Articles Posted in Student loans

Many people are facing uncertainty about PSLF for all kinds of reasons.  We’ve focused on those who were told they were in the PSLF program only to find out that their loan types didn’t qualify all along, and now they have to start all over.  We also help borrowers who were in the wrong payment plan and their servicer should have known that that plan did not qualify for PSLF.  Congress even set up a TE-PSLF program to temporarily waive those in the wrong payment plan provided their payment was at least as much as it would have been under IDR.

We now see two other issues popping up with more frequency.  Those encouraged to go on forbearance when they should have been on an income driven plan at a low or even zero payment which would have qualified for PSLF.

One other issue that a potential client is facing is having her PSLF certification under review now for years.

How can you trust your student loan servicer when they don’t follow the law 61% of the time per a recent Inspector General’s Report?

Let’s look at a relatively simple chore – re-certification of income under an income driven plan.  What appears to be simple, can have meaningful impact.  If nothing has changed, you likely can do it yourself – but do yourself a big favor and keep reading just in case.  Here is a brief explanation of what we do to re-certify the borrower’s income to remain in an Income Driven Plan (IDR) for federal student loans:

When we are asked to re-certify an IDR plan, we ask that the borrower advise of their marital status, income of each spouse, # and circumstances of dependents, amount and type of federal loans, and lastly whether the borrower is working or intends to work public service.  There are times that nothing has changed from the borrower’s prior circumstances the previous year and we likely would simply submit their tax return to renew.  We would need to obtain a signed authorization form and often follow up with the servicer(s).  We are often re-explaining how the forgiveness works, the 1099 expectation, impact on their credit, ability to qualify for a mortgage one day.

Discharge by disability is something that I don’t see enough borrowers take advantage of to eliminate student loan debt.  Today, there was a story in the Wall Street Journal, “Over 60, and Crushed by Student Loan Debt” focusing on the large increase of borrowers over age 60 who have student loan debt and are facing garnishment by social security.

For many who are faced with this dilemma, there can be easy solutions.  First, there are up to eight different income driven plans which for someone on social security, may result in a zero payment to close to it.  The key is making sure you pick the correct plan, and ignore a servicer who tells you that your loans are ineligible for IDR.  There is always a way.  Remember the servicer represents the creditor and not you.  You are not their customer.  Their legal position in pending lawsuits is they don’t have to explain all of your options.  Reach out to a qualified student loan attorney to learn what you need to know.

Second, and perhaps even better, many people in this situation will qualify for a Total and Permanent Disability (“TPD”) Discharge for federal student loans.  Some are afraid of doing this feeling they still need to work part-time to pay their other bills.  No problem, the Department of Education allows some income from employment – up to the poverty guidelines for a family of two which in Florida for 2019 is $16,910.  I thought it was higher, but it’s still likely high enough for most.  Also, even if you are a family of one, they use a family of two.  Why I don’t know, but they do.  There is a three year monitoring period where you are required to annually certify that you have not exceeded that in employment earnings.  Note, this does not include income from passive investments.  And perhaps the best news of all, a TPD discharge is tax free through 2025 per certain budget laws passed in early 2018.