[00:00:00] Speaker A: In this episode, we go through several.
[00:00:01] Speaker B: Upcoming deadlines for federal student loans and also discuss a recent student loan settlement that may impact your financial situation.
[00:00:09] Speaker A: Let's get started.
[00:00:12] Speaker B: 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.
[00:00:23] Speaker A: Hello. My name is Brinson Harrison of Escape.
[00:00:25] Speaker B: Student Loan debt and your host for.
[00:00:26] Speaker A: The Escape Student Loan debt podcast. This week's episode is one of those.
[00:00:30] Speaker B: Episodes where we're really just going through several different stories that are going on.
[00:00:34] Speaker A: Right now with federal and private student.
[00:00:36] Speaker B: Loans and how they impact you.
[00:00:38] Speaker A: So instead of there being like one.
[00:00:40] Speaker B: Central focus or lesson that we're trying.
[00:00:42] Speaker A: To teach, we're instead just going to give you a what's in the news?
[00:00:45] Speaker B: Type of rundown of things, of what.
[00:00:48] Speaker A: You need to be made aware. So we'll handle certain deadlines after the break, but before the break, we'll talk about just things going on in the news.
[00:00:54] Speaker B: And the first thing that we're going to discuss actually touches on what we.
[00:00:57] Speaker A: Covered in a very recent episode, which.
[00:00:59] Speaker B: Is the possibility, at least last episode.
[00:01:02] Speaker A: Was a possibility that the Fed may lower interest rates. Well, if you've been keeping up this week, they lowered the central interest rate.
[00:01:09] Speaker B: By half of a point, which essentially means half of a percentage. And as we've shared, this will impact.
[00:01:16] Speaker A: Several different areas of the economy, from.
[00:01:18] Speaker B: Mortgages to an indirect way, car loans.
[00:01:21] Speaker A: Home equity lines of credit, and an.
[00:01:23] Speaker B: Even more indirect way. When you see interest rates in the.
[00:01:26] Speaker A: General economy go down, you also see.
[00:01:29] Speaker B: Interest rates for certain indices go down, like the SOFR rate. And the SOFR rate is in an index that is used to really set the rates for a number of different.
[00:01:40] Speaker A: Things in our economy, like credit cards.
[00:01:42] Speaker B: But more importantly, private student loans. So if you have federal student loans.
[00:01:47] Speaker A: And you are kind of in that.
[00:01:48] Speaker B: No man's land where you're a little frustrated with things that are going on with the save plan, with understanding what.
[00:01:53] Speaker A: Your forgiveness credits may be, and you.
[00:01:56] Speaker B: See these interest rates for private loans creeping down to the point where it.
[00:01:59] Speaker A: Actually may be a wash, if not.
[00:02:01] Speaker B: More financially beneficial, to refinance it with a private lender, now is the time to start to look and see what those rates would be.
[00:02:10] Speaker A: The benefit of doing so with private.
[00:02:11] Speaker B: Loans, of course, is that you have.
[00:02:13] Speaker A: The ability to get a interest rate.
[00:02:15] Speaker B: Breakdown from various carriers by doing a.
[00:02:18] Speaker A: Soft pull of your credit, which will.
[00:02:20] Speaker B: Not impact your credit score in the least. If you do happen to see one.
[00:02:24] Speaker A: That, you know, perks up and is identified as one that's a real opportunity.
[00:02:29] Speaker B: To save some money. Only at that point when you fully.
[00:02:32] Speaker A: Apply would they do a hard pull of your credit which actually would impact your score. So as I've shared in the past, when interest rates are more competitive, I.
[00:02:40] Speaker B: Encourage you to do this every quarter.
[00:02:42] Speaker A: Or so, at least a couple of times a year. If you're in that camp where refinancing.
[00:02:46] Speaker B: A federal student loan and then a.
[00:02:48] Speaker A: Private loan is something that may be worthwhile, or if you already have a private loan, as we've shared, you can.
[00:02:55] Speaker B: Refinance that as many times as necessary.
[00:02:57] Speaker A: Without adding any amount to your balance. So it's worth keeping up with on a semi regular basis. The next thing we want to make.
[00:03:06] Speaker B: You aware of is a settlement that impacts those who have their loan servicer or had their loan servicer at one.
[00:03:13] Speaker A: Point in time as Navient. If you're looking on the screen, we're going to share an article, and that.
[00:03:19] Speaker B: Article is titled here's which Navient student loan borrowers may qualify for relief under $120 million settlement.
[00:03:25] Speaker A: And the first paragraph states, the Consumer Financial Protection Bureau last week said it.
[00:03:29] Speaker B: Had reached $120 million settlement with student.
[00:03:32] Speaker A: Loan giant navient that could lead to.
[00:03:34] Speaker B: Compensation for hundreds of thousands of borrowers. The CFPB accused Navient of steering student loan borrowers into expensive forbearances, miscalculating their bills and tarnishing their credit reports.
[00:03:44] Speaker A: And under the terms of the settlement.
[00:03:46] Speaker B: Navient is banned from servicing federal student loans ever again in quote.
[00:03:51] Speaker A: So let's talk about what this means conceptually.
[00:03:53] Speaker B: If they have ever been your servicer.
[00:03:55] Speaker A: Or you're someone who might have had.
[00:03:57] Speaker B: Sallie Mae in the past, which in some cases would be eligible for this settlement as well.
[00:04:02] Speaker A: We've covered how at Studentaid dot gov.
[00:04:04] Speaker B: Comma, you can see who your current.
[00:04:06] Speaker A: Servicer is by either just going to.
[00:04:08] Speaker B: Your dashboard or pulling up your NSLDs.
[00:04:11] Speaker A: Data file to see that information as well.
[00:04:14] Speaker B: But essentially what they're saying is the Consumer Financial Protection Bureau, which is the.
[00:04:18] Speaker A: Entity we've covered in the past, that you can escalate complaints to either the.
[00:04:23] Speaker B: Student loan ombudsman or the Consumer Financial Protection Bureau. They're in charge of protecting consumers, as their name implies.
[00:04:31] Speaker A: So they have identified a number of.
[00:04:33] Speaker B: Different things that navient has done that has misled borrowers.
[00:04:36] Speaker A: And some of them, and I'm reading.
[00:04:38] Speaker B: From this list, are charging fees to enter a forbearance, which is not something.
[00:04:42] Speaker A: They'Re supposed to do, charging multiple late fees for a single delayed payment, denying.
[00:04:48] Speaker B: Access to the loan payment history for.
[00:04:50] Speaker A: A borrower when requested, receiving inaccurate information about public service loan forgiveness program and.
[00:04:55] Speaker B: Their eligibility for relief or steering borrowers.
[00:04:58] Speaker A: Into interest accruing forbearances and not informing them about other options like income driven repayment plans.
[00:05:05] Speaker B: There is so much if you have not educated yourself about student loans, where you lean on your servicer to give.
[00:05:11] Speaker A: You accurate information, and you could have an unscrupulous lender who, for their own.
[00:05:16] Speaker B: Financial benefit, is steering you into stuff.
[00:05:18] Speaker A: That cost you more money or for.
[00:05:21] Speaker B: Something that's a little less, more treacherous.
[00:05:23] Speaker A: We have talked about in the past.
[00:05:24] Speaker B: That the fact of the matter is.
[00:05:26] Speaker A: If you listen to this podcast regularly, I don't want to pat myself on.
[00:05:29] Speaker B: The back, but I would say you are probably more informed than the average person who works customer service at these student loan borrowers. So it's highly likely that you run.
[00:05:37] Speaker A: Into someone who is just unaware of.
[00:05:39] Speaker B: Of different options that you may have for these federal student loans and put.
[00:05:42] Speaker A: You into deferment or forbearance, which adds money to your balance without telling you about other options. So as a part of this settlement.
[00:05:50] Speaker B: $120 million, what they have not shared is who is exactly eligible. They said all these things that Navient did wrong, but they haven't necessarily shared how you can make sure or find out if you're eligible for this settlement.
[00:06:03] Speaker A: They also haven't identified any particular way to apply or any system that navient is going to be used to, like.
[00:06:10] Speaker B: Notify people advance that they are part of the settlement.
[00:06:13] Speaker A: So it is highly possible that you could just get money in the mail as a part of this settlement without.
[00:06:18] Speaker B: Having to apply at all.
[00:06:20] Speaker A: And there also is no details as.
[00:06:22] Speaker B: To like what amount you may receive.
[00:06:24] Speaker A: Or how they're going to calculate who.
[00:06:26] Speaker B: Was burned more on their end than another consumer. So this is one that you need.
[00:06:30] Speaker A: To be aware of if you are.
[00:06:32] Speaker B: Someone who has had navient or Sallie Mae in the past. And it's something where unfortunately, until more details come out about the settlement, which I'm sure will occur over the next.
[00:06:40] Speaker A: Several months, it could just be wait and see mode. But maybe you get a surprise in the mail that's a pleasant surprise, where.
[00:06:47] Speaker B: You open it up and it's a check from that servicer that I'm sure you hate so badly.
[00:06:52] Speaker A: So those are a couple news stories.
[00:06:53] Speaker B: Of the day as it relates to federal and private student loans.
[00:06:56] Speaker A: And after the break, we'll go through.
[00:06:57] Speaker B: Three upcoming deadlines that you need to know of if you have federal student loans.
[00:07:03] Speaker C: This is the escape student Loan Debt.
[00:07:05] Speaker D: Podcast, a show for established professionals whose student loan payments or loan balances are impacting their marriage, their business, their credit, or their dream of achieving home ownership.
[00:07:16] Speaker C: We'll be right back.
[00:07:20] Speaker E: Are you interested in learning the tools.
[00:07:22] Speaker B: And techniques we use to get student.
[00:07:24] Speaker E: Loans forgiven, reduced, reorganized, or expedited? Well, great news. We're currently updating our flagship course, escape student loan debt, to reflect the current changes in the student loan landscape. To stay up to date on the launch of the course and opportunities to sit in on our live recording sessions, head to escapestudentloanede.com and join our email list now.
[00:07:48] Speaker D: You're listening to the Escape Student Loan Debt podcast.
[00:07:52] Speaker C: Subscribe
[email protected].
[00:07:55] Speaker D: Dot welcome back.
[00:07:57] Speaker A: Welcome back for the break and for the first update or impending deadline we discussed.
[00:08:02] Speaker B: We're going to cover the end of.
[00:08:05] Speaker A: The fresh Start program for those with.
[00:08:07] Speaker B: Defaulted federal student loans.
[00:08:10] Speaker A: If you have heard me talk about.
[00:08:11] Speaker B: Defaulted federal student loans in the past, you know that it is one of.
[00:08:14] Speaker A: The worst financial circumstances in which you can find yourself, and the consequences for.
[00:08:19] Speaker B: Defaulting on a federal student loan are incredibly severe.
[00:08:23] Speaker A: First, unlike having a private student loan.
[00:08:25] Speaker B: Where, depending on the state in which.
[00:08:26] Speaker A: You live, there's like a statute of.
[00:08:28] Speaker B: Limitations as to how long a lender can pursue you for repayment.
[00:08:31] Speaker A: With federal student loans, there is no length of time that can expire where the federal government can't come after you for repayment. It's highly likely if you have a.
[00:08:40] Speaker B: Defaulted federal student loan that's on your credit report, that you would not be able to get a federally backed mortgage because of a report called the CaIVRs report that shows your history of lending and how you've managed those debts with other federal entities.
[00:08:54] Speaker A: It's something where in some cases, they.
[00:08:56] Speaker B: Will not only garnish your wages, garnish your tax refunds, but in some states can even strip you of your licenses.
[00:09:03] Speaker A: Where you would be unable to work.
[00:09:04] Speaker B: In your profession until you are no longer in default status.
[00:09:08] Speaker A: And prior to the fresh start program.
[00:09:10] Speaker B: Two of the ways that you could.
[00:09:11] Speaker A: Get out of it would be to consolidate it into a new student loan that was a consolidated loan. But the problem with that was if you have that consolidated loan, a lot of times there's fees and interest that would be added onto that debt, which.
[00:09:24] Speaker B: Would not be wiped away if you consolidated.
[00:09:27] Speaker A: And it also did not remove the default from your credit report. So it may show that you have.
[00:09:32] Speaker B: A current loan, but it would still.
[00:09:33] Speaker A: Stay on your credit report for a.
[00:09:34] Speaker B: Number of years as that defaulted status.
[00:09:37] Speaker A: The other way would be to rehabilitate.
[00:09:39] Speaker B: Your federal student loans, which you can only do time.
[00:09:42] Speaker A: And that's a process that would occur over like a ten month period where.
[00:09:45] Speaker B: You essentially had to make a payment.
[00:09:47] Speaker A: Under IDR plans for ten months straight.
[00:09:50] Speaker B: And if you did that, then you would be able to have that default removed, and you'd be able to borrow.
[00:09:56] Speaker A: Again and get back all of the permissions that you have as a borrower in good standing. Well, the fresh start program is a program that essentially allows you to just say, hey, I don't want to do.
[00:10:06] Speaker B: Any of those things. I just want you to say that my loans are in good standing.
[00:10:11] Speaker A: And if you apply through fresh start.
[00:10:12] Speaker B: This is something for few years now where you've just been able to say.
[00:10:16] Speaker A: Hey, you know, I applied, I told you that I want to do this. And they would remove the default from.
[00:10:20] Speaker B: Your credit report and give you just a blank slate.
[00:10:23] Speaker A: Well, unfortunately, that program is ending September 30 of 2024.
[00:10:28] Speaker B: So if you have federal student loans.
[00:10:29] Speaker A: In default, it says even on the.
[00:10:31] Speaker B: Student aid website, which we'll link to this in the show notes, that it takes about ten minutes to apply before the deadline.
[00:10:37] Speaker A: You can go to my Ed debt or you can call the phone number.
[00:10:43] Speaker B: That'S listed, or you can even mail it in.
[00:10:46] Speaker A: But because that deadline is so close.
[00:10:48] Speaker B: Upon us, I would highly advise you.
[00:10:50] Speaker A: To do this online and make sure.
[00:10:52] Speaker B: That you take advantage of this before the deadline.
[00:10:54] Speaker A: I cannot overstate this. The difference between you just being able.
[00:10:57] Speaker B: To make a phone call or go.
[00:10:59] Speaker A: Online and getting out of default versus even rehabilitating your loans is potentially thousands of dollars that you can keep in your pocket to get back in good standing.
[00:11:08] Speaker B: So if you're in default, this is something that you do not want to miss before September 30. Next up, we have the end of the on ramp period for federal student loan payments.
[00:11:19] Speaker A: If you recall, that payments started again last October. And because so many people had gone years without making payments, there was a.
[00:11:28] Speaker B: Twelve month on ramp period where you could make a payment.
[00:11:31] Speaker A: But if you happen to miss that payment or make a late payment or make a partial payment, instead of doing like they did in the past, where it would go on your credit report.
[00:11:39] Speaker B: For a number of years, during this twelve month period, they would essentially look and see, hey, I missed a payment in, say, September.
[00:11:47] Speaker A: We are going to retroactively put their.
[00:11:49] Speaker B: Loans into forbearance for the month of.
[00:11:52] Speaker A: September so that it does not show.
[00:11:54] Speaker B: Up on the credit report as a.
[00:11:55] Speaker A: Missed or late payment. They were doing this for twelve months.
[00:11:58] Speaker B: As a result of the end of.
[00:12:00] Speaker A: The Covid-19 payment pause. And this also ends at the end of September. So if you have any payment that you were thinking, oh, you know, I missed one a couple months ago, it.
[00:12:10] Speaker B: Was no big deal.
[00:12:12] Speaker A: That was because of the on rent period. If you miss 1 October moving forward, it will have an effect similar to what it had before the pandemic, which can, if you remember, be pretty devastating to your credit. So you want to make sure that you understand, hey, we're moving into a.
[00:12:27] Speaker B: New era of student loans. I don't have the same flexibility that I've had over the past twelve months.
[00:12:32] Speaker A: If you're in the camp that's in.
[00:12:34] Speaker B: Pause for the save plan, this has.
[00:12:35] Speaker A: No impact on you because that's an administrative forbearance.
[00:12:39] Speaker B: But there are several plans who are not in forbearance.
[00:12:42] Speaker A: You could be on another IDR plan, you could be on a graduated plan. I hope you're not on a graduated plan.
[00:12:47] Speaker B: You could be on a standard plan.
[00:12:49] Speaker A: And whatever plan you're on, if you're.
[00:12:51] Speaker B: Currently making payments, you need to be.
[00:12:52] Speaker A: Aware that that grace period is no.
[00:12:55] Speaker B: Longer when it comes to the on.
[00:12:57] Speaker A: Ramp for student loan payments. And lastly, we're going to end with the fact that the period where you.
[00:13:03] Speaker B: Have not had to recertify your income for IDR plans is also coming to a close.
[00:13:07] Speaker A: This is something that had been pushed.
[00:13:09] Speaker B: Back to November 1.
[00:13:10] Speaker A: So if you recall, if you had an IDR plan anniversary that comes before.
[00:13:14] Speaker B: November, then you really just get to skip a year.
[00:13:16] Speaker A: But if you're somebody who is like.
[00:13:18] Speaker B: November, December, early next year, then we.
[00:13:21] Speaker A: Are, you know, in the period of.
[00:13:23] Speaker B: Time where your student loan servicer may be reaching out to you asking if.
[00:13:26] Speaker A: You can either send in a tax return or pay stub or give access.
[00:13:30] Speaker B: To the IR's website. As a matter of fact, we're getting calls and emails from people who are already getting these letters and they're confused.
[00:13:36] Speaker A: Because they're saying, hey, I thought I didn't have to deal with this. It's because you're within two or three.
[00:13:40] Speaker B: Months of when you would have to.
[00:13:42] Speaker A: Update that payment and that's around the.
[00:13:44] Speaker B: Time that your servicer starts reaching out.
[00:13:46] Speaker A: So you want to be aware that.
[00:13:47] Speaker B: There'S like certain deadlines where if you.
[00:13:49] Speaker A: Do not, we've done an episode on this, give them that recertification. You could have your student loan payment.
[00:13:55] Speaker B: Go through the roof.
[00:13:56] Speaker A: You could be kicked off the IDR plan, so you want to make sure you keep an eye out.
[00:14:01] Speaker B: I would encourage you to go to studentaid Dot gov and make sure that both there and with your loan service that they have updated information for your email address, your phone number, and your.
[00:14:09] Speaker A: Mailing address so you don't miss any communications. But we're in that window where you need to start paying attention again to make sure that if you need to update your payment for the upcoming year.
[00:14:19] Speaker B: That you do so.
[00:14:21] Speaker A: So those are a number of updates.
[00:14:22] Speaker B: And student loan happenings in the news.
[00:14:24] Speaker A: I know this isn't one of our.
[00:14:25] Speaker B: Teaching episodes, but hopefully it's still informative.
[00:14:28] Speaker A: Because there's so much that's going around with student loans right now, both federal and private. My name is Brinson Harrison with escape student loan debt.
[00:14:35] Speaker B: I hope this got you a little.
[00:14:36] Speaker A: Closer to having your student loans forgiven.
[00:14:38] Speaker B: Reduced, reorganized, or expedited, and we will.
[00:14:40] Speaker A: See you again in two weeks.
[00:14:44] Speaker E: From escape student loan debt this was the escape Student Loan Debt podcast, a show for established professionals whose student loan.
[00:14:51] Speaker B: Payments or loan balances are impacting their marriage, their business, their credit, or their dream of achieving homeownership.
