Speaker 1 00:00:08 What's up, everyone. Welcome to the finance for physicians podcast. I'm your host, Daniel Raimi. Join me as we dig into what it looks like for physicians to begin using their finances as a tool to live better lives. You can learn more about our
[email protected] let's. Jump into today's episode. What's up guys. Hope you're having a great day today. I, uh, I, I really wanted to make sure we covered this, this hot topic. That's recently come out with student loans is a pretty big deal. We'll link to the press release on this, but, uh, there's been some pretty big changes regarding PSLF and how, how that's going to work for some of your prior payments and prior loans. Um, it's a limited time they call it, they're calling it a limited time waiver. So I wanted to make sure and, uh, jump on here and talk with you guys about what this is and how it might affect your situation.
Speaker 1 00:01:06 So, so we're going to cover that today. Kind of talk through what the, um, what the changes are and, and how that might affect you. We'll also link to the press release, so you can kind of redo that if you want to. So, so let's jump right into this. So this is a big deal. So PSLF, well, I guess before we jump into what's going on, um, we'll do like a quick refresher on PSLF. So the key to PSLF is you have to have really three things happening. You have to have qualified loan, so a certain type of loan to qualify very specific type of loan to qualify, which is direct loans. You also have a, you have to have qualified payments happening. So you have to be under a very specific type of payment plan. If, you know, make those payments on time each month, it's gotta be exact like to the penny.
Speaker 1 00:02:01 So examples of the payments that are payment types that are qualified would be like a IBR or pay or repay, uh, the income-based repayment plans. And then the third big requirement is you have to be at a qualified employer. So all 5 0 1 C threes and most non-profits and government employers are, uh, the typical type of qualified employers here. So you got to do all three of those things, or be qualified under all three of those over the course of 120 months of payments. And that's how you qualify for PSLF, which at the end of it, the loans disappear or are forgiven. So just a quick background, the problem with PSLF has been there's, there's just a lot of like red tape and, and, and it's confusing and, and there's a lot of a, of issues with the servicers making errors. And there's just been a lot of, um, a lot of problems that result in that, for example, the average person, like 90% of people that apply for forgiveness are declined.
Speaker 1 00:03:13 And there's a lot of reasons for that. And, um, we talked about that a few episodes back with, uh, Travis Hornsby about we got into student loans, but there's a lot of reasons that that's occurring. You know, a lot of which are related to the, all the red tape and the, um, you know, or just straight up errors. But, um, I think what's according to this announcement coming out from, from the government is that they're, they're trying to acknowledge some of these big issues that have been happening and, and come up with a solution to fix them. And so we'll kind of talk through what that looks like. So really who is this for? I think that's the first question. So this would be potentially valuable information for really any of you that have federal student loans and that are potentially at qualified employers now, and even really in the past, if you're in that boat, or if you have people, even that you know of, this is, this is going to be potentially valuable information and your situation.
Speaker 1 00:04:18 So one of the number one problems that happened as a result of these requirements is, so I mentioned one of the big qualifiers is the loan type. In order to qualify, you have to have a direct loan. The problem is especially, you know, back 10 years ago, there was a whole bunch of other types of loans that were still federal loans, but they weren't qualified. So the most common example is FFL loans. Or so there, these are federal loans that don't qualify for PSLF. And so a lot, it's hard to tell that you even have these without looking at the details. So a ton of people had FFL loans that thought that they probably were qualifying for PSLF and come to find out that they weren't because FFL does not count same sort of deal with Perkins loans. Those just don't count. Another big issue was people didn't realize, or they got bad advice about consolidation when you consolidate your loans, it resets the PSLF clock.
Speaker 1 00:05:23 So if you've got 20 payments in and you consolidate that just starts you over at, uh, you know, starting at one, and then on top of that, all the errors and that sort of thing, it's just, this has been a bit of a mess. So based on this press release the, uh, solutions that they're proposing, the government is going to start working on. First of all, this is time limited. So it's, you got to get it done in a, before a deadline. What is the deadline? The deadline to submit or to qualify for this waiver is October 31st, 20, 20. Now I know that sounds like a long way away, probably. So we're recording, we're recording this in October of 2021. And so that may seem like a long way away, but I'm telling you, a lot of people are going to qualify for this and there's going to be like a rush.
Speaker 1 00:06:12 And I think it's going to be potentially, um, a backup in processing. So I could see this taking a really long time. Okay. So what are they actually giving you in this limited time waiver? So, first of all, they're going to count all payment types, no matter what repayment plan you're in for PSLF, they're also going to count all loan types for PSLF, as long as you are, or were employed at a qualifying employer, they're going to count all different types of loan types, and they're going to count all different types of repayment plan types. So that's huge. That's like the biggest part of this waiver. That's a monster impact. For example, if you had an FFL loan and we're making payments, when you go to check and see how many payments you have qualified, you're going to realize they're not counting at all. Whereas with this waiver, it's now counting.
Speaker 1 00:07:14 We'll talk a little bit more about how they're gonna do all this, but the big thing is, as a result of this waiver, they're going to now count all those prior payments, no matter what payment type they were, and no matter what loan type you had, as long as you were working in a qualified employer, there's also some other stuff in the waiver. Uh, they're promising to start to automate PSLF eligibility. Um, they they're proposing some better solutions to correct errors, um, especially prior errors. Like they're going to do some like audits and kind of built-in, um, review, um, and then also in the future to limit errors. And then there's a few military perks that will, uh, you know, potentially be a value for some of, some of you guys that are were in the military is inactive duty. Okay. So their estimates are that this is gonna potentially positively affect 550,000 borrowers.
Speaker 1 00:08:08 So that's why it's a huge deal. I know personally, you know, our planning firm, we work with many people I can think of just off the top of my head and many people that will benefit substantially from just this particular. They're also estimating the average borrower will benefit by receiving 23 additional payments as a result of this, um, this waiver. So that that's a big deal. Um, you know, put that into context like dollars and cents. I mean, it's like 20, think about it. Like if you have, you know, for your situation, you 23 times, you know, the, a monthly amount you're paying in practice, um, you know, say you're paying $2,500 a month or, you know, 3000 a month or something. I mean, that's, uh, we're talking like 50 grand of benefit here, you know, plus, um, depending on your situation could be a lot more, but definitely thousands to tens of thousands, even up to a hundred thousand type numbers, uh, as far as value just, uh, associated with this limited time waiver, I was a little surprised that they, uh, I th I don't know, maybe I'm starting to be less surprised about this, but, um, I was surprised that they didn't put some sort of like, means testing on it as in, like, if you're making, you know, over X dollars of income, you're not going to be able to qualify for some of these things.
Speaker 1 00:09:27 But I think the idea is to really follow through with the promises of PSLF. So I definitely that's the feeling you get from the press releases they're, they're trying to make, make good on their promises. So it, ultimately, it was originally originally designed for public service employees, no matter what their financial situation was. And so in that respect, it's, it's, it's spot on. So anyway, let's talk through some of the, um, specifics of this. So this limited time, uh, waiver such a big deal, because it's going to allow a lot of people to count some of their prior payments that were otherwise not counted at all. So the key is you had to have been working for a qualified employer at the time of payment. So, you know, maybe in training, you're working for a hospital, um, like most universities are qualified. You know, those are, that's gonna, you know, be a qualified employer.
Speaker 1 00:10:20 So, but you gotta be working for a qualified employer at that time. So really they're, they're saying any payment, like I said, regardless of loan type, or regardless of the repayment plan, your rent is going to count. So those FFL loans I was talking about earlier that a lot of people had, or some people still have them, those FFL loans and Perkins loans that we're not counting. Now, they're gonna, they're gonna count those. Now, the trick is the catches, I guess, is you have those have to have been consolidated or be consolidated into a direct consolidation loan before this deadline to kind of get wrapped into this deal. So they have to become, or be already direct loans. And you can do that by completing a direct consolidation. You have to do that before October 31st, 2022. So going back to what I said earlier, same sort of thing here.
Speaker 1 00:11:15 There's going to be a rush for this. So I would get on this like today, if you have an FFL loan, or if you have a Perkins loan now that, you know, you know, you need to consolidate to allow it to be eligible for this. I would be consolidating that like today, and then on the repayment plan type. So you could have had a period of time where you weren't, you didn't realize that extended graduated payments didn't count. And so now doesn't matter what payment payment plan you were under. It's all going to count. So it was a couple of the other qualifiers. Um, they have to be loans, uh, taken out by the student. So no parent plus loans, nothing through the parents is going to qualify for this. So in order to, um, qualify, as I mentioned, you gotta, you gotta be indirect loans before October 31st, 2022.
Speaker 1 00:12:05 You also have to have submitted a PSLF employer certification form before the same date, October 31st, 2022. So two things you gotta be indirect loans now, or be consolidating into direct loans. And then number two, you have to have submitted or submit a new PSLF employer certification. And that all has to be done before that October 31st, 20, 22 deadline. If you're not doing those one or both of those there, you know, you could potentially just miss out on this. I'm not sure how they're gonna handle that because it is written as a limited time waiver. It appears that you'll miss out on it and it will be a loss benefit. So if you're in that situation, you know, you had old loans back in the day that were FFL loans or Perkins loans that you weren't getting qualified for. That's a huge deal. You got to get on this.
Speaker 1 00:13:01 There's also, I haven't mentioned this situation. There's also a lot of people that there was just some consolidation related errors. So we have definitely a handful of people that consolidated all their old loans. They were FFL loans and they consolidate them into direct loans. And then some of them just didn't get consolidated. And so, or maybe people just consolidated not realizing that it's, it's gonna reset their PSLF payment count. So all that whole consolidation stuff that was going on, typically it was to get into a direct loan or to get your stuff simplified. Those were the main reasons people were consolidating is just to kind of simplify all their stuff. So, but that's caused a ton of huge problems with PSLF because it resets the clock. Um, and then there were some errors, a lot of times, like I was saying where some of them got consolidated and some of them didn't.
Speaker 1 00:13:58 So now with this waiver, it's basically gonna count all those payments before and after in no matter what loan type you had, um, as long as you get them all into direct loan, now it's going to count all of them. So it's going to kind of wipe away that whole, uh, consolidation issue that has happened. It's caused a ton of problems. If you already have direct loans and you have already submitted employer certification, and you have some payments qualified, you should, according to this, you should see some corrections coming in in the next few months. And, you know, they're, they're indicating they're going to be proactive about this and, and, and go ahead and get on this and research the errors and, and, and then notify you about what payments will potentially be added. And so, according to this, there, you don't have to actually do anything on your end if you already have direct loans.
Speaker 1 00:14:55 And if you've already done employer certification now, in reality, I don't know that I would count on that necessarily just from the history of how all this stuff's played out, I would be a little more proactive and be watching for this. We'll talk about that in a second. It's a positive sign. Um, we'll just see how it shakes out over time. Also, this waiver is suppose, uh, is intending to address some of the technical issues and errors and timing problems that were occurring along the way. There was a lot of people we were seeing that were doing employer certification, and it was like, you know, they were having anywhere from a few payments to up to like 10 or 20 payments that were just missing. And we could not figure out why sometimes it was just hairs that, you know, we were able to eventually uncover, and sometimes it was just, maybe they had the, you know, they were off, they made the incorrect payment amount, or they were late a little bit or just little stuff here and there, but they are committing as part of this waiver to address a lot of these little technical errors and issues and fix them.
Speaker 1 00:16:01 Now, they D I D they didn't have a lot of detail in this press release about how that's all gonna work out like exactly. So I don't know, you know, we'll be digging into it more and we can cover that if we, as we find out more information. So I'm not exactly sure how that's gonna play out or what, uh, errors or issues they will fix versus what they will consider just an error. But, um, it is promising and there are a lot of ease administrative errors, and, you know, they're promising to be auditing them and coming up with the accurate amount of, of payments. There's also a military benefit I mentioned. So what that is, your months on active duty will count towards PSLF, even if you're in deferment or forbearance. So a lot of people go into active duty and then they go into deferment or forbearance, um, because that's an option and it stops the payments for a little while, but they didn't realize that was not, that stopped their count for PSLF.
Speaker 1 00:17:00 So, as part of this waiver there, I'm going, gonna now qualify those payments that were, I guess, not technically made during active duty. They're gonna still count those months of deferment or forbearance, um, while on active duty towards PSLF. So that can be a big deal for those of you in the military. And it seems like they're indicating there's going to be some more to come on this. Like, it sounds like there may be going to offer this benefit for the future. It didn't say that very explicitly. Um, but it sounds like that's the direction they're going with this military benefit. They're also promising some, um, uh, future automation in relation to qualifying federal employees. PSLF progress. They're going to use like department of education records, data, and, and match that up with other federal and try, make a better effort to more proactively automate progress towards PSLF.
Speaker 1 00:17:56 And then the other big announcement, or are part of this waiver, is that they're gonna work. They're gonna do some review or audits on prior PSLF denials and prior PSLF processing. There's been a ton. I've mentioned this several times. There's been a ton of errors, a ton of, um, you know, problems with servicer PSLF reporting. And so they're gonna, they're committing to review all denied applications for PSLF and PSLF processing, and, and they're, they're working to find a lot of these errors proactively and, and get them fixed. So apparently there are, they're gonna be reaching out to borrowers as they go through these review processes, and then you'll have the opportunity to request a second review. If you feel like their report or their corrections are still incorrect, you'll have this option to request a second review. And then they're also working on a more permanent reconsideration process.
Speaker 1 00:18:59 Uh, it seems like the, the details on that are not clear. They haven't really released all how, how all that's going to work, but it sounds like they're being, they're trying to make a much better effort towards ongoing, um, audits and reconsiderations, um, to help improve the reporting on this. And also as part of this, they're committing to improving reporting of PSLF in general, and providing better timelines and results and making it a more seamless application process. So, so it sounds like this is coming out now. Um, this has been a fast kind of progression w uh, you know, as everybody knows, student loans have changed a ton and, you know, with COVID forbearance, that's been a big deal. And they, it sounds like they're going to roll this out pretty fast. They say in the coming months, you can get more information on
[email protected] slash PSLF waiver.
Speaker 1 00:19:51 So there should, you know, I think they're going to be updating this. Um, you can also log in to your FSA account. You want to make sure your contact info is accurate on the FSA or the student aid website. So you can go to student aid.gov/settings and make sure your contact info is accurate there. Cause that's going to be how they're going to be reaching out to you to let you know what they find you're actually going to be qualifying for as far as payments qualified. So if you are, you know, in that camp of you've already had your loans, 100% of them are direct and you've already done ECF or employment certification. This is all supposed to happen automatically. They're going to look at all your payments and decide if there are FDL or, you know, prior payments that should have been qualified that were due to this waiver that would now become qualified.
Speaker 1 00:20:44 And they're gonna just proactively let you you in the next few weeks or months. Um, but, um, I would, I think what I would do is I would be as proactive as possible. I would go ahead and do ETF again and, uh, try to get as many on, try to get caught up as much as you can now is going to be the best time really of any time I can even think of them, especially. I mean, they're switching servicers fed loans is going away. That's a whole separate topic. Um, so that's kind of another reason to do this, but I would just say now's a great time to get ECS or employment certifications caught up to speed. It doesn't hurt to do this. And I think that's going to just provide more of an accurate count and hopefully you'll start to see or hear from the servicers or from the federal, uh, federal aid people about what their results are in relation to your situation.
Speaker 1 00:21:38 Now, if you have never done ECF or employment certification, you got to get on that like now, because you have to have done at least some or one employment certification to be automatically qualifying for this waiver or be on their list to be reviewed for this. So you definitely want to do that ASAP. Um, and same thing for those of you that still have FFL loans or Perkins loans, um, you have to get those consolidated in direct loans, ASAP. That's a big deal. And so that, that will be, um, I have a feeling there's going to be a mad rush to do this. And so you want to get on that ASAP now, if you just aren't sure what loan type you have, I'm sure there's a lot of you that are like, well, you know, I don't know if I have FVL loan or direct or what, or did I have FVL in the past?
Speaker 1 00:22:29 Did I can, if you're just, if you're not sure, um, how this affects you, um, you can go on to student aid.gov/aid-summary, and they have a loan breakdown section that, you know, break down all of your loan types and that'll at least give you an indication of what you have now. And you can see some of the older loans that you had. And so if any of the loans say Perkins loans, or start with FFE, ELO, uh, FFL at the front, those are the loans I'm talking about that are not qualified or normally are not qualified. And so if you have any of those with a balance now, and you're in a PSLF qualified employer, those are the ones that have to get consolidated ASAP. Or if you have any of those types of loans that have already been consolidated from a long time ago, you might, there's a good potential.
Speaker 1 00:23:27 You'll get some value out of this. If you were working for a qualified employer back when you were originally paying those, there's a good chance. You'll get some pretty good value out of this, uh, waiver program, but that's going to depend on, you know, how many payments you made during that period of time. And then the other thing is if you had any non-qualified payments that were made in the past, this is going to be a little harder to find, but you can dig down into your loan records and see what your payment history is. And if you had any of these non income-based repayment plans, uh, in the past, those will be the ones that, you know, potentially will or should be getting reclassified as qualifying payments, as long as, um, you were at a qualifying employer. So if it was me, I would want to, I would be digging into my history and I would want to understand kind of how this is going to affect me.
Speaker 1 00:24:24 And then I would want to check to see that their review is in line with what I'm expecting to get out of this. So I would want to know, you know, how many payments do you think you're going to be able to add to each loan that qualify for PSLF as a result of this whole program. So maybe you're like the average person they're saying is going to get 23 added payments as a result of this. So maybe that's you, maybe you're, you should expect your payment count for PSLF, maybe you're at 80 now, and you should expect it to go to 90, a hundred, 103 payments. So it's, that's really good information to know, because you can kind of check the data as it comes in to make sure it lines up with what, what you're thinking it's going to be. That's just, that's, that's kind of the direction I would go.
Speaker 1 00:25:13 This is, I would want to know that ahead of time. Now, if you, if you're at one of our clients at our planning firm, feel free to reach out to your primary contact here. We're happy to help with this. We can, you know, dig in, we're going to already have all your records on this, and we can tell you, um, you know, exactly what payments are going to, um, you know, now be counted as a result of this, and we can give you a pretty good estimate of how it's going to affect your, uh, eligibility date of, uh, getting PSLF. And so definitely reach out as you, um, you know, as we, as we get in more information on this and definitely send, uh, over the emails you receive, and we can kind of double-check those results. Now, if, if you're, if you're not actively working with us, um, we're happy to talk about how we might be able to help with this kind of thing.
Speaker 1 00:26:02 We have a, um, student loan, like standalone service, where we look strictly at, um, your student loans and kind of do an audit and look at the plan and make sure you're in the optimal repayment plan and, and that sort of thing. So feel free to reach out if you have any interest in that sort of service. Also, um, our planning services all are going to include, you know, student loan advice and help as part of that. So, um, feel free to reach out if you have interest in those and are looking for help, particularly on this, this specific area. Um, but I think the main thing is that, you know, at a minimum, you make sure you're capitalizing fully on this. And it's a good reason to kind of dig in, to see where you're at with PSLF, if you don't already know and look back at your history to see, you know, how this is going to affect you and make sure you're fully maximizing this waiver.
Speaker 1 00:27:04 And like I said, we have some time until the deadline. So this is a limited time thing. It's not, um, it's not gonna, it's not a permanent change, so you have to do it by next October. So October 31st, 2022, you gotta do potentially you have to take action by then, but I would totally not wait. Like even really anytime like the sooner, the better, because like I said, there's going to be a mad rush of people going after all this stuff, plus they're switching services. So there's a lot of stuff going on, suit alone wise. So I would be all over this ASAP because potentially a lot of value at stake, and there's going to be a lot of people going on. So hope this has been helpful, good luck, uh, navigating student loans. And, uh, we'll look forward to talking to you next time as always, thank you so much for joining us today.
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