Tune in as we chat with student debt expert Dr. Tony Bartels about the COVID-19 Student Loan Repayment Relief Ending and strategies for re-entering repayment
Since March 13, 2020, borrowers with federally held student loans have received student loan repayment relief. Interest rates have been set to zero percent, payments have been suspended, and for those using income-driven repayment or working towards Public Service Loan Forgiveness, the suspension time has counted towards qualifying forgiveness payments.
The current relief is now set to expire on January 31, 2020. Many receiving student loan repayment relief have been notified by the Department of Education and/or their loan servicers that repayment will be restarting in 2021. The entire student loan collection system was never intended to be turned off and on all at once, like a switch, so what can we expect this February 2021? Listen in to learn more.
In this episode we mention the following links and information:
- Federal Student Aid: https://studentaid.gov
- Federal Student Aid COVID FAQ: https://studentaid.gov/announcements-events/coronavirus
- VIN Foundation COVID-19 Repayment Restart blog post: https://vinfoundation.org/covid-19-veterinary-student-loan-repayment-restart/
- VIN Foundation Repay Wiser Tools: https://vinfoundation.org/resources/repay-wiser-veterinary-school-debt-loan-repayment/
- VIN Foundation New Veterinary Graduate Student Loan Playbook: https://vinfoundation.org/resources/class-2020-veterinary-student-loan-playbook/
- VIN Foundation Student Debt Center: https://vinfoundation.org/studentdebtcenter
- VIN Foundation My Student Loans tool: http://www.vinfoundation.org/mystudentloans
- VIN Foundation WikiDebt: https://vinfoundation.org/wikidebt
- VIN Foundation Webinars: https://vinfoundation.org/resources/webinars/
- Email help from VIN Foundation: studentdebt@vinfoundation.org
You may learn more about the VIN Foundation, on the website, or join the conversation on Facebook, Instagram, or Twitter.
If you like this podcast, we would appreciate it if you follow and share. As always, we welcome feedback. If you have an idea for a podcast episode, we’d love to hear it!
TRANSCRIPT
Intro
Jordan Benshea: Welcome to the Veterinary Pulse podcast. My name is Jordan Benshea. I’m the Executive Director of the VIN Foundation. Veterinary Pulse is the heartbeat of the profession. Join us as we talk with veterinary colleagues about critical topics, from student debt to mental health, and share stories. Stories connect us as humans, as animals, as a veterinary community. This podcast is made possible through individual donors like yourself, and our technology partnership with VIN, the Veterinary Information Network. Thank you for being here. This episode, we’re having a conversation with VIN Foundation board member and student debt expert, Dr. Tony Bartels, about COVID student loan repayment strategies. We cover what you need to know with the latest CARES Act changes, and best practices to restart your loan repayments. Please check the Episode Notes for links and information mentioned. Thank you for listening.
Meet Tony Bartels, DVM, MBA: Student Debt Expert
Jordan Benshea: Hi, Tony, thanks so much for joining us.
Tony Bartels, DVM, MBA: Thanks for having me again.
Jordan Benshea: Can you tell us a little bit about why you’re so passionate about student debt? Clearly, you’re the one that does a lot of the webinars. You’re providing a phenomenal amount of information. What is it that drives you to help so many veterinary students and veterinarians in this situation?
Tony Bartels, DVM, MBA: Yeah, that’s a great question. I think mostly because my wife and I are living it. We are both veterinarians and we both use student loans to pay for our veterinary education. Combined, we have in excess of $400,000 of federal student loans. So, it makes sense that we’re really passionate about this, because we have a direct connection to it. Before I got into veterinary school, I had a career in corporate finance, and numbers were a thing that we’re always drawn to, and unfortunately, this is just one of those ugly side effects of becoming a veterinarian these days. So, it’s student debts and sometimes the numbers can get quite large. Trying to help our colleagues make sense of their repayment options, how it all works, and can work best for them seemed like a natural fit for me. Because I have a direct connection and vested interest in understanding this myself, it made sense to try to pass along what we’ve learned and our experience with paying student loans on to our colleagues as well.
Jordan Benshea: I think that boots on the ground approach and experience that you have is clearly, I think almost the best way to come to this, because it’s easier from an outside approach to look at this and try to understand it, but when you are boots on the ground, you’re in this and as you said, you’ve got a vested interest.
Tony Bartels, DVM, MBA: Yeah, for sure. I think that it’s just so hard. It requires almost full time attention to understand what is going on with student loans, and the rule changes, particularly now with COVID-19, and the pandemic student loan repayment relief that I normally talk about. It’s become so intensive to try to not only understand what’s real, but to pick through the noise and all of the other things that I see are often out there that are not very helpful and are not very accurate. So, veterinarians can get past all of that stuff and get on to what they went to veterinary school for, and that was for treating animals and helping their owners.
Jordan Benshea: Right, it is a very confusing topic. Unfortunately, as we’ve seen, there is also some advice out there that was not in the best interest of those with student loans. That can be tricky as well. Hopefully, the information that we’re providing will give them some clear direction. Let’s just dive in.
Understanding COVID-19 Student Loan Repayment Relief
Jordan Benshea: What’s going on with student loans this year, and where are we at now?
Tony Bartels, DVM, MBA: We’ve seen a lot of changes to federal student loans, particularly this year. All of it having to do with COVID-19 and the effect that that’s had on the economy. Essentially, since March 13th, interest and payments have been turned off. The interest rates for all federally held student loans have been set to zero since March 13th. So, anybody with those types of loans has not accrued any interest during that timeframe. For those of us in repayment, the payments have essentially been shut off as well. They’ve been put in an automatic forbearance, which was a little problematic. The forbearance terminology is not always associated with good things, but in this case, the forbearance that turned off the interest and the payments on our student loans also came with the additional benefit of counting towards forgiveness if you are using an income driven repayment strategy or working towards public service loan forgiveness. Those were some pretty beneficial changes that have been made for those of us who have these federally held student loans.
Jordan Benshea: This was initially supposed to end on December 31rst. What’s the timeframe that we’re looking at now with the latest information?
Tony Bartels, DVM, MBA: Yes, actually it was supposed to end at the end of September. September 30th it was supposed to shut off. That’s what the CARES Act, the legislation that dealt specifically with this, indicated that those benefits would be shut off at the end of September. However, they have been extended through presidential action twice now. They were extended initially through the end of December, and then most recently, as of last Friday, they were extended another month. Right now, we can expect those same benefits to persist through January 31, 2021.
Jordan Benshea: Okay, so we’ve got an extra month at this point. We just don’t know. We don’t know what’s going to happen with the new administration. We don’t know what’s going to happen come January, there are a lot of things up in the air. So, what do veterinarians with veterinary student debt loans need to know right now?
Tony Bartels, DVM, MBA: I would say that you need to know how to interpret what has been released in terms of information. Again, the relief has been extended in its current form through the end of January, which means you really don’t have to do anything between now and the end of January. I do expect to see some additional information come out from our loan servicers. I just got an automated message from my loan servicer, Great Lakes, yesterday which was telling me how the relief was due to end on December 31rst. So, that wasn’t very helpful, because we know that it has been extended another month. The student loan repayment system was never meant to be turned on and off like a switch like this. I think in anticipation of this period, this benefit ending at the end of this year, the loan servicers were scrambling to provide information. In that whole approach, yesterday I got an automated message that was telling me what I needed to do to keep my loans in good standing after the first of this coming year. The reality is, we’ve got another month. So, just be aware that you’re probably going to get some information from your loan servicer, or you’re going to see some information floating around out there that may not always be entirely accurate. But you don’t have to make a payment, you’re not going to have any interest accruing through at least the end of January 31, 2021. Now, if you’re using an income driven repayment plan, or you’re in an income driven repayment plan before all of this started, then you will get credit towards forgiveness, which is great. The interest that you had accrued prior to this, if you had any unpaid interest on your account should not get capitalized as we end this special type of forbearance that we’re in and eventually end up back in repayment whenever that might be.
Advice for Recent Graduates and Income-Driven Repayment Plans
Tony Bartels, DVM, MBA: For those folks who are graduating or who graduated in 2020, it’s a little bit more complicated. Your grace period is probably ended or nearing an end. I have seen some of those folks who haven’t done anything with their student loans, sometimes their loan interest is capitalized, and sometimes it is not. Technically speaking, once your grace period ends your loans automatically transfer into a standard 10-year repayment plan. For those of you that have done nothing since you graduated, your loans are technically in repayment after the grace period ends, but because of this benefit, you haven’t had to make any payment and you haven’t seen any additional interest accrue. So, I would encourage those folks who have recently graduated in 2020 and your grace period is just ended to submit an income driven repayment application. If you file a tax return before you graduate, before you graduated you probably have a pretty low or no income on that tax return, that will set your payment to zero when and if this relief period ends, and at that point, you won’t have to make a payment, but you can still reevaluate your situation at that moment. What you want to avoid there is having a standard 10-year monthly payment due say on February 1rst. You don’t want to be put in that position where if you’ve got a veterinary size student debt balance, and you’re automatically in the standard 10-year plan, but it’s really hard to tell because nothing has really happened since you graduated in terms of repayment. You want to avoid having a 2,000, 3,000, $4,000 monthly payment due because you’re automatically in that standard 10-year plan. So, apply for an income driven repayment plan, if nothing else, just to buy you some time to decide which is the most effective repayment strategy for me as you’re working through that information.
Public Service Loan Forgiveness Insights
Jordan Benshea: What if a veterinarian is in an income driven repayment plan prior to COVID, but they’re working towards public service loan forgiveness, what do they need to know?
Tony Bartels, DVM, MBA: One of the other stipulations that were included with the CARES Act and these presidential executive actions is that the time spent in this forbearance period does count towards forgiveness. Meaning accounts towards income driven repayment taxable forgiveness, or the non-taxable version of public service loan forgiveness. So as long as you still continue to work for a public service loan forgiveness qualifying entity, so a state, federal, or tribal 501C3 nonprofit organization, then that time that you’ve been working and otherwise meeting the public service loan forgiveness qualifications would count towards public service loan forgiveness. You should receive the 9,10, 11 plus months of qualifying time towards public service loan forgiveness as long as you were still employed by that entity and met the 30 hours per week employment qualification.
Jordan Benshea: If they are in repayment, but not in an income driven repayment plan, your recommendation is that they get in an income driven repayment plan. Is that correct?
Tony Bartels, DVM, MBA: For those folks that are working towards public service loan forgiveness, absolutely, because that’s one of the requirements for making a public service loan forgiveness qualifying payment is using an income driven repayment plan. If you weren’t using an income driven repayment plan prior to this pandemic relief starting in March, then you want to apply for one. So you can make sure that you can get that time to qualify towards public service loan forgiveness.
Jordan Benshea: What about those who are in repayment, not working towards public service loan forgiveness, but not in an income driven repayment plan?
Tony Bartels, DVM, MBA: If you’re not in an income driven repayment plan, you’re likely using some time driven repayment plan. You’re either in a standard 10-year plan, the default repayment plan, or you’re maybe in an extended one or graduated repayment plan. Those types of things don’t result in an unpaid interest balance. So, your loan balance has pretty much been where it was when you entered the pandemic relief period. If you still maintained your income, we’ve seen the veterinary profession, particularly small animal veterinary profession, has really been quite busy during this pandemic period. So, a lot of veterinarians are making more money than they ever have. If you’re in a time driven plan, and your student debt to income ratio is less than one, then it can make financial sense to actually make some payments during the pandemic period, because your payments are going to go directly towards the principal, which will reduce the amount of interest that accrues when that interest gets turned back on after the pandemic relief period is over. What I would recommend in that case, because you just never know what can happen. This pandemic, if anything, has taught us how certain uncertainty can be. I think that to prepare yourself adequately, I would allocate money that I would have otherwise maybe put towards my student loans in a special account, maybe interest bearing, so I’m going to earning some interest on that savings. Then right before the pandemic relief period is due to end, I would consider making a payment of all payments towards those student loans, that’s going to go directly towards my principal. Again, as long as everything in my other financial life was in good order, and I didn’t anticipate any changes to my income coming up, and I’ve already maximized my retirement savings and built my emergency fund and I was meeting some other financial goals that I might have, I might consider making an additional payment towards my student loans. If I were not using an income driven repayment plan, and only if my student debt to income ratio is less than one, and I anticipated remaining there for the duration of repayment.
Jordan Benshea: Okay, that’s some good advice. I’m betting there are people who probably are thinking I have this money, which would normally go to student loans, what do I do with it? Holiday shop? What are we talking?
Tony Bartels, DVM, MBA: I would just like to emphasize that if you were using an income driven repayment plan prior to this pandemic relief, and particularly if your debt-to-income ratio is greater than one, or even greater than that, greater than two, where we know it’s quite likely you’re going to hit student loan forgiveness under the income driven repayment plan, it doesn’t make sense to pay more than your income requires. My wife and I are anticipating reaching student loan forgiveness eventually, and during this pandemic relief time, we haven’t had to make any student loan payments. We also haven’t been accruing any interest, but the time counts towards forgiveness. So, this has been extremely beneficial for those of us who anticipate reaching forgiveness, because we haven’t had to make any payments, the time still counts, but the interest stopped growing as well. Less will ultimately end up being forgiven, just by virtue of this pandemic student loan repayment relief, so this has provided us an opportunity to boost our forgiveness savings plan, make sure that we’re actually maximizing our retirement savings and looking for other opportunities to grow our wealth and grow our investments outside of our student loans.
Jordan Benshea: This is really a great opportunity for so many people and having the right information is so vital to ensure that it’s not wasted.
Tony Bartels, DVM, MBA: Right, exactly.
Jordan Benshea: With everything that we’ve discussed, we’re in an ever-changing environment always, but especially in 2020.
Resources and Final Thoughts
Jordan Benshea: Where should veterinarians and colleagues go to keep a lookout for updates and new information?
Tony Bartels, DVM, MBA: I have found that the Federal Student Aid website has been pretty current on the available information. So, the first place I would go to is studentaid.gov. That’s where you’re going to find the most recent information on COVID-19 and all of the impact. There’s even a really good frequently asked question section there. What if I’m an income driven repayment? What if I’ve got income driven repayment certification due during this timeframe? What can I expect? What are my responsibilities? Does my time count towards forgiveness? All of that stuff is actually laid out in pretty good detail on the studentaid.gov site. At the top of the screen, there’s a COVID-19 pandemic student loan information center. Your loan servicers have been a little bit behind in terms of providing information. Again, they’re usually the primary sources, the ones that are going to provide you the most direct information, but unfortunately, I always have to go back to studentaid.gov to check to make sure that what they’re telling me actually matches what the Department of Education is saying. Third, go to VIN Foundation, VINFoundation.org. We’ve been releasing some blogs and creating pages that deal with this content specifically. That’s where we’ve been posting a lot of more detailed information that corresponds to what we’re covering here. So, VINFoundation.org, on the blog we’ve got a page that deals specifically with COVID-19, and the direct effects to your student loans. We’ve also got the Student Debt Center on VIN Foundation. So VINFoundation.org/studentdebtcenter. That’s where you can upload your student aid data file, understand what your student loans look like, and then ultimately simulate them long term. We do also factor in the repayment relief that’s been in effect for this period, so it will account for those impacts on your long-term student loan projection. And ultimately, if you need direct assistance, reach out to VIN Foundation, student debt at VINFoundation.org. We’ve got a couple of different ways through VIN or through VIN Foundation to get you some direct assistance with your student loans and repayment questions.
Jordan Benshea: All of these links that you’ve just mentioned, we will put in the Episode Notes along with those four suggestions of where to go. So, in case everybody listening doesn’t remember those URLs, don’t worry, just check the Episode Notes and you’ll get all those links there. Is there any other information you think veterinarians with student loans need to know?
Tony Bartels, DVM, MBA: Yes, I think that the more that you can be an active participant in your own repayment strategy and education, the more it’s going to reduce the stress around student loans and repayment. At least I have found that to be the case for myself, and also the students and veterinarians that we work with. Knowledge is power, right? I know it’s cliche, but the more that you know about how this stuff can work, the more educated decision you can make on your repayment strategy. It really does help to reduce that stress that’s associated with student debt. I think a lot of that stress around student loans comes from not knowing generally how to be comfortable with either managing debt or how finances work. Particularly, how the finances in student loans work, which are completely different from traditional finance and other loan types that we see. You have to be an active participant. You’re invested in these decisions; these are your student loans, and they have a direct impact in terms of your short- and long-term finances. So really taking that role, I think, can help reduce that stress that is associated with it, whether it be financial stress, or emotional stress that are associated with your student loans.
Jordan Benshea: So don’t stick your head in the sand.
Tony Bartels, DVM, MBA: Yeah, essentially don’t stick your head in the sand. That is never a good repayment strategy.
Jordan Benshea: Thanks so much, Tony, for joining us. I really appreciate it. Is there anything else you wanted to share?
Tony Bartels, DVM, MBA: No. Thanks for doing these. I think these are a really helpful way of getting this information out. You can listen to them at your leisure. They’re not as intensive as some of the Climbing Mt. Debt sessions that we do, but that’s okay. We can do these in bits and chunks, and hopefully that helps. Again, I have to correct myself here, having some website dyslexia. The federal student aid website is studentaid.gov. So, I was right the first time [not studentloans.gov – previous error corrected in this transcript] so studentaid.gov is where you can go to not only download your student aid data file, but also get those up-to-date COVID-19 informational releases on what’s currently happening with your student loans.
Jordan Benshea: Wonderful. All those will be in the Episode Notes as well. We’ll make sure that the correct links are in there and everything that Tony’s mentioned you guys can go and check out. Thanks so much, Tony. I really appreciate it.
Tony Bartels, DVM, MBA: Thank you, Jordan.
Outro
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.
