Financial Planning Updates
A number of changes to student loans have occurred in recent months. Here is an overview of those changes and information about how to learn more.
Biden-Harris Student Debt Relief Plan
The Biden administration announced plans to cancel up to $20,000 of student debt. Current students should automatically receive this benefit, because their FAFSA data is already on file with the Department of Education. Recent graduates who have neither FAFSA data from 2020 or 2021 on file with the DOE nor a tax return showing income-driven repayments for those years may have to file an application to get the eligible amount of debt canceled. This application has not been implemented yet; the deadline will be December 31, 2023. Learn more.
CARES Act Expiration
The student loan payment pause that was part of the CARES Act will expire on December 31, 2022. Borrowers will receive notices from their loan servicers about the resumption of payments a few weeks prior to this date. Some borrowers will need to re-enroll in auto-debit. Learn more.
Loan Servicer Transitions
A number of companies that previously serviced student loans are planning to exit the business and transition current loan holders to other organizations. Fedloan Servicing will transition to another student loan servicer between now and December 31, 2022. Navient has begun transferring loans to another student loan servicer between now and December 2023. Granite State transitioned loans to Edfinancial throughout 2021. Any remaining accounts are expected be transferred by the end of 2022.
All borrowers should have received communication regarding these transitions from their loan companies. If you have questions about these transitions, reach out to your loan provider.
Public Service Loan Forgiveness Waiver Period
On October 6, 2021, changes to the Public Service Loan Forgiveness program rules were announced. For a limited time, borrowers may receive credit for prior months of repayment to count toward the 120 months required by the program. The waiver allows borrowers to include months where they were employed by a qualifying nonprofit or government entity, regardless of the loan program, repayment plan, or whether the payment was made in full or on time.
Previously, the program only allowed borrowers to count months in which they paid on Direct Loans in a standard or IDR payment plan, and payments needed to be made on time and in full. This change will allow many borrowers to increase the number of qualified months that they’ve worked, resulting in faster loan forgiveness.
This is important to all borrowers with non-Direct federal loan balances, including Perkins loans, FFEL Stafford, FFEL Plus or FFEL Consolidation loans. If you currently have balances in these non-Direct federal loans and are are working for an eligible employer (501(c)3 nonprofit or government), consider consolidating these non-Direct student loans into a new Direct Consolidation Loan (DCL) before the end of the waiver period.
The deadline to apply for credit for these newly qualifying months is October 31, 2022. More information is available at studentaid.gov.
The Office of Financial Planning can assist you with questions about these changes or any other finance questions. Please contact Michael R. Clancy, MBA, CFP, CLU, director of financial planning, at email@example.com or 215.991.8595.
Drexel University College of Medicine
Office of Admissions
2900 W. Queen Lane, Philadelphia, PA 19129
215.991.8202 | 215.843.1766 (Fax)
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