Episode Transcript
[00:00:00] 2023 and you are closer than ever to making the first student loan payment you've had to make since March of 2020. In this episode, we tell you some quick tips you can know at the start of the year that will keep your student loans on the right track when those payments resume. Let's get started.
Hello. My name is Brenton Harrison, founder of escape student loan debt, and your host for the escape student loan debt podcast. I hope you all are enjoying the start of 2023 and that the new year is treating you well. In this episode, we want to give you just five quick tips of things that you can do to make sure that your student loans start off on the right track in this new year. This is incredibly important because if you have certain federal student loans, you have not been required to make a student loan payment in almost three years.
And by the time student loan payments restart, it will have been over three years. And I promise you, whether you think this is the case or not, you can fall out of the habit of understanding just how much of an impact student loans can have on [00:01:00] your finances and student loans can have on your budget.
So here are five things you need to know to start your student loans off right in 2023.
Number one, update your contact information with your student loan servicers and the department of education. When you look at the student loan landscape since March of 2020, in addition to the pandemic and freezing payments and freezing interest, you've also seen a lot of transitions as it pertains to student loan servicers themselves.
There have been a number who have looked at the difficulties that are faced with being a student loan servicer, the cost of doing so, the negative press that comes with doing so, and have decided that they're just out, they no longer want to continue partnering with the department of education to service these debts. And as a result, they have pulled out of the business.
Now to the student loan borrowers, whose accounts have been serviced by these private companies who are exiting the business, they are now being forced to transfer their loans to existing servicers [00:02:00] who are still in the ballgame. This is not something that you have to do in terms of signing up or agreeing to do so it happens with, or without your . , you might have gone to sleep. And when you went to bed, Navient was your student loan servicer, and you wake up the next day to get an email that lets you know, that Aidvantage is now your loan servicer. And that process of transferring the account happens between the two companies and you are not involved in that process.
The downside of this is because you're not involved in this process, you never have the opportunity to ensure that all of the information that Naveen is passing on to aid vantage is correct as it pertains to things like your address, things like your cell phone number or the best time to reach you.
Even your email address. And that is crucially important because over the course of the last three years, it hasn't been that relevant. You haven't had a student loan payment that was due. You haven't had interests that were growing on your loans. But the downside of this payment freeze is that for anyone who was previously paying their student loan payments Through auto [00:03:00] drafted payments, they have to tell their loan servicer that they would like to sign up for those payments again, before they restart; it does not happen automatically.
Now, if you have a new loan servicer who doesn't know whether your information is accurate or not, and they're trying to let you know that it's time to sign up. They're trying to let you know what your payment will be when you sign up. Or they're just trying to contact you for questions you might have about your account, and it's going to a wrong email or wrong address where they're leaving calls at the incorrect number. Then you're not going to get that crucial information. And at worst you would risk missing a payment by not understanding that you do have to sign back up to have them pull from your account.
So step one, you need to go to your student loan servicers website, whether it's your old servicer or whether you now have a new servicer, you need to create a profile if you have not already. And once you go to the settings of that profile, make sure they have an accurate phone number, accurate time to reach you and accurate address and an accurate email address.[00:04:00]
Number two, sign up for an account at studentaid.gov.
While the department of education partners with these private companies that are student loan servicers to service this debt, that relationship, as I mentioned, has become a little contemptuous. And there have been investigations that have found that these student loan servicers have misled borrowers.
They have neglected to tell them about better student loan options that might've been available to them.
And as a result, borrowers across the country have a feeling of confusion as it relates to where they stand, not just for their payment, their payment plan, but also the amount of credit they have towards forgiveness programs, like income driven repayment and public service loan forgiveness. So to combat this misinformation, to combat this confusion, the department of education has said that over the next several years, they are going to be pushing for the department of education, student aid website, studentaid.gov, to be the sole place where you can go to get the most up to date and accurate information as it [00:05:00] pertains to everything, student loan related. And you can already see the impacts of this concerted effort to move everyone towards this site.
For things like consolidating your student loans, submitting information for public service, loan, forgiveness, even figuring out whether you took out a Pell grant when you were in school, you can already do most of those things on the student aid.gov site. But in anticipation of this becoming the sole source, you want to make sure that just like you have an account and a profile with your student loan servicer, that you also have one with student aid.gov and can familiarize yourself with the layout of the site, because in the future, this will be the go-to piece of information that you need to manage your debts.
Number three. Once you've created a profile with studentaid.gov, you need to download your aid data file.
When you log onto your profile at studentaid.gov, it brings you to a dashboard. And on that dashboard, you can see the overarching details of your student loan balances.
And on that dashboard, you can click on my aid and view [00:06:00] details. Once you click on view details, that takes you to a screen that breaks down those loans in more detail in terms of the type of loan that it is the balance on each of those particular loans, when you took it out and the like,
On that second screen in the top right corner, there is a button that says, download my aid data.
When you click this information, if you're a PC person, it downloads it as a notepad file. I'm not sure how it downloads as an apple user, but it downloads a notepad file that gives you even more details as it relates to your student loans that will be key in understanding what your payment will be when student loans resume and what date they're expecting that student loan payment to start.
This is the key of step four, which we'll cover after the break. And that step is all about you understanding. Ending that payment that's upcoming and starting to build it into your budget. But the first step in doing that and understanding that payment is downloading that formal aid data file to find that [00:07:00] information.
Welcome back before the break, we ended with letting you know how to download your aid data file. And we share with you that that will be very crucial in you understanding what your payment would be whenever they decide to resume. As a reminder, there is a student loan payment and interest freeze currently in effect placed in effect by the department of education. And that will remain in effect until the earlier of 60 days following the Supreme court's resolution of the Biden's student loan forgiveness program, or June 30th, 2023.
What that means is that if tomorrow the Supreme court decided they were going to make a decision on that program, then 60 days after that date student loans would resume, that would put it at around March. But let's say that for whatever reason, they had not made their decision by June 30th of this year. That means that 60 days following June 30th, student loan payments would resume no matter what. It's the earlier of the two dates. Now, [00:08:00] when it comes to what that payment will be, it will be whatever it was prior to the payment freeze itself.
And since that was almost three years ago will have been over three years ago by the time they resume, it's easy to understand that you might have forgotten what that payment will be, but you can find it on the my aid data file that you download it in step three.
You have on the screen, an example of an aid that a file. And it's a huge document that tells you literally everything about every single student loan you've ever taken out. You can't do. And you have to scroll a ways down this document to find the current student loan that you have, especially if you've consolidated your loans in the past.
But once you get to the bit of information on the document that shares details of your current debts, you'll see a lot of information such as the payment plan that you were on prior to the pandemic. When you first took out that student loan, you'll see the amount of that loan that is principal versus the amount that's interest.
But you also see a bit of [00:09:00] information that tells you exactly what your next student loan payment will be. So you will see information that might say next student loan payment is planned to be a hundred dollars and you have to keep in mind that you might have multiple student loans. So there are people out there who took out loans, uh, in every single semester they were in school. So they might have eight different loans.
You might have a certain amount of your total loan payment going towards each of those eight different debts. So you would need to total them up to determine the final payment. You also have people who have consolidated their loans and they might've consols. Solidated some loans that were subsidized loans and some loans that were un-subsidized loans. Well, those loans can not be put together. So it doesn't matter if you had 50 different subsidized loans and 50 unsubsidized loans. When you consolidate them, you'll now have two loans. You'll have a direct consolidated, subsidized loan and a direct consolidated un-subsidized loan.
If that is the case for you, you [00:10:00] can't stop at looking at the one payment. You have to see what both of of them will be. And combined, that is what your new payment will be when student loans resume. We'll get into the details in a later episode about how to know when your payment will change, because if you're on an income driven repayment plan, you know, that those payments recalculate every single year. But you should have the comfort of knowing that if you're on these plans that are based on your income and you're like most people and your income before the pandemic is lower than it was after the pandemic.
You will probably get at least a few months when payments resume where you'll be paying based off of the amount of income you were earning in either 2019, or in some cases, even 2018 or 2017's earnings.
And then lastly check whether or not your loans need to be consolidated. We have talked about this ad nauseum; for almost every single program that we've talked about to this point: public service loan forgiveness, income driven repayment plans, adjusting all [00:11:00] these credits. Anything that you can think of, they only apply to direct loans. They don't apply to Perkins loans. They don't apply to Stafford loans. You have to have the word direct somewhere in your student loan title, to know that it will count and you will receive credit for everything for which you might be eligible.
You can find this information on the site or in the aid data file. If you go to student aid.gov, when you click on that view details button that I told you about, it will show you every single student loan that you have. If even one of them says Stafford or Perkins, and doesn't have direct in the title, it's highly likely that you need to consolidate and you can do so directly on the student, a website as well.
That process needs to be completed before may of this year, because for all of these programs, with the special adjustments, And the one-time allowances that we've discussed, the crucial deadline is may of 2023, to ensure that everything is in place to receive that credit when it's applied after July of 2023. [00:12:00] So a quick search of viewing your loan details will let you know whether you need to consolidate. If you already have direct loans, except for some special circumstances, you're likely fine as is. You just need to make sure that you wait and keep your eye on your loan balances and your forgiveness credits as we get past that July deadline. But these are five quick tips that you can know will make sure your loans are in good standing when the payments resume and when interest resumed. Once again, my name is Brenton harrison of escape student loan debt. If you like what you're hearing, please leave us a rating and review. Subscribe to our email list, and keep your eye out for our upcoming updated flagship program, escape stud
