Listen in as student debt experts and Board Member Drs. Tony Bartels and Rebecca Mears in this next installment of our Student Debt Series. This episode we’re covering the top three trends from the trenches of student loans: 1) Consolidation procrastination 2) Using the wrong repayment plan 3) Incorrect minimum monthly payments. Now is the time to pay attention if you’ve had your head in the sand with your student loans, so listen in and also learn if you are in The Pickle!
As always, we want to hear from YOU. Please share your thoughts by sending an email or joining the conversation.
GUEST BIOS:
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.
Dr. Rebecca Mears
Rebecca Mears, DVM is from Lexington, KY, where she completed her BS at University of Kentucky. She is a graduate of University of Georgia’s College of Veterinary Medicine. While in vet school, she served as the National Business Certificate Director for the Veterinary Business Management Association (VBMA) and as a board member for Vets for Pets and People. During this time she took an active role in wellbeing awareness and access within the veterinary community. Rebecca then worked as an equine general practitioner and is an active AAEP member. In her time away from veterinary medicine, she can be found hiking, baking, and hosting impromptu dance parties. She is passionate about giving back to the profession and improving the lives of veterinarians, pre-vet and vet students.
LINKS AND INFORMATION:
VIN Foundation Student Debt Center: https://vinfoundation.org/studentdebtcenter
Check your current student loan servicers and other loan details — VIN Foundation My Student Loans tool: http://www.vinfoundation.org/mystudentloans
Loan Repayment Simulator: https://vinfoundation.org/loansim
VIN Foundation WikiDebt: https://vinfoundation.org/wikidebt
VIN Foundation Webinars: https://vinfoundation.org/resources/webinars/
VIN Foundation get updates: https://vinfoundation.org/updates/
VIN Foundation GIVE page to support these programs & tools: https://vinfoundation.org/give
VIN Foundation Blog, Related Student Debt Blog posts:
Personalized student loan Help from VIN and VIN Foundation: https://vinfoundation.org/veterinary-student-loan-debt-help/
Infographic ONE-TIME FORGIVENESS COUNT ADJUSTMENT:
https://vinfoundation.org/resources/veterinary-student-debt/student-debt-one-time-forgiveness-count-adjustment/
One-Time Forgiveness Count Adjustment Video Case Study, 1999 DVM may save more than $65,000 in student loan costs:
https://youtu.be/6gp7cXvEy8c
Income-Driven Repayment Plan Discretionary income calculations, WikiDebt: https://www.vin.com/studentdebtcenter/default.aspx?pid=14352&catId=74141&id=7249857
Repay Wiser:
https://vinfoundation.org/resources/repay-wiser-veterinary-school-debt-loan-repayment/
Borrow Better: https://vinfoundation.org/resources/borrow-better-veterinary-school-loan-debt/
New Grad Student Loan Repayment Playbook: https://vinfoundation.org/resources/veterinary-new-grad-student-loan-repayment-playbook/
Federal Student Aid Data, Consolidation, and Repayment Applications: https://studentaid.gov/
SAVE Repayment Plan Offers Lower Monthly Loan Payments
https://studentaid.gov/announcements-events/save-plan
New Proposed Regulations Would Transform Income-Driven Repayment by Cutting Undergraduate Loan Payments in Half and Preventing Unpaid Interest Accumulation: https://www.ed.gov/news/press-releases/new-proposed-regulations-would-transform-income-driven-repayment-cutting-undergraduate-loan-payments-half-and-preventing-unpaid-interest-accumulation
Payment Count Adjustments Toward Income-Driven Repayment and Public Service Loan Forgiveness Programs:
https://studentaid.gov/announcements-events/idr-account-adjustment
Department of Education press release (Nov 2022): https://www.ed.gov/news/press-releases/biden-harris-administration-continues-fight-student-debt-relief-millions-borrowers-extends-student-loan-repayment-pause
Department of Education press release (April 2022): https://www.ed.gov/news/press-releases/department-education-announces-actions-fix-longstanding-failures-student-loan-programs
One-time Forgiveness Count Adjustment https://studentaid.gov/announcements-events/idr-account-adjustment
Federal Student Loan Servicers: https://studentaid.gov/manage-loans/repayment/servicers
Public Service Loan Forgiveness (PSLF): https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service
Stay up to date with VIN Foundation updates: https://vinfoundation.org/updates/
Email VIN Foundation: studentdebt@vinfoundation.org
Get updates to stay tuned for the VIN Foundation webinars on student debt.
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: This is the one that is keeping me up at night. I am a procrastinator extraordinaire, and at some point, I think it was either last week or the week before when we’ve been working through a lot of these questions that our colleagues have posted on the VIN and VIN Foundation Student Debt Message Boards. There are still a lot of veterinarians who have some really complicated student loan portfolios that probably should have consolidated a long time ago, but thankfully they still have some time left to consolidate and benefit from what is known as the one time forgiveness count adjustment. But you have to do that before the end of the year.
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.
Current Student Loan Landscape
Jordan Benshea: We are back here again with our VIN Foundation Board Member and student debt experts, Dr. Tony Bartels and Rebecca Mears, and we’re here to talk about the latest news in student loans. Welcome back, Tony and Becca.
Tony Bartels, DVM, MBA: Hello. It’s that time again.
Jordan Benshea: It’s that time again. Feels like this whole year has been that time again.
Tony Bartels, DVM, MBA: Longer than that.
Rebecca Mears, DVM: It’s Tony’s favorite season, right? That’s what it is.
Tony Bartels, DVM, MBA: Yeah. Oh, man.
Jordan Benshea: Except that now it’s not a season. It’s just a year long topic.
Tony Bartels, DVM, MBA: It never ends.
Jordan Benshea: So obviously since COVID there’s been a lot of changes to student loans and this year has been one of many changes to the student loan landscape with interest coming back and repayments starting, and as we head into the end of the year, we wanted to kind of make sure we shed light on a few really important areas that we are seeing coming from colleagues and where we think colleagues with student loans should really be focused right now. It’s easy with so much going on to kind of get a little confused on where the focus should be and where the effort should be put, so in this episode we’re going to be focusing on three major trends that we’re seeing from colleagues that we really think should be addressed. As we go through them, we’ll be answering a lot of the questions that come up about them, and then as always, there’ll be more information in the episode notes along with a bunch of links. So you don’t need to stop and write this down or scribble something down, you can just know that those are in the episode notes and that you can get to them.
Consolidation Procrastination
Jordan Benshea: So, the three topics that we’re going to be discussing today, which also relates to a blog post that we just published are, one, consolidation procrastination, two, using the wrong repayment plan, and three, incorrect minimum monthly payments. So let’s dive right in and start with consolidation procrastination. What’s the latest, Tony and Becca, with consolidation options for colleagues with student loans?
Tony Bartels, DVM, MBA: Yeah. This is the one that is keeping me up at night. I am a procrastinator extraordinaire, and at some point, I think it was either last week or the week before when we’ve been working through a lot of these questions that our colleagues have posted on the VIN and VIN Foundation Student Debt Message Boards. There are still a lot of veterinarians who have some really complicated student loan portfolios that probably should have consolidated a long time ago, but thankfully they still have some time left to consolidate and benefit from what is known as the one time forgiveness count adjustment. But you have to do that before the end of the year, and the more I look at the calendar I’m like, holy crap it’s November. I mean, we’re really getting close here, and the part that I think has complicated things is what, this also aligns with the restart of repayment and the release of a new repayment option and the loan services were already incompetent, but now they’re even more bogged down. So things are taking longer than they should, and staring at November, you still have time to consolidate if it makes sense for you to do so. But it pretty much has to go right the first time for you to get it through before the end of this year. That’s kind of where we are, and with so many of our colleagues, again, these are folks that graduated a while ago because the more complicated loan portfolios are the ones that contain multiple different loan types. So direct loans and Federal Family Education Loans, commonly known as FFEL’s, are the ones that tend to complicate loan portfolios. FFEL’s were the precursor to direct loans, so anybody that was in higher education and using student loans around 2010 or before could have these loans in their portfolio.
Understanding Loan Consolidation
Tony Bartels, DVM, MBA: Most people don’t even know unless they look, and kind of the old adage, more is missed by not looking than not knowing, and we really just need you all to look. Take a look at your student loans, go grab a federal student aid data file in the studentaid.gov portal and upload it into the free VIN Foundation My Student Loans tool, it’s in the Student Debt Center. We have the technology set up there to break your loans out and show you the types of loans that you have, and there’s even alerts that pop up in there if we identify these Federal Family Education Loans, these FFEL program loans that tend to be the problem children of the federal student loan program. This is kind of the impetus for benefits like the one time forgiveness count adjustment. It’s so complicated that they want to make it easier, but they can’t do it automatically. These Federal Family Education Loans, some of them are called privately held, which means they’re contractually obligated in a way that benefits some of these private holders of these, but they’re still federally backed loans. So you have to consolidate them to get them fully into the federally held universe of the direct loan system, so then you are eligible for all of the goodies and new benefits and new repayment plans that have been announced and are in place now. So that’s where the confusing and complicated nature comes into play, not to mention that consolidation in the past was kind of a bad thing. If you consolidated your loans previously before a lot of these changes have been made over the last couple of years, it would restart your repayment clock. But that’s what that one time forgiveness count adjustment is about and why it’s so beneficial is that it suspends that. It’s going to give you credit for the time that you’ve already spent in repayment, particularly towards forgiveness, and it could even add more. So if you have older loans that have repayment time that extends beyond the loans that you use for veterinary school, you could even boost your forgiveness time. The more forgiveness time you have, the sooner you’ll reach forgiveness, the less you’ll pay towards your student loans. So this is why this is so imperative, and we’re really just trying to make a last second push here to make sure everyone who has these complicated loan portfolios has an opportunity to benefit from consolidating and receiving that one time forgiveness count adjustment.
Jordan Benshea: That’s something that we hear a lot, is that people are concerned that if they do this, how is that going to impact their forgiveness time?
Tony Bartels, DVM, MBA: Yeah. Exactly, and it’s going to help it. So it’s now nobody can really see exactly what their forgiveness time is right now, which is part of the stress and one of the failures of the federal student loan system to date. But as part of this one time forgiveness count adjustment in 2024, everybody is going to get to see what their official forgiveness count is, and that will be a metric that is contained in your student aid file and one that you’ll be able to track going forward so you know how far away you are from reaching forgiveness. You also have some data to then discuss with your loan servicer if they tell you something else. So that’s another thing to look forward to, but you want to make sure that that count is as high as it possibly can be. For many of you, that’s going to require you to consolidate. But in order for that to get that maximum count adjustment, you have to submit that consolidation loan application before the end of this year.
Jordan Benshea: And so once you submit that application to consolidate, does the Department of Education give you an estimated payoff date?
Tony Bartels, DVM, MBA: Oh god. Yeah. That’s one of the issues. So the consolidation system is still kind of using the old language in there. It’s not reflecting any of the account adjustment language. It’s not reflecting any of your existing repayment time because, again, it doesn’t have that data in the system to use. So it assumes you’re starting repayment from zero. So it will show you a payoff date that is 20 or 25 years in the future, depending on the repayment plan that you’re looking at, and then most people hit the brakes and are like, oh, I don’t want to do this, or they’ll come back and ask a question. But just know that the forgiveness count adjustment trumps what is shown in that consolidation application, and you will get credit for the time that you’ve been in repayment, if not more depending on the history of the loans that you’re including in that consolidation.
Jordan Benshea: Okay, and what about, are there instances in which you should not consolidate your student loans?
Tony Bartels, DVM, MBA: Yeah. So if you have already consolidated your loans, so if you graduated from veterinary school and you consolidated all of your loans into a direct consolidation loan, then there’s nothing left for you to do. So all of your loans are what I call, fully consolidated, then you just have to wait until the count is applied. Or you can look at your loans, see if there’s a more beneficial repayment option that you could use, see what that monthly payment is, what it could be given maybe changes to your family size and your income over the last few years because nobody’s had to update their income during the pandemic forbearance period. So, basically, it’s just more of a general check-in on your student loans. You don’t have to consolidate your loans again if they’ve already been consolidated. The exception to that would be if you have Federal Family Education or FFEL consolidated loans. So, again, one of the complicated natures of these old FFEL program loans is you could also consolidate those into a FFEL consolidation loan back before 2010 when they still existed, but we’d need you to consolidate that version of a consolidation loan again into a direct consolidation loan. So if you open up your portfolio and you see something that is not a fully consolidated direct consolidation loan portfolio, then you should be asking yourself, can I benefit from a consolidation?
Jordan Benshea: And now is the time to do that.
Tony Bartels, DVM, MBA: Yeah. Now and before the end of the year is the time to do that. Another example of folks who don’t need to consolidate, let’s say you’re a more recent graduate. So, after, let’s say 2014, 2015, you only used direct loans and you only had loans from veterinary school, then there probably isn’t a good reason for you to consolidate. Now the exception to that would be if you didn’t include any Health Profession Student Loans or Loans for Disadvantaged Students or Perkins Loans, I still see a lot of those floating around too. You could use this as an opportunity to include those loans into a direct consolidation loan and assign them the forgiveness time that you already have on your direct loans from veterinary school.
Rebecca Mears, DVM: I think it’s definitely worth the time to just take a moment, download that student aid data file, upload it to, again, the free VIN Foundation My Student Loans tool and double check this information because we’ve seen plenty of people on the Student Debt Message Boards that have been asking questions about, well, I thought I had consolidated my loans before, and maybe they have that FFEL consolidation loan that Tony was talking about, or for some reason, they have a partial consolidation. It’s like, maybe that’s the case, but you do want to take advantage of this one time forgiveness count adjustment and be sure to consolidate those loans again. So it really just takes a couple of minutes. It sounds like a big deal, but just double check that information to make sure you’re in the best spot moving forward.
Tony Bartels, DVM, MBA: Yeah. It is hard. It’s really hard to overstate how valuable forgiveness time is in the income driven repayment or student loan repayment universe. So people that have forgiveness time, and now everybody has nearly 4 years of forgiveness time after the pandemic forbearance benefit as long as you were out of school during that time. Forgiveness is a likely outcome for many of our colleagues, regardless of how much your income has increased. The more forgiveness time you have, particularly without having to make payments on your student loans like nobody has had to for the last nearly 4 years, that increases the probability that you’re going to hit student loan forgiveness under these more beneficial income driven repayment plans. And if you’re likely to reach forgiveness, it generally doesn’t make sense for you to pay any more than your income requires for your student loans. You’ll save a lot more of your income and be able to boost other areas of your overall financial wellness if you do take that approach rather than trying to more aggressively pay off those student loans.
Jordan Benshea: So the takeaway from this first part from number one is if you can consolidate, consolidate and do it now before the end of the year, and even if you’re not sure, definitely worth checking.
Tony Bartels, DVM, MBA: Absolutely, and make sure you’re kinda staying plugged in because, again, the people that have waited till this point or just discovered that they’re eligible to consolidate, you kinda have to get this right the first time because if you don’t, it takes too long to reset the process, if you will, and allow you to start it again. And you’re going to miss that window. So, if you have questions about the consolidation process or what you’re seeing when you’re starting that consolidation application, then reach out or post to the VIN Foundation Student Debt Message Board area, and we’ll do our best to get those questions answered for you. But you’ll also find tons of questions and answers already in there, I mean, Rebecca and I have been crazy busy in there, and there are literally thousands of cases that we’ve done over the last several months that cover this and other topics in the realm of student loan repayment.
Jordan Benshea: Yeah. I think it’s worth taking a moment and talking about how I mean, both of you have been so, so busy with the efforts to help colleagues, and we’re so grateful for all of your endless nights and early mornings. Also there is a huge depth, deep bench of information in those message boards, and part of what we try to really encourage within VIN Foundation and this learning is that you can really learn from each other. So even if you’re waiting to get an answer from somebody else or you’re just not quite sure, really diving into those Student Debt Message Boards and seeing what sort of questions are out there. You’re not alone in this, and a lot of people have similar questions. So it’s really worth taking a, like just taking a few minutes and browsing through those sections and seeing how you can learn from other colleagues who are going through this, and learning some information there as well. So that’s a huge deep bench of information available and we highly encourage you spending the time to kind of explore that.
Tony Bartels, DVM, MBA: Yeah, and just a quick review, and I know I’ve caused some confusion with some of the webinars on this in the past, any veterinarian has access to those Student Debt Message Board areas. It does require you to have a username and password because we can’t, I mean I wish we could help the universe, but our focus is veterinarians and veterinary students. So we do just need to make sure that we’re helping veterinarians, and that’s where our focus is. So if you’re a VIN member already, you have a VIN username and password, you already have access to this. If you don’t have an active VIN username or password, we can have you create one through a VIN Foundation application that we have available, that will allow you to have access to that Student Debt Message Board area.
Jordan Benshea: Exactly. There’s a quick VIN Foundation, where you create a quick free account, and you create your username and password, and then you’re able to have access with it. As always, those links will be in the episode notes, so any veterinary professionals able to go in there and get this help, and as with all the VIN Foundation resources and programs and tools, it’s all free and available because our goal is to really help. So really encourage you that if you are wondering, that’s an option and it’s available for anyone that needs it.
Navigating Repayment Plans
Jordan Benshea: Okay, number two on our list of trends from the trenches is using the wrong repayment plan. So how can we help colleagues who are using the wrong repayment plan or what are sort of the regular things that we are seeing?
Tony Bartels, DVM, MBA: So this doesn’t rise to the urgency that the consolidation does because you’ve got some time to work through this, but the process is similar. So I’m going to encourage you to go grab a student aid data file from studentaid.gov, upload it into the VIN Foundation My Student Loans tool, and look at the details in there. Look at the income driven repayment eligibility tab. Are you eligible for the old version of IBR or the new version of IBR? Are you eligible for Pay As You Earn? Pay As You Earn is going to be a casualty in the changes that have been made, so not everybody is eligible for Pay As You Earn. It has specific eligibility requirements, but many of you are using it or could be using it before it gets phased out on July 1st of 2024. So anybody who is eligible for and using Pay As You Earn after July 1st of 2024, you can continue using it, but you won’t be able to get back into it if you haven’t been using it where you left it. So July 1st, 2024 is the phase out day for Pay As You Earn. In the past I probably spent the last, I don’t know, I think Pay As You Earn came online in 2012, nearly 10 years talking about how great Pay As You Earn and how that is the most beneficial repayment plan for most veterinarians. Now that has shifted because as part of those changes that are phasing out Pay As You Earn, we have a new repayment plan called SAVE. That’s going to be the most beneficial plan for some folks. But it’s not as simple as saying this one is the best versus this one is not. It really varies based on your circumstances now. So some of you that are eligible for Pay As You Earn and not using it could benefit from using it and need to get into it before July 1st of 2024. Some of you, who I’ve probably told myself, Pay As You Earn is your best repayment plan, you may find that SAVE is better for you. So it’s time to take a look and see if it makes sense for you to change from Pay As You Earn to SAVE. Or if you’re eligible for the new version of IBR, it’s going to make sense for you to get into the new SAVE plan, use it for at least the next 5 years, and then potentially switch to that new version of IBR later on down the road, if it makes sense for you to do so. That’s more of a strategic one that we have more time to talk about, I’m just going to kinda introduce it here. But the people that are eligible for the new version of IBR can benefit from SAVE because it’s going to generate the lowest monthly payment, provide a very beneficial unpaid interest subsidy where you won’t see your loan balance grow. But the new version of IBR allows you to reach forgiveness at 20 years versus 25 years for those veterinarians who are using SAVE. So there’s a more complicated analysis, but the good news is it’s a more beneficial outcome. It allows you to keep more of your money, reduces the cost to your student loans, and in some cases, will allow you to reach student loan forgiveness sooner. So the wrong repayment plan, particularly in that blog post that I’m talking about, is that generally people because of all the changes that have been made or because they don’t really understand the differences, they either throw their hands up, they pick the one that they remember the most, which tends to be income based repayment. Almost nobody should be using an income based repayment plan, IBR. There’s two versions of IBR, and it’s almost never the plan that you should be using, at least right now, but I see that a lot. So I see people that are using IBR, and it’s not the right time. One of the other things that we’ve seen with the release of SAVE is that folks that were using the old version of IBR, what I call IBR 2009, that plan is essentially obsolete now. SAVE is going to be the next better option for you, and at some point, you’re going to want to move your loans from the old version of IBR into this new SAVE plan. Right now, you may not want to do that right away because you have a very low or beneficial IBR payment.
Switching to SAVE: When and Why
Tony Bartels, DVM, MBA: So the next time you’re due to renew, you can switch to SAVE, but you may also find that SAVE will generate the lowest monthly payment for you now, which means you should change to SAVE sooner rather than later. So there’s a lot baked in there. Really, it kind of boils down to knowing there are new options out there. It really depends on what options you’re eligible for, which ones you’re using, and what your monthly payment can be under those new options to see if you should change sooner or later.
Understanding the Pickle: Pay As You Earn vs. SAVE
Jordan Benshea: So one of the groups are falling into what you’ve been calling the pickle.
Tony Bartels, DVM, MBA: The pickle. Yes. Lots of folks are falling into the pickle. Those are the people that are uniquely impacted by the Pay As You Earn phase out. So the pickle is SAVE can generate a lower monthly payment for you and provide that beneficial unpaid interest subsidy. So, SAVE has this unique feature where if your payment is less than the monthly interest, which is very possible and very frequent for people with a veterinary education size loan balance, you can have a monthly payment that’s less than the interest accrues. Generally, that interest accrues, it adds to your loan balance, you see your loan balance growing, it makes people tear their hair out. So they can’t stand watching their loan balance grow. So that was one of the more frequent complaints, and one of the reasons why SAVE was created. So SAVE has a 100% unpaid interest subsidy. So when your minimum monthly payment doesn’t cover the interest, the Department of Education now covers the remainder. You will never see your loan balance grow using SAVE. Huge, huge benefit. The kicker is that for people with graduate school loans, they have to stay in repayment for 25 years before they reach forgiveness versus 20 years under Pay As You Earn. So one of the more freq-, another one of the frequent complaints with student loan repayment is like, I don’t want to be in repayment forever, so 20 years sounds more appealing than 25 years for most people. But SAVE because the payment is lower and because it has this unpaid interest subsidy, you can end up paying less, but you have to be okay with being in repayment longer compared to Pay As You Earn, so hence the pickle. There’s no easy answer there. It really kind of comes down to can you stomach being in repayment 5 extra years knowing that it’ll probably cost you less and lower the potential forgiveness tax at the end.
Using the Student Loan Repayment Simulator
Tony Bartels, DVM, MBA: So that’s where the using the next tool in the VIN Foundation Student Debt Center, the Student Loan Repayment Simulator, so you take your my student loans information, you send it over to the Student Loan Repayment Simulator, you start plugging in your income family information, and we run projections. We can give you some objective measures of what does it look like if I switch my loans to SAVE? Am I due to end up paying less than I am using Pay As You Earn? And then the next question is, can you stomach being in repayment for an extra 5 years, even if the numbers say this is a good idea?That part, I can’t really help answer for you, I tend to let the numbers make the decision. But as we’ve learned painfully over the years, student loans go way beyond just numerical analysis. So, there are other components there that you’re going to have to wrestle with and come to the decision on your own.
Rebecca Mears, DVM: I was glad you walked through sending that information over to the loan repayment simulator because I know this stuff can seem really confusing. I mean, we’re talking about plan switching and consolidation and for some reason there’s a pickle involved and it can just get to be. I know it can just get, but I do think like seeing the numbers laid out in front of you really starts to give it a little bit more context. So, like, these are my loan balances, you transfer that information over to the loan payment simulator, you use your adjusted gross income, your family size, the amount of years that you’ve been in repayment, as Tony has said, most of us have been in repayment, and if you’ve been out of school, you have at least 3 and a 1/2, almost 4 years towards forgiveness already. That’s one of the common things that we’re seeing, are people aren’t including that in their simulations. So just really maximizing those results to see what does this look like, and start putting a little bit more meat to it. So it’s not just these ideas that seem a little bit beyond what we’re usually thinking about when we try to tackle our student loans.
Incorrect Minimum Monthly Payments
Jordan Benshea: Third on our list of trends from the trenches are incorrect minimum monthly payments or those that are higher than necessary. So let’s dive into this. What does that mean from a trend perspective?
Tony Bartels, DVM, MBA: Yeah. This gets back to not only the general incompetence of the loan servicers, but the changing nature of the landscape while the new student loan repayment plan was created, and turning interest and payments back on kinda like a light switch. I mean, the system was really not set up for this, and as a result, there’s been a lot of mistakes that have been made. I experienced this myself. So anybody who was using what used to be called Revised Pay As You Earn that was converted to SAVE, the new income driven repayment plan, their payments should be lower than they were under Revised Pay As You Earn. The formula says so. So they made some tweaks to how they calculate the minimum monthly payment using SAVE compared to how RePAYE calculated your payment. The math shows that your payment under SAVE would be less than it should be or was before under Revised Pay As You Earn. That’s not happening in everybody’s case, it happened to me. So I was expecting to see a monthly payment that was lower than my previous RePAYE payment was, and it came back much higher when I got my first statement from my loan servicer, and that was confusing. For anybody who has tried to call their loan servicer during this period, you know how painful it is.
Navigating Loan Servicer Issues
Tony Bartels, DVM, MBA: It’s literally hours on hold trying to get a hold of somebody, and then usually they blame you for doing something wrong, which is not helpful in any stretch of the imagination, and the reality is most often, they make the mistakes, but you have to know how to correct it. So you have to know how is the payment calculated. So in the Wikidebt area of the Student Debt Center we have a discretionary income page that walks through all of that math. They’re pretty basic equations. It’s not hard to calculate what your payment should be using whatever you think the most recent income information you have is, plus your family size. You can double check, you can do a quick math check of what that monthly payment should be using whatever plan that it is that you’re enrolled in. If the loan servicer has a higher number than you’re calculating, then you have to find out why. That unfortunately comes with waiting on hold to reach somebody there that can help you correct that. Now you can try to go through the studentaid.gov universe. It has been going through a lot of changes too, some of those have been really helpful. I was finally able to correct my payment through the studentaid.gov portal. So you can electronically recertify your income, which is ultimately what allowed me to get my payment to what I expected it to be under SAVE. Then, essentially, they just send that information over to your loan servicer, and they make that your payment. So, you can use that if it will work. Although I had to go through the student aid portal a few different times until I got it to show me the number I was expecting. So don’t let it dictate your monthly payment. Do the math on your end. You can use the Student Loan Repayment Simulator to check too, but if you want to check what your payment should be for just this next 12 months, plug it into that discretionary income formula for the plan that you’re using. See what that minimum monthly payment should be, and if it’s not within a few dollars of what you’re seeing either in the studentaid.gov website or on your loan servicer portal, then ask why. Or go through the application again to see if you can get that calculation to correct on its own. So there’s a lot of factors that go into why that is, ultimately, it comes down to what is the latest income information that your loan servicer has on file. Some of them might have some different income information than you’re expecting. If you provided some income information during the pandemic forbearance that you weren’t expecting them to use, they are using whatever they have most recently on file. There was a lot of loan servicer shakeup during the pandemic forbearance, so we lost a couple of loan servicers. A lot of those loans got moved over to new loan servicers that sometimes that information didn’t make it over appropriately, so they’re showing you payments that don’t make any sense whatsoever. So there’s a lot of reasons why you may see an incorrect student loan payment, but it’s worth your time to get it corrected. These income driven plans, again, are designed to prevent you from paying more than your income requires you towards your student loans. So if you think the payment is too high and you can get a lower one, then get a lower one. There’s better things that you can do with your money, particularly over the long term it will also save you money on your overall student loan repayment as well. So you ultimately want that minimum monthly payment to be as low as the rules allow under the most beneficial repayment plan for you. If you end up hitting forgiveness, so be it, just be prepared for that potential tax at the end. If you end up paying your balance to zero, even using an income driven plan, again, so be it. At least you won’t pay any more than a certain percentage of your income, so you have the rest of that income to use for other areas of your overall financial wellness.
Jordan Benshea: So we’re also hearing that many, you mentioned higher payments and trying to get it lower, but we’re also hearing about colleagues who are concerned that their payments are too low since they were set during a time when their incomes were lower, and then they’re assuming that they’re no longer going to reach forgiveness.
Tony Bartels, DVM, MBA: Yeah.
Pandemic Forbearance and Income Changes
Tony Bartels, DVM, MBA: That has been a direct result of the pandemic forbearance. So if you go back in time to when that was created, the thought was, and for many people there was some significant economic shock, and they didn’t want student loan payments to contribute to that, so they essentially turned it off like a switch. Turned the whole thing off. No interest. No payments were due. If you were using an income driven plan, that time still counted towards forgiveness. Since then they’ve even announced more benefits and changes along the way, but that means that your loans might represent a payment from 3 or 4 years ago. Your income may have significantly changed over that period of time, but that’s okay. Your renewal dates are such that they are pushed into the future as part of the pandemic forbearance benefit as well. So, you’re going to want to, that’s part of that, what I call student loan physical exam. So when you upload your student aid data file into the VIN Foundation My Student Loans tool, when you click the show details on any of those tabs in there you’ll see an anniversary date listed if you’re using an income income driven repayment plan. If that date is before March of 2024, then you can add 1 year to it until you get beyond March of 2024. They’ve done a much better job recently, the newer files definitely have more updated anniversary dates that showed dates into 2024 and even beyond. I’ve even seen some renewal dates that are out into 2025. It really just depends on what your renewal date was as you were entering that pandemic forbearance period. So if you’ve got a $0 payment because you graduated in 2019 and consolidated your loans and applied with a tax return from vet school, like we recommend that you were doing at that time, then you probably have had a $0 payment since 2019 and probably will until probably next May or June. So that puts you 5 years into repayment with no payments towards your loans, and that makes it really likely that you’re going to reach student loan forgiveness even if you’ve seen a significant increase in your income along the way. So don’t discount that possibility just because your income is much higher than it was when you first graduated. That forgiveness time is just amazingly beneficial. So you want to run that simulation, make sure you include those years in repayment to see if you’re still likely or projected to reach forgiveness, and then take the plan that makes sense accordingly.
Jordan Benshea: Alright, and what other changes or information do you think that colleagues need to know right now?
Student Loan Physical Exam: What You Need to Know
Tony Bartels, DVM, MBA: I would stress the importance again of that student loan physical exam. Just take a good look at your student loans. I know there really hasn’t been a lot of reason to know the different loan types you have, or the different plans that you might have been eligible for or not eligible for. There are so many people that graduated around my time frame where they were just reserved to the outcome that the old version of IBR was going to be the best plan for them because all of the new iterations, either they weren’t eligible for or didn’t make sense for them because they were married. That has all changed. Again, that kind of comes back to that, IBR. The old IBR version is now obsolete, they finally created a plan that older borrowers like myself can benefit from, even if you’re married and it makes sense for you to file your taxes separately. So that was difficult before, and it kind of pigeonholed you into the old version of IBR, but not anymore. The same applies for those that have even graduated well before I did. So some of the biggest benefits that I’m seeing are for veterinarians who graduated veterinary school in the late 1990’s and early 2000’s, and that’s where that forgiveness count adjustment comes in. But some of them won’t benefit from it if they don’t get those loans consolidated before the end of the year. So I was just responding to somebody this week who had, who graduated veterinary school in 1998, but they have the older privately held FFEL program loans that are not eligible for this one time forgiveness count adjustment. As soon as she consolidates her loans and that gets processed, her loans are likely to be forgiven tax free because there’s a special tax exemption on any student loan forgiveness if you receive it before the end of the 2025 tax year. So people that are looking at their student loans and wondering why am I still paying on them decades later, you may not have to anymore. But you have to make sure you’re not missing out. That same person, if they haven’t reached out or they didn’t or they don’t consolidate their loans before the end of the year, they’re stuck paying those loans the way they were paying them for the last 20 or 25 years. So it’s, again, it’s really worth your time to take a look at this stuff to hopefully get rid of what is repeatedly reported as one of the biggest stressors in our profession, that being student loans.
Rebecca Mears, DVM: Yeah, absolutely. I mean, Tony, you hit it, the nail on the head there because I was going to say, you don’t want to be the person that, come January 1st, is on the Student Debt Message Board or emailing Tony and I and saying, like, “well, what is this one time forgiveness account adjustment, how do I take advantage of it?”. I don’t want to have to tell you you’re too late. So do that student loan physical exam and start looking into this stuff now and and make the moves that you need to to make to benefit from the ongoing programs.
Jordan Benshea: Now is the time to pay attention and to take action.
Rebecca Mears, DVM: Oh, yeah.
Tony Bartels, DVM, MBA: Absolutely.
Outro
Jordan Benshea: Well, thank you so much, Tony and Becca, and we will put a lot of information in the episode notes and add links to the blog post and more. Anything else you two want to leave our listeners with today?
Tony Bartels, DVM, MBA: No. Thank you again for allowing us to get the word out and, please anyone listening, if you have questions, don’t hesitate to ask. I mean, this is the time to do it, again, you’re kind of running out of time. So we don’t want you to kinda be on the outside looking in, particularly for any of these time sensitive benefits.
Rebecca Mears, DVM: I also want to say thank you to the people that have been on the message boards because you’ve been patient with us, which we greatly appreciate. But also just that sharing of knowledge and being able to help so many colleagues and learn from one another and everything else because there have been so many changes and whatnot. So really, thank you to everyone for sharing your stories, you can do it anonymously. And then also for your patience with us as we work through everyone’s student debt questions.
Jordan Benshea: Absolutely. Thanks everybody for reaching out, and stay up to date. You can sign up for updates on the website. There’ll be links in the episode notes, and stay alert, stay aware, and know the information. Now’s the time to pay attention. Thanks, Tony. Thanks, Becca.
Rebecca Mears, DVM: Thanks, Jordan.
Tony Bartels, DVM, MBA: Thank you, Jordan.
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.
