Income Driven Repayment Waiver +Subscriber Q &A

Brenton: [00:00:00] You've been slugging along, making student payments for what seems like an eternity, but you may be closer to having those loans wiped away than you realize. Tap in and see why. Hello, this is Brenton Harrison of Escape Loan Debt and your host for the Escape Student Loan Debt podcast. The past few episodes, we've been talking about some of the allowances and forgiveness programs and special waivers that have been made available to people who are pursuing things like Public Service Loan We've covered some of the details of plans like income driven repayment plans, and as we've started to post some of these things on social media, we've had followers and subscribers who have asked us about applications they've submitted where they haven't seen their credit for their forgiveness updated on their account. So hopefully this episode give you some context into how these payments will be credited, when they'll be updated, and especially in case of income driven repayment plans, a one time only correction of past inaccuracies [00:01:00] that will get you closer to having loans forgiven than maybe you originally realized. If you'd like to cover some of your questions on these podcasts, we're happy do so. All that we ask that you send proof that you are following and subscribing this podcast to us via screenshot posting on your story and tag us or send it to us at Escape Student Loan Debt on Instagram. We've talked in previous episodes about the driven repayment plans. These are federal repayment plans for people who want to pay a percentage of towards their discretionary income each year, rather than paying the amount that's actually needed to pay off their student loans in full. If you are trying to pay off your loans in full, there are federal repayment plans available, such as the standard plan, the graduated plan, the extended plan. Not all these are great plans, we'll cover in future episodes, but with those more conventional plans, you have a period of time in which you have to repay your [00:02:00] loans in full. And whatever you are paying is designed to make sure that debt is fully extinguished by the time that repayment period hits month zero. Income driven repayment plans are not necessarily designed to pay off your debt in full. It's only intended to make sure that a a of your discretionary income until the earlier of those loans being off in full or after years of payments. And for these plans, if you've been paying for 20 or 25 years there's $999,999 left on your student loans, they will still be wiped away as long as you covered your payment during those 20 or 25 years that you're required to do so. That's an important wrinkle and one of the things that Federal student Loan servicers have with over the years is giving student loan borrowers an accurate account of how many credits they have in terms of payments towards [00:03:00] that 20 or 25 year requirement. You have people are are going back forth between their student loan servicer, which might have changed or three different times over the years. They're checking with student aid.gov, and when they ask the different entities exactly how many payments do I have towards my 20 or 25 years, no one can give them a straightforward answer. That's not the only thing that student loan servicers have struggled with over the years, some things willfully, some things un willfully. Another area of concern that has been uncovered as the Department of Education has researched these inaccuracies centers on something called forbearance and deferment. These are all topics we'll cover in more detail in episodes, but I wanna make sure you an accurate understanding of some time sensitive rules that are impacting you in the next few months. Deferment and forbearance, to put it simply, are two different ways that place a pause on your federal student loan payments. As we get deeper into intricacies of [00:04:00] how deferment and forbearance impact your loans, you'll understand that student loan servicers love when you go into deferment or forbearance because when you come out of either status, it only increases the amount interest that's growing on your loan. So it's not something that they have actively deterred borrowers from entering into. And when you look at the regulations regarding deferment and forbearance, there are some things they were supposed to adhere to that they did not. And one of those things is that they were not supposed to allow student loan borrowers to be in forbearance for longer than 12 months consecutively, or 36 months cumulatively over course of the repayment period. They definitely didn't follow this because I personally know student loan borrowers who have been in forbearance status for or three years in rin row, less cumulatively over the course of that repayment. All of these errors and inaccuracies led the Department of Education make amends wanted to some wrongs and [00:05:00] then make a better path for the future. And they are making this attempt by creating something called the IDR Waiver, the Income Driven Repayment Waiver. And this is designed to give credit towards forgiveness for student loan borrowers across the country who may not be in driven plans, and it's also designed to make sure that moving forward there's a much clear cut process for finding where you can get an accurate count for your repayment credits. So what I thought we would do is read directly from the Department of Education studentaid.gov put link to this page in the show notes. If you're listening to us, you'll be able to find it there. I always encourage you to also check out some of our videos on YouTube so you can see on screen what we're covering. So you can see here that the Department of Education will begin working on implementing these changes immediately for this IDR Plan waiver, but you may not see the credits accounted for on your Student aid website until the [00:06:00] fall 2022, and that is a generous assumption. I would assume there will be of people out there who won't see these payments reflected until 2023, early in the year or even towards middle of the year. But let's see what some of these payments will be. As of this initiative, the Department of Education will conduct a one time only revision of the IDR qualifying payments for people who have either direct loans or federally managed F E FFEL loans. I promise you there's a reason that we go through some of things that we will go through over the course of this podcast. This is why we took such time to go through the differences between federally owned loans, direct loans versus FFEL loans. listen to that history of loan debt series, you know that there are federal family education loans that were initially managed and owned by private banks. And when the Department of [00:07:00] Education switched to direct loans only they bought essentially some of those old FFEL off of the books of those banks. But there are still thousands of Federal loans that are managed by private banks that are not eligible for this revision. If you have a privately privately managed FFEL loan, have to consolidate that loan a new direct consolidation loan, we'll put the link to that in show notes as well, in order to have this revision counted. But if you want to make sure that's automatic, have it automatically revised, you have to have a federally managed loan, or you have to have a Direct Loan. You can they will do this revision for people who have any months in which they were paying their loans, regardless of the loan type or loan repayment plan. What that means is that they are taking people who in those plans, like standard plans, extended plan, graduated plans that typically are not [00:08:00] for forgiveness, and they will give credit for any months you are in repayment under those loan types and loan plans towards the 20 or 25 years by income driven repayment plans. They're basically saying if you want to switch up and have your student loans forgiven under income driven repayment, we're gonna give you a one time only opportunity to have any payment you've made towards your federal student loans counted, even if those plans weren't income driven repayment plans. They are also revising the account credits for those who spent more than 12 months consecutively, or 36 months cumulatively in forbearance with their federal loans. Remember, that's against guidelines. So the way that will work is that any month exceeding those allowable limits will be credited forgiveness. If I have my loans in forbearance 15 months consecutively, which is three longer than what is allowed, then I will get credit for months 13, [00:09:00] 14, and 15 when it comes to my tracking for loan forgiveness. If I have my loans in forbearance for months cumulatively, more than the allowable guidelines, I will get credit for months 37, 38, and 39 towards my path to forgiveness. They are also giving credit for months spent in deferment, with the exception of those who deferred their loans because they were in school, for those who were in deferment prior to 2013. And then lastly, any time that you were in repayment prior to consolidation on consolidated loans. In our most recent episode where we talked about the public service loan forgiveness waiver, we covered that under usual plan guidelines and public service loan guidelines could consolidate your loans put them in where they're eligible public service loan forgiveness. But in doing so, you would lose credit for any payments you made prior to consolidation. Under this IDR Plan waiver and under the public service loan [00:10:00] waiver, they are allowing you to keep the credit for past payments made on consolidated loans prior to that consolidation process. Now let's assume that in doing this one time revision, the Department of Education finds you have already met your 20 or 25 years requirement. That is great because you would be one of the people out there who can see their loans automatically forgiven without having to do any applications. wait for them to give you an accurate assessment and your loans would be wiped away at that time. If you have held or managed loans, which can't be forgiven in that status, but you have been in payment for that loan for 25 years, you can consolidate that loan using a direct consolidation application, and once it's a direct loan, you would then see that loan automatically wiped away as well. And here's another great thing. If you have made these qualifying payments and they find that not only have you [00:11:00] met that or 25 year threshold, but maybe under this revision you've been paying for 27 28 years, you would receive a refund for all of the months that you paid beyond that 20 or 25 year requirement. This is something we on Instagram channel based on a question we got from a subscriber. So I encourage you guys to send questions in as well. Do not worry. In almost all cases, you have overpaid when pursuing a forgiveness program under the federal government, you will at some point in time get a refund for those overpaid months. And after the break, we'll tell you when and how you'll see these credits apply to your account. Full advertisement break. So when are you gonna see these revised credits applied to your account? Direct on the Department of Education website they are being pretty transparent that it might take a a As a matter of fact, even though they're telling people that they won't see these revised credits put into place [00:12:00] before the fall on their website, they tell you for those who have held loans, they can complete that process before the Department of Education implemented these changes, which is estimated to be no sooner than January 1st, 2023. But just because you don't the impact now doesn't mean that you won't see it later, but I do understand that means that you're asked to trust the federal government and the Department of Education and your student loan servicer, a number of different entities that haven't necessarily earned that trust over years. So what I would encourage you to do is to keep an accurate account of all documentation you've submitted to your loan servicer and to the Department of Education, if you have emailed them, the emails and archive them. If you have a fax, If you fax them, make sure you keep a receipt that fax went through successfully, and I would even at this point, throw as much at the wall to see it sticks as possible. [00:13:00] If you're worried. I would much rather them tell you that you submitted an application 20 times and you only needed submit it once than I would you to submit one app incorrectly. But in the grand scheme things, a opportunity that bookends a number of different changes we've seen through things like public service loan forgiveness,, loan forbearance, student loan servicer changes, and it's a whirlwind of changes keep track of, but we're gonna do our best to keep you abreast of changes in the marketplace and make sure that when all these things calm down, we get to some of these foundational elements of student loans so you can build your knowledge base and get closer to having these loans reduced, forgiven, reorganized, or expedited. I'll see you soon.