CLIMBING MT. DEBT - STUDENT LOAN TRIAGE IN THE AGE OF COVID

MAJOR CHANGES ARE HERE FOR YOUR STUDENT LOANS, WE’RE HERE TO HELP!

In these uncertain times, reliable information is vital to stay up-to-date on how changes made by Congress and the Department of Education impact your student loans.

VIN FOUNDATION STUDENT LOAN REPAYMENT RESOURCES:

1) Student Loan Triage in the Age of COVID Webinar Recording

Watch the webinar recording below of the recent webinar from the VIN Foundation in collaboration with the Veterinary Information Network (VIN). In this video Tony Bartels, DVM, MBA covers common myths and misconceptions about the impact of COVID on student loans and the latest information on the CARES Act. We welcome any questions and feedback.

2) Questions & Answers

Tony Bartels, DVM, MBA has put together a compilation of the most common Questions & Answers from the webinar:

“How do I know if my student loans qualify for the CARES Act suspension?”

Only federally held student loans qualify for the suspension. That includes ALL Direct Loans, some Federal Family Education Loans (FFEL), and some Perkins Loans. This will not include Health Professions Student Loans (HPSL) nor Loans for Disadvantaged Students (LDS).

For FFELs and Perkins, check your loan servicer website to see who the “owner” of the loan is. If it is not the Department of Education, then it will not qualify for the suspension. You can also utilize the VIN Foundation My Student Loans tool to analyze your Student Aid Data file. If the “Loan Servicers” tab does not show “Dept of ED” before your loan servicer name, then your loans will not qualify for the suspension.

You can consolidate non-federally held FFELs, Perkins, HPSL, and LDS using a Direct Consolidation loan that would be eligible for the suspension. However, make sure you understand all of the “side-effects” of consolidating student loans that are in repayment.

“If my payments are suspended and I’m using an income-driven repayment plan (IBR, PAYE, REPAYE) does it “tack on time” at the end to my forgiveness?”

No. If you are using an income-driven repayment plan when the suspension started, then the suspension period will count towards forgiveness.

“I am in repayment and my loan status now says “Forbearance” however I’m using automatic payments and not sure if I need to turn that off?”

No. The CARES Act suspension will automatically stop payments and interest on your student loans. Your autopayment will also be suspended.

“I see in my loan servicer account that my loans are in ‘forbearance.’ I also received a letter from my loan servicer that specifically is referring to the suspension as a ‘Federally set Forbearance.’ Is the ‘suspension’ the same as this special ‘forbearance?’ Why they are using the word ‘forbearance’ in this case?”

I know this is extremely confusing, particularly since we’ve been talking about how bad a forbearance can be for your student loans and income-driven repayment plans under more normal non-pandemic circumstances. But let’s address this now that we are dealing with extenuating pandemic circumstances:

The CARES Act calls this temporary student loan repayment relief a “suspension.” Nowhere in the law do they mention forbearance. However, most of the loan servicers are automatically putting federally held student loans into a “forbearance” status.

This is not the same kind of forbearance that causes so many student loan issues in non-pandemic times. This special forbearance is a non-capitalizing “administrative forbearance.”

My best guess is that this administrative forbearance is the easiest way loan servicers are able to logistically apply the suspension quickly. Administrative forbearance is not a new feature — it is a special kind of forbearance that loan servicers can use at their discretion. Since the suspension is in response to very special circumstances, the Dept of ED is directing the loan servicers to apply the administrative forbearance in an effort to achieve the “suspension” mentioned in the law.

As we covered during the recent webinar, some of the loan servicers also use some language around your forbearance status to convey the special emergency nature of this forbearance, which helps to differentiate it from a financially harmful, non-pandemic forbearance.

The other good news is that the law specifically mentions this special suspension period counting towards forgiveness, provided you were in or are able to get into a repayment plan that tracks forgiveness during the suspension. That means we have language to fall back if we need to once this suspension period is over.

“Should I make payments to my loans during the suspension?”

It depends, but probably not. The suspension is in place due to the uncertainty around COVID-19. Uncertainty equals risk. Take advantage of the flexibility to use that cash for other expenses or to build up reserves in case your finances are affected by the pandemic. You can always choose to make payments to your student loans before the suspension ends if you are not affected financially. However, please note that paying more towards your student loans while using income-driven repayment and planning for the forgiveness is contraindicated.e extra cash on hand incase you need it.

3) COVID Impact on Your Student Loans

Tony Bartels, DVM, MBA has put together a blog and video with the latest helpful information.

4) Student Loans in the Age of COVID Prezi

Review the Student Loans in the Age of COVID presentation materials including clickable links to the resources referenced in the presentation. Think of this as the “slide deck” you can click through and review at your own leisure as a quick summary of the webinar.

STUDENT LOAN TRIAGE IN THE AGE OF COVID WEBINAR RECORDING

*Repay Wiser tip!

If you’re a recent veterinary school graduate, check out the New Graduate Student Loan Playbook for information on your specific Repay Wiser situation.

Repay Wiser is part of the VIN Foundation Student Debt Center three part series of helping veterinary colleagues throughout their student loan path. It starts with pre-veterinary students learning how to Apply Smarter to veterinary school, continues for veterinary school students as they learn how to Borrow Better while in school, with the final (and longest) journey along the path helping veterinarians Repay Wiser.

As always the VIN Foundation welcomes questions and feedback on all of the tools and initiatives available.

The helpful three part student loan series Apply Smarter, Borrow Better and Repay Wiser is part of the VIN Foundation Student Debt Center. The VIN Foundation Student Debt Center is a mobile-friendly comprehensive resource helping veterinary students, veterinarians, and those who support them manage student debt through school and beyond. Explore the VIN Foundation Student Debt Center.