Hello, loyal readership! Today I wanted to talk about a different subject that we haven’t touched upon yet – student loans! Student loans afford many to go to college, or get an advanced degree or Master’s degree in exchange for a great future profession and higher earning potential, but also have drawbacks in that you have to pay these things back over time and often with very high balances!

Planning around them is a big deal and here are some updates to consider within this sector. If you work for a non-profit, or government institution you may be on track for Public Student Loan Forgiveness if you are paying back your loans on an Income-Based Repayment (IBR) plan and you make 120 qualifying monthly payments (10 years) while employed by that institution. This is especially pertinent to the federal government, state government, and doctors working for nonprofit hospitals.

However, recently there has been a major change to this because as of December 2021, FedLoan Servicing will no longer be servicing student loans.  This will impact millions of borrowers but more importantly, those who are pursuing PSLF should be on high alert.  Currently, there is little information as to who will take over the management of these loans but there are things you can do to protect yourself in the meantime.  The following are our recommendations.  

If your loan servicer is NOT FedLoan Servicing: it is unlikely that anything will change with your loans.

If your loan servicer IS currently FedLoan Servicing:

• Download all payment history.  Historically when loans have transferred to other servicers, the loan terms do not change, but the new servicer does not know your history with the previous lender.

• Prior to FedLoans termination (December 14, 2021), note (screenshot) your current balance AND accrued interest balance.  You want to be sure that when your loan is with the new carrier, the outstanding interest is not capitalized (added to the principal balance).

• Be on the lookout soon for communication from a student loan company that they will be your new servicer.  This will tell you when and how you can access your loans.  (signs point to MOHELA becoming your new provider but there is nothing currently stating that)

• Continue making your payments to FedLoan until you hear otherwise

If you work for a 501c(3) or a government institution and are pursuing Public Service Loan Forgiveness (PSLF):

• Do everything stated above

• Download ALL Employment Certification Forms (ECF) that have been previously submitted

• Note your current income-based payment plan and your re-certification date

• Send in a new ECF by November 1 to get the most up-to-date certification possible

• When you receive communication from your new servicer, if they do not initially indicate it, reach out to them quickly to ensure that they will be processing certifications and applications for PSLF customers

• DOCUMENT EVERYTHING.  Unfortunately, student loan servicers notoriously make mistakes and transitions haven’t run smoothly.

One last thing to note, there has been a temporary pause on required student loan payments due to COVID-19 that was just extended to January 31, 2022 for the final time.  One can either not make payments or pay them down if they so choose. The loan industry expects things to be difficult and busy when millions of borrowers begin making payments again and figuring out how to get back on track.  To add the challenge of transferring millions of loans to another company only adds more stress to the chaos.  Anyone who is paying down their student loans should try to pay these down as much as possible during this time frame to capitalize on the 0% interest period! 

We hope this helps in the changing landscape of student loan advisory!