Episode Transcript
Brenton: [00:00:00] While there are over 800,000 people who got letters this week saying their student loans were forgiven, there are probably even more who recently got communications that they are nowhere near as close to Loan forgiveness as they originally thought.
In this episode, we're gonna decipher these letters, what they mean and why in most cases they are no cause for alarm. Let's get started.
Brenton: Hello, my name is Brenton Harrison of Escape Student Loan Debt. And your host for the Escape Student Loan Debt podcast. In this episode, we're gonna go through some communications that people have been receiving that's been very confusing over the last couple of months.
And the reason they're so confusing and so stressful is before student Loan payments start, people are now taking a more keen interest in making sure they've been following the steps to be eligible for the Income Driven Repayment Plan [00:01:00] Waiver and the Public Service Loan forgiveness Waiver. They're starting to pay closer attention to not just the rules of that program, but the update of their credit as it pertains to getting close to forgiveness.
Now, if those people are paying attention, they also saw that recently there was an article or a series of articles that came out. I. With the same type of title, showing one on screen. If you're watching with us on YouTube. This is from Business Insider and it says, over 800,000 student Loan borrowers are set to start seeing their Debt wiped out following the Income Driven Repayment reforms. And what they're referencing is that this week or in over the past couple of weeks, people have been getting emails and letters saying that their student loans either have already been forgiven or are about to start being forgiven as a result of the Income Driven Repayment plan waiver that we've talked about ad nauseum over the last several months.
And in these articles, they go over the fact that in most cases, under these Income Driven Repayment [00:02:00] plans, you have to pay for 20 or 25 years. But through a series of reforms, after finding out that student Loan servicers were doing a terrible job, they instituted this waiver and they go on and on about that waiver as if you had never heard about it.
But I know if you are a follower and listener of this podcast, you've heard about it plenty. So what's frustrating about this? Well, what's frustrating is you might not have gotten a letter. And you might have done some of the steps that we recommended, like consolidating any ineligible loans like, applying for public service Loan forgiveness certification through each of your previous employers.
And you might have just noticed that your payment account hasn't Adjusted. Or even worse, you might have gotten notifications with an update of your progress towards these forgiveness programs and been displeased with what that update gave you.
You see this most frequently when it comes to public service Loan forgiveness, because we've had clients who are in public service all over the country who have sent us copies of these letters that they've been receiving, and these letters are update letters that [00:03:00] show how much credit you have potentially available towards public service, Loan forgiveness versus how many you had approved. If you're following along with us on screen, and we'll put a link to this document in the show notes. We have a de-identified letter that has a person who, has applied for public service Loan forgiveness, and it's an update letter.
The first paragraph says, we have reviewed your public service, Loan forgiveness, and temporary expanded public service, Loan forgiveness certification and application form, and have counted the number of qualifying payments made during each period of qualifying employment.
The following information is provided for each Loan, eligible for the public service Loan forgiveness. The total number of eligible payments made, the total number of qualifying payments made out of the 120 required for forgiveness under public service, Loan forgiveness, the estimated number of payments that are still required. And the date that you are expected to be eligible for forgiveness under these programs. So they're essentially saying, we're gonna show you the number of payments you could potentially get credit [00:04:00] for.
Then we're gonna show you the number of credits we gave you, and then we're gonna show you the remaining credits you have to accrue prior to having your student loans forgiven. Now this person submitted this form, and if you look on the screen, you're actually seeing a list on the left hand side of the number of student loans that they have.
You're also seeing the disbursement date for each of these loans. So the date of initiation for each of the loans. The Loan program shares the type of student Loan they have, and then there's a column that says P S L F, eligible payments.
So in this case, one of their loans has as little as eight payments that could be eligible. Their other loans have 98 payments, so that's a significant amount that they could receive credit for. But the next column says P S L F qualifying payments total.
So this is what they've actually been credited, and in no case have they been credited more than 42 payments, so they haven't even gotten more than half of their potentially eligible payments applied to their account.
So there are a number of people out there who have gotten letters such [00:05:00] as these, and they're saying, I did all these things. You told me that they're gonna go back and they're gonna give me credit for any month that I paid, and I work here in this period of time. And instead of having four years, I should have eight years or nine years.
And based on the rules we have covered, they are absolutely correct. And if you look at this letter, it would make it seem like something is amiss. Either Brenton told you the wrong information. The waiver doesn't work. They have it out for you. There's all different types of things that could run around in your head when you're trying to have these student loans forgiven.
But we're here today to walk through why this letter is of no real concern until at least the fall of 2024. And after the break, we're gonna walk you through what this letter really means so that you can have an idea of when you should expect to see the credit I promised you added to your account.
[00:06:00]
Brenton: Now that before the break, I hopefully, talked you off the ledge and alleviated some of your concern about whether you're going to be eligible for these programs and get those one-time adjustments, let's go through this letter in a real detail to figure out what it's actually [00:07:00] saying. The first sentence is, we have reviewed your public service Loan forgiveness and temporary expanded public service Loan forgiveness, and have counted the number of qualifying payments made during each period of qualifying employment.
So let's break that down in more detail. We have talked about public service, Loan forgiveness, and the way that the rules typically worked. Those rules stated that you had to be paying your loans for the entirety of the 10 years On an Income Driven Repayment plan .
You had to be considered a full-time equivalent employee of a nonprofit or government entity while you were making those payments. And that previously meant that you were working at least 40 hours a week for those eligible institutions and you could only have direct loans. So it's not, oh, I can do it at the end.
It's, you had to have direct loans for the entirety of the 10 years, while paying on an Income Driven Repayment plan and working as a full-time equivalent employee at an eligible employer. So what they're saying in this letter is when we reviewed your account, we first applied the [00:08:00] rules traditionally found in public service Loan forgiveness.
And then the second step that we took as we applied the rules of the temporary expanded public service Loan forgiveness. This isn't even a program that we've talked about on the podcast, but temporary expanded public service loan forgiveness is a program for people who were meeting all of the right requirements, with the exception of having the wrong Repayment plan.
So this is an example of someone who may be worked for an eligible employer and had a direct Loan, but maybe they were paying on a graduated extended plan or a standard plan and not an Income Driven Repayment plan. For those people, temporary expanded public service, Loan forgiveness is a separate application and program to which they can apply and have those credits counted, even though they didn't have the right Repayment program. So they're saying step two is we apply the T E P S L F rules, and you did not have the right amount of credits under that program either.[00:09:00]
Now you see no reference to these waivers on this letter because this payment account does not take them into consideration.
They're just going off of the program rules for those two specific programs. And if I look at this person's credits, it makes perfect sense. Going back to the screen, if you're following along with us, you can see that this person, in terms of the types of loans, they have a direct Loan. They have a direct Loan, a direct Loan, a direct Loan, all taken out between the years of 2011 and 2014, which lets me know that those are the years that they were in school.
And then there's a direct consolidation Loan taken out in December of 2022. And what that lets me know is at some point in time, for some reason or another, this person likely consolidated all of these loans that you see below it into a new direct consolidation Loan.
Now, if I look at all those loans before they consolidate it, it makes sense the number of potentially eligible payments they have under public service. Loan forgiveness. 98 payments. 98 payments, 98 payments. These loans [00:10:00] probably all came out of their grace period at the same time. And this person has likely been working for a nonprofit or a government entity for the entirety of their working years, and it has been 98 months since all of these prior loans came out of Grace period, which means that in a perfect world, they could get up to 98 months of credit.
Now this lets me know that maybe they didn't have all of their employers verified, or maybe they had the wrong type of loans.
For some Loan that's not listed here. There's no real way of telling just from this letter, but for some reason or another, even though they could have gotten 98 months credit, for some reason they only had 42 months credit.
Now for the consolidated Loan, it's even worse for the consolidated Loan. They have only had eight months where they could have received these public service Loan forgiveness credits. That makes sense. This letter was sent in August. They consolidated last December. But none of those months have been credited, which also lets me know that that person probably has not sent in an up-to-date employment [00:11:00] certification form for their employment where they are currently.
But this is just saying that based off of those rules, here's the credit you receive. It is a whole different ball game of when they will have their credits applied based on the waiver. But there are places where you can go to see when that would likely occur. A few episodes ago we talked about the timeline under which they're going to apply these account adjustments, and we mentioned, if you're looking on screen, we're sharing this as well.
All of this will be in the show notes. That the way they're gonna do it is the first people to have their accounts reviewed are gonna be the people that, for Income Driven, Repayment plans or any payment plan have been on it for at least 20 or 25 years. And for those who are working in public service, who have worked in public service while paying their loans for at least 10 years. The reason those of the people that are gonna be applied first is because they have the highest likelihood of being eligible for immediate forgiveness [00:12:00] under the rules of the waiver. So if they see you've only been paying for 18 years and they're looking at someone else's account, And they don't know if they're yet eligible, but they can see they've been paying for 23 or 26 years, they're going to review their accounts first because it's more likely they're eligible for immediate forgiveness than it is for you.
The next people they're gonna review are borrowers with at least one approved public service Loan forgiveness form to update the months that could qualify for public service Loan forgiveness only. So they're essentially saying that if we see that you already have a form on file and there's potential months that you are paying that could be missing, we're gonna review yours next.
But they also say there's a potential that they would not make the final adjustment to these accounts until 2024, and then finally they will review all eligible loans. So if you're not pursuing public service, Loan forgiveness and have an employer on file. If you are not in Repayment for those student loans for at least 20 or 25 [00:13:00] years, you will literally be the last person to have your loans reviewed. And they have already shared that it could be the summer or the fall of 2024 before all of these credits are finally updated.
Now, there's something else to recount because remember that this person consolidated their loans. In this statement it says, borrowers who have consolidated will have their P S L F counts temporarily reset to zero, and then these accounts will begin Adjusted. So not only could this person be stressed or frustrated because they see this account be incorrect.
They might get a letter in a month or so saying that they have no credits towards public service Loan forgiveness, and there will be no cause for alarm. It's all a part of this process. They will then make sure that all the remaining P S L F accounts will be Adjusted semi-regularly until they have accounted for everyone through the year 2024. And then after the adjustment in 2024, all periods that are credited towards Income Driven Repayment plans will also be credited for [00:14:00] public service Loan forgiveness. You'll remember the technical public service Loan forgiveness waiver expired in October of last year. But they are giving this reprieve for people who are applying through Income Driven Repayment Plan waiver.
They're saying, once we've done the adjustment towards Income, Driven Repayment, we'll then go back and add those extra months for people with public service Loan forgiveness as well. So all this episode is to do, is to give you an idea of why these letters are no cause for concern. Of why if it's gone six months or nine months since you consolidated or submitted a form and you've seen no updates, it's no cause for concern.
The real time for concern will be if we get to the end of fall 2024 and then you have not seen those eligible payments updated. And even if that's the case, there is a place where you can go to have your account reconsidered. We will put this document. In the show notes, but there is a place where you can submit a written notification where you're asking for them to manually go through your account to ask for a [00:15:00] reconsideration.
But for now, take a deep breath. No cause for alarm. Unfortunately, it's a bit of a waiting game, which is unfortunate for sure when you're talking about the federal government. But we have a long way to go before some of these things will come to fruition, but they will come to fruition.
And if they don't, There is recourse to make sure that your account is addressed. I'll see you soon.
