Listen in with student debt expert and Board Member Dr. Tony Bartels in this next installment of our Student Debt Series. In this episode we’re covering the latest news on student loans as we close out 2024 and start 2025.
Topics covered included:
- December 18, 2024 US Department of Education announcement on Pay As Your Earn (PAYE) and Income Contingent Repayment (ICR)
- Timeframes/features and additional information about PAYE and ICR
- Income Driven Repayment (IDR) profiles
- What this latest news means for the Save On Valuable Education (SAVE) plan
- Where things stand on the One-time Forgiveness Adjustment
- Additional helpful information for borrowers
As always, we want to hear from YOU. Please share your thoughts by sending an email or joining the conversation.
NOTE: This is an ongoing situation, for continued updates visit the VIN Foundation Blog and student debt message board areas.
GUEST BIO:
Dr. Tony Bartels
Tony Bartels, DVM, MBA graduated in 2012 from the Colorado State University combined MBA/DVM program and is a VIN Foundation Board Member and Student Debt Expert, and an employee of the Veterinary Information Network (VIN). He and his wife, a small-animal internal medicine specialist practicing in Denver, have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation resources. Beyond debt, his professional interests include small- and exotic-animal practice. When he’s not staring holes into his colleagues’ student-loan data, Tony enjoys fly fishing, ice hockey, camping and exploring Colorado with his wife, Audra, daughter, Lucy, and their two rescued canines, Addi and Maggie.
LINKS AND INFORMATION:
VIN Foundation Student Debt Center
VIN Foundation IDR Profiles: WikiDebt – IDR Eligibility
Student Loan Repayment Simulator
VIN Foundation GIVE page to support programs these programs & tools
VIN Foundation Blog, Related Student Debt Blog posts:
- PAYE and ICR income-driven repayment plans temporarily reactivated
- The election is over. Change is on the horizon. What is next for your student loans?
- Student Loan FAQs and What’s Next?
- SAVE is blocked. What does that mean for your student loans?
- Choosing between PAYE and SAVE income-driven plans: Are you in The Pickle?
- A ‘new’ income-driven repayment plan?
Personalized student loan help from VIN and VIN Foundation
Income-Driven Repayment Plan Discretionary income calculations, WikiDebt
Federal Student Aid Data, Consolidation, and Repayment Applications
Department of Education Updates on Saving on a Valuable Education (SAVE Plan)
SAVE Plan Court Actions: Impact on Borrowers
Have a veterinary story you want to share?
Email VIN Foundation: studentdebt@vinfoundation.org
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
Tony Bartels, DVM, MBA: They still have this option on the Income Driven Repayment application to, put your loans in a plan with the lowest monthly payment. Don’t ever check that box. That causes a lot of the issues that we see with the repayment plan processing and having your loans end up in the wrong repayment option. Select the plan that you know you’re eligible for and that you know is best for you. Don’t let your loan servicer try to choose it because they’re not doing a very good job of choosing those plans for you.
Meet the Hosts and Podcast Overview
Jordan Benshea: That is student debt expert and VIN Foundation Board Member Dr. Tony Bartels, 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. We are back here again with our VIN Foundation student debt expert, Dr. Tony bartels.
Latest Student Loan News and Updates
Jordan Benshea: We’re missing Dr. Rebecca Mears today, but we do have Dr Tony bartels with us and we are here to talk about the latest student loan news as we head into the new year and finish out what has been a crazy student loan year. So welcome, Tony.
Tony Bartels, DVM, MBA: Thanks, Jordan. Yeah, crazy, crazy indeed.
Jordan Benshea: Oh, and it’s not like 2024 has been crazier than 2023 or 2022 or 2021 or 2020. They’ve all had their own certain crazy flair. So today, what we’re talking about is on December 18th, the U.S. Department of Education made an important announcement about two Income Driven Repayment plans. Can you tell us more?
Understanding PAYE and ICR Plans
Tony Bartels, DVM, MBA: Yeah, so they reopened Pay As You Earn and the Income Contingent Repayment plan. So PAYE and ICR, which were phased out on July 1st of this year with the release of the SAVE plan of the Department of Education, move to reopen PAYE and ICR because of all of the uncertainty now around SAVE. So, when SAVE got blocked by the 8th Circuit Court, there were very limited options for student loan repayment. That has necessitated this reopening of two that they were hoping to phase out in an effort to simplify repayment. So people do have more options for, navigating student loan repayment and also earning forgiveness credit, both under the Income Driven Repayment strategies as well as the Public Service Loan Forgiveness program.
Jordan Benshea: Is there a time frame associated with PAYE and ICR?
Tony Bartels, DVM, MBA: So, they are open officially as of this announcement, so December 18th, which means you can apply for them at studentaid.gov. How successful that’s going to be in terms of the loan servicers processing those applications kind of remains to be seen. That’s been pretty much a mess since the court blocked SAVE. But apparently those are starting to move, but Pay As You Earn and ICR will be options that are available to you again to apply for via the studentaid.gov portal. They will be open since that announcement, so December 18th and through July 1st of 2027. So the plan is still to phase them out, but now they’re going to push that phase out into the future, presuming that some of this uncertainty will be resolved by then. That’s kind of laughable considering how much has been introduced over the last several years, but that’s the goal, I guess.
Jordan Benshea: So if somebody’s considering these repayment plans, what are some key features of PAYE and ICR, and let’s also, just for our audience, most people probably know, but let’s spell out what PAYE and ICR both mean, please.
Tony Bartels, DVM, MBA: Yeah, so PAYE is, or I call it PAYE, is Pay As You Earn. So, it is a type of Income Driven Repayment option that became available in 2012. It has very specific. eligibility requirements and they’re kind of confusing. So generally speaking, if you are what they consider a new borrower after October 1st of 2007, and you also received at least one federal direct loan after October 1st of 2011, then you would be eligible for Pay As You Earn. So to simplify that, generally speaking, if you graduated from a higher education program in 2012 or later, then you’re probably eligible for Pay As You Earn. That’s not always true depending on your borrowing history, but it’s a rule of thumb you can start with. ICR, so Income Contingent Repayment, was kind of the OG, the original income driven experiment that came online. I think it ended up in some legislation in 1994 and first became available in 1995, but it was the first plan to allow you to make payments based on your income. Now, it’s not a great option. Pay As You Earn was the best repayment option until we got SAVE. But however, SAVE is questionable now, depending on where it’s going to land, and you can’t really use it. So Pay As You Earn is your next best option if you are eligible for it. ICR does have some really specific use cases. So because the payment is really not that beneficial from an income standpoint, but it does have some features in it where if your debt to income ratio, your student debt to income ratio is low, maybe because you have loans from 15, 20 years ago and your income now exceeds that student debt balance, ICR can be a good option to help you earn some forgiveness credit, and maybe get you across the forgiveness finish line if you’re close. So, it does have some utility, particularly after the One Time Forgiveness Count Adjustment benefit that was announced and is being applied to people’s loans. There’s a lot of people that are very close to reaching that forgiveness finish line, and ICR can provide you a way to get there if your student debt to income ratio is relatively low.
IDR Profiles Explained
Jordan Benshea: Okay, and we’re also hearing about the IDR, Income Driven Repayment profiles. I’m guessing these are different than dating profiles online. So can you share with our listeners, what is an IDR profile?
Tony Bartels, DVM, MBA: Yeah, the IDR profiles is something that actually I created just to try to make sense or try to categorize people a little bit, because not everybody is eligible for all of the income driven plans. So it depends on your loan types. It depends on your borrowing history. When you put all of that together, you will fall into 1 of 4 Income Driven Repayment profiles. The best way to understand which profile you are in is to take your federal student aid data file that you can get from the studentaid.gov website and put it into the VIN Foundation My Student Loans tool. In the My Student Loans tool there’s an Income Driven Repayment eligibility tab in there, and you’ll see how much of your balance is eligible for particular income driven plans because we’ve got all of the algorithms in there to pick through your loan types and your loan history and show you which options you have available. That will pretty much put you into 1 of these 4 Income Driven Repayment plan profiles. Of the four, IDR Profile 1 and IDR Profile 2 are the ones that make you eligible for Pay As You Earn. Or I guess to say it another way, if you are eligible for Pay As You Earn, you are either in IDR profile 1 or IDR profile 2. But if you’re in IDR profile 3 or 4, you won’t have access to Pay As You Earn. So you won’t have to really worry about Pay As You Earn being reopened because you don’t have access to it anyway. For ICR, if you’re in IDR Profile 1, 2, or 3, then you could use ICR if it works for you. So, which plans am I able to use, then which plans should I use are two different concepts that we like to help people wade through as they’re trying to figure out this mess that is Income Driven Repayment recently.
Jordan Benshea: For our listeners, you don’t have to remember all those profiles. We will send you a link and all the information. We’ll definitely have the link in the episode notes that talks about the profiles.
Who Should Consider PAYE or ICR?
Jordan Benshea: So, if we have colleagues who are borrowers right now listening, who should consider PAYE or ICR?
Tony Bartels, DVM, MBA: Yeah, it really depends on the plan that you’re using now, your Income Driven Repayment profile, and then kind of your career financial plans as well. So I’d say most of the people that we encounter recently that are trying to figure this stuff out are either new grads who haven’t selected a repayment plan yet, or people who have put their loans into the SAVE plan and they’re just not sure what to do right now, because that plan is blocked, you don’t have any payments, you don’t have any interest accruing, but you’re also not earning forgiveness credit. Alright, depending on what you’re doing and which other options you might have available for repayment options, you may want to switch out of that SAVE forbearance. So for example, if you switch to SAVE maybe because you weren’t eligible for Pay As You Earn, you were in IDR Profile 3. So before you were using the old version of IBR, which wasn’t great, it was better than nothing, but it wasn’t great, but SAVE was a lot better. Maybe you’re working for a nonprofit, maybe you’re a shelter veterinarian or something, and you’re getting close to reaching Public Service Loan Forgiveness, but you can’t get there if you keep your loans in SAVE. having Pay As You Earn reopen, having ICR reopen gives you a couple of other options, depending on which plans you’re eligible for there and what your student debt to income ratio might be, to help you get into a plan that is forgiveness eligible, so you can get across that Public Service Loan Forgiveness finish line. So that’s generally, I would say that that’s probably where a lot of the benefit is going to be. For new grads, if you can get a $0 payment or a very low payment using a plan like, Pay As You Earn it’s not a bad idea. However, the SAVE forbearance is still a really good place for your loans to be as well. So, one of the key differences to be aware of here, while you might be able to benefit from a plan like ICR or Pay As You Earn, there’s no interest benefits in either of those plans like there is in SAVE, or was depending on how that turns out. So if you have a monthly payment that’s less than the interest that accrues on your loans, which commonly happens with income driven plans and veterinary school size student loan balances, then you’ll see an unpaid interest balance grow. So you’re not going to hit your principal, you’ll actually add unpaid interest, your loan balance grows. This is what necessitated or was kind of the reason for creating SAVE, as people hated watching their loan balance grow. SAVE provided what was called an unpaid interest subsidy, where if your payment was less than the monthly interest that accrued the Department of Education covered all of that unpaid interest. Now, if you move away from SAVE, where your interest is currently not accruing at all, into a plan like PAYE, Pay As You Earn, so you can log forgiveness credit, you may see your loan balance grow. It’s a tough call to know, which is better in that scenario. Is logging forgiveness credit and seeing your loan balance better than not having your interest accrue but not logging any forgiveness credit? That really depends on the specifics of your overall circumstance. The Public Service Loan Forgiveness thing is a little, it makes it more interesting because there’s nobody’s blocking that, that’s still fully available. It was just much more difficult to get to Public Service Loan Forgiveness because we didn’t have very many repayment options after they phased out Pay As You Earn and ICR and SAVE was blocked. So most of that benefit for switching is going to be for those folks that are trying to reach Public Service Loan Forgiveness, but there can be other benefits for certain folks. But it really depends upon your short and long term goals
Jordan Benshea: Okay, and so any other specific case considerations colleagues should know about or do you feel like that’s pretty much covers it?
Tony Bartels, DVM, MBA: Yeah, I would say that if you’re currently using a time driven plan, and this is happening to a lot of the new grad veterinarians who are approaching the end of their grace period after they graduated veterinary school this year, if you don’t choose a repayment option, which has been very difficult to do because of all the blocking and processing struggles for applications, your loans end up in a standard 10 year plan automatically. That could be a really large payment, particularly for a new grad with an average or above average amount of student debt. So having access to plans like Pay As You Earn, particularly for new grads, recent grads, you’re going to be able to get a much lower minimum monthly payment compared to a standard plan. So, if you’re trying to get out of that standard plan and you’re looking for a good alternative while some of this uncertainty and student loan repayment plays out, then the Pay As You Earn is a great place to be. For some of the people who consolidated their loans during the One Time Forgiveness Count Adjustment, but the timing might have overlapped with all of the court intervention with the repayment plans and you weren’t able to get your loans into either Pay As You Earn or ICR, if your student debt to income ratio is lower, well this is a great opportunity to try to complete that process. So if you consolidated your loans this past summer and you did so to benefit from the One Time Count Adjustment, but you applied for a plan and then all of a sudden your loan servicer held up that application because of everything that was going on in the courts, well now you should be able to apply for ICR or Pay As You Earn, if you’re eligible and not hit that wall that was put up when the court blocked SAVE and pretty much everything was put on hold. So some of that mess is starting to untangle at least here in the short term.
Navigating the SAVE Plan and Forbearance
Jordan Benshea: What does this mean for borrowers who are enrolled in SAVE? Should they think about switching? I mean, I know that there was a lot of positive feedback about SAVE originally and then it sort of was short lived, so where does this leave colleagues now?
Tony Bartels, DVM, MBA: Yeah, no, I think that, I mean, my loans are in SAVE and they’re in that forbearance. My wife’s loans are in that same position. Neither one of us is eligible for Pay As You Earn and ICR really isn’t a great option for us, so the SAVE forbearance is not a bad place to be. The uncertainty sucks. We still have no idea, next year, what that’s going to look like for a student loan repayment strategy. However, it’s not really costing us anything either. So we’re not having to make payments. Our interest isn’t accruing. Yeah, I’m not earning forgiveness credit, I’d prefer to be continuing to earn forgiveness credit, but it’s not a bad thing either to just have my loan stuck in this kind of suspended animation while we wait and see this play out. Now for some people too, I mean, this could be a strategic opportunity for you to pay down your debt student debt. You can use SAVE in this forbearance. If your debt to income ratio is 1, less than 1, or heading in that direction and you’re going to pay your balance to $0 before reaching any kind of student loan forgiveness, then getting your loans into that SAVE general forbearance where no interest is accruing and paying your balance down, those payments will go much further because they’ll hit your principal faster because that interest isn’t accruing. So, as much as everybody is anxious because their loans are stuck in this suspended animation, there are some good things about that as well. So, it really depends upon your circumstances, and if you want some help wading through that, that’s what the Student Debt Message Board area is for, is to help bounce those ideas back and forth and do some number crunching and see, “hey, what is this going to cost me if I try to accelerate my student loan repayment during this general forbearance period?”, or, “what do my loans look like if I put them into Pay As You Earn instead of keeping them in SAVE?”. So, we can help you kind of wade through all of that.
Important Changes and Tips for Borrowers
Jordan Benshea: What are some other important changes as we look at student loans as we start to close out 2024 and head into 2025?
Tony Bartels, DVM, MBA: Yeah, so there’s, I guess, some under the radar ones. I mean, I’ve been talking about this One Time Forgiveness Payment Count Adjustment and we’ve all been kind of waiting for that data to show up in the student aid data file, or to be available in your studentaid.gov portal, or maybe through your loan servicer. It is available, but it’s tricky. So, there’s a bit of a hacky way that you can get to that data. We do lay out those steps in some blog posts and also on the Student Debt Message Board area. If you’d like some help accessing that or making sense of what that data looks like, then again, the message boards is a great place to post that data, and then we can help analyze that with you because that’s a pretty critical piece of information when we talk about switching student loan repayment strategies. The One Time Forgiveness Count Adjustment has kind of fast forwarded everybody’s progress towards forgiveness, so you really want to know how close or far you are from reaching student loan forgiveness before you make a major shift in your student loan repayment strategy. Thankfully, we can start to see some of that payment count data and use that in our analyses and strategies. Some of these other things, I mean, the loan servicers, they still suck.
Jordan Benshea: (Jokingly) Wait, wait, what?
Tony Bartels, DVM, MBA: If anything, we’re getting worse, which is really, really hard to imagine. But just because you submit an application and you check a box on that application thinking everything is going to be okay, it may not necessarily be okay. I mean, you have to really follow those applications closely, take screenshots, make sure you get confirmations. Particularly make sure you have confirmation of the repayment plan you’re selecting. There’s been a lot of weirdness going on, reported from a lot of different veterinarians who are like, “I’m nearly positive that I selected this repayment plan, but then my loan servicer put me in something completely different”. If you’re not kind of documenting that along the way, it’s really hard to correct so you almost have to start the process over. So, just document everything you possibly can. I generally joke that you shouldn’t believe the first three things that your loan servicer tells you, so if it sounds wrong, there’s a good chance it is. That’s another place where, report that over on the Student Debt Message Board to say, “hey, my loan servicer is telling me this, does that sound right?”, and we can help guide you through that and give you some of the language that does currently exist. Hopefully that can help resolve your issue.
Jordan Benshea: Make sure your contact information’s up to date with them too. That can be confusing and frustrating. I mean, there’s nothing more enjoyable than knowing you did something and then having someone tell you, you didn’t so.
Tony Bartels, DVM, MBA: Exactly, and I will say, please, please, I mean, they still have this option on the Income Driven Repayment application to put your loans in a plan with the lowest monthly payment. Don’t ever check that box. That causes a lot of the issues that we see with the repayment plan processing and having your loans end up in the wrong repayment option. Select the plan that you know you’re eligible for and that you know is best for you. Don’t let your loan servicer try to choose it because they’re not doing a very good job of choosing those plans for you.
Jordan Benshea: Oh, that’s so tough because you would think that a checkbox like that, “oh, they’re probably looking out for my best interest”. Of course, most people are going to say they want the lowest, so why wouldn’t they check it?
Tony Bartels, DVM, MBA: Yeah, that was just fraught with a lot of issues right now because technically SAVE is that plan, but they can’t calculate a SAVE payment. So it’s really screwing with their algorithms. It’s just not a good idea to select that box. So if you want to put your loans in Pay As You Earn, or you want to put your loans in IBR, or you want to put your loans in ICR, then check the box for that specific plan. Don’t check that box, that is that generic one.
Jordan Benshea: Okay. Any other important changes?
Tony Bartels, DVM, MBA: Yeah, we saw this week as well, the Department of Education started including the pennies for some of your loan balances.
Jordan Benshea: Bonus!
Tony Bartels, DVM, MBA: Yeah, make sure we’re really tracking things literally down to the penny. We’ve never had to deal with pennies before, and when we had some people uploading their files this week into the My Student Loans tool, the pennies broke the My Student Loans tool. So some of you, if you were trying to upload your student aid data file into the My Student Loans may have received some errors, and you weren’t doing anything wrong. So it’s because of the pennies that are in the file that we were able to fix, so that is now addressed because the VIN geeks, as we affectionately refer to them, are super fast and super awesome and fixed that error. So if you did get one of those errors when you were trying to upload your student aid data file this week, then please give it another shot. We have fixed that, so you will see some penny information in your student loan data, so lucky you. But yeah, amazing, just those tiny little changes sometimes can wreak some havoc.
Jordan Benshea: Yeah, and this is probably a good opportunity to say, if you really appreciate the student debt education tools and programs and them being updated so quickly and us bringing you these podcasts and more, we really appreciate any support you can provide to the VIN Foundation. It is a non profit. We do survive on anonymous grants and generous donations from people like you, and there will be a link in the episode notes for that as well. We are always trying to keep everything up to date as fast and as quickly as we can, and please reach out if you see something. We had a veterinarian that reached out this week and said, “I’ve uploaded this once, twice, three times, I know I’m not doing it wrong and you’re not a loan servicer, so this should be right”, and it really helped us. So we were able to reach out to that veterinarian and get them help and get this fixed ASAP. So, huge props to the team for that. I’m sure there’s going to be other updates because that changes the constant with all things. Where can colleagues go for additional updates as they come in?
Staying Informed and Getting Help
Tony Bartels, DVM, MBA: Well, studentaid.gov is a great place to start. ED, so educationdepartment.gov is also another place where they post some of these press releases, like the announcement where Pay As You Earn and ICR were reopened was posted there. Those are places that I go to, but again, I swim in this pond and I’m constantly amazed when I read what they write on those pages how they expect anyone to make any sense of this. That’s really what we try to do, so then I would head over to VINFoundation.org, and we’re constantly posting blog posts or integrating some of that feedback, what we’re learning into the message board discussions that we’re having with colleagues on helping them understand their student loan repayment options and how those have been changing. So we’re trying to really translate the federal student loan repayment ease, if you will, and that’s where you’ll find that stuff on the VIN Foundation blog posts in the Student Debt Center and on the message board discussions that we’re having with veterinarians and veterinary students about their loan repayment strategies.
Jordan Benshea: Wonderful. Is there anything else you think our listeners need to know about this news or going into 2025?
Tony Bartels, DVM, MBA: Yeah. Stay tuned.
Jordan Benshea: Stay alert, stay tuned.
Tony Bartels, DVM, MBA: Yeah. I mean, the new Congress starts on January 3rd and the new administration gets inaugurated on January 20th. We still have the court case to see what’s going to happen to SAVE and what that means going forward. Then we may even see some additional legislation that could provide some, well, we’ll see, I mean, changes to student loans and repayment options. We’re going to be having to crunch through all that and see which makes the most sense for our particular situations.
Jordan Benshea: Never a better time to give a tax deductible donation to the VIN Foundation to support these efforts, Tony.
Tony Bartels, DVM, MBA: Yeah, no doubt. Tis the giving season.
Outro
Jordan Benshea: Tis the giving season. Thanks everyone for being here. Thank you, Tony, as always for providing some sanity in the midst of this insane student loan realm. We really appreciate it. Thanks everyone. Hope you have a happy holidays with your family and friends.
Tony Bartels, DVM, MBA: Thank you and happy holidays, everyone.
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.
