Dr. Tony Bartels and Dr. Rebecca Mears on the latest student debt hot list topics and what borrowers need to do now

TRANSCRIPT

Intro

Tony Bartels, DVM, MBA: It’s just going to be chaotic, I mean, the loan servicers aren’t prepared. The borrowers aren’t prepared. There’s always, you know, mistakes are always made and people are going to have lots of questions and quite frankly, they’re going to be overwhelmed once repayment starts. So you kind of want to get this stuff figured out before because if you try to make a phone call on September 1st, you’re probably going to have some really, really long wait times to get ahold of anybody. So, take advantage of the time you have now to get this stuff straightened out and have a reasonable plan in place so you’re not, you know, scrambling once the interest and payments start back up.

Meet the Host and Guests

Jordan Benshea: That is student debt expert and VIN Foundation Board Member, Dr. Tony Bartels with Dr. Rebecca Mears, and this is the VIN Foundation’s Veterinary Pulse Podcast Special Student Debt Series. I’m Jordan Benshea, Executive Director of the VIN Foundation. Join me as I talk with veterinary colleagues about critical topics and share stories, stories that connect us as humans, as animals, as a veterinary community. This podcast is made possible by individuals like you who donate to the VIN Foundation. Thank you. Please check the episode notes for bios, links, and information mentioned. Hello, Tony and Becca. Welcome back with us.

Tony Bartels, DVM, MBA: Hello, Jordan. Yeah. Time to time to talk student loans again, obviously.

Jordan Benshea: Yeah. Student Debt Series. Yeah, I think we have the most episodes around this series. Welcome, Becca.

Rebecca Mears, DVM: Hi, everyone. I’m really excited to be here.

Jordan Benshea: Yeah. We’re really excited to have both of you here. You guys have been working so hard just trying to answer all of these student debt questions, and it seems like there’s just been, of course, with all the news, a huge influx of colleagues. I guess we’re doing our job because the colleagues are reaching out. 

Current Hot List of Student Debt Questions

Jordan Benshea: So, as always, let’s dive right in, and this episode, we’re going to be focusing on kind of a current hot list of questions that we have been seeing from colleagues asking about student debt. We recently sent out an email with this hot list, and we highly recommend that you sign up for our emails if you are interested in staying up to date on this, we will not email you a lot. We probably should email you more, just to keep up with everything, but let’s dive right in. 

Major Student Loan Happenings

Jordan Benshea: So first off, let’s focus on the major student loan happenings, and there has been a lot of them. But what if, just kind of going down this list for colleagues, let’s start with, if you are a veterinarian who finished veterinary school before 2014. What do those colleagues need to know?

Understanding Federal Family Education Loans (FFEL)

Tony Bartels, DVM, MBA: Yeah, so the first thing, you know, the reason why that 2014 cut off kind of exists is, has to do with how the student loans have evolved over time. And, around 2010, there was a phase out of the previous student loan types that most people had, Federal Family Education Loans. So after July 1st of 2010, nobody received any new Federal Family Education Loans. So, you know, kind of working our way back, if you started veterinary school in the fall of 2010 and graduated in May of 2014, you’re not likely to have any of those Federal Family Education Loans if you initially started borrowing at that time. So if you had undergrad loans, that might complicate things, so you still could have some Federal Family Education Loans in your historical student loan portfolio even if you graduated in 2014 or after. But for the most part, if you were a person who, your first introduction to the federal student loan system was in veterinary school, then you should be in the clear, when it comes to those older loan types if you started veterinary school in 2010 and graduated in 2014. But for anybody that graduated before then or has any of those older Federal Family Education Loan types in their portfolio, that you really, really, really want to consolidate. 

One-Time Forgiveness Account Adjustment

Tony Bartels, DVM, MBA: You want to get familiar with the one time forgiveness account adjustment. We’ve got a special infographic on the VIN Foundation website, it’s got its own dedicated page and there’s also a one time forgiveness count blog post that supports that. But essentially, those Federal Family Education Loans have really been problematic when it comes to benefits and income driven repayment plans and public service loan forgiveness, and this is a really unique opportunity to clean all of that up. So all of the repayment time that you’ve logged up until that point, even if you’ve got some income driven repayment history on them or public service loan forgiveness time, which actually that’s not even really possible on those older FFEL loan types anymore. But if you consolidate them, you’ll preserve all of that income driven repayment time and even earn some additional qualifying forgiveness time as part of this one time forgiveness account adjustment. So it’s a super beneficial time to clean up those older loans. You have to consolidate by the end of this year, so that was recently extended since I think the last time we talked about student loans on this podcast. So the opportunity to benefit from that one time forgiveness count is, until the end of this year.

Jordan Benshea: That’s why it’s sort of top on our list of things that colleagues should focus on right now because that’s the goal with really this whole roundup, is sort of this hot list is what you need to know right now because a lot of these things might be time constructive.

Tony Bartels, DVM, MBA: Yeah, and this one time forgiveness count is going to be a common theme in this one. That is, in my opinion, the most beneficial of all of the goodies that are floating around out there right now. I mean, it doesn’t tend to get nearly any press, because it’s really complicated, but it is really, really, really beneficial.

Income-Driven Repayment Plans and Forgiveness

Jordan Benshea: Okay, so what if we have colleagues who have loans that have been in repayment longer than they’ve been using income driven repayment?

Tony Bartels, DVM, MBA: Yeah, and that comes right back to that one time forgiveness count adjustment. So most of the more beneficial income driven repayment options didn’t start until 2009, but many of you have been in repayment for much longer than that. And what the one time forgiveness count adjustment does is, it goes back beyond even when, you know, IBR first started. So before 2009, all the way back to 1994 when income contingent repayment, the first of the income driven plans was put on the books. You can go all the way back to loans from 1994, and any repayment time that you have on loans from 1994 or after will be counted as forgiveness qualifying payments as part of the one time forgiveness count adjustment. The kicker is it’s only eligible for those federally held loans, which is why you want to consolidate by the end of this year, if you have some of those non federally held loans like those Federal Family Education Loans or Health Professional Student Loans, Loans for Disadvantaged Students, Perkins loans, those types of loans aren’t automatically eligible for this. But if you consolidate them into a direct consolidation loan, they will be eligible for the one time forgiveness count adjustment.

Jordan Benshea: So what I’m hearing is, take advantage of this.

Tony Bartels, DVM, MBA: Absolutely. It is, I mean, it is crazy beneficial because the more forgiveness qualifying time you get, not only might you actually receive forgiveness if you’ve been in repayment for a long time, which some of our colleagues will. So if you’ve been in repayment for 25 years already, you’re going to get forgiveness on your loans as long as they’re the right loan types and they receive that one time forgiveness account adjustment. But maybe you get 20 or 22 years or 23 years of qualifying forgiveness payments, which means you’re really knocking on the door of being done with repayment, and it’ll save you, in most cases, a lot of remaining repayment costs the closer you get to forgiveness with this one time count adjustment.

Rebecca Mears, DVM: We’re talking a lot about, you know, this additional time towards forgiveness for this time it’s been in, that we’ve been in repayment. What if I’m not sure about how much time I’ve spent in repayment and I want to look that up, is there a way to do that?

Jordan Benshea: Good question. We get that a lot. Yeah.

Tony Bartels, DVM, MBA: Absolutely. 

Student Loan Physical Exam

Tony Bartels, DVM, MBA: So I mean, it starts with what we call the student loan physical exam. So you have to go to studentaid.gov, the Department of Education website where you applied for your aid initially. But it also is the place where you’re going to find your student aid data file, which is the official record of all your federal student loan borrowing history, and there’s a way for you to download that ugly file containing all of that data. It’s a TXT file. You want to take that file from the studentaid.gov portal and put it in the VIN Foundation my student loans tool, alright, that’s going to show you all of your loan types. We’ll break them down by the categories. It’ll show you all the loan dates, so when you started borrowing those, and then we can start to piece together how much repayment time you have. You know, unfortunately, the time that you’ve spent in school will not count towards the forgiveness count adjustment. But any time that you’ve spent in repayment and even certain deferment and forbearance time will also be counted as qualifying repayment time as part of that forgiveness count adjustment. So start looking for which loan types you have so you know if you need to consolidate, but also looking at the dates that are associated with those various loan types, and thinking about when they first entered repayment at various points along the way. And if you consolidate them altogether, the count that you’ll receive will be the greatest count available. This is where, you know, a lot of us have some really torturous pathways to and through veterinary school. If I had loans from, you know, 1999 and I took, I had a prior career doing something else for 5 or 10 years, and then I went to veterinary school, I’ve got loans from back in the, you know, early 2000’s that might have 5 or 10 years of payment time on them. I can combine them with my veterinary school loans that might have 5 or 10 years on them as well, and I can add that together. So I’ll get the greatest amount of forgiveness qualifying time based on the loan that has the greatest number of repayment months on it. So that’s what makes this forgiveness count adjustment so beneficial.

PAYE and RePAYE Changes

Jordan Benshea: One thing we’ve talked about before for sure is PAYE and that there are a lot of changes potentially coming to PAYE. So if somebody is eligible for PAYE and if they’re using PAYE, we’ve talked about there are things that they need to know. So let’s remind them, what are those?

Tony Bartels, DVM, MBA: Just for clarification, Pay As You Earn, PAYE, I call it pay. It’s one of the more beneficial of the income driven repayment plans. It is on the chopping block, it’s called that. So there’s been some changes proposed to income driven repayment, and they are working their way through the system. So they’ve already made it through the negotiated rulemaking process, which is where they open it up and the public comments on them. Then they’ll piece together all those comments, maybe make some minor adjustments around the edges, but then set an effective date. That’ll likely be in 2024, but we haven’t seen that yet. But what that ultimately means is that we’re going to see, potentially Pay As You Earn phased out, meaning that you’ll no longer have access to it if you’re not already using it. So the good news is that if you are already using it or you’re planning to use it, then you can keep using it. Anybody that’s enrolled in Pay As You Earn when these changes take effect will be able to continue using Pay As You Earn for as long as you stay with it or until you reach forgiveness. But after the effective date, if you’re not using it, you won’t be able to get into it. Or, if you select out of Pay As You Earn for any reason, you won’t be able to get back in. So it’s one of those areas where you really want to know, am I eligible for Pay As You Earn? Not everybody is, so it has some special eligibility requirements that VIN Foundation My Student Loans tool can help you understand if you’re eligible for Pay As You Earn. Then you want to see, am I using it? There’s a lot of people that think they’re using Pay As You Earn, but when we look at their files, it shows Revised Pay As You Earn or Income Based Repayment or something entirely different. So this stuff is really confusing, the details really matter. You want to know whether or not you’re using Pay As You Earn, if you’re eligible for it, and confirm that that is the plan that you’re actually using with your student aid data file or with your loan servicer, and then decide whether or not it’s the best plan for you. So with the Pay As You Earn phase out, we’re also going to get some improvements to Revised Pay As You Earn or RePAYE, and those could be beneficial for you too. So, you want to start to compare what these look like and thinking about, you know, when repayment restarts and beyond, which repayment plan is going to be best for you.

Pandemic Forbearance Refunds

Jordan Benshea: We hear a lot from colleagues that, “wait, I didn’t have to make payments during the whole pandemic? But I kind of wanted to get ahead of my student loans, so I went ahead and made payments. Should I have not made payments? Should I have saved that money?”, and a lot of them are surprised to hear that if they did make payments starting from March 13th of 2020, they can get a refund.

Tony Bartels, DVM, MBA: Yeah absolutely, I still, we still, we find that every day. People that have either uploaded their file, we’ve got alerts set up in there to detect whether or not you’ve been making payments during this pandemic forbearance period, and if so, we want you to be aware that you can request a refund of that. So you request that refund of any of those payments that you’ve made since the forbearance benefits began, which was March 13th of 2020. The loan servicer will provide you a refund of those payments, so that will get added back to your student loan balance. But when you’re not accruing interest and we’ve increased the probability through the one time forgiveness account adjustment and improvements to Revised Pay As You Earn, that people are going to reach forgiveness. When you’re projected to reach forgiveness, it doesn’t make sense for you to pay anything more than is required on your student loans, and nobody’s been required to make any payments for more than three years. So if you have, you can get a refund of those payments and redirect those funds to other areas of your financial wellness, or you could even just stick it in a savings account and it’s going to generate more funds for you that you can then decide to use towards your student loans later if you want to. But there’s really no benefit to turning those funds over to the Department of Education right now. Request a refund if you’ve made a payment on those, and the forbearance benefits, while it is quite likely they’re going to end at some point later this summer, you know, we’ve said that seven or eight times, they keep getting extended. So, you know, it’s not out of the realm of possibility that it could get extended again, which means you would want to have those funds in your control longer earning interest or doing other better things in your overall financial wellness plan, than just sitting in the Department of Education.

Jordan Benshea: Well, especially with the high interest yield saving options right now. I mean, those rates are pretty high.

Tony Bartels, DVM, MBA: Yeah, at minimum, but I also find that most of our veterinary colleagues are generally not terribly satisfied with the rest of their financial wellness, and there’s way better things that you can be doing with your money besides putting it towards your student loans to shore up some of those areas.

Jordan Benshea: So is there a time frame that’s sort of the deadline to ask for a refund?

Tony Bartels, DVM, MBA: Yeah, that actually isn’t entirely clear, but I suspect that once the forbearance benefits end, you’re also going to lose that opportunity to request a refund of those payments made. So I, if you’ve made those payments, I would request a refund as soon as you can, but anticipate that that option will go away as soon as the for forbearance benefits officially end, which is likely to be, you know, later this summer, maybe sometime in August.

Jordan Benshea: Right, okay. 

Income-Driven Repayment Plan Renewal Dates

Jordan Benshea: So another question that we get a lot is, a lot of people ask questions, for those that are in an income driven repayment plan, when is my renewal date? That’s a really, really hot topic. So what information do we have for colleagues about the renewal date for income driven repayment plans?

Tony Bartels, DVM, MBA: Yeah. So that’s another one that’s a little bit of a can of worms. But, first place…

Jordan Benshea: A lot of these things seem to be a can of worms.

Tony Bartels, DVM, MBA: The first place to start, again, is that student aid data file, upload it into the VIN Foundation My Student Loans tool, doing that physical exam of your student loans, and if you expand the details for any of your loan types in the My Student Loans tool, you’ll see an anniversary date listed if you’re in an income driven repayment plan. So as long as you’re using an income driven repayment plan or change to one during the forbearance benefit period then you’ll have a, what’s called, an anniversary date or other people call it their recertification date, the date that you have to provide updated income information to continue having your payment calculated based on your income. But nobody has had to provide any income recertification information during the pandemic forbearance benefit period. So for more than three years, people have either forgotten or they’re dying to try to renew their income information, but the loan servicers aren’t accepting it. So nobody has been required to provide this income information unless it would result in a lower monthly payment than you had previously using an income driven repayment plan. So many of you, especially some of the recent graduates, 2019, 2020, 2021, 2022, many of you have had a $0 minimum monthly payment on your income driven plans since you’ve graduated, and that will persist. So nobody’s been required to provide renewal information through at least the end of the forbearance benefit period, plus six months after that. That’s going to bring us into February of 2024 most likely. So anybody that shows an income driven repayment plan date or an anniversary date for recertifying of less than February of 2024, you can pretty much add a year to the date that’s showing in your file until you get beyond February 2024, and that will be your next renewal date. So if you’ve got a very beneficial or low monthly payment on your income driven plan, you can enjoy that for, in some cases, a significant period of time even beyond when the payments start back up. Then start to think about what that renewal will look like, and how much that’s going to generate by using something like the VIN Foundation Student Loan Repayment Simulator, to see what your repayment will look like after you renew in 2024 or, in some cases, 2025.

Tax Filing Considerations for Married Borrowers

Jordan Benshea: Okay, so for those that are colleagues that are married, a lot of the questions that we get are around taxes. I mean, a lot of questions in general, it seems like they almost want, they’re almost looking for CPA help. But a lot of colleagues are saying, “hey, if I’m married, should I be filing separately? Should I be filing jointly? What should I be doing?”. 

Navigating Tax Filing for Student Debt

Jordan Benshea: They’re almost looking for tax help, but as it relates to student debt. So within our purview, since we’re not accountants or CPAs, if there are colleagues who are married and they’ve been filing their taxes separately because of student debt, should they file together? What sort of information and advice do you have for all that?

Tony Bartels, DVM, MBA: The marriage questions. Marriage, it’s complicated, so it’s the…oh, it’s all complicated, all of it.

Rebecca Mears, DVM: Marriage or filing your taxes?

Tony Bartels, DVM, MBA: The filing your taxes part is particularly complicated. I mean, as soon as we started having payments that are a function of our incomes, we’ve also subjected student loan repayment to all of the annoyances and idiosyncrasies of the tax filing system. So, many of you may have gotten accustomed to filing your taxes separately from your spouse to keep your student loan payments lower, particularly in a plan like Pay As You Earn. But there hasn’t been any payments that have been due, so there really hasn’t been a good reason to file your taxes separately when there’s no payments due and no interest is accruing. 

Amending Past Tax Filings for Refunds

Tony Bartels, DVM, MBA: But we couldn’t really predict that those pandemic forbearance benefits would be in place as long as they have been, so good news, and one of these lesser known facts in the complicated tax filing system, you can actually go back up to three tax filing years, the most recent three tax filing years, and change a married filing separately status to a married filing jointly status. Again, because nobody’s been required to provide any renewal information during the pandemic forbearance period and for some time after, it’s going to make a lot of sense for many of you who have filed recent tax returns separately, to go back and amend those tax filings to from separately to jointly. You may get, in some cases, some pretty significant refunds by doing so. So visit that, visit with your CPA to talk about whether or not that’s going to make sense for you. But then also think about when you do get, it’s tied to that anniversary date, so if you’re using an income driven plan, what is my anniversary date? When am I next going to have to provide updated income information and what tax return will I be using at that point? So if my next renewal date isn’t until mid or late 2024, well I’m going to have an opportunity to file my taxes again for 2023, possibly separately, to have that one on file when I renew my income information, which means I might be able to go back for 2022, 2021, and 2020 and amend those tax filings to jointly. So that’s the, that’s what I’d be investigating for those of you that have filed your taxes separately recently for student loan payment purposes.

Jordan Benshea: Yeah, and you recently covered this in a Dear Doctor Debt column, so we’ll make sure to link that in the episode notes as well.

Tony Bartels, DVM, MBA: Absolutely. Yep.

New Graduate Student Loan Playbook

Jordan Benshea: For colleagues that are graduating this year, 2023, we do do an annual New Graduate Student Loan Playbook and webinar, as well as additional information and checklists, etc. So we did do one of those, in the beginning of April, and so what sort of things are sort of the highlight takeaways for this specific year?

Tony Bartels, DVM, MBA: Again, coming back to the one time forgiveness count adjustment. So those of you that graduated even this year or during the pandemic forbearance benefit period at all, this one time forgiveness count adjustment can be extremely beneficial for you, particularly if you were one of those career changers or had some repayment time on loans from before veterinary school. You may have the opportunity to transfer some of that older repayment time to your veterinary school loans, which would make you or help you reach forgiveness faster than you would if you didn’t consolidate during this one time forgiveness count adjustment. So I would highly recommend looking at your loans. You should know whether or not you’ve had some loans from before veterinary school, the trick is whether or not they have any appreciable repayment time logged for them. But if they have some repayment time on them, then I would highly recommend consolidating them so you can impart that qualifying time as forgiveness time as part of the one time forgiveness count adjustment. I would also consider 2023 may be the last graduating class who could conceivably have access to Pay As You Earn. So it’s still available now, I don’t know exactly when it’s going to get phased out, again, my sense is probably sometime in 2024. But that means you have the opportunity to choose it, and your class may be the last class, if you’re eligible for it, to select Pay As You Earn as a repayment plan if it’s the most beneficial for you. That’s exciting as well. 

Changes in Repayment Plans and Interest Subsidies

Tony Bartels, DVM, MBA: For those of you that are also eligible for the new version of IBR, I call it IBR 2014, then we’ll encourage you to actually get your loans into Revised Pay As You Earn, so you can benefit from the unpaid interest subsidy and then the proposed changes to Revised Pay As You Earn, which is going to lower the monthly payment and increase the unpaid interest subsidy, which is more beneficial for your loans in general. Particularly as you’re just getting started and your income is ramping up, will decrease your payments no matter what your debt to income ratio is. So even if your debt to income ratio is relatively low, you could still really benefit from Revised Pay As You Earn in the short term here, particularly with the proposed changes. Then for those of you that are looking at forgiveness in the future, we’re going to start talking about using Revised Pay As You Earn and switching to that new version of IBR, IBR 2014, when the time comes. So it’s just, there are definitely some changes coming to, especially for the very recent graduates who are more likely than not to be eligible for a plan like IBR 2014 or new IBR, which means you’re going to want to start with RePAYE and eventually switch over to that new version of IBR, if it looks like you’re going to hit forgiveness. That’s going to be something we’re going to be talking about a lot, only really pertains to new and recent grad scenarios. We did touch on that in the new grad playbook in more detail, so I would encourage you to review those materials if you want to learn more about that.

Jordan Benshea: Yeah, now all these things that we’re talking about, you know, our audience knows, all the links will be in the episode notes, so take a look there. So those are really the hot list items, but we also have these “honorable mentions”, AKA coming soon or other areas of interest or topics, but ones that aren’t as, you know, as mostly asked as the other ones. So let’s start with unpaid interest capitalization, so what’s the latest on that?

Upcoming Changes in Unpaid Interest Capitalization

Tony Bartels, DVM, MBA: So that’s one of those changes that have already worked their way through the negotiated rulemaking process and will take effect on July 1st, 2023. So we talked before about some of the Pay As You Earn phase out and the RePAYE, you can think of those as still kind of working their way through the system and haven’t had an effective date set yet. These changes to how unpaid interest capitalization is going to be treated had already worked their way through that entire system, and the effective date is July 1st of 2023, and for loans that are first entering repayment, they will not capitalize your unpaid interest or interest that had accrued during school. Now, normally this is a pretty big deal because a lot of us accrue a lot of interest during school, but for those of you that have been in school, mostly during the pandemic forbearance period, you don’t have a lot of unpaid interest, if any at all. So you’re not going to experience a lot of unpaid interest capitalization anyway. But going forward, this is going to be beneficial once interest gets turned back on and because interest rates are now higher. Those that are starting veterinary school now or last year or next year are going to see the return of that unpaid interest, and it’ll be quite high and add a significant cost to their total education. So not having that added to their principal, so that’s what capitalization is, you take that unpaid interest and you add it to the principal, not having that happen when you have your loans first sent to repayment can save you significant amounts of interest over the course of repayment. There are some caveats to that, so only loans that are first entering repayment will not experience unpaid interest capitalization. Unfortunately, if you consolidate your loans, which is still going to be a common recommendation for many new graduating veterinarians, consolidation will capitalize any unpaid interest you have. So we want to talk about that or at least know how much unpaid interest you have. The other exciting areas where this applies is when you’re switching from one repayment plan to another. So I’ve mentioned a new strategy starting with Revised Pay As You Earn, switching to an income based repayment, the new version particularly. Normally, before these changes take effect, any switching from one plan to another would be another one of those triggers where unpaid interest would capitalize, so now that that goes away, even if you have a significant amount of unpaid interest using a plan like Revised Pay As You Earn, it will not get added to your principal if you switch to another plan. Unfortunately, if you start with income based repayment and switch to another plan, it still will capitalize your interest because they could not change that provision, because by law when you exit income based repayment specifically, it says that the unpaid interest must be capitalized. So overwhelmingly, it’s a positive change. Most instances of unpaid interest capitalization will go away, like when people were forgetting to provide their renewal information, that was a real common source of capitalization. That’s going away, again, except for plans like IBR specifically. But in general, that’s going to provide a lot of relief for folks since that still seems to be one of the more confusing aspects of income driven repayment, is getting that income driven renewal information on time.

Jordan Benshea: Wow, and that was just one question.

Tony Bartels, DVM, MBA: I know. It’s crazy. This has been nuts trying to keep up with all this stuff, and we’re not even, you know, they haven’t even turned the interest and the payments back on.

Jordan Benshea: Just think of everything we’re going to have to tell people once that happens.

Tony Bartels, DVM, MBA: Yeah.

Jordan Benshea: So going back to the one time forgiveness count adjustments, let’s talk about when those will be applied and what they might need to know.

Tony Bartels, DVM, MBA: Yes, the most recent guidance on that is 2024. Earlier when that was first announced, they were hoping to have that done before the forbearance benefits would end or sometime in 2023. They’re still hoping to cancel for those folks who have eclipsed the 20 or 25 year maximum that is required to reach forgiveness. They’re hoping to have that applied by the end of 2023, but if you still have repayment time remaining, you’re not going to see that forgiveness account adjustment applied until 2024. We don’t know exactly when, right now it just says 2024.

Supreme Court Ruling on Special Cancellation Benefits

Jordan Benshea: Okay, and the thing that we hear about a lot in the news, that we’re all kind of curious to see what’s going to happen, I mean a lot of these things, but one of the big ones is the supreme court rule and the ruling on the special cancellation benefits. So where are things with that? Where does it stand now?

Tony Bartels, DVM, MBA: Yeah, so the cases were heard in February. It’s kind of, you know, in that deliberation process, if you will, where the Supreme Court is kind of working up their final decisions and the material that will support that. Normally, that information starts to roll out in June, so we’re just a month or weeks away here from knowing what the resolution will be on that one time cancellation benefit. So, just as a refresher, that was a benefit that was announced by the Biden Administration that would cancel up to $20,000 of federally held student loan balance if you met certain income thresholds, so $20,000 being eligible for folks who had received a Pell Grant in the past. That’s another one of those triggers we have set up in the VIN Foundation My Student Loans tool. If you forgot or not sure if you’ve received a Pell Grant in the past, you can upload your student aid data file and there’ll be an indicator in that my student loan summary that shows whether or not you’ve received a Pell Grant. But if you have, and the Supreme Court allows these benefits to go through and you meet the income threshold requirements, you can expect to see $20,000 of your student loan balance canceled. If you have not received a Pell Grant and still meet those income thresholds, then you’ll see $10,000 or up to $10,000 of student loan balance canceled.

Jordan Benshea: Either one would be a huge benefit for a lot of people. I mean, $10,000, that’s real money, $20,000, that’s real money.

Tony Bartels, DVM, MBA: More beneficial for those folks who have very small balances and undergraduate debt. So we haven’t really focused a whole lot on the cancellation benefits, but like you said, I mean, any amount is significant. But we’re talking about our, many of our colleagues have 200, 300, $400,000 of student loan balance, so a $10,000 cancellation, while nice, is really not appreciably changing their overall repayment strategy.

Jordan Benshea: Right, but still real money.

Tony Bartels, DVM, MBA: Yep.

Preparing for the End of Forbearance Benefits

Jordan Benshea: So we’ve heard this a lot, and we’ve taken guesses, we’ve put bets in. When do we think the forbearance benefits and interest and payments are likely to start up again?

Tony Bartels, DVM, MBA: Well, they’ve already cursed themselves by saying final, like, again on this one.

Jordan Benshea: Right.

Tony Bartels, DVM, MBA: I think they’ve said that 4 or 5 times. So if you’ve ever done this in your own work, as soon as you mark something as final, that almost guarantees that it’s…

Jordan Benshea: Guaranteed edits.

Tony Bartels, DVM, MBA: Exactly.

Jordan Benshea: Yep.

Tony Bartels, DVM, MBA: I think it really, a lot of it’s going to depend on what the Supreme Court decides, especially if they decide against it, which I think in my opinion is quite likely. There will be some significant push to have them extended again or try in some other manner. We’ll see, but the way that the wording is written right now is that the benefits will expire 60 days after the determination is made by the Supreme Court and no later than 60 days after June 30th. So the latest we can see this go is August 30th unless it’s extended again. But, you know, the Secretary of Education just last week said that this was going to be the last time and everybody should expect to re enter repayment, but he’s also said that 2 or 3 times before, so take that for what it’s worth. But, you know, there is a really good chance that this will come to an end later this summer, but there’s not an insignificant chance that it will be extended again.

Staying Updated and Seeking Help

Jordan Benshea: Okay, so where can colleagues go for updates? Because one thing that we do know is that things will continue to change.

Tony Bartels, DVM, MBA: Yeah, absolutely. So, you know, vinfoundation.org, the blog is, you know, we’ve got tons of content there. The Student Debt Center is a great place to do that physical exam, studentaid.gov is kind of that official source. You’re going to want to check your loan servicers, now you’re not always going to see the information in your student aid file match what your loan servicer is telling you, but that’s the benefit of looking. I always like to be able to double check what my federal student aid file says against what my loan servicer is saying, and if they are different I want to call my loan servicer and find out why. And there’s been a lot of loan servicer shuffling going on recently, so another reason to just make sure that everybody’s on the same page, particularly if we are going to re-enter repayment later this year. I mean, that’s going to be, it’s just going to be chaotic, I mean, the loan servicers aren’t prepared. The borrowers aren’t prepared. There’s always, you know, mistakes are always made and people are going to have lots of questions and quite frankly, they’re going to be overwhelmed once repayment starts. So you kind of want to get this stuff figured out before because if you try to make a phone call on September 1st, you’re probably going to have some really, really long wait times to get ahold of anybody. So, take advantage of the time you have now to get this stuff straightened out and have a reasonable plan in place so you’re not, you know, scrambling once the interest and payments start back up.

Jordan Benshea: Yeah, absolutely. Anything else our listeners should know?

Rising Interest Rates for Veterinary Students

Tony Bartels, DVM, MBA: Oh, well, the only other thing I think that didn’t make it into that email that’ll be in the next one that we send out, whenever that is, is that the interest rates for next year were set. They’re going to be the highest that we’ve seen them, ever in this structure. So veterinarians who are borrowing for veterinary school can expect to see direct unsubsidized interest rates at 7.05% and direct grad plus rates will be at 8.05%. So for those of you that are in school, how much you’re borrowing is really going to have to take focus again. We’ve gotten really used to this no interest stuff accruing during school, but when it does get turned back on, it’s coming back on fast and furious. So we have to be really cognizant about how much we’re borrowing with that interest accruing while we’re in school.

Outro

Jordan Benshea: Okay, anything else from you, Becca?

Rebecca Mears, DVM: I think the big thing is there’s so much going on, I mean, we’re talking about all these changes, some that have happened and some that are coming. And I think just trying to stay tuned with what’s going on and as you have questions, as you inevitably will, I have questions all the time, let us know. That’s kind of what we’re here for, is to help work through those problems, and so reaching out to us at [email protected], letting us know what’s kind of tripping you up and what you want to know about.

Jordan Benshea: Yeah.

Tony Bartels, DVM, MBA: Absolutely, and Becca and I have both been really busy in the student debt folder where we provide that personalized assistance, and it’s crazy how different the plans and strategies are based on your specific circumstances. Everybody’s circumstances are so different, and it’s really, you can really get nuts with this stuff, and we do and with…

Jordan Benshea: Mission accomplished.

Tony Bartels, DVM, MBA: With good, yeah, with good reason. I mean, there’s 10’s and sometimes 100’s of 1000’s of dollars on the table just based on what repayment strategy you choose to embark on. So, it’s well worth the time to dig into this stuff and try to understand it and how it applies to your circumstances.

Jordan Benshea: Absolutely. Thank you both so much for joining us again, and I’m sure we will be back here soon with another update. Thanks, you guys.

Tony Bartels, DVM, MBA: Absolutely. Thank you.

Rebecca Mears, DVM: Thank you.

Jordan Benshea: Thank you for joining us for this episode of the Veterinary Pulse. Please check the episode notes for additional information referenced in the podcast. If you enjoyed this podcast, please follow, subscribe, and share a review. We welcome feedback and hope you will tune in again. You can find out more about the VIN Foundation through our website, VINFoundation.org, and our social media channels. Thank you for being here. Be well.