Episode Transcript
[00:00:00] Hey guys, I hope you have had a good week so far, or as good a week as you could have had given the circumstances and all the things we're seeing about student loans and the Department of Education and the like. Have a very quick episode for you today. No intro, no commercial, no outro. Because I don't want you to be misled into thinking that there's some major update when there really hasn't been. We're really only doing this episode because you may see things in the news that make it seem as if there has been a major update. So what occurred? Basically what occurred is this week, the 8th Circuit Court of Appeals really just kicked a ruling back down to the lower court regarding the save plan. We've gone through this many times. The save plan is currently on pause. There is no ability to make payments under the plan. They also, as a result of pausing the save plan, have paused the processing of forgiveness for all plans that were created under a similar statute. Basically meaning all plans that were created by the Department of Education. Those plans being pay as you earn and income contingent repayment plan. You can make payments under the other plans that are not saved, but once you get to the end of that period, if you're eligible for forgiveness, they're not processing forgiveness under those plans. They're only processing forgiveness for those who have met the requirements under income based repayment because that plan was created by Congress.
[00:01:29] So the 8th Circuit Court of Appeals, they basically looked at the ruling of the lower court which had basically put those things on pause. It had not definitively ruled on the legality of the save plan or the other plans that were created by the Department of Education. And what the Court of appeals said is we think that they were right. So we now are going to send this case back down to the lower court and ask them to confirm their opinion and in a permanent matter. So that's generating a lot of headlines for several reasons.
[00:02:01] One reason is because they didn't just say that they think that the court was right in terms of their thought process on the save plans legality. They also said that they think that the court has a point that there's a possibility that the ability to get forgiveness under the other plans created by the Department of Education was also lacking in legality, for a lack of a better phrase. So the thing that's generating the headlines is it is kind of another canary in the coal mine that the court system is going to potentially take the stance that not only save but also pay as you earn and income contingent repayment. Plan are illegal. Now, the court did say that the forgiveness that's offered after 20 or 25 years under income based repayment plan is legal because it was put into place by Congress. So if there is like a silver lining, they're not saying that the very concept of student loan forgiveness is illegal. They're saying there's a possibility that student loan forgiveness under plans created by the Department of Education is legal. It's not a final decision. They're just kicking it back to the lower court to confirm that decision. Even if they confirm that decision, you know, it could be appealed to a higher court after that decision is made. So there's really nothing new in terms of what you need to do. It's just a confirmation of a pause that is still in effect and them asking them to make a more permanent decision on what that pause will mean. It does not change anything about your strategy right now beyond what we've discussed in the past. Like I said, you still can get forgiveness under income based repayment if you've met that 20 or 25 years. Even if you've met your 20 or 25 years on another payment plan where they're not processing forgiveness, you can switch to the income based repayment plan so that they will then offer forgiveness. Once you have made that switch, you can still do public service loan forgiveness and you can actually do public service loan forgiveness on any plan. So if You've met your 10 years under income contingent repayment pay as you earn income based repayment, you can get that forgiveness under any of those plans. It's just the plans like pay and ICR where they're trying to have forgiven after 20 or 25 years that is currently in limbo. So again, no major changes, nothing for you to do. But I'm just sending you this quick episode because what I didn't want is for you to to see a headline, think that there has been something more permanent that has occurred and start to worry. So nothing more to worry about beyond what we have already discussed. So hopefully this was helpful. Hopefully this did something I don't want to say, you know, soothe your nerves or ease your concerns. It's just a, you know what time when it comes to student loans. Right now, like I said in the past episodes, we are going to have some more one on one reviews of people's student loan status. So if you are interested in having your student loans reviewed while we're in this kind of low, while we're waiting for some of these things to settle with the department, you can go to escapestudentloanedebt.comreview and we will contact you to get your information and set up a time if you're chosen, to have a complimentary review that we de identify and then post on the podcast. I will see you guys soon.
