ICYMI | IN CASE YOU MISSED IT| Updates About Federal Student Loans
A few student loan industry updates that have occurred over the last few days and months that you may have missed..
Recent Student Loan Industry Updates
- President Joe Biden announced earlier this month that he was evaluating whether to cancel student debt and would have an answer in the next few weeks. Millions of borrowers have been on edge for several weeks, but not for much longer. Biden is meeting with legislators this week to discuss loan forgiveness, and an announcement might be made soon. The safest bet continues to be to prepare as if repayment will begin in September by verifying the accuracy of your NSLDS, confirming that all of your contact is up to date and that you have accurate records of your repayment portfolio.
“In all likelihood, student loan forgiveness will be limited in eligibility and amount, so you can’t count on it erasing all of your student loan debt,” stated Mark Kantrowitz- CNBC.com
- Prior to payments resuming May 1, 2022, The Biden Administration announced an additional payment extension scheduled to end August 31, 2022. Since the Forbes article from last September titled ”Biden Administration Cancels $1 Billion In Student Loans But Bungles The Rollout, Concerning Advocates”, the approval rate has remained low, but it is increasing. According to Department of Education data from March 2022, only 117,426 (for PSLF, TEPSF, and the PSLF waiver) of the 1,175,672 combined public service loan forgiveness (PSLF) and TEPSLF applications submitted from November 9, 2020 were declared eligible for forgiveness.
This additional extension is designed to help by allowing servicers more time to complete their transfers and streamline their tracking. Several servicers announced that they would be leaving the industry as Lawsuits Continue to Plague Student Loan Servicers under Miguel Cardona Secretary of Education.
- All PSLF applicants will have their accounts transferred from Fedloan to Mohela. FedLoan Servicing, the exclusive PSLF program servicer, is transferring the duty of (accurately) monitoring who qualifies for pslf loan forgiveness to Mohela. This includes overseeing the Ed Dept’s Limited Waiver PSLF/TEPSLF Program. While the most common question we continue to receive from public service clients remains “when is FedLoan servicing ending”, all indications are that by the close of 2022 Mohila be complete by October 31, 2022. Studentaid.gov has a newly calibrated pslf calculator and loan repayment simulator here.
- The One-Time Payment Count Revision for Eligible IDR Borrowers being offered by the Education Department will begin efforts to review all IDR accounts for additional qualifying payments, but borrowers may not have the complete final results reflected in their NSLDS records until fall 2022. It will also consider crediting any months in which you had time in a repayment status, regardless of the payments made, loan type, or repayment plan. The credits will also apply to 12 or more months of consecutive forbearance or 36 or more months of cumulative forbearance toward IDR and PSLF forgiveness. In addition, months spent in deferment (with the exception of in-school deferment) prior to 2013; and any time in repayment prior to consolidation on consolidated loans.
- According to Politico, which first revealed the Education Department’s consideration of a Fresh Start Program for Defaulted or Delinquent Borrowers idea in October 2021, more than 7 million borrowers are in arrears on federal student loans. The latest pause, according to the US Department of Education, is a good opportunity for borrowers to plan for when payments resume, which can help lower “the risk of delinquency and defaults after restart.” There’s an added benefit for individuals who have previously been affected by delinquency and default: you’ll get a “Fresh Start.”
According to the Education Department, millions of federal loan borrowers will have their late or default status erased as a result of Biden’s extension, allowing them to “re-enter payments in good standing” when repayment resumes in September.
Even though defaulted borrowers will no longer be behind on payments – there is no clear schedule for when that status will change – and some may still be in danger of missing payments again when the halt ends in September.
TitanPrep Keeps You Informed
Our clients choose to work with us because they want to, not because they have to. And TitanPrep offers much more than just student loan document preparation. Our Monitoring service includes Client Portal access, full data monitoring and tracking services on any legal or federal database, where reporting errors can occur. Email correspondence and document storage are also archived. With your authorization, we communicate on your behalf with your loan servicer and conduct 3rd party servicer follow up preventing inaccuracy in your records. We review and update all recorded information to ensure reporting accuracy. Any errors discovered by the TitanPrep team are immediately reported to the client and corrected on your behalf. Our streamlined process makes your case simple and stress-free, with easy step-by step guidance to achieve fast results.