Episode Transcript
[00:00:00] Speaker A: In this episode, we do away in this episode, we do our best to keep opinions at bay and talk about.
[00:00:06] Speaker B: The real, actionable things you need to be aware of when it comes to your student loans and who just won the election.
[00:00:12] Speaker A: Let's get started.
[00:00:15] 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.
[00:00:26] Speaker A: Hello, my name is Brenton Harrison of.
[00:00:27] Speaker B: Escape Student Loan Debt and your host.
[00:00:29] Speaker A: For the Escape Student Loan Debt podcast. We are a week and a half removed from our most recent presidential election and as I shared, I don't really want to get into any of it, really. Besides just what we need to be aware of when it comes to likely.
[00:00:46] Speaker B: Changes when it comes to your federal student loans, things you need to be aware of. And if there's anything that you need to do in the here and now in advance of this incoming administration and.
[00:00:56] Speaker A: Even some of the things that we talk about now will be speculative. But I'm going to do my best to basically say, hey, there's a whole bunch of stuff that could happen. But based on what we know, here.
[00:01:05] Speaker B: Are the things that are definitely likely.
[00:01:08] Speaker A: To happen and here's how you act accordingly.
[00:01:10] Speaker B: So when you see our next president.
[00:01:12] Speaker A: Talking about doing away with the Department of Education and all that, that's not.
[00:01:15] Speaker B: Going to be in this episode.
[00:01:16] Speaker A: We're going to talk about the things.
[00:01:17] Speaker B: That we actually do know.
[00:01:18] Speaker A: And to me, I think one of the best ways that you can kind.
[00:01:21] Speaker B: Of anticipate some of the things that.
[00:01:23] Speaker A: Are to come when it comes to federal student loans is by looking at some of the policies enacted by the Biden administration. Department of Education, where President Trump was most vocal or his legislative buddies were most vocal as opponents. So we can kind of read the.
[00:01:39] Speaker B: Tea leaves based on the things that they kicked up the most dust about to have an idea of what's to come.
[00:01:43] Speaker A: And the first thing to me that.
[00:01:45] Speaker B: Is obvious is the save plan, the saving on a valuable education plan.
[00:01:49] Speaker A: And I think it's fairly certain to.
[00:01:50] Speaker B: Say that that plan is dead. It's already going through the courts and.
[00:01:53] Speaker A: There was a high possibility that it would have been knocked down anyways as.
[00:01:56] Speaker B: A result of these challenges, led by Republican attorneys general.
[00:02:00] Speaker A: But the only thing that keeps it alive is the Department of Education that.
[00:02:04] Speaker B: Wants to see it exist. So in the absence of that Department.
[00:02:07] Speaker A: Of Education mandate, they could just close down the program.
[00:02:10] Speaker B: And that is something that I fully anticipate to happen. Even if it goes through the courts, you will likely See, the Trump administration just say that this plan no longer exists.
[00:02:19] Speaker A: But in our most recent episode, we.
[00:02:21] Speaker B: Talked about the impact that it could have when it pertains to other income driven repayment plans.
[00:02:26] Speaker A: So going back to that episode, which.
[00:02:28] Speaker B: We'Ll link to in the show notes, we talked about there being two really separating factors when it comes to income driven repayment plans. Now, one of the issues with the.
[00:02:38] Speaker A: Save plan is the amount of money.
[00:02:40] Speaker B: That would be forgiven in terms of student debt was a very high number.
[00:02:44] Speaker A: So there was the argument that this.
[00:02:46] Speaker B: Amount of money being spent or forgiven without going through the congressional purse approval.
[00:02:52] Speaker A: Process is not allowed.
[00:02:54] Speaker B: Now, I think that that's one of the bigger reasons why the save plan will go away. But another that makes it easier to be removed from the lineup is the fact that that plan was created by the Department of Education. And under those two camps of IDR plans, we have one plan called the Income Based Repayment Plan that was created from an act of Congress. And there are two versions of that plan, the old Income based repayment plan and the new income Based repayment plan.
[00:03:21] Speaker A: On the other side of the fence, there are these plans that were created by the Department of Education. There's the Income contingent repayment plan, there's the pay as you earn plan, and.
[00:03:29] Speaker B: Then there's the save plan as well as the repay plan. But my bigger fear, which again, now we're going into the things like the.
[00:03:36] Speaker A: Save plan, that's almost positively going to happen now we're getting a little bit more into speculation.
[00:03:41] Speaker B: My fear is that the administration would go a step further and eliminate all plans that were created by the Department of Education, leaving only the IBR plans as the options that you have available to you under the Income Driven Repayment Plan umbrella.
[00:03:55] Speaker A: So over the next year or so, we should have some clarification. But as of right now, I would.
[00:03:59] Speaker B: Say that the state of the income Driven repayment plan umbrella is definitely in flux.
[00:04:04] Speaker A: The one plan that I would highly.
[00:04:05] Speaker B: Anticipate being removed from under that umbrella is the save plan itself.
[00:04:11] Speaker A: Next up, we have the income recertification.
[00:04:13] Speaker B: Deadline for federal student loan borrowers.
[00:04:16] Speaker A: And for this we need to go to the Department of Education so that.
[00:04:18] Speaker B: We can have a refresh of the current guidelines as it pertains to when.
[00:04:21] Speaker A: You recertify your income. As a brief recap, as I'm pulling.
[00:04:25] Speaker B: This up, you are aware that if.
[00:04:26] Speaker A: You have an income driven repayment plan.
[00:04:28] Speaker B: You'Re required to update your income with your student loan servicer once every year.
[00:04:34] Speaker A: And that One time per year is.
[00:04:35] Speaker B: Actually called your IDR plan Anniversary.
[00:04:39] Speaker A: It's something that you can access by either contacting your loan servicer or you can download your National Student Loan Data Service file, as we've shown you how.
[00:04:47] Speaker B: To do on previous episodes.
[00:04:49] Speaker A: So in that data file, you'll be able to find for each of your.
[00:04:52] Speaker B: Student loans, they should hopefully have the same IDR plan anniversary. But whatever date it's listed, that's the time per year that you have to refresh, recertify your income so that your payment for the upcoming 12 months can be calculated. Now, as a result of all the payment pauses that we've seen Since March.
[00:05:08] Speaker A: Of 2020, there has been this continuing.
[00:05:11] Speaker B: Kicking of the can down the road when it comes to the next time that you're required to update your income. And as a result, as we've discussed, there are people that we work with who have federal student loans who are paying for a payment plan that's based on their income, quote unquote, but it's technically being calculated off of something that they earned in 2018 or 2019.
[00:05:31] Speaker A: Well, the most recent guidance that we have from the Department of Education is.
[00:05:35] Speaker B: That that was due to come to an end in November of 2024. So this month, November 1st, was actually.
[00:05:42] Speaker A: The earliest point in time that a.
[00:05:44] Speaker B: Person would have to update their income. Now, that does not mean that everybody had to update their income on November 1st. It means that your IDR policy plan anniversary, if it came after November 1st.
[00:05:56] Speaker A: Then you would have to update it.
[00:05:58] Speaker B: On that plan anniversary.
[00:05:59] Speaker A: But if your policy anniversary came prior.
[00:06:01] Speaker B: To novemb, then you wouldn't have to update it until the next calendar year.
[00:06:07] Speaker A: So, for example, if your IDR plan.
[00:06:09] Speaker B: Anniversary was July 1st, well, this year.
[00:06:11] Speaker A: You got to skip that plan anniversary.
[00:06:14] Speaker B: And continue paying based on older income. You won't have to adjust your payment until the next July 1st in 2025.
[00:06:21] Speaker A: But if, as an example, your IDR.
[00:06:23] Speaker B: Plan anniversary was December 3rd, then you will have to, on December 3rd, update.
[00:06:29] Speaker A: Your IDR payment on that actual date because it falls in this calendar year.
[00:06:34] Speaker B: And after novemb first.
[00:06:35] Speaker A: Now, this continuous kicking of the canon extension when it comes to when you recertify your income is another area where.
[00:06:41] Speaker B: The incoming administration has said that they disapprove of this.
[00:06:45] Speaker A: They think that this is something that was only done as a political trick to curry favor with voters. Again, we're not going to get into the opinion portion of this podcast. We're just going to say that it.
[00:06:54] Speaker B: Would stand to reason that if the administration has been so upset about the number of extensions that they may say.
[00:07:00] Speaker A: That that recertification deadline is going to.
[00:07:02] Speaker B: Be pushed up and that instead of being able to wait until next like Octo 15th, 2025 because it happened to come after November 1st, that you might.
[00:07:11] Speaker A: Be required to recertify that income with.
[00:07:14] Speaker B: Your student loan servicer in a faster rate.
[00:07:17] Speaker A: The next area that we'll talk about.
[00:07:18] Speaker B: Are the Biden Student Loan Forgiveness programs.
[00:07:20] Speaker A: We've gone into detail about these in the past. There was one, the initial plan that I thought had a good chance of passing, but because of the things we talked about when it comes to legal standing and again those legal challenges, that.
[00:07:32] Speaker B: Program was struck down.
[00:07:33] Speaker A: There has since been another stab at it that I told you was unlikely.
[00:07:38] Speaker B: To be pass or past legal muster.
[00:07:40] Speaker A: And those are officially dead. So if you see any forgiveness programs, mass forgiveness programs that are not the ones we've already discussed, like Income Driven Repayment Plans, Public Service Loan Forgiveness, then it's not going to pass because this.
[00:07:54] Speaker B: Is something that the incoming administration has seen as too generous.
[00:07:57] Speaker A: Now we'll talk about Public Service Loan Forgiveness a little bit after the break. But another area that we've discussed that is a current Department of Education program that has been enacted are Public Service Loan Forgiveness buybacks.
[00:08:09] Speaker B: So to recap, there are plenty of.
[00:08:12] Speaker A: People right now who are on administrative.
[00:08:13] Speaker B: Forbearance for save plans that are not getting credit towards things like Income Driven Repayment Plan Forgiveness and Public Service Loan Forgiveness.
[00:08:21] Speaker A: But if you are a person who is in a position where you have enough employment credits to qualify for 10.
[00:08:28] Speaker B: Years worth of service at an eligible entity while having federal student loans. The Public Service Loan Forgiveness Buyback program allows you to basically use your income from the years in which you've worked for those eligible entities, pay the back payments that you you would have needed to pay at that time to get your credit and receive Public Service Loan Forgiveness.
[00:08:48] Speaker A: So that's something where if you have any ability to prove that you have.
[00:08:53] Speaker B: Enough credits already to go back and.
[00:08:55] Speaker A: Say, hey, I have 10, 11, 12.
[00:08:58] Speaker B: Years worth of employment history.
[00:08:59] Speaker A: I just didn't happen to pay for these one or two years. Can you go back, tell me what I've needed to pay so I can make that payment, I would go ahead and do that like tomorrow. There is no time to wait because that's something. Where have they said this going to go away?
[00:09:13] Speaker B: Not necessarily, but it is an area where it's saying, hey, this is something.
[00:09:17] Speaker A: That was enacted by a Department of education under an administration that our incoming president has had issues with in the past.
[00:09:24] Speaker B: That's one where I could also see it standing to reason that they would do away with the Public Service Loan Forgiveness buyback program. Do I think that it is likely that you could have that application submitted and then have the forgiveness approved and processed within that period of time before early January? Probably not.
[00:09:42] Speaker A: But I can also tell you that when it comes to things like the.
[00:09:45] Speaker B: Income Driven Repayment Plan, one time adjustment, that there were plenty of things that I didn't think would be approved, where.
[00:09:51] Speaker A: I told people to kind of throw stuff against the wall to see if.
[00:09:53] Speaker B: It sticks and it stuck.
[00:09:55] Speaker A: So this is one again where if.
[00:09:57] Speaker B: You have that proof of employment, I would as soon as possible apply for.
[00:10:01] Speaker A: Public Service Loan Forgiveness buybacks. We'll put a link in the podcast so you can see how to do so.
[00:10:06] Speaker B: And maybe it doesn't work, but if.
[00:10:08] Speaker A: It does, you might just get in in terms of getting that forgiveness processed before the program is potentially done away with. Now, after the break, we'll talk about.
[00:10:16] Speaker B: Some things that are harder to do away with, even if the next administration wanted to.
[00:10:20] Speaker A: And to be clear, not all of these things are things that they have.
[00:10:23] Speaker B: Expressed an appetite to do away with, but hopefully it provides you some comfort.
[00:10:27] Speaker A: And we'll get to it after this brief break.
[00:10:29] Speaker C: This is the Escape Student Loan Debt.
[00:10:31] 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 homeownership.
[00:10:43] Speaker C: We'll be right back.
[00:10:47] Speaker E: Are you interested in learning the tools and techniques we use to get student 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 escapestudentloan debt.com and join our email list Now.
[00:11:15] Speaker D: You're listening to the Escape Student Loan Debt Podcast.
[00:11:19] Speaker C: Subscribe now at escapestudentloan debt. Com.
[00:11:22] Speaker D: Welcome back.
[00:11:24] Speaker A: All right, let's bring some sunshine into the room and talk about some things that will be a little harder to do away with. One of those is the Public Service Loan Forgiveness Program. We've already had people asking, is the Public Service Loan Forgiveness Program going to be canceled? To be clear, in the past, Republicans.
[00:11:38] Speaker B: Have tried to cancel the Public Service Loan Forgiveness Program.
[00:11:41] Speaker A: It is very difficult to do so.
[00:11:43] Speaker B: There's a concept in the Senate called a filibuster. And essentially unless you have 60 votes to force a vote on a topic.
[00:11:52] Speaker A: Somebody can get up and just start talking about whatever they want to until.
[00:11:56] Speaker B: Literally time runs out on the session.
[00:11:58] Speaker A: So for things like Public Service Loan.
[00:12:00] Speaker B: Forgiveness, if there were an appetite to do away with it and it came up to a vote, you could have a Republican senator from a swing district, a Democratic senator, just get up and start reading the newspaper until the legislature legislative session runs out. And I think that that is actually a far more likely scenario than the.
[00:12:17] Speaker A: Public Service Loan forgiveness program being done away with. So I don't think there's anything to.
[00:12:21] Speaker B: Worry about when it comes to that program because in order to have it pushed to an actual vote, you would have to have both swing state Republicans and a decent number of Democrats join on the side of that vote in order to do so.
[00:12:35] Speaker A: So the PSLF as it stands, I think is extremely safe now when it.
[00:12:39] Speaker B: Comes to programs under the Income Driven Repayment plan umbrella.
[00:12:43] Speaker A: Also say that the income based repayment.
[00:12:45] Speaker B: Plan is safe for the same reason if they were to do away with.
[00:12:49] Speaker A: All of the other IDR plans and there were no options for a person.
[00:12:52] Speaker B: Who owes 200, 300, 400, 500.
[00:12:54] Speaker A: We know people who owe $600,000 in federal student loan debt and now there would potentially be nothing for them to.
[00:13:01] Speaker B: Pay on except for a graduated plan.
[00:13:03] Speaker A: Or a standard plan. I think that would also be something.
[00:13:06] Speaker B: That would be hard to pass with a 60 vote majority in the Senate.
[00:13:10] Speaker A: We've also had people talk to us about the one time account adjustments for.
[00:13:14] Speaker B: Income Driven Repayment and Public Service Loan Forgiveness.
[00:13:17] Speaker A: This is not as much an issue of there being a majority to do.
[00:13:20] Speaker B: Away with these rules.
[00:13:21] Speaker A: It's the fact that most of the work is already done.
[00:13:23] Speaker B: And it's one of those things that's.
[00:13:25] Speaker A: So complicated that it would be almost impossible to unscramble the egg.
[00:13:29] Speaker B: We have shown you what it looks like for just a single data file for a borrower trying to keep track of their payments when they have their credit histories. For Income Driven Repayment Public Service Loan.
[00:13:39] Speaker A: Forgiveness, I can tell you that it.
[00:13:41] Speaker B: Is extreme, extremely difficult, especially when someone has potentially consolidated their loans once, twice, three times to figure out when and when you should not apply credits based on those programs. So when you're looking at this final number, that's part of why it's taken so long for the Department of Education to give you your final updated number when it comes to the credit you have towards income Driven repayment plan forgiveness.
[00:14:03] Speaker A: And it would be even harder and.
[00:14:05] Speaker B: More of a burden to go back in time and remove credits that have.
[00:14:09] Speaker A: Already been applied to someone's account. And if you're an administration that said.
[00:14:13] Speaker B: That you want to do it away with the entire Department of Education, definitely.
[00:14:16] Speaker A: Not something that you would want to.
[00:14:17] Speaker B: Put budget dollars towards for your own.
[00:14:19] Speaker A: Department to take on that task themselves. And when it comes to scenarios like them doing away with the pay plan.
[00:14:25] Speaker B: The revised pay as you earn plan.
[00:14:27] Speaker A: I don't want to again get too deep into the speculation, but I will say there are some things, even changes.
[00:14:33] Speaker B: As a result of Department of Education guidelines where if they were done away.
[00:14:36] Speaker A: With, could provide some planning opportunities for things like how you file your taxes when it comes to having a spouse who may not have federal student lo.
[00:14:45] Speaker B: And some other areas.
[00:14:47] Speaker A: And the new version of the income based repayment plan is like I said.
[00:14:50] Speaker B: Very, very similar to the pay as you earn plan.
[00:14:53] Speaker A: And the old version of the IBR is something where now that we have newer plans, obviously in comparison it may.
[00:14:59] Speaker B: Not look as generous.
[00:15:00] Speaker A: But there are some opportunities in terms of how you would plan even if.
[00:15:03] Speaker B: You are an older borrower under these versions of idr.
[00:15:06] Speaker A: So I don't want you to think that the sky is falling as pertains.
[00:15:09] Speaker B: To your federal student loans.
[00:15:11] Speaker A: There are options out there and we'll.
[00:15:12] Speaker B: Be here to help you discuss them and give you all the information you.
[00:15:15] Speaker A: Need to know to have your student loans forg reduced, reorganized and expedited. So I hope that you'll be back here in two weeks for another episode.
[00:15:24] Speaker E: From Escape Student Loan Debt. This was the Escape Student Loan Debt podcast, a show for established professionals whose student loan payments or loan balances are.
[00:15:33] Speaker B: Impacting their marriage, their business, their credit, or their dream of achieving homeownership.
