Listen to Berkeley Talks episode #140: An update on Public Service Loan Forgiveness.
Intro: This is Berkeley Talks, a Berkeley News podcast from the Office of Communications and Public Affairs that features lectures and conversations at UC Berkeley. You can subscribe on Spotify, Apple Podcasts or wherever you listen. New episodes come out every other Friday.
Amanda Prasuhn: Okay. I want to thank everyone for coming to this presentation today about the latest updates to Public Service Loan Forgiveness and student loans. My name is Amanda Prasuhn and I’m the Director of Public Interest, Financial Support at Berkeley Law and our financial aid office. And here with us today, we have a panel of experts ready to answer our questions and make PSLF more accessible, easier to understand. It’s a very complicated world out there.
I did want to issue this caveat right at the beginning that no one here is providing you with individualized student loan advice today. You can always reach out to our financial aid office, the Department of Education, your loan servicer if you have these specific questions, but they’re going to be answering general questions about the latest updates. I’m going to be asking questions that I’ve prepared, but you can also ask any questions that you have at any time using the Q and A feature, and I will read those questions aloud to our panelists. So please do that when you’re ready.
Here with us today, we have Kat Welbeck from the Student Borrower Protection Center. We have Suzanne Martindale who is a Berkeley Law alum, and is with the California Department of Financial Protection and Innovation. And Kyra Taylor, who’s also a Berkeley Law alum and is at the National Consumer Law Center. So, I’m going to ask our panelists really quickly to just go around and introduce themselves and explain what their organization or their office does really briefly. Kyra, you’re unmuted, if you want to go first.
Kyra Taylor: Sure. So I’m Kyra Taylor and I am the staff attorney at the National Consumer Law Center. And what that means is I do a variety of types of work. So I do federal advocacy work to improve the student loan system for low income student loan borrowers across the country. I work with legal aid organizations across the country. I work with state agencies across the country as well. And then I also provide direct student loan services to low income borrowers here in Massachusetts. And we publish a student loan law manual. Can’t leave that out. And we have a public facing website on student loan options the studentloanborrowerassistance.org website that I also update and blog on.
Amanda Prasuhn: Awesome. Kat, you want to go next.
Kat Welbeck: Sure. And I just want to thank you, Amanda, for having us today and also super excited because Kyra and Suzanne are rockstars, so excited to join today’s panel with them. But for everyone, I’m Kat Welbeck, advocacy director and civil rights council at the Student Borrower Protection Center. So, we’re a national nonprofit. So we working on a mix of similarly, so here a mix of advocacy policy making and litigation strategy. So our whole goal is to alleviate the burden of student debt for borrowers all across this country. So, I’m really excited to be here and talk more about student debt, but thanks.
Amanda Prasuhn: Thank you. And Suzanne.
Suzanne Martindale: Hey, good afternoon, everyone. So, my name is Suzanne Martindale. I am currently the Senior Deputy Commissioner for Consumer Financial Protection at the California Department of Financial Protection and Innovation. We are California’s state consumer financial protection agency. So, we regulate all manner of financial services companies from banks and credit unions and mortgage companies to debt collectors and payday lenders. But very importantly for today’s call, we regulate student loan companies. So we license the major student loan servicers. We also enforce California and federal consumer protection laws that apply to lenders, servicers, debt collectors, private financing instruments, you name it. But to be very clear, although the federal government primarily oversees the student loan system, we regulate at the state level, the companies that are servicing your loans. So that means that if you’re having a problem with your servicer, not only can you go to them or department of ed, you can come to us, you can file a complaint and I’ll be happy to put a link to our website in the chat so that you can do that as well.
Also, prior to my coming to this department, I was an advocate working alongside Kat, Kyra, and other people to lobby for changes to the student loan system, to make it better, easier. We know it’s complex. I went through it, I got PSLF last year. So, ask me anything. But we even for experts like us in this space, we have all found it personally challenging to navigate the system. So, all this to say, my open and comment, you’re not alone if you’re confused, and we are here to do whatever we can to help you.
Amanda Prasuhn: Okay. Perfect. Thank you all so much. I’m going to jump into some of the questions I’ve prepared. And again, anyone can use that Q and A function at any time. And you are all welcome to just jump in and talk whenever you have an answer to my question. So, I’m going to start this off by saying that we know there’s been a ton of big changes to public service on forgiveness, especially in the past six months to a year. Can someone briefly describe what this new Public Service Loan Forgiveness waiver is and how it changes Public Service Loan Forgiveness temporarily? I’m going to make Suzanne do it if no one does it.
Suzanne Martindale: Okay. I can start at a high level. The folks can supplement it. There are many moving parts to it, but essentially using this current emergency authority, the Department of Education is empowered to waive, or just ignore some of the eligibility requirements that typically would apply to someone who’s trying to get credit toward PSLF. The way the system normally works, you have to have the right kind of federal loan, you have to be in the right kind of repayment plan, you have to make the right kind of payment amount at the right time. All these different things, all while working for an eligible employer. So one cohort that probably not going to be most of you on this call, but one cohort of folks that have been shut out over the years from PSLF are folks who have older kinds of federal loans that are sort of no longer being offered and are not qualifying loans.
Today, if you fill out the FAFSA, you get your federal loan, you’re going to be getting a direct loan, a loan from the direct loan program, where the Department of Education, the federal government owns the loan and you’re the borrower. There were older loans that were issued under these defunct programs called federal family education loan. That was when private lenders used to make the loans and the feds guaranteed it. The Perkins loans, some other kind of specialty loans that no longer exist, where if you were making payments on those loans, didn’t count. So now there’s an opportunity for folks to consolidate their loans, to convert them into a direct loan and then get past credit for the payments they made on those loans.
Also, if you happen to be in the wrong kind of repayment plan, or maybe you paid the wrong amount or something like that, they’re also going to look back and they’ll just give you credit for the time, so long as you going forward, make sure you have a direct loan and you go back and certify, yes, I was working at a qualifying employer, which generally speaking means you worked for some sort of government agency, or you worked for a 501 C3 nonprofit. Those are the two major categories that are going to definitely be eligible for Public Service Loan Forgiveness.
There are other types of nonprofits that may or may not qualify where the department has discretion to decide if that employer is eligible, but by and large, the upshot of this is if you take a couple steps to certify your employment and do what you got to do to make sure you have the right kind of loans, for folks who may have not otherwise gotten credit for some of those past payments, they’ll now be able to get credit if they take certain steps between now and October 31st. So, that’s kind of the general overview, but there are some other nuances and it can get a little complicated, but that’s the basic point of what’s happening right now with the PSLF waiver. And if anyone else wants to add or augment, please feel free.
Kyra Taylor: Yeah. So I would just jump in because I know for myself, I was very anxious about like, oh my God, are they going to take away PSLF in the future? And could I be grandfathered in and all that stuff. And so, the waiver is really key to people who have already done some form of public service and who want to get credit for that time towards discharging those preexisting debts. It’s time-limited. So, it’s going to end in October. And so, for folks who are intending on discharging their law school debt with PSLF, they should be watching for the change in regulations that are coming. The department changes its regulations via the thing called a negotiated rule making. And Suzanne, you were in the Neg Reg that was negotiating the new regulations. We haven’t seen the proposed rules or the final rules yet, but they will be coming out and they will be changing how people will be able to get PSLF in the future. And then Kat, you know all of the details on the waiver. So I will turn it over to you.
Kat Welbeck: No, I was going to say those were both such amazing overviews. And the only thing I was going to add, and this might take a spin to this conversation because I think both you and Suzanne covered that so wonderfully. It’s just to also note that this change happened because of borrowers raising their voices and telling the Department of Education that these are the problems, this is why the system’s broken and we’re seeing positive changes from that.
So, to Kyra’s point about there’s still changes to come to see what the permanent program looks like beyond this one year waiver. Again, keep that drum beat about caring about student debt, letting the administration know, this is a priority for you. This is an issue that deserves continued national attention in the way that has continued to get this drums… This continued attention because that’s where we’re getting changed, and so please continue to do that. We’re not maybe at the advocacy part of this conversation yet, but I just feel like I always got to do that.
Amanda Prasuhn: No, it’s perfect. Thank you all so much. It’s a great overview of the waiver. And I do want to get into the advocacy portion in a little bit, but before we get there, this new waiver has been in place since October of last year. What are we seeing in terms of, how many people have benefited so far who has benefiting and how many more are likely to see changes while the waiver is in place?
Kat Welbeck: I don’t know who wants to jump, but so far, I know at least as of last month, over 100,000 people have gotten, I think over $6 billion of debt canceled. So, this is really happening. And so also just another word, to earlier points, everyone here may not… Many of you may still be students or maybe earlier in your career, and so it may not be at 120 payments yet, but still let people know because this is happening and people are getting their debt canceled.
And then, just one point to people who may not be at 120 payments yet, but might be recent grads, definitely make sure you, and we’ll drop links about things to take advantage of the waiver, but also see if possibly, maybe you graduated and you weren’t in an IDR plan, or maybe you hadn’t submitted your PSLF form because maybe you graduated during the payment pause, so you just were like, “Oh, okay, I’ll do that later.” Also, there’s still ways for people who may not have reached 120 payments to benefit. So also just make sure if you’ve already started on the path to repayment that you’re looking to make sure that maybe you can get credit for payments that may not have otherwise counted during this waiver period.
Kyra Taylor: And I just want to jump in to say, because we’re talking to a whole bunch of law students who will probably go on to become advocates on behalf of low income folks. And I think that the PSLF waiver and our student loan system generally, epitomizes why application based relief, opt in relief is almost always a problem when you’re talking about vulnerable populations. And so I would just ask that you remember this experience and this fear you feel about being able to obtain PSLF forgiveness when you’re thinking about other types of reforms for vulnerable people. Because the problems that we see here are the problems that we see repeating over and over and over again, when relief programs are made available to people who need them.
Amanda Prasuhn: Perfect. I think what Kyra and Kat were just talking about in terms of, what do borrowers actually need to do to take advantage of this waiver and to make sure they’re set for PSLF? What are the action items? The people on this call are thinking about because some are current law students, but some have graduated and they’re already working in qualifying employment. What exactly are their next steps?
Suzanne Martindale: Well, I think this is true for anyone, whether or not the waiver is applicable to you, because remember the waiver is meant to remove some of the barriers for people that made ineligible payments in the past, so that may not apply to you. You may just be someone who’s about to graduate or who’s fresh out of school and is in repayment and is trying to figure out what to do next. So, the fundamentals are, make sure you have an account on studentaid.gov, your federal student aid account or FSA account is your portal into all the stuff you got to do to manage your federal student loans. When you set up that account and log into that account, you can see all your loans, what they are, their repayment status. You can see who your servicer is. And that’s where you’ll see repayment, assistance tools, a PSLF help tool that’ll help you generate a form to certify your employment.
And that’s the kind of stuff you need to do as a borrower who’s trying to manage their federal loans and work toward PSLF. You want to make sure that you’re in an income driven repayment plan. They’re one of several. You can do a little widget to kind of figure out which one is the best one for you to kind of estimate your monthly payments based on your current income.
Again, you can use the help tool to generate an employer certification form so that you can certify that you’re in eligible employment. You’re going to need your employer’s federal tax ID number, that’s something to know. Get that from your HR people and find someone who will sign your form. That can also be a challenge. And we’ve heard that anecdotally from some people. So, those are kind of the things you need to do, make sure you’re managing your loan, make sure you’re enrolled in the right kind of repayment plan for you and for PSLF, you need to be in an income driven repayment plan, like income based, pays your earn, revised pay as your earn, there are several. And then you need to certify your employment.
And it’s not required that you certify your employment at any time before applying for forgiveness, but it’s recommended you do it every year and/or every time you change jobs, because it’s hard to go back later and get your past employment certified. Now, you can go in and out of public service and that’s okay. You don’t restart the clock. So, you can do five years in government, do five years at a law firm and you can go back to government and you’re on year six. It doesn’t restart the clock. You have to accumulate 120 payments. That’s something that’s very important for people to know.
But so those are the basic things that you need to do and really should be doing now, even though we’re still on payment pause, you can apply for an income driven repayment plan now. You can try to certify your employment now. The servicers are still there and processing forms and applications. So, don’t wait on it. I would say, particularly take advantage of the breathing room you have right now to get all your paperwork in order.
Kyra Taylor: So, I would jump in. We got a question about whether or not you can go in and out of public service. I want to reiterate for myself, I have bumped in and out public service over my career. My loans haven’t exploded. The one thing I would flag for this group is that income based repayment is like a safety net behind PSLFs. So let’s say you get into it and you decide you really like plaintiff side work or you really like working in the defense bar. And now you’re making money. You can stay in many of the income driven repayment plans and use that sort of as a safety net so that after 20 years or 25 years, depending on the plan you’re in, you’ll still obtain cancellation. And in the American Rescue Plan act that cancellation is now tax-free.
And hopefully that act will be repeated when it ends in 2026. And so, those would be two big things I would flag. I will also say I am a bad PSLFer. I have not certified yet. And the risk is always that your employer will disappear. Before becoming a lawyer, I was an elementary school teacher. One of the schools I worked at now doesn’t exist and I actually cannot find that employer. And so, I would just caution you to maybe be a little bit better around your paperwork.
And the last thing I want to flag is that we’ve seen big payment history problems, particularly for people who are in $0 repayment plans and with IDR and PSLF, that six-month grace period, after you graduate your program, doesn’t count towards forgiveness in PSLF or IDR. And so, if you’re working for a non-profit, you might say, okay, I don’t want this grace period to continue. I want to switch into the IDR plan. You may still have a $0 payment, but then at least you can get those months counted towards PSLF cancellation or IDR cancellation.
Amanda Prasuhn: Someone in the chat just asked a question about potential changes to PSLF. And is there any talk of having that grace period time ever change and count for Public Service Loan Forgiveness? Do we know if that’s on the table?
Suzanne Martindale: I mean, at the negotiating table, there was some discussion around whether certain periods of deferment or forbearance or grace could and should count. I mean, many of us at the table pointed out that sometimes folks are in school and they’re also working. Why aren’t they getting credit for that? The point has been made. I have not heard anything back from them, and as someone mentioned, we are awaiting to see the actual proposed rules, which will then be open for public comment. And anyone who wants to comment can submit a comment to the federal register.
So is that something to… And we will make sure that when we do see the rules that the community is aware, so that folks just feel like they want to comment, they have the opportunity to do so. So it’s been discussed, but we don’t know which way the department is going to go on that. Their default is to say, we want to look at people who are in repayment, but they understand that in some cases, someone might for whatever reason, be in a payment pause, but still be working and really should get credit for that. So, it’s on the table. We just don’t know the chances of that getting counted.
Amanda Prasuhn: Perfect. Thank you, Suzanne. I have another question about the waiver, and I know I’ve bothered you about this, Suzanne, multiple times. How long do borrowers need to wait to get their payment counts updated? If they’re now eligible for Public Service Loan Forgiveness through the waiver and they weren’t before, how long is it taking for their application to process? I’ve heard from people there’s this whole thing where if you apply, you initially see a rejection notice and then later on your loans get forgiven. So, what’s this actual process looking like for people?
Kat Welbeck: I don’t know who wants to jump into one, but I would caution for patience. It is taking a while. A lot of people are trying to submit paperwork through this waiver. And so it is not uncommon to hear a wait of a month plus or months. So, don’t fret if you do hear about longer wait times, because that’s what we’re hearing. But again, people are getting their debt forgiven. So, still stick with the process. The other thing I’ll add is there are some hiccups that the department’s aware of. And just before I go into what some of them are, definitely, you have an amazing, wonderful, fabulous resource in Suzanne. So, make sure you let her know, you let her office know, you let the CFPB know, you’re reporting these issues.
You also reach out to the ombudsperson at the Department of Education when you have these issues. We have heard that, for example, when people consolidate these older fed loans. So again, this might not apply to a lot of people on this call, but for people who consolidate older fed loans, and so they may have been working for years in public service, they consolidate these older loans into a direct loan to get access to PSLF through this waiver. They might see that they have one qualifying payment, that could be very alarming, when you said I’ve worked in public service for many years, I’m consolidating so I can take advantage and say that I have 120 plus qualifying payments. That is an automatic message that people will get from federal loan servicing so don’t fret, there will be another message that comes after that, that actually brings the updated payment count.
And so, I know there are some glitches that people are getting along the way, but definitely still continue through the process, report them out as you see them, because the more that we hear about these issues, we’re able to report back to… Various sources kind of figure out what’s happening and then also kind of troubleshoot or do this, warn people that might happen so you don’t freak out when you first see it, because that is very alarming. I can imagine after consolidating seeing that, but that is happening. So, I’ll just leave that there.
Suzanne Martindale: Yeah. And I’ll just add just for everyone’s awareness, the state regulators and state attorneys general meet at least once a month with the U.S. Department of Education directly. I met with them an hour ago. And as we go through the waiver, they are very appreciative of hearing fact patterns back from the states, because in some cases I put in a link into the chat earlier to their PSLF waiver page. In some areas they’ve actually changed their disclosures and their information on the website to clarify in response to some of the borrower stories that we’ve been lifting up, that Amanda, that you send to me from Berkeley, to make sure that the information is clear and actually that they have a consistent policy about how they’re implementing the waiver. So, we really, really do appreciate hearing what these individualized questions, because it’s actually helping directly inform the Department of Education’s implementation of this waiver. So, keep them coming.
Amanda Prasuhn: Suzanne, I did just get a question in the Q and A about someone’s specific situation where they think they’re eligible, but now it’s saying they’re not eligible and they won’t be eligible for a while. Aside from reaching out to our office, which I definitely encourage people to do, so we can take a look at your actual loans and what are you seeing in front of you, where should people head when they’re running into these problems when they think they should be eligible, but they’re being told they’re not? Who do they contact and where do they go? You’re muted, Suzanne, if you wanted to respond.
Suzanne Martindale: I’m usually so good about that. Okay. Anyway, I would say, of course, checking your account on studentaid.gov, talking to your servicer. If that doesn’t work, certainly as a California borrower, you can file a complaint with us. We also have a relatively new ombudsperson who takes informal inquiries about student loans. So, say you don’t necessarily want to file a formal complaint with us, but you just want to ask a question, we have a staff person named Selena Damien. She is our DFPI’s student loan ombudsperson. And she also is happy to answer basic questions and refer people appropriately, whether to somewhere else in our department or potentially to resources with our community partners. So, I can put her email in the chat as well, and her information’s also accessible from our website. Sometimes you’ve got to go to more than one place, unfortunately, just to kind of put the pressure on, to get things fixed.
But to Kat’s point though, some of this stuff, it’s a little glitchy, but over time, things are getting corrected and the department is also monitoring and periodically auditing what the servicers are doing to try to catch what could be systemic automated errors that need to be fixed. So just don’t be surprised if it’s a little bit bumpy, and also there’s nothing stopping you from resubmitting an ECF to say, no, I think you’re wrong. I’m going to try again to certify my employment, for example. So, unfortunately, there’s no one size fits all answer to this, but between all of us on this call, we are also resources for you all, but I’ll put in DFPI’s ombudsperson’s email into the chat as well as an additional resource.
Amanda Prasuhn: Awesome. Okay. This is sort of my last waiver-specific question, but I know we’re talking about negotiated rulemaking and these big changes to PSLFs and student loan repayment. What’s the possibility that the Department of Education changes things based on how this waiver has gone, as in making the provisions of the waiver, something that’s permanent, or even just how they’re counting up payments is a different process during the waiver period than it normally is. Is there any chance of them saying it’s way easier to do it this way? Let’s just change the entire process.
Kyra Taylor: I will just jump into say we’ve got negotiated rule making happening. We’ve got new rules that are going to come out. So, hey, who knows? I think in the past, the Department of Education is not great at making things simpler, but I am optimistic that with, pointed comments from all of us, all of you who are watching that they will move in the right direction and that they will consider, potentially making some of these changes permanent.
And just to follow up on Kyra’s point, I think one that, and then what Kyra said earlier about just the importance of making access to relief easy. The fact that people have to opt into relief and instead of making things automatic, I think one thing that we’ve seen in this waiver, the fact that yes, borrowers have to opt into the fact that figuring out the waiver, but there are some parts of the waiver that are supposed to be automatically get federal work experience, but I think we’re seeing that cutting out some of the barriers to access PSLF is… So, when we talk about the benefits of the waiver, I think some things that are great about it are cutting out some of the barriers. And I think to Kyra’s point, the possibility of that being a long-term solution because we see, when you just cut out barriers, more people access relief, it’s mind blowing, big surprise.
Kat Welbeck: But I think that is on our wishlist. It’s something we’re advocating for, but also to Kyra’s point, I think the more people that say that, the more people that message that, the more people that talk about the way that this is life changing, or I think that’s when we get more power to this movement. And then also one quick thing, I’m going to drop a link to a website that our team has about accessing PSLF through this waiver. And so if you have more questions about some of the logistics of what that looks like, I just dropped that in the chat.
Kyra Taylor: And I was also seeing grads ask questions about the payment pause. And so, I’m going to jump in on that too, because that’s a big, big, big deal. So for folks who have ed held loans, so that’s direct loans and some fed loans. So, the federal family education loans, like Suzanne was saying before, were discontinued in 2010, but some people still have them. Sometimes they’re held by the Department of Education, sometimes they’re held by a private lender. If your loans are ed-held, then you’ve been in a payment pause and you’ve had zero interest accrue. So, if you were making payments, it was going towards the interest and then eventually to principal, once all your interest was paid off, but also all of these months, without payments still count towards PSLF if you were in qualifying employment and also count towards IDR cancellation. So that is huge for a lot of people. So if you’re running into problems on that front, that the months in the payment pause are not counting, those are definite flags to raise with all of us.
Amanda Prasuhn: Thank you. I need to check that we’ve answered that question. Okay. I want to move… We’ve talked about negotiated rule making a little bit, but Suzanne, Kat, Kyra, can you tell us a little bit more about, what other expected changes might be coming up from the negotiated rule making process and how can borrowers prepare for these upcoming changes?
Suzanne Martindale: Yeah, so this is… If you’ve taken admin law, negotiated rule making is like a footnote in the textbook. No one ever covers it, but the reality is that there are a handful of federal agencies that before they can even move forward with publishing a proposed rule, they have to convene a stakeholder committee. It’s called a negotiated rule making committee in advance. The meetings are open to the public. And at those meetings, the agency in question, here it’d be the Department of Education produces draft proposals for what regulations could look like. The way they do it at department of ed, they do issue papers, highlighting the issue and saying, what should we do? And then the committee is composed of different communities of interest. Two year schools, four year schools, public private, for-profit, financial aid, accreditors, student borrowers, legal aid, sometimes consumer advocates, state regulators.
And so, it’s people with different perspectives that are stakeholders and who care about what the department might do to change the regulations. This committee met last fall. There were 12 topics. It was a massive committee. Their PSLF was broken out into two. They’re considering a regulation around clarifying eligibility. They’re also considering revamping the process so that it’s clear the process for applying. And so, also on the back end, there’s the opportunity to appeal, a request reconsideration if you’re denied. In addition, they’re considering creating, through regulation, a new income driven repayment plan. There are a bunch of different repayment plans out there. Some of them are statutory. They are baked into the higher education act. Some of them, the department using its authority under the HEA, they’ve created via regulation. So, pay-as-you-earn was an executive order. Revised-pay-as-you-earn, I negotiated that one in 2015, that’s a regulation. But then the original IBR, income-based, that’s in the statute. So, it totally depends.
But they are considering creating a new IDR plan. We don’t know what it’s going to look like. We all pushed for it to be as generous as possible. Lower the percentage of income required, raise the threshold for discretionary income. I mean, we tried everything. We don’t know what’s going to be and we’ll have to see. We did come to consensus around using authority wherever we had it to try to reduce and eliminate interest capitalization, that horrible thing that happens with federal student loans, where after a while, unpaid interest piles up and they tack it onto your principle, which makes your loan balance grow. It happened to me, it sucks. So, they are trying to, wherever they feel, they have statutory authority, they’re going to remove interest capitalization events, like exiting a repayment plan or something like that.
So, we’re going to see, I think some areas where they’re trying to reduce interest capitalization, and then some other areas that are really more for a population of student borrowers that I would say is not Berkeley Law. There are some debt relief regulations for people that went to a predatory vocational program that ripped them off and they’re stuck with the debt. So there’s kind of some other cleanup that they’re doing on some of those regulations as well. There will be potential changes to both PSLF and income-driven repayment plan options, as well as interest capitalization. And those are all rules that we’re going to see rolled out, I think sometime this year and we’re all waiting to see what happens.
Amanda Prasuhn: I want to link this to how we’ve been in this COVID payment pause since March 2020, and it just got extended again last week through October 31. Do these continued extensions, I saw in the notice that was put out about it that, the Biden administration is potentially using this time to implement more of these potential changes. Is that related… Are these continued extensions related to the possibility that borrowers, when the payment pause finally ends could be entering an easier to navigate student loan repayment world?
Suzanne Martindale: I’ll say a few brief things and then hand it over to Kyra. So, another thing that folks may or may not be aware of, if you’ve been in repayment, you may have noticed that your loan servicer is changing. That is part of this. So again, we are a state regulator. We license these servicers. We’ve been working in coordination with other states, the Department of Education and the Consumer Financial Protection Bureau, which also regulates the servicers directly, to coordinate and monitor the loan servicing transfers that are happening right now because fed loan servicing and a few others are actually ending their contracts with the government. They will no longer be federal student loan servicers. So those accounts need to be moved somewhere, because that’s been of grave concern to all of the regulators is to ensure that the transfers happen appropriately, particularly for PSLF borrowers who have so many additional data points and pieces of paperwork that are associated with their loans, because they’re not only trying to repay, but trying to qualify and certify toward PSLF.
So, we’re trying to make sure, and we have examiners that are monitoring transfers in real time. So, accounts going from servicer A to servicer B, did 100% of the information get transferred? Because they had different IT platforms. I mean, it gets real technical and weird. And so, we are monitoring those transfers in real time and correcting problems as we spot them. And I think the department earlier today said that about 80% of the fed loan accounts have been transferred, but there’s more to go. And so, that’s also a problem because historically, anyone who was qualifying or working toward PSLF was at fed loan servicing. Now that servicer is leaving. So, all of those people have to go somewhere else. So that is a piece of this puzzle, but there may be some other aspects to it that Kat and Kyra want to speak to.
Kyra Taylor: On the servicer issue: I know I touched on this before, but we have seen, there’s been some like explosive reporting by NPR indicating that in addition to when accounts transfer from one servicer to another, that payment histories are lost, etc. There’s also been just big problems with counting payments period. Across the servicers, it’s come up with income-driven repayment, there are 4.4 million people who have been in repayment for 20 years or longer, which is crazy because they should have gotten cancellation under the income-driven repayment plans, and that cancellation should have been automatic, no application required.
And so, it brings up this question of, what’s happening here and why are things going wrong? I will say when I have requested my own payment history, I have gotten this Swiss cheesy record of my own use of IDR. And so, if I had to do law school over again, I will tell you, I would have aggressively kept every record, because I assume like many other student loan borrowers that the government would be good at keeping records and that they would keep accurate records. And that assumption has not been true.
So, I will say that to all of you, if you haven’t kept records, now is the time to start. Save every email, etc. But Amanda, for your original question in terms of like, is the system going to be better by the time repayment is turned back on? No. I hate to be cynical, but no, because there’s no way that the department can put all of these new regulations into effect. And also these are incremental changes to a system that is rife with monumental problems.
And so it’s like little fixes and I think it’s better, but the department won’t be able to guarantee that all the people who are eligible for cancellation will obtain it by the time repayment restarts. We have no idea what they’re going to do in terms of a new IDR plan. And I would just note for this audience, IDR doesn’t account for regional differences in the cost of living and it doesn’t account for if you’re a caregiver, for family members and it doesn’t account for, my husband is a veteran, it doesn’t really account for if you have a spouse who’s deploying and you’re the one who’s got to hold the fort down, back stateside. So, there are lots of life circumstances that the student loan system just doesn’t account for, even though those instances have big impacts on your finances. So, I wish I could be more optimistic. I think we’re fighting for changes every day, but the reality is, no, it’s still going to be pretty crappy.
Amanda Prasuhn: Kat. I see you reacting over there. Do you have anything to add?
Kat Welbeck: No, I just want to aggressively nod and completely agree. I think literally Kyra just went through the laundry list of things and we say, you have to fix these things before payments turn back one, that’s what we’ve been advocating for. We’re like, it makes no sense to return people into a system that you know is broken on so many fundamental levels, but to Kyra’s point, can they actually really even fix this before turning on payments? No. Especially even if the date’s August. Obviously, absolutely not. But also to Kyra’s point, these are fixes that are going to take time. But it’s still, I think something worth asking. I mean, talking about our federal government and we’re thinking about the type of advocacy that we’re doing.
We have actually acknowledged how many places this is broken. The department has acknowledged this, they are working to fix this. I mean, we do have an administration that is committed to fixing these flaws, but it is crazy to think about all the things that Kyra just mentioned, all the things that we’re talking about. Right now, we have a date to turn on payments before the waiver period is over. So again, thinking about the fact that people are entitled to, whether it’s PSLF cancellation, IDR cancellation, so many other issues with servicing abuses, just say, okay, let’s turn the payments back on and we’ll fix it as we go, but just thinking about, I don’t really have anything to add to what Suzanne and Kyra said, but just thinking about how unjust it is to say, “Yeah, keep making payments, knowing that we haven’t fixed everything.” So, just something that we always like to push when we’re talking about the return to repayment, and we haven’t gotten up that cancellation, but I’ll hold that for later.
Amanda Prasuhn: I’m going to bring it up in like two minutes, I promise. I want to get to a couple, I see some questions in the chat. Just a couple little small specific questions. One is someone asked, is there a possibility of paying more than what is allowed, paying more than the minimum payment to make sure that the principal doesn’t explode? I know in the past there was this huge issue with being in paid ahead status and really having that mess up your chances of PSLF. How has that changed or is there any talk in allowing people to do that and keep control of their student loan debt while not interfering with PSLF?
Suzanne Martindale: One of the usual requirements for PSLF is that you make an on-time payment for the exact amount on your bill. So, if you go a penny over, penny lower, wouldn’t have qualified. The waiver takes care of that. So, I know folks that were trying to pay more than the required, because they wanted to reduce the interest and then found out that those payments weren’t counting because they were in paid ahead status. So, the waiver does take care of that. So, if that does apply to you, everything else you were doing right, but you paid the wrong amount, that should get credited back to you during that time period, during the time in which you made those payments, you should be getting credit for that if all the other things you met or are correct. So, that is something that did also come up in negotiated rule making, and it may be addressed in the PSLF regulations going forward.
Amanda Prasuhn: Great.
Kyra Taylor: And I would just jump in to say, if you’re not in qualifying employment, I mean, I think for me, graduating from law school, I was like, where will I get a job? I don’t know. And so, one of the strategies I used when I wasn’t in public interest employment was to say, okay, I have a huge amount of student loan debt, and I’m going to try to cover as much of the interest as I possibly can so that if I have to, if my interest is going to be capitalized, for whatever reason that it won’t be too bad when I switch back into public interest employment. Other people say, you know what, I’m going to reach that 10 years. I don’t care what it takes. I think it depends on how you look at your life and what outcome you think is most likely, and that’s going to be an individual determination for you.
Amanda Prasuhn: Great. Okay. And then another question that came in through the chat, I’m sure you’ll all have many opinions about this, but to what extent can you rely on when fed loan servicing or the new loan servicer tells you that you have a particular number of qualifying payments? Is that the end all be all? Is that correct? How do borrowers actually keep track of their own payments and compare that with fed loan servicing accounts?
Suzanne Martindale: Yeah. That’s why I’ve put in the chat, print out your payment history once a year. It can be really hard to get documents from your servicer when they’re more than a year old. Whatever’s in your online account that you can save and memorialize, I would keep it, because I remember trying to document a period where I was putting an administrator forbearance or something, but it was from five years ago and they just never got back to me. So, there’s probably a month or two that I lost. I could have gotten PSLF a little earlier. So, that would be my recommendation. In terms of relying, there’s no great answer here, but again, the PSLF regulations that they are contemplating would include a reconsideration process where you kind of appeal if you think that they got it wrong, and then there would be a duty put on the servicer to go back and ultimately on the department to go back and double check to see if it’s accurate.
If you think it’s not accurate, file a complaint because if you file a complaint with us, we’re the consumer financial protection regulator that regulates all the federal loan servicers. We have attorneys, we have subpoena power. I mean, we can turn up the heat on these folks if you think that they’re not accurately counting your payments. So, that’s another plug again for our department as the California Consumer Financial Protection Agency on this.
Amanda Prasuhn: Nice. Thank you, Suzanne. Okay. Let’s get to this question because it’s in the Q and A, and everyone is wondering, where does the Biden administration, this Department of Education, this Congress, where do they stand in terms of broad loan cancellation, or a set amount of loan cancellation? Where are we in the process? Is it still on the table? Has time passed? People want to know.
Kyra Taylor: So we all talk about this all the time. And a lot of our advocacy has to do with fighting for cancellation, because I think it makes a sense on a lot of different fronts. We know that student loan debt is a racial justice and gender justice issue. We know that the same in inequalities that are present within broader American society are also reflected and perpetuated through our student loan system. So, there’s that angle. There’s the piece that, there’s a whole bunch of borrowers who are in the student loan system that should be eligible for cancellation that either don’t know that they should apply for it. They don’t know that they can apply for it, or they’ve tried to apply it and the paperwork has messed them up because it’s a really complicated system. And then there’s also the political realities, which is, who wants to be the president that turns on student loan payments.
That has all of these American families feel the pressure of losing hundreds of dollars every month, especially when we’re facing inflation. And it’s a very different experience to go to the grocery store these days than it was two years ago. And you’re having to do more with less. So I think there are a lot of reasons that support cancellation. I think I’m encouraged by Ron Claine made statements recently saying that the administration was going to extend the student loan pause until they figured out what to do with cancellation. They haven’t said no. And so I also think if they wanted to end the debate, if they didn’t want to do it, they would’ve said that two years ago they wouldn’t have kept us sort of all waiting with bated breath, and we have midterms coming up. So, they’re like plenty of political reasons to do this. And so that would be my top line thoughts. I am cautiously optimistic.
Amanda Prasuhn: Kat, I would love to get your opinion on this. And also just tell us, we’re all borrowers in this room. What can we do to make our voices heard and let people know that we’re interested in cancellation?
Kat Welbeck: For sure. I would agree with Kyra, again, cautiously optimistic. And I think, for very much so for the same equity and political realities, I think this is a decision that a president has to make and that he also has the authority to do. And I think that’s something, just to be clear, there’s still some questions, and people are like, is this going to be through a congressional act or is this going to be administrative action? I think anyone who has watched Congress like recently, we know nothing is getting through that way. So, this really does have to be executive action. And if people are like, do we have the authority? The same authority that we’re working through with this payment pause. So, we have the authority to do this, but I think it’s really about pushing one, the president to make this happen.
So again, I think the more that we keep student debt in the conversation, the more that we talk about again, like Kyra said, it’s really just continuing to reinforce the same, really reinforcing systemic inequities. Tweet about it, talk about it. This is an issue. This is the way that we talk about the president delivering on his campaign promises. Also, one thing that I really, really want to push is the importance of broad based cancellation. And I think, going back to this earlier point about, how do we make sure that relief is as broad as possible and reaches people in need as much as possible. And as much as people are saying, let’s target it to reach the people who need it the most, that it’s actually the way that oftentimes people who need it most don’t get it.
So, again, making sure that it’s broad based and making sure that… I also have thoughts on the amount, but also seeing more research say that actually larger amounts of cancellation help cut down the racial wealth gap, really cut in to these disparities that we see in student debt. We know women hold more student debt. So, having a higher level of cancellation also helps more women. So really thinking about the ways that one, the amount, but two pushing this into the conversation that making sure that, as we get to midterms, we’re saying this is a priority issue for again, 45 million Americans.
Suzanne Martindale: Yeah. The administration’s watching Twitter. So if you’re on Twitter, feel free to be active. In my personal capacity only, follow the debt collective.
Amanda Prasuhn: Awesome. Related to this idea of, when will this payment pause happen? Midterms are coming up, someone in the Q and A asked, do we think this will be the last payment pause? We’ve heard final quite a number of times. What is the chance? I know we’re far out, but what’s the chance this gets extended again? It’s ending really close to those midterms, which makes me think a little bit that it might get extended. Any insight on that?
Kyra Taylor: I love that question because… Oh, sorry, Suzanne.
Suzanne Martindale: Oh, I was just going to say really quickly, weirdly, the Department of Education itself found out about the extension on Twitter. So sometimes the White House just kind of springs it on the department, apparently, which I found was kind of interesting. They did say though, they don’t think the loan servicing transfers are going to be done before the fall. So, that’s also a factor, just a little tidbit of information. And department, obviously, doesn’t really opine. The White House makes these decisions. That said, all of the pieces that they’re trying to implement now and the PSLF waiver going to October 31st, they more or less implied, they think there’s more than non-zero chance it gets moved again. Kyra, go ahead.
Kyra Taylor: I think, yeah. A hundred percent. I echo all of that. I would just also say that I love that question because I get that question from clients. Who maybe dealing with that from an associate degree, a certificate. I see plenty of cosmetology graduates or students who are now dealing with that debt. I hear it from Ph.D.s. I have a friend who’s a social worker. I have a neighbor who’s whose brother has medical school debt. My postal worker asked me these things. So, I think it’s ubiquitous. You are not alone in wondering this and that it’s been really confusing for borrowers having the administration do this in like three month chunks, because you’re like, well, how do I plan my finances around this? How do I know what I can afford or can’t afford? Could this continue indefinitely? Will I get cancellation? Will the payment pause be extended? I think there are so many big questions that cause people a lot of anxiety.
Kat Welbeck: Oh, and one thing that Kyra made me think of, and again, in talking about how ubiquitous this issue is, I think that’s a really good point. And one thing we’re talking about, I agree with Suzanne, definitely tweet about it, but also one thing to note, a lot of this pressure too, is also, okay, because of midterms, it’s coming from also Dems up for reelection, so broadly. So, also making sure that you’re letting your elected official know, again, this is not going to… That cancellation is not coming through Congress. Unless many, many things change that are different, it’s not coming through Congress, but there’s still pressure that you can put on your elected officials to let them know, because there have been letters from, from both houses.
Senators and members of Congress saying, you have to extend the payment policy. You have to cancel the debt, because they realize, too, this is something that they’re hearing in their district. So also tweet at the president, tweet at different members of Congress, because they also are feeling this pressure too. And so, the more pressure points we add to this, I think the more that we can get this a moving.
Amanda Prasuhn: Perfect. Kyra, you mentioned all of these different people that you interact with who have a student loan debt in some way, someone asked in the Q and A, is there a type of financial counselor or student loan advisor for someone who’s maybe not in school anymore, or isn’t working with an LRAP program like we have, where do they get the help that they need to figure out if they’re eligible for PSLF for another type of loan cancellation?
Kyra Taylor: So, I don’t have good answers on that one. I think it’s all piecemeal. I think it’s really confusing for people when they’re choosing to go to school, and they’re thinking about the amount of debt that they’re going to take on. There’s no one to really turn to. And I get these questions a lot from veterans who are like, “Okay, I’m going to reenter the civilian workforce.” Like where are the quality programs? And I have to say, I don’t have one way of determining what’s a quality program versus what’s not. I think you should be suspicious of any school promises that you receive and try to verify them. But you’re going on faith. And I think the same thing is true for when people have exited their program and now they’ve got to repay the debt that, how do you learn what you’re eligible for?
I think fortunately for the audience here, like your lawyers, so you’ve got to leg up to look at the studentaid.com website to look at our website, the studentloanborrowerassistance.org website, to look at the student loan law manual, to look at the regs, to look at the law, but there aren’t a lot of good resources. I mean, a lot of people turn to their student loan servicer, and it’s a crapshoot whether or not you’re going to get good information from them. I think Suzanne’s office is now putting out more information. So, I think that would be a good place to turn to, but if they’re not in California, I think it’s really hard.
Suzanne Martindale: One thing I will add is that we are trying to ramp up our efforts to gather resources for borrowers to be a resource personally, but also to be able to refer people out as appropriate. We have already launched a massive student borrower outreach and communications campaign and have had a couple events already, are generating and developing and continuing to grow our list of community partners at the local and state level, a mix of private sector, nonprofit and government, grassroots organizations that play a role in empowering and helping people, helping empower their communities to navigate all of these challenges.
In addition, Governor Newsom’s budget includes a proposed $10 million, one-time appropriation to code to our department to help us, not only grow our communications and outreach work ourselves, but to also develop a grant program so that we can give money directly to community based organizations that can then increase their capacity to do individualized counseling with borrowers, whether it’s through a legal aid office or a credit counseling organization and so forth.
So that’s, again, forward-facing, hasn’t been approved yet. We’re actually testifying on it in the state assembly next week. But if that gets approved and starting July 1, our department’s going to be standing up a grant program so that more offices like Kat’s and Kyra’s and others can actually take individual clients and actually help them walk through and provide the kind of individualized counseling that government agency really can’t do. We can respond to formal complaints, but we can’t give legal advice. There is a bit of a line there. So, there is no one size fits all answer, but we are trying to do everything we can to try to amplify and expand the resources that are available to people to get individualized answers in counseling.
Amanda Prasuhn: Okay. I think this is going to be my last question before you wrap things up. I’ve gotten a couple questions in the Q and A about this waiver we’ve been talking about, does it automatically apply? Is there anything people need to do who think that they’ve actually done everything? They’ve already submitted PSLF forms to document their employment. They have direct federal student loans and an income driven repayment plan. Is this going to be automatically applied to their loans and are their PSLF loan payment counts going to be updated later on?
Suzanne Martindale: So, it’s going to depend, if you’ve already certified your employment going back to a certain amount, and so they know that you’ve been in a qualifying employer, to the extent they can automatically identify people who should be getting extra credit, they are doing it automatically. But if there’s a period of time where you never certified that period of employment, you’re going to have to take that step right now. I will say not to get anyone’s hopes up yet, but the Department of Education is trying to prepare and design a pathway for states to match data with them, to proactively identify people who work in the public sector at least. We are actively trying to make that happen so that someone who currently works in local or state government in California would be automatically identified, but no promises because there’s going to be a lot that we need to do to make that happen, but where they can automatically identify, they are giving some people automatic credit, but it’s going to depend on the facts and circumstances of what you’ve submitted to the Department of Education thus far.
Amanda Prasuhn: Perfect. Okay. I want to be able to wrap this up right at 2 p.m., so as we’re wrapping up, I want to thank you all for sharing your wisdom with everyone who’s here. And I want to give you the opportunity to plug, if you have any upcoming events or I know you’ve been sharing links in the chat, but if there’s anything you want to share with people who are here today, please do so now so they can register and follow you and keep up to date.
Kat Welbeck: I’m just going to drop the link to our forgive my student website that walks through this waiver process. So, if you have more questions about your specific situation, whether it’s, you have older loans, or you just need to submit a PSLF form, it should walk through those processes. And then also just to let you know, we do host monthly webinars on the PSLF waiver. We don’t have the date for our May webinar. Our link set up and the date set, but what I will do is I’ll email Amanda, once we have that set, but again, it just walks through step by step through that process. So, if anyone wants more information about the waiver, I’ll share that out.
Amanda Prasuhn: I’ve been attending your monthly webinars and they’re super helpful. So, I definitely encourage everyone to jump on one of those. Kyra, do you have anything to plug?
Kyra Taylor: So, I actually have a different thing to plug. I want to say that we have too few student loan advocates in the world and too few student loan lawyers. And so, because there are law students here, I just want to pitch that if you find yourself at a legal aid and you’re like, “Man, I want to do student loan log,” well, give me a call. And we will talk about what resources you need, how to set up a practice, other legal aid attorneys who are doing it really well and serving a large volume of folks, folks who are doing impact litigation in this space. I think there is a lot of really interesting work that’s happening and we need more brilliant minds in the mix. We have a lot of brilliant people in the mix, but we need more. So, I would propose that. And again, if you run into problems, if you see something, say something. You have all of our contact information, all of our websites, please reach out when you see that things are going wrong in terms of your own student loan account.
Suzanne Martindale: And to that end, putting my lecturer hat on, to help train up and help develop the next generation of student borrower advocates, since 2019, thanks to the sponsorship of Berkeley Center for Consumer Law and Economic Justice, I have been teaching a course every spring on student loan law. To my knowledge, it is the only regular course offering at any university on this topic, which is insane to me, but I’m hoping that other people replicate it in other schools. I’ve turned it into a pretty successful, one unit credit, no credit, but it gives you the overview of student loan law, higher education act, the consumer protection laws that apply, admin law, federal preemption, and all the basic kind of core legal concepts that really come to bear on the student loan landscape. So I’m assuming I can hopefully teach it again next spring. It’s not the university, it’s more like, can I fit it in on top of my day job, but I’ve so far been able to do it. So I’m teaching it every spring and keep eyes peeled if you’re a continuing student, because I hopefully will be able to teach again next year.
Amanda Prasuhn: Perfect. Thank you all. I do want to say that Suzanne and I are hosting a PSLF workshop in May, as the last part of my Demystifying PSLF series. So, the registration link for that is up on the LRAP website. Someone asked if this presentation will be recorded, it is recorded. I’m going to put that up on the LRAP website as well and send that out later. So I want to thank Kat, Kyra and Suzanne for being here today. It was so important to have you here sharing this information, and I hope everyone has a good rest of their day.
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