Student Loan Fact Sheet
(Current as of 8-9-2023)
Student borrowing and debt relief initiatives have changed once again. To assist students, staff members, and families in navigating the plethora of material, the various initiatives are explained and summarized herein to the best of Midland’s understanding. Access https://studentaid.gov for additional details. If further information and clarification are provided, we will attempt to update this webpage.
The student loan repayment pause has ended!
Federal student loan interest will resume starting on September 1, 2023, and payments will be due starting in October 2023. Borrowers will have different dates in October on which their payments on outstanding loans will be due. The Department of Education indicates they will provide direct touch with borrowers and ramp up communications with servicers before repayment resumes to ensure borrowers and their families are receiving accurate and timely information about the return to repayment. All borrowers will be notified before payments are due, but your contact information must be current or information will not reach you. After three years of repayment pause, borrowers must check to be sure it is. Keeping contact information current is the student’s responsibility and is not an excuse for missing payments.
On Friday, June 30, the Supreme Court sided with those opposed to President Biden’s student loan debt forgiveness plan. If you were counting on that plan to reduce your payments, that unfortunately is not going to happen. In light of the Supreme Court decision, President Biden and Secretary Cardona announced several additional proposals to lessen the burden for borrowers. Because some of these provisions are also being challenged and, if finally approved, will take time to implement, our best advice is to prepare for repayment now if you have outstanding student loan debt. As the restart of loan payments draws near, loan servicers will be swamped with inquiries and required processes. Steps you should take now:
- You are responsible for maintaining current contact information in your profile on the loan servicer’s website and in their StudentAid.gov profile so your servicer can reach you. Several of the largest companies that service federal student loans (Navient, Pennsylvania Higher Education Assistance Agency and Granite State) announced during the pandemic that they will no longer be servicing loans for about 16 million borrowers, who will now have newly assigned servicers.
- Log in to My Federal Student Aid to find your servicer by using an existing FSA ID or creating an FSA ID to sign in. Ensure passwords are current and working. You can see your servicer, view loan details, apply for a direct consolidation loan or sign up for an income-driven repayment plan if an IDR plan is a better option for you. An IDR plan can make your payments more affordable, depending on your income and family size, though you will pay more interest over the course of repayment. A new income-driven repayment option (SAVE), parts of which could be available this summer, revises one of the four existing income-driven repayment plans and caps borrowers’ bills at a share of their discretionary income with the aim of making debt payments more affordable. The plan could limit payments for undergraduate loans to 5% of discretionary income and loans other than undergraduate to 10% of discretionary income.
- Check out Loan Simulator to find a repayment plan that meets your needs and goals or to decide whether to consolidate.
- Review auto-debit enrollment or sign up for the first time. To do so, log into the loan servicer’s website or contact the loan servicer directly.
- If you are enrolled in additional classes at least half-time, make sure your loan payments are deferred, if possible. When a student graduates or enrollment drops below half-time, a student has a one-time six-month grace period before loan repayment begins.
- Watch the news for updates, but don’t count on anything changing the need to begin repayment.
- Be alert and do not respond to scammers who offer to “help” you!
Midland recognizes that the return to repayment could result in possible financial challenges for many borrowers, especially during the adjustment period. The planning you do now may lessen those challenges. Do NOT allow your student loans to default and cause you to have bad credit for many years. Though Midland’s financial aid staff is always willing to answer questions and assist you where possible, your loan servicer is the place to go for help at this point. Log into your student loan account to see who that servicer is and plan for repayment now. In most cases, consolidating through a private loan would cause you to lose federal benefits and is likely not the best solution.
Download these resources to learn more about your student loans:
Public Service Loan Forgiveness (PSLF)
- Separate from the loan cancellation program summarized above, the Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on federal student loans after 120 payments for borrowers working full-time for federal, state, Tribal or local government; military; or a qualifying non-profit.
- Temporary changes, the application for which ended October 31, 2022, provide flexibility that makes it easier to receive forgiveness by allowing borrowers to receive credit for past periods of repayment that did not qualify for PSLF.
- After the October 31, 2022, deadline, regular PSLF rules apply (see below). Borrowers must request PSLF by completing the PSLF form and certifying employment to be considered for loan forgiveness per the regular PSLF rules.
- The Department of Education has proposed regulatory changes to ensure more effective implementation of the PSLF program moving forward.
- Visit PSLF.gov to learn more and apply. Additional information is available regarding PSLF at https://studentaid.gov under the Manage Loans dropdown.
- Past periods of repayment will now count whether or not you made a payment, made that payment on time, for the full amount due, or on a qualifying repayment plan. The Department of Education is working to apply changes announced in April 2022, as part of the payment count adjustment. These changes mean that borrowers with federally-managed loans may still see an increase in their payment counts toward income-driven repayment forgiveness and PSLF.
- The NEA and AFT are promoting the use of PSLF and also have resources available on their websites for members: nea.org/student-debt-support and aft.org/benefits/summer.
To be considered for PSLF, you need to submit a PSLF form. The easiest way to do this is by using the PSLF Help Tool. The PSLF Help Tool allows you to:
- Check to see if your employer is already in our employer database.
- Request that your employer’s eligibility be reviewed if it is not already in our database or has not yet had its eligibility determined.
- Prepare and sign your PSLF form, and request certification and signature from your employer—all electronically.
- Generate your PSLF form for manual signature and submission to the PSLF servicer (if electronic submission isn’t possible).
Top tip: Certify your employment every year and any time you change employers. This lets you confirm you’re on track toward forgiveness.
Full-time Employment for All PSLF
You must have worked full-time for a qualifying employer during the calendar month you were also in repayment on your loan. You can receive credit only for periods of repayment after October 1, 2007, when the PSLF Program began. If you haven’t done so already, you must file a Public Service Loan Forgiveness (PSLF) Certification & Application (PSLF form) for any period where you are seeking credit toward PSLF.
|Normal PSLF Requirements||Changes if pursued & eligible by October 31, 2022|
|Receive credit only on Direct Loans||Receive credit for periods of repayment on Direct, FFEL, or Perkins Loans|
|Repay under the 10-year Standard Plan or an income-driven repayment plan||Periods of repayment under any plan count|
|Make on-time payments||Periods of repayment on loans before consolidation count, even if on the wrong repayment plan|
|Work full-time for a qualifying employer in order to receive credit||Periods of repayment where payments were late or for less than the amount due also count|
|Must work for a qualifying employer at the time of application and forgiveness||Periods of repayment on loans before consolidation count, even if paid late or for less than the amount due|
|If you got Teacher Loan Forgiveness, the period of service that led to your eligibility cannot also count toward PSLF||Can get forgiveness even if not employed or not employed by a qualifying employer at the time of application and forgiveness|
|If you got Teacher Loan Forgiveness, the period of service that led to your eligibility can count toward PSLF if you certify PSLF employment for that period|
- Making 120 qualifying payments or the equivalent
- Being employed by government, 501(c)(3) not-for-profit, or other not-for-profit organization that provides a qualifying service*
- Working full-time (for PSLF, borrowers are generally considered to work full-time if they meet the employer’s definition of full-time or work at least 30 hours per week, whichever is greater)
- Having Direct Loans or consolidating into Direct Consolidation Loans
- Certifying qualifying employment for the periods when credit toward PSLF is requested
*Employment at a for-profit organization does not qualify
Fresh Start Initiatives
- On April 6, 2022, the U.S. Department of Education (ED) announced an initiative called “Fresh Start” to help eligible borrowers in default.
- Fresh Start will continue through one year after the COVID-19 payment pause ends.
- If loans are eligible, borrowers will temporarily regain several student aid and credit reporting benefits and could get out of default and keep the benefits for the long term.
- Students eligible for Fresh Start can access federal student aid again and can apply for federal grants and loans if they want to go back to school, which could help borrowers complete unfinished degrees, possibly making it easier to repay loans.
- Most borrowers with Fresh Start eligibility must make long-term payment arrangements with the U. S. Department of Education or their guaranty agency. Borrowers who do not make payment arrangements will again be subject to default collections one year after the payment pause ends.
- Borrowers who make payment arrangements will be transferred to a non-default loan servicer.
- Collections relief borrowers have gotten during the COVID-19 payment pause will continue during Fresh Start, including the following collections relief:
- Tax refunds (and child tax credits) will not be withheld.
- Wages will not be garnished.
- Social Security payments (including disability benefits) will not be withheld.
- Collection calls will not be made.
Which loans are eligible?
|Defaulted William D. Ford Federal||Defaulted Perkins Loans held by schools|
|Defaulted Federal Family Education Loan (FFEL) Program loans||Defaulted Health Education Assistance Loan Program loans|
|Defaulted Perkins Loans held by ED||Student loans remaining with the U.S. Department of Justice for ongoing litigation|
|Direct Loans that default after the end of the COVID-19 student loan payment pause|
|FFEL Program loans that default after the end of the COVID-19 student loan payment pause|
Note: FFEL Program loans that default during the COVID-19 payment pause will be taken out of default as a result of the expansion of COVID-19 relief. These loans aren’t eligible for Fresh Start.
If borrowers are not sure whether loans qualify, they can call the Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hard of hearing 1-877-825-9923). Payment arrangements can be made by contacting the Default Resolution Group, by visiting myeddebt.ed.gov, or by contacting the loan holder by phone or in writing.
- In late 2022, the Department of Education began reporting defaulted loans as “current” rather than “in collections” to credit reporting agencies.
- At that point, borrowers have the opportunity to get out of default. If they choose to do so, borrowers will get to keep the benefits listed above and receive access to the benefits listed below.
- Access to Income-Driven Repayment (IDR) Plans
- Access to Student Loan Forgiveness Programs
- Access to Short-term Relief (Forbearance and Deferment)
- If borrowers accept new federal student aid or choose to keep the benefits, here’s what will happen:
- The U.S. Department of Education will transfer the borrower’s defaulted loans from the Default Resolution Group (or from a guaranty agency) to a loan servicer.
- They will return those defaulted loans to “in repayment” status.
- They will remove the record of the default from the borrower’s credit report.
- Borrowers will lose access to all the benefits listed above if they don’t act before the Fresh Start period ends.
What do defaulted borrowers need to do?
- The U.S. Department of Education will reach out to eligible defaulted borrowers in the coming months with info about what they need to do.
- In the meantime, a defaulted borrower must make sure the loan holder has the borrower’s most up-to-date contact information so important messages about Fresh Start are not missed.
- Borrowers who don’t know who holds their loan(s) should reach out to the Default Resolution Group.