COURSE PREVIEW! : Student Loans Back! What Now?! [Session 1]

Brenton: Hello, this is Brenton Harrison of Escape Student Loan Debt and your host for the Escape Student Loan Debt podcast. If you're looking at your calendar and saying, hey, doesn't he typically release episodes on Friday? You are correct. It is Thursday and we're releasing an episode because this is not a typical episode. There will be one of our more typical 15 minute Friday episodes that we release tomorrow. But what I wanted to do is give you a preview of some of the stuff that we're covering in our course, Student Loans Back What Now? If you have not been keeping up, we have a live course that we are in the middle of. We've been meeting on Tuesdays and Thursdays. This Tuesday was the first session. We have another session today, Thursday at 6 p. m. central time. We've been going over everything that you need to know to get your loans back in good shape and have a strategy, for when federal repayments start in October. So what I thought we would do is there are four live sessions. If you sign up for the course, you not only are able to sit in on the live sessions, which are classroom style, we've had people ask very specific [00:01:00] questions and get very specific answers about their student loans. We record the instruction time. We do not record, record question and answer time. If you join the class, not only do you get access to me live, you also get lifetime access to the recording. So I would say, even if you can't join live, just having access to the recording would still be valuable. So since there are four sessions, I thought it wouldn't be that big of a deal to let you listen to one to get an idea of the depth of advice that we're giving and how we're making sure that you have the structure that you need in advance of October. So after the intro, you are going to hear session one of the Student Loans Back What Now course. If you're still interested in joining for the last three sessions or to get the access to the recordings, which you have lifetime access to. So today's date is Thursday, September 21st. What we will do is we will put not only the link for you to purchase in the show notes, we'll also put a special discount code and we'll keep that discount code active until Friday. So Friday, [00:02:00] September 22nd, it will expire at midnight. So we'll give you an incentive to make sure that if you're interested, you go in and get a discount since you missed the first live session. But after the break, you'll hear me again in session one of our course, Student Loans Back What Now? Are your student loan payments or loan balances a major obstacle in your financial life? Then tune in and let's escape student loan debt. Here is the agenda for the four sessions. We are going tonight to go over registration and documents. So there will be some, uh, stuff in terms of getting into the details for things you need to know. But what we want to make sure tonight is that you have a foundation where you're signed up for all the sites you need to be signed up for, that you have a baseline understanding of the structure of your student loans, what your payment plan is. When that payment plan will change, depending on the payment plan that you currently have, who your loan servicer may be. We're going to go over all [00:03:00] of that tonight. In session two, we're going to go in detail, excuse me, over forgiveness waivers. There's two main forgiveness waivers that we're going to talk about multiple times throughout this course. One of them is the Income Driven Repayment Plan Waiver, a one time offering, a very huge deal. We want to make sure that you have all of your credits updated for income driven repayment. There are also people who have been paying their student loans who have worked in public service, either for a non profit or a government entity. They are potentially also eligible for the Public Service Loan Forgiveness Waiver. So in session two, we're going to talk in detail about those waivers, and we also are going to make sure that we give you a timeline if you're already on track for forgiveness for when you might receive that for forgiveness, or if you are, um, not quite in the place where you're already ready for forgiveness, we'll at least make sure that you know how long it will take to see those credits. Updated. In Session 3, [00:04:00] we're going to go over payment plans and strategies. So there are a lot of people who are wondering how to pick a payment plan, how to manipulate their payment plan in a legal way. We're going to show you how to identify a payment plan that might work for you and some things that you can do moving forward once student loan payments restart to lower your required minimum payment towards your loans. And then in Session 4, we're going to talk about How to Decide Between Having Your Student Loans Refinanced with a Private Lender or Aiming for Forgiveness. So those are the four sessions, but tonight we're going to talk about registration and documents. So, let's get into it. The very first step in the entire course, depending on when you all registered and got the email, you may not have completed this step, but step number one... Register at StudentAid. gov. Every single one of you, if you have a federal student loan, you have a student [00:05:00] loan servicer. That could be Mohela, it could be Aidvantage, Nelnet, whatever. Wherever you're getting emails, that is the entity that the Department of Education is contracting with to service your loans. There is one website that the Department of Education uses as the centralized location for all student loan data. So the first thing we want you to do, if you have not already registered for a profile at StudentAid. gov, you need to register for a profile. If you do have a profile at StudentAid. gov, I want this to become the place that you go to look for All student loan data. There are several reasons for that. The Department of Education has found out that many of these loan servicers has not been doing a good job. So they have an initiative called the NextGen Initiative, where over the course of the next five years, they are trying to essentially phase out any need that you might have to go to your student loan servicer site in the first.[00:06:00] So, if you're trying to change a payment plan, sign up for a payment plan for the first time, if you have public service loan forgiveness credits for which you might be eligible, and you're trying to verify your employers, submitting documentation, they're trying to, over the course of the next five years, make studentaid. gov the site where you can do all of that. So, as they transition towards that site, studentaid. gov needs to be where you register to have a profile. If you could, give me a thumbs up if you do not already have a profile with StudentAid. gov. If you have not, just in case there's somebody who watches the recording and hasn't, when you sign up, they're going to ask for your social security number, they're going to ask for your address, your name, because you might have had a different name when you got these student loans, all of that information. It does not reflect your loan data immediately. What they do, because there's been name changes, because they might have to pull it from multiple servicers, they take your social security number, they [00:07:00] connect your loan data in the Department of Education database to that social security number, and that can take two or three days. So if you sign up tonight, you probably won't have your aid data reflected in your account until maybe around Friday or so. But I would highly encourage you between now and the next session, I would do it today, maybe it's done by Thursday, and we can dig into some of the loan data because we're even tonight, we're going to go through some of the stuff that you find on that site, but highly, highly, highly encourage you to sign up for this profile, and it will take two to three days to connect your loan data to your account. Now, Once you have logged on, you're going to be able, among other things, to go to a dashboard. That dashboard is going to have a little emoji or whatever you call this little person in the top right corner, or it might just show your name. When you click on your name or that emoji, it's going to be able to show you your dashboard or your aid data. And on this dashboard, there's [00:08:00] a lot of information that you can see just from the jump as it pertains to how much you owe. So you're looking at a de identified dashboard of someone that we worked with in the past who gave us permission to use it. They have student loans, in this case, with principal of 275, 000. And with federal student loans, they keep the interest separate from the principal. So they have a interest of about 4, 000. So this person owes about 280, 000 in student loans. You can also see their loan servicer. We're gonna talk about the importance of identifying your loan servicer in just a second. But on this dashboard, you're gonna be able to identify your loan servicer in the right corner. If you are pursuing public service loan forgiveness, we'll talk about this shortly, identifying your loan servicer is, um, the first thing you need to know because eventually, if you're not already eligible, eventually we're going to move your loan servicer to a servicer called Mojila. So if it's not already named [00:09:00] Mojila, we need to know. So this person uses Advantage. That is their student loan servicer. When you come on to this dashboard, the first thing that I'm interested in knowing, so if you click on view details, it will take you to another page. And on that page, you'll be able to see a wealth of information. We're going to go through each of the bits of information you'll find. But one of the first things that I want you to identify is your student loan type. I'm going to walk you through the types because this may be one of the most important things that we cover in terms of knowing whether or not your loans are good as is, and maybe we just need to submit some documentation so you're eligible for some of the things that we're going to discuss. Or if you need to consolidate your loan. So this is a big slide because this slide is going to let you know from the jump, whether you need to consolidate any ineligible loans into what's [00:10:00] called a direct consolidation loan. Let me walk you through why. Here, when you click on the View Details section, are some of the loan types that you might see. There are loans called the FFEL set of loans. These also might reflect as what's called Stafford Loans. And you might have a Stafford Unsubsidized Loan, or a Stafford Subsidized Loan, an FFEL Unsubsidized Loan, or a Stafford Unsubsidized Loan. And when you see this, These loans came from a period in time, as crazy as it may sound, when you could have a federal loan that was not actually owned by the federal government. It was just backed by the federal government in terms of a guarantee. So there are FFEL loans that are called federally held, meaning they are owned and managed by the federal government. And then there are FFEL loans that are privately held, meaning they are likely held by a servicer or a [00:11:00] bank, and they are just. Backed by the good faith of the federal government. It is incredibly important if you have an FFEL loan that you listen to this. The odds are, if you have these loans now, that you'll have to consolidate them. I mean, it would just, in almost all circumstances, it would benefit you to do so. In the small instance that you don't, if you have an FFEL loan. We can identify whether it is federally held or privately held based on the name of your student loan service, which I'll cover in just a second. But before we even move on, if you see your loan types and you see an FFEL loan or a Stafford loan, that is an immediate red flag. And I expect you to ask me some questions during the break, but it's likely that that's going to lead you to need to refinance your loans. You also will see a type of loan called a Perkins loan. Another red flag, if you have a Perkins loan, unless you just are [00:12:00] trying to have your student loans paid off instead of forgiven, you almost certainly will have to refinance your student loans. So these are the problematic loan types as it pertains to some of these waivers. The loans that we're looking for are direct loans. These are the quote unquote good loans. You can have many versions of them. You can have a direct loan. You can have a direct plus loan, a parent plus loan, a subsidized loan, an unsubsidized loan, a direct consolidated subsidized loan. If you see direct, we're in good shape. If you see FFEL, Stafford, or Perkins, we need to make sure that you don't have to consolidate, but you probably will. Direct is good. Anything else, might have to make some adjustments. Here is why. Income Driven Repayment Waiver. This is the first instance where you will see the potential benefits of consolidating any ineligible loans into an eligible loan. And we will walk you through the [00:13:00] consolidation process. Here's what it means. For those of you who are not familiar. An income driven repayment plan is a type of payment plan. It's not just one. There's a number of plans under this umbrella. So there's this big umbrella called income driven repayment plans. And each of the plans under that umbrella has its own idiosyncrasies. But the general thread of those plans is that instead of basing payments off of what you actually need to pay off the loan in full, they base it on a percentage of your income. When we do the payment plan session, we'll talk about what it means to, you know, consider income. But conceptually, if I owe, I actually gave this example, there's some people in the room who were in the room on Saturday. If I owe a million dollars in student loans, and you owe 100 in student loans, and we're on the same income driven repayment plan, and we have the same income under these plans, we will have the same student loan payment. [00:14:00] has no connection to the loan balance all about what you actually make. Now the problem with that example is that if I owe a hundred thousand or a million dollars in student loans and maybe I'm paying 50 bucks a month, it is clear that I'm not going to pay enough to actually pay my loan balance down. As a matter of fact, it's going to increase in most scenarios. So the other element of these income driven repayment plans is that. If you have been paying on them for 20 or 25 years, any remaining balances are forgiven. So in the scenario that I gave, if I owe a million dollars and I'm paying 50 bucks a month for 25 years or 20 years, it doesn't matter that I only pay 50 bucks. They're going to forgive whatever's left on my student loans. Now, in usual times, You had to be on those plans for the entire 20 or 25 years to have your student loans forgiven. You could not just pay on another plan for 19 years and [00:15:00] then in the 20th year switch to an income driven repayment plan and get your loans forgiven. You had to get 20 or 25 years worth of credit in order for them to wipe it away. There are... Probably millions of people who are either not on those plans because they didn't know how they worked and were afraid of them, or they were on them and got off them, for whatever reason, they might have thought they were on a plan and were not, for whatever reason, they did not accrue those 20 or 25 years credits, but they have been paying for longer than 20 or 25 years. What the Income Driven Repayment Plan waiver does is no matter how long you've been paying your student loans, it's going to give credit for those past payments as if you were on an Income Driven Repayment Plan. If you've made five years worth of payments, you now have five years worth of credit towards loan forgiveness, even if it wasn't an income driven repayment plan. 10 years, you have 10 years worth of credit. 20 years, 20 years worth of credit. 25 [00:16:00] years, that means that you are eligible for immediate forgiveness. So no matter how much you've paid, no matter if it was a late payment, a partial payment, if you have at least that amount of credit, We can do some things throughout this course that will show you how to be eligible for potentially immediate loan forgiveness. Now here's the thing about this. In order to be eligible for the waiver, you have to have either a direct loan or you have to have a federally owned FFEL loan. So this is the first instance where you can see that it might benefit you just to be safe to consolidate an FFEL loan or a Perkins loan because if you have an FFEL loan, that's. privately held it's not eligible at all. It has to be a direct loan or a federally owned FFEL loan. Now, how do you know if it's a federally owned FFEL loan? When you click on the view details page, it will not show it on this page. When you click on view [00:17:00] details, you can go through each individual loan and it will show you your loan service cert. If you see on that page something that says Department of Ed Slash. And then the name of your servicer, it's a federally held FFEL loan. If Department of Education is in the title, it's federally held. If you just see the name and you don't see Department of Ed or Ed anywhere on that view details page, you have a privately held FFEL loan, which is not eligible for the repayment waiver. We have to take some steps to make you eligible, but don't worry. Anyone can be made eligible with a federal loan. The next thing that you will see with these, um, student loan servicers, as we mentioned, if you are pursuing public service loan forgiveness, and there are some of you in the room that I know work for non profits or government entities or churches, then If you already have 10 years worth of payment history, don't think about following any rules. Just think, I've had [00:18:00] student loans for longer than 10 years. There's a possibility I might be eligible for Public Service Loan Forgiveness. Public Service Loan Forgiveness, instead of 20 or 25 years, is a 10 year program. If you have 10 years worth of payment history while working for a non profit, you could have your loans immediately forgiven. If that is you and you have student loans where you're like, I got 12 years worth of payment history, I might be already eligible to have these things wiped away. At some point, if you do not already have MoHELA as your loan servicer, we're going to need to get your loans to MoHELA as a part of the forgiveness process. MoHELA is the only federal student loan servicer that processes public service loan forgiveness applications. You can get public service loan forgiveness no matter who your loan servicer is, but when it's time to actually have them wiped away, at some point, they have to be transferred to MOHELA in order for that to take place. Are [00:19:00] we good so far? I'm going to pause the recording. Someone please remind me to restart the recording because I will definitely forget, but I'm going to pause the recording for just a second because we've covered a lot already. Are there any questions before we move forward? If you have a question... And you're, uh, you're feel free to hop off of mute or you can type it. It's up to you. Alright, so the second part of these waivers, the Public Service Loan Forgiveness Waiver, let me tell you why this is so important. The Income Driven Repayment Plan Waiver, it is, um, it is retroactive and they're going to look Back in time. And as long as you have consolidated any ineligible loans by December 31st of this year, you will be eligible. So if you have that FFEL loan, as long as you hop in before, uh, December 31st, you'll be okay. You could. Consolidate those loans December 30 if you'd still be okay, although I would advise you not to wait. [00:20:00] With Public Service Loan Forgiveness, there is also a waiver that's a one time waiver. If this happens again, it's because there's probably been another COVID type event, so let's pray that this is a one time waiver, where they are also going back and saying if you're pursuing this, Any payment towards any payment plan of any amount, doesn't matter if you are following any of the other rules, that payment will count towards your 10 years of credit as long as you have worked for a non profit or government entity. Now, we'll get into all the other ways that they could add credit. It's more than just making a payment. But here's the thing, this waiver technically expired last Halloween, but what they have said is that if you take care of what you need to take care of before December 31st, which for those who are ineligible, is consolidating those ineligible loans, they will give you credit for public service loan forgiveness. So they're essentially saying technically that waiver ended, but because we already have to update your credits for income driven [00:21:00] repayment plan waiver. When we do that, we will also update your credits for public service loan forgiveness as well. Now, let's say, because we had a person ask during the question and answer, that you have consolidated your loans, that you are trying to get your credits updated, but you do not yet have the 10 years of credits that's needed to have your loans immediately wiped away, which I'm telling you guys, we've done this and we've had people's loans. Once they get to their account and reviewing it, we've had their loans immediately wiped away. But if that's not you and you have seven or six or four years worth of credit, when you consolidate those loans, you have to pick an income driven repayment plan moving forward. If you have more credits to receive, it's the typical rules that apply. This is a backwards looking waiver. It's not forwards looking. Backwards looking, they're saying if you weren't on the right type of payment plan and you have to be on an income driven repayment plan to [00:22:00] be eligible for public service loan forgiveness, we're going to give you one time, hey, it's all good, it's on us. But moving forward, if you're still trying to get credits, you have to follow the typical rules. And the typical rules say that one of the things that has to be in place is an income driven repayment plan. So to the question of the person who asked. During the Q and A, when you sign up for that new payment, it has to be an income driven repayment plan. In Session 2, we will talk through how to pick those plans, either Session 2 or Session 3, but we'll talk about how to make sure you get that progress. Alright, let's keep moving. Now, once you have identified your loan servicer, this is all about making sure that you're up to date with information as, like, when it comes to where you live, what your contact information may be. I cannot tell you how many times I look at people's studentaid. gov profile, and then look at their student loan servicer profile, and they have different contact information. [00:23:00] An old address, an old name. like a maiden name, uh, an incorrect phone number. All of that stuff needs to be refreshed and verified with your current loan servicer. The reason that they could be inaccurate is because many of these loan servicers went out of the business during the pandemic and they transferred your data to the servicer that took over their accounts. AidVantage was one of those. There was no AidVantage in federal student loans prior to the pandemic. Well, at the time they sent the loan over, the Department of Education sent over the contact information they had on file on that date. So if you have moved, if you have changed a phone number, if you have changed a name, if you have changed an email address, that may be out of whack with your current loan service. So you might be getting emails and say, I'm good to go, but not know that they have the wrong address. You need to log in and update all of that information. If you don't already have a profile on the site, register for [00:24:00] a profile on the site and confirm your contact information. That is important because when the Department of Education, there are some people who tonight may even be on the call who are already eligible for loan forgiveness. If they find out that you have made more payments than are needed, they will actually refund you those payments, but they send a check. So if they send a check to the wrong address, not very good. If they have the wrong email address on file, they may be contacting you about a missed payment, a late payment, a change to your structure. They have the wrong email address on file. They won't get it. I don't really know many student loan Rs who proactively call people's cell phones unless you owe them money, but it's just good to confirm your contact information. The next thing is you need to register for. E statements. E statements just make it easier. If you're a snail mail person, um, just trust me on this one. When it comes to federal student loans, you do not want to rely on paper for this entity. I'm all for it. I like [00:25:00] receiving some mail. If I get a bill, I'd rather get a paper bill than an email bill because I miss emails. But with the Department of Education, if you do snail mail, it can take them months to send you information that you might be able to access immediately if you have an E statement. And then lastly, sign up for auto payments. If your loan servicer has not changed, or even if it has changed, so let's go first to those who haven't changed. You might have been auto paying your student loans prior to the pandemic. That connection has severed. So if you're getting a bill saying this is what you owe on student loans, and you're expecting that it's going to auto draft because that's what used to occur, it will not occur. Most loan servicers have already sent an email, you know, asking you to sign up for auto pay, but if you haven't done it, you need to do it. Um, that's the biggest reason for those who had their current servicer. If you do not have a servicer that you had pre pandemic, then they don't even have your information to auto draft in the first place. So you need to go and set up [00:26:00] auto draft, um, unless you are just the type that likes sending in a check or logging in online, which I would not recommend, sign up for auto payments. Next, identify how much you are actually paying. So now we're getting, we had a question about identifying payments. We want to identify the payment amount and the payment plan. So now we're going to get into how you can identify what you were paying prior to the pandemic. So... You've seen this page. This is the page we referenced where you log into student aid.gov and you are able to see a dashboard on this dashboard. And I want all of you to do this before next session, if at all possible. On this dashboard, you will see view details and then once you go to view details on the next page, in the top right corner there's a section, uh section that says, download my aid data. Okay? Very important that you download this data file. When you download this data file, it will look [00:27:00] like absolute gibberish, but throughout this course, we're going to tell you how to work through this file. This file is the quickest place for us to figure out what you were paying prior to the pandemic. It is the National Student Loan Data System file. Alright, this is what an NSLDS data file looks like. Like I said, it looks like gibberish. Um, I'm going to show you a site that will break down some of the information in a much quicker format for you. But in terms of identifying your payment, this file is something that's good for you to know how to digest. So the first thing you need to know is this file is always going to be time specific. It's going to give you the time that you requested the file. That's going to be when, uh, you have the date stamped. That's important because every single month your loan data changes in terms of what your interest amount is, your principal amount. So you can't download this one time. If you're trying to get the most up to date data, you have to continuously re download it. So we requested this file in October of [00:28:00] last year. It's going to have your name, which obviously we've taken out, it's going to have your contact information. This is another quick way to verify all of your contact information with your student loan servicer. It's going to have your graduation status. So if you are no longer in school, it's going to have you as graduated. It's also going to show you the total current balance of your student loan. So Remember, we said this person owes about 280, 000. We can actually see student loan total, all loans, outstanding principal, 275, 000, student total, all loans, outstanding interest. You can see this on this category. So this first section here is literally just what's my contact information? What's my loan? What do I owe? The next section that you see is a listing of all of the student loans that are in the student loan data system connected to your name. So many of these, because this person happens to have consolidated their student [00:29:00] loans, are going to show a zero balance. You can see that they have a direct Stafford subsidized loan. Zero balance. Remember, direct is good. Direct Stafford unsubsidized. Zero balance. Let's see, they had an FFEL plus graduate loan. So this person at some point in time had a loan that was not eligible for public service loan forgiveness. Zero balance. FFEL Stafford subsidized. Zero balance. I'm going to go through here and I want to make sure that I don't see any FFEL loans with a current balance. What I do see I see Direct Consolidated Unsubsidized and Direct Consolidated Subsidized, and these have a current balance. So this lets me know that this person probably noticed that they had some loans that were not eligible, and at some point in time, they consolidated them into a direct consolidated subsidized and unsubsidized loan. But here's why this is important. First section. Um, identifying information, [00:30:00] next section, all of the student loans you've ever taken out. It then goes, and to the question of the person who asked this during the Q& A session, this then goes through the individual history of each loan. So, for example, this person had a direct Stafford unsubsidized loan. I can see when they took that student loan out. They took it out in July of 2012. I can see when they started repaying it. They started repaying it in October 2013. So, as you go through this student loan history, if you can identify the earliest date that you started repaying a loan, it will give you a heads up to know how much student loan credit you might Receive when these waivers are put into place. So I can immediately see October 30th, 2013. This person is now essentially 10 years removed from the date that they first repaid at least this loan. So they could potentially have 10 years worth of forgiveness credits, either towards income driven repayment [00:31:00] or public service loan forgiveness. Now for this loan, remember they consolidated everything. So as you go through the data of this loan, you'll see a loan repayment plan type. And you see standard repayment, but remember, this is a loan that was consolidated. So you're going to also see a balance for this loan. Balance of this loan is 0. So, this isn't the payment plan that we're looking for. This isn't the payment amount we're looking for. We're trying to identify the loans that currently have a balance, and we're trying to find the payment plan and amount that they're paying on those loans. So, we go through this, and we see all of these different loans. Direct Plus Graduate. Direct Plus Graduate. We know from looking at their loan data that these don't have a balance. We'll get towards the... Bottom here, let's find it. Alright, here's the first loan that we identify that has a balance. Direct, Consolidated, [00:32:00] Unsubsidized. As you go through this loan data, you'll be able to see the time they started repaying it. You'll be able to see the current balance, the loan outstanding principal. We now know that this loan has a balance. But here's what you will also be able to identify. You'll be able to see the loan repayment plan type. And that is revised pay as you earn. This is a type of income driven repayment plan and you'll also see a loan repayment plan scheduled amount of 513. So that's what they were paying for this particular loan. But remember that they have two. So we have to find the second loan. But we now know from looking at this document, the first loan that they have was on the revised pay as you earn payment plan. They were paying 513 a month. Now we find the second loan. Direct Consolidated Subsidized. We can see. that they are also on Revised Pay As You Earn plan. And under that plan, they were [00:33:00] paying 76 a month. So between the two loans, you have to total them up. It's not one or the other. You have to total them up. This person was paying about 600 a month on their loans prior to the pandemic, and they were on the Revised Pay As You Earn plan. So, very important that you go and you find that payment amount here and identify your payment plan. So we showed you that that person in our example, they were on the revised pay as you earn plan, and we showed you, they were paying about 600 a month. The revised pay as you earn plan is the payment plan. Now here are some problematic payment plans, where if you see this on your loan data, Talk in the question and answer. We'll talk about how to ratify it. We'll also talk in session three about how to pick the payment plan that's right for you. But here's some problematic payment plans. You should not be on a graduated plan. The graduated payment plan is a payment plan where the payment [00:34:00] starts low and it increases every two years. There is not much benefit to it. Most people sign up for it at the beginning of their repayment history because they are trying. To make sure that their payment is low. It's much easier in most cases to have a low payment on an income driven repayment plan than it is to have a graduated plan that continually stair steps up. Graduated plans are also not eligible for forgiveness. It's a plan that requires you to pay your student loans off in full. That is the right thing for some people. But if you're trying to pay your student loans off in full, there are better ways to do it than being on a graduated plan. The next payment plan that we want to avoid, this is as you're identifying the payment plan that you're on, then you want to avoid this plan, Income Contingent Repayment. Income Contingent Repayment is a type of income driven repayment plan. It's in that umbrella, or I should say under that umbrella. It [00:35:00] has the longest repayment period in terms of what's required before your student loans are forgiven and the highest payment. It is the most unforgiving of the income driven repayment plans. It is typically something that you see people sign up for if they took out loans for their children, which is called a Parent PLUS loan. I, as a parent, took out a student loan in my name for the benefit of my child. If you are in that scenario, we'll talk about something that you need to do, but there is a way to make sure that you're not under income contingent repayment. You want to avoid this plan at all costs. The next is called income based repayment, but there's a caveat with this one. Income based repayment is not, in and of itself, a bad plan. It is that there are better options available for some borrowers. And to me... Those borrowers who have better options would be borrowers who took out their first loan and had an outstanding student [00:36:00] loan before July 1st, 2014. I know that's a very random line in the sand, but just understand that if you owed student loans, On July 1st, 2014, and you're on income based repayment, there is likely a better plan available. That's why I showed you that loan data, so you'll be able to go out and identify when is the first time that I took out a student loan. Because if it's 2012, it may be, hey, I'm before July 1st, 2014 and I'm on income based repayment. Brenton said that I need to dig a little deeper because that may not be the plan for me. If you did not have a student loan by that time and you took out your first student loan after July 1st, 2014, income based repayment might be a good plan for you. We'll talk about it more in session three, but that's the line in the sand. July 1st, 2014, if you had a loan on that date, and hey, income based repayment, probably not a good plan. Post July 1st, [00:37:00] 2014, have income based repayment, not necessarily a bad plan. We'll talk about how to decide for sure in Session 3. Now, identifying payment changes. This one will be very helpful if your student loan payment is an income driven repayment plan. Graduated plans, we already mentioned. They increase your payment every two years. We need to get off of those plans. There are also plans called standard plans. A standard plan is like a car loan or a mortgage. You owe 15, 000. A standard plan says, hey, if you're going to pay this off in 10 years, here's how much you have to pay us every single month to make sure it's paid off in 10 years. Let me turn my light on. It's getting dark outside. All right, so. The Income Driven Repayment plans are a little different. With Income Driven Repayment, it's not like a standard plan where the payment never changes. Income Driven Repayment plans change every single year. [00:38:00] Remember, they are basing this payment off of your actual income, which means that as your income changes, so does your student loan payment. Now, based on the way that they calculate these incomes, they typically, for most people, they use a number from their previous year's tax return to calculate their payment. So I want you to think about this conceptually. Student loan payments were paused for most people in March of 2023. In March of 2020, excuse me. Now, by March of 2020, most people did not have their recent year's tax return publicly available. They might not have even filed yet. It might not have been in the IRS database. So if they're basing payments off of your previous year's tax return in 2020, the 2019 return for many people was not yet available. So they might have been making payments based off of their 2018 income. Even best case scenario would be [00:39:00] 2019, so now we're in 2023. It is highly possible if you have an income driven repayment plan and were paying prior to the pandemic, that when payments restart next month, you're paying based off of what you were earning 5 years ago or 4 years ago. Here's why that's important. Only you now, than you were at that point in time. If you're making significantly more now than you were in 2018 2019, then it is benefiting you for them to wait as long as possible before they ask you to update your income. If I went from making 50, 000 to 100, 000 now, I don't want them to find out that I'm making 100, 000 until as late as possible. If I went from 100, 000 to 200, 000, I don't want them to find out until as late as possible. For some of you, it's the reverse. Maybe you've lost a job or lost a side hustle. It's all about what was your income now versus then. If you're making less now, then [00:40:00] you want them to find out as soon as possible that you're making less now. But the first thing that we can do is identify what date they are using to ask you to change your income. This is the exact same file that we were looking at before. And right under the payment, there's a section that says Loan Repayment Plan IDR Plan Anniversary Date. IDR stands for Income Driven Repayment. So this is saying that for this person, and every person has their own anniversary date, for this person, their loan servicer is going to ask them, unless you tell them before what your income is, they are a point on their calendar where they're going to ask them on May 27th of each year what they're currently making. That's this particular person's anniversary. Yours is going to be different, and you can find it on your loan data file. But when you find this loan repayment IDR plan [00:41:00] anniversary, this line in the sand will let you know when your payment will change, and I'll show you why. When you look at your payment plan anniversary, and I know this is a lot, that's why we're doing question and answer. When you look at your payment plan anniversary, the Department of Education has already said that they are not going to ask anyone to recertify their income, which is just a fancy way of saying, we're not going to ask you what you're earning, Until March 1st of 2024, that is the first time that they will ask anybody, unless that person volunteers, and you would volunteer if you want them to know that you're making less money. But if you don't volunteer, they're not going to ask anybody before March 1st, 2024. What that means is that if your anniversary falls between now and March 1st, 2024, they are just going to kick the can a year. [00:42:00] As an example, let's say that you log on and it says that your IDR plan anniversary date is November of 2023. Well, that falls within that window. So, they're not going to ask you in November. They're going to wait till November 2024. Now, let's go into next year. Let's say that your anniversary is February 24th of 2024. That still is within that window. So that means that whatever your payment plan is for next month when they start, they're not going to ask you to change it and update your income until February 24th, 2025. We are going to show you how to calculate what your payments might be, so you can figure out if that's a good thing or a bad thing. There are many people out there where that's a very good thing, because it's essentially telling them, Oh my goodness, I have another 15, 16, 17 months before they're going to ask me what my income is. And because I'm making a significant... [00:43:00] significantly higher amount, I can plan out when my payment will change. And I can also, when we get to session three, have an idea of what it might change to. So there's going to be people out there who are going to go from 50 a month to 300 a month, or from 600 a month to 2, 000 a month. You want to know exactly when that will occur so you can plan accordingly. If my payment was going to go from 500 to 1, 000, I want to know exactly when it's going to change so that I can save that extra 500 a month, or I can pay down other debts that are in my budget so that I can take care of all those things before that higher payment kicks back in. So if you can identify your payment plan anniversary, it will tell you those things. The last thing before we open it up for question and answer. Is forbearance and on ramp because I want to plan for the scenario that you might be looking at that payment when you see that loan data file or you might have already gotten your bill and you might be saying I cannot pay that. Like it's not a matter of [00:44:00] me wanting to, I cannot pay that next month. This is something the Department of Education has done to protect borrowers as they re enter repayment for the first time in three and a half years. Typically, the consequences for not paying a federal student loan are incredibly harsh. They can garnish your wages, they can garnish your tax refund, um, in some states, you know, if you have a professional license, New York is one of them, you will be, like, they will suspend your professional license. It's just a whole bunch of stuff that you don't want from having a defaulted federal student loan, which is what occurs when you just stiff them on the repayment. Um, so what they are doing is they're saying, we're planning for the scenario that many people may just not have the financial means to just jump right back in immediately. So they are saying that between now... In September 1st of [00:45:00] 2024, if you miss a payment, if you make a late payment, if you make a partial payment, in terms of how they report it to credit bureaus, in terms of like, are you defaulted, are you delinquent, they are going to pause that until September 1st, 2024. So, if you're worried, oh, well, what if I miss, what they're going to do is they're going to say, For example, we sent John Doe a bill for their student loans for 50 and that's their payment for October. October comes, they don't get the payment. What they're going to do is they're going to retroactively put your account into forbearance for that month, which would mean that they're not going to give you any adverse reporting to a credit bureau. They're going to do that for a year. Now, they are already... promising that they're going to do that. But they are also saying that they cannot guarantee that your credit bureau might not [00:46:00] still report that payment as late. What they're doing is trying to make sure that doesn't happen. But if you're missing a payment, you'll be okay with your student loan servicer, but you may not be okay with the credit bureau. You need to check and make sure that if your student loan servicer doesn't say that you're late. or Delinquent or Defaulted, that your credit bureau also does not have you with that status. And if you're worried about that, we can show you how to dispute that, but you need to understand they will say that you were in forbearance. They are not guaranteeing that they can say that your credit won't push you as late, but they're doing everything they can to make sure that doesn't happen. They're going to retroactively apply forbearance. What they are not going to do. If they are not going to cover any interest that accrues on your loans during that period of time. Here's why that's important. I mentioned that income driven repayment plans have no connection to your student loan balance. Doesn't matter what you owe. So if your student loan balance is increasing, it does not [00:47:00] have any impact on your income driven repayment. It's going to stay the same, but let's say that you have a payment plan where you actually are required to pay it off in full, like a standard plan. Well, if you have a standard plan and the balance of your loans is increasing, it now means that you have to pay more each month to pay it off in full in that given time period. So if you take advantage of this and interest is growing on your loans and you don't have an income driven repayment plan, the next time that you sign up for payments, your amounts could have changed. I would say. If you know for sure that you can't make repayments, instead of depending on this system, I would consider, which we'll walk you through how to do, I would consider just asking for your loans to be put in forbearance. Don't wait. Don't assume that they're going to take care of it. I would just say, I can't pay. Can you put me in forbearance? For how long can I be in forbearance? But if you are planning to pay and are just worried about [00:48:00] whether you can make the payments each month, I would not be as worried because as long as you are getting on your feet between now and September 20, uh, September 1st, 2024, there is a mechanism in place to make sure that the effects of that missed payment are muted. So that was a lot for tonight. We're going to move into question and answer. We're going to stop the recording for tonight. All of these recordings will be available. You have lifetime access to them. Uh, and, and we're going to go from here into some things that you all might want to cover. One second