Returning to Repayment 2023

Returning to Repayment 2023

Returning to Repayment – What’s Ahead for Student Loan Borrowers?

The freeze on student loan payments expires in September. In place since March 2020, the start of the pandemic, Federal Student Loan borrowers have been exempted from making monthly payments and saw their interest rates drop to zero during this time.

Beginning on September 1, 2023, interest on all Federal student loans, Direct Student Loans, Direct PLUS, and the older FFELP and Parent Loans will begin to accrue interest. Monthly repayments begin again on October 2023, based on arrangements made with the borrower’s loan servicer.

What next steps should borrowers take to prepare for repayment?

  • Eye on Washington! The Administration appears to be working quickly to create a new program to provide debt relief and support to student loan borrowers. Initial details were released on 7/5/2023, revealing new repayment and forgiven options. If approved, the program will take a year before it begins.
  • In the meantime, borrowers of Federal Direct Student Loans, Federal PLUS Loans, and the older FFELP should visit studentaid.gov, check their loan account for accuracy and payment details, and double-check the name and location of their loan servicer. Since the freeze, many borrowers many have seen their loan accounts moved to a new loan servicer.
  • After reviewing their loan account, borrowers should examine their ability to restart their loan payment. If unable to resume making their payment, borrowers should investigate eligibility for one of the many repayment-sensitive options, including:
  • Graduated loan payments
  • Income-Driven (IDR) or Income Contingent (ICD)
  • Temporary interest-only payments.
  • Borrowers can log in to their account at studentaid.gov or speak with their loan servicer to determine their options.

Borrowers on a qualified Public Services Loan Forgiveness Program (PSLF) should contact their servicer to restart their loan payment and verify the official completion date (which may have already occurred.

Borrowers may be eligible for one-time Payment Count Adjustments towards Income-Driven Repayment and Public Service Loan Forgiveness Program repayment timelines.

Other Things to Consider

Taking advantage of private education loan refinancing can provide relief from high-interest rates or the need to lower monthly payments. But, borrowers should “check their rate” and get pre-qualified. Comparing rates and benefits is essential before refinancing one’s federal loans to a private education loan program. Switching federal loans to a private relationship will eliminate all future government benefits. Borrowers can refinance current private loans while leaving their federal loans alone. Contact an established education loan refinancing lender for a rate quote.

New employer-employee programs are coming online every day. These programs allow employers to contribute to an employee’s student loan payment through various tax-free benefits typically reserved for advanced education credentials. Resources can be redirected to an employee’s student loan repayment and college planning needs using these and other critical financial resources.  Programs can be instrumental to an organization’s efforts to hire and retain talent. Consult with your HR Department to determine the benefits your organization offers.

Always pay off high-interest-rate consumer debt first, including credit cards and loans. Student loan consolidation and private education loan refinancing can be an option.

Consult with your financial planner before significantly changing your retirement and financial profile. Beware of tax implications.

We will be monitoring developments from Washington and across the higher education landscape. Stay Connected to stay up-to-date.

Tom O’Hare is the founder of Get College Going, author of “Pivotal College Planning Workbook”, and a partner of Pivotal College Years. As an education advisor, Tom works to guide parents, students, and employers through the complexity of planning and funding education pathways after high school. He

frequently writes about higher education access, completion, and affordability.

 

Protecting You and Your College Student

Updated June 28, 2023

September is right around the corner.

Negotiating the deposit, reserving the dorm room or off-campus housing, attending orientation, and calculating the financing of the remaining balance are all top of mind for new and returning college-bound students. But there is more!

Protecting your college student, new or returning,  and your family is critical. Please take a minute to take the important steps to make their 2023-2024 academic year successful.

What’s the big deal – as students transition from high school to college, many will be turning 18 years of age —a milestone in their lives and a new designation in the eyes of colleges and universities, the legal and medial world. They are now ADULTS.

Our children will always remain young at heart, but when they turn 18 years of age, the rules change. An eighteen-year-old becomes responsible for themselves. Their medical care, status as a citizen to vote, legal and law enforcement, and other consumer actions. As adults on campuses, travel to and from, and begin to live independently it is critical to have the proper documents, and agreements in place to be able to support and protect your college-age student and family.

Before They Settle In

Here is a summary of the important documents and areas to help protect your student and family:

  1. FERPA Agreement – signed by the student and parent(s) annually; the Family Educational Rights and Privacy Act (FERPA), is an agreement that permits school administrators to speak with parent(s) about academics, housing, financial, campus life, infractions (public safety), and more. .
  2. HIPAA Authorization Form – allows a physician to speak with a parent regarding the medical needs and condition of an individual eighteen years or older. Having a HIPAA Form (Health Insurance Portability and Accountability Act of 1996) in place can assist a college student when seeking medical attention. Keeping the jointly signed document (parent(s), legal guardian  and student) in a students smart device is recommended.
  3. Health Care Proxy, also known as a Healthcare Power of Attorney –   it allows the designated individuals (parent or guardian) to act on behalf of the student to make health care decisions on their behalf if unable to make or communicate those decisions. Check your specific state guidelines
  4. General Durable Power of Attorney – acting on behalf of a a student, the designate can assist in managing financial needs, pay bills, and assist in matters business related matters.
  5. Living Will – for students who have assets, are part of a family trust or other investments.
  6. Tuition Insurance – protect your investment when your student can not complete a semester due to injury, illness or an unforeseen reason. School do not issue refunds and have stricter guidelines before they due. Plans due not cover early separation due to academics.

PLUS

  • Immunization records must be current, including all vaccinations. For many higher education institutions this now includes COVID-19.  for the Fall. Check with the college to determine if they have a specific form that a student’s primary care doctor must complete before arriving on campus. Medical records take time, don’t wait.
  • When students are attending school outside the families normal health care insurance network it is important to determine upfront if there are other providers covered within their insurance providers network.
  • For students who plan to attend college outside of the US (full-time or study abroad) having a valid US Passport is vital. With the current reported backlog, student’s should plan accordingly to apply for a new or renew a current document.
  • Student bring lots of items, some valuable which can potentially be miss placed, lost or stolen. Smart devices, laptops, and other technology can be a huge temptation parents should check their coverage through their homeowners insurance policy.
  • If a car is going on campus (commuting or dorm student) parents should check their coverage, personal injury and property.
  • Personal safety, self-defense and situation and awareness is huge on a college campus. Learn 10 School Safety Tips every student, high school or college-age should know. Enroll your son or daughter in a personal safety course before stepping on a college campus or when they are back on break..

Individuals who are part of the Sandwich Generation, caregivers for their parents may be very familiar with some of these documents, but many times miss executing them for the college students. Consult with your Family Law, Estate Planner, and insurance agent to add protect.

Sending a young mind off to college can be like opening the barn door and letting the horses run free. Help your college-age student understand the need to be their own advocates and make wise and safe choices. There is no denying it, annually, many college students consume an excessive amount of alcohol resulting in visits to the ER to have their stomachs pumped or worse, The temptation is huge and even for the most mature, pressure can out way wise choices. As a dad four college-age students, I encourage all parents to have a frank and honest conversation about drinking, drugs, and making wise social decision.

Their choices are the key to a successful college career.

For more information on these and other college planning needs, please feel free to contact me, Tom O’Hare at Get College Going