans less than $500k, for loans larger than that, the maximum is 25%. Violations can be severe, and can include all interest voided, and the lender can even face criminal charges. This may be an important negotiating point, and something that you should carefully raise to avoid making an inadvertent extortion violation yourself.
You may see an interest rate way higher than 18% for credit cards and payday lenders. Why is that? Well, they have unique rules is one answer. Rates can fluctuate based upon default rates, the company’s operating expenses, credit score and card type. They also can choose to follow another state’s laws which may allow for higher rates.
The IDR online application is back up, though a demo revealed there are some big new restrictions on enrollments:
Credit reports and credit scores are used widely in this country. Practically every financial activity somehow involves your credit score. If it’s wrong or lower than it should be, you can be charged additional fees and/or thousands more in interest.
Right now, there are considerable disruptions in the financial world. We are seeing drastic changes involving student loans as you likely know. Duplication of accounts, erroneous reports of missed or late payments are frequent and can be very damaging.
Just yesterday, we heard from a potential client who had been making his payments on time, but due to an addressing error, his loan servicer had changed and he did not receive notice of the change. So his payments have been going to the old servicer. Meantime, the new servicer has dinged his credit for 90 days for missed payments. You can bet something like that can cause a score to decline precipitously. People are regularly denied a mortgage, car, apartment, or new credit for this. At the very least, existing costs will likely go up as other creditors perceive a risky borrower.
More and more signs are pointing toward bankruptcy being the best platform going forward to address student loans. Why?
President Trump signed an executive order titled Restoring Public Service Loan Forgiveness a couple days ago. While this should have to go through the normal channel of rulemaking which will take approximately one year, it appears that PSLF will be excluded for non-profits which engage in a “substantial illegal purpose” including:
(a) aiding or abetting violations of 8 U.S.C. 1325 or other Federal immigration laws;
(b) supporting terrorism, including by facilitating funding to, or the operations of, cartels designated as Foreign Terrorist Organizations consistent with 8 U.S.C. 1189, or by engaging in violence for the purpose of obstructing or influencing Federal Government policy;
As I blogged about a couple weeks ago, you can check the amount of IDR time you have been credited for on studentaid.gov now. If for any reason it is not there, a private company has released the VIN Foundation Download My IDR Progress browser extension for Chrome. It allows a borrower to grab a copy of their IDR payment history showing the qualifying vs. ineligible payments.
Yesterday the new Secretary of Education, Linda McMahon, was confirmed so perhaps we will learn of some concrete plans for the Department of Education shortly.
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog