Blog

Free Resources for Student Loan Help

There are free resources out there to help you with your student loans. For many people, these resources are enough to set them in the right direction.

Are you trying to figure out how much you owe and how to pay it back?

If all your loans are federal loans, you can can set up an Federal Student Aid account and see all your federal loans at one time. Within this account you can use their repayment estimator to get a sense of what you might owe.  You can also use the estimator without an FSA login to ballpark repayment amounts.

However, the repayment estimator has its limitations, and may not be that helpful if you are already in repayment and looking to switch plans or if you have complex questions about the best income-driven repayment plan for you.  If you want to run the calculations for yourself, you can check out my series on the various repayment plans

Student Loan Repayment Plans – Part 1, Fixed Balance-Driven Plans

Student Loan Repayment Plans – Part 2, Graduated Balance-Driven Plans

Student Loan Repayment Plans – Part 3, Introduction to Income-Driven Plans

Student Loan Repayment Plans – Part 4, PAYE (Pay As You Earn Plan)

Student Loan Repayment Plan – Part 5, IBR (Income Based Repayment)

Student Loan Repayment Plan – Part 6, RePAYE (revised pay as you earn)

There’s a lot of detail there, but if you’re looking for even more, Equal Justice Works has an excellent free ebook for public interest attorneys that works just as well for every other type of borrower.

You can also check out Student Loan Borrower Assistance, a project of the National Consumer Law Center or The Institute for Student Loan Advice (TISLA).

You should also consider calling your servicer (NelNet, Navient, FedLoans, etc.) and asking them for options.  But be aware that we have seen servicing issues throughout the industry, so be sure to verify what they tell you with independent resources.

If you have private loans, you will have to talk to your lender / servicer to learn about repayment options.  Under private loans, you won’t have as many options as under the federal plan.

Are you having an issue with your servicer?

If you have called and re-called your servicer over a dispute and not gotten anywhere, it may be time to try a different approach.  The Department of Education has an Ombudsman office that you can use to escalate a dispute with your student loan servicer.  Write a clear letter explaining the issue and submit it here.  In the past, my clients have had the most success with using the online portal option — response times seem to be faster that way.

Are you worried about qualifying for Public Service Loan Forgiveness?

The basic PSLF checklist is (a) right type of loan on (b) the right type of plan while working (c) the right type of job.  Learn ore about each of these requirements with the PSLF FAQ here.

If you were paying on the wrong type of repayment plan, you can potentially qualify for forgiveness under the Temporary Extended PSLF Program.  You can learn more of the details and apply for that program here.

Are you in default?

When you are in default it’s important to bring the loans back into good status so that you don’t get a wage garnishment. Although you may have to pay some amount of money (it can be as little as $5) for the initial months, it may be possible to get your loans into a $0 repayment plan depending on your income.  Typically your options are either consolidation or rehabilitation to get out of default.  You can read about the pros and cons of these options here.

Be aware that your servicer is paid money to bring you out of default and that the payment amount depends on the option you choose.  In other words, your servicer may not suggest the option that’s in your best interest.  Do your own research on the best way to get out of default.

Are you considering refinancing?

Private refinance companies are increasingly reaching out to federal borrowers to entice them to refinance into private loans at lower interest rates.  Be sure you understand the tradeoff before you agree to refinance.  You lose all federal benefits and cannot take those balances back into the federal system.  Still, some people find it to be the best option in the long run.  I’m not against refinancing, I just want borrowers to know exactly what they are signing up for before they do it.

Do you have issues with your for-profit school?

You may want to speak to the Harvard Project on Predatory Student Lending, or your local legal aid society.

If you’ve submitted a borrower defense application and are waiting to hear back, you can share your experiences here as part of a lawsuit arguing that the Department of Education needs to begin processing applications.

Do you want to learn more details on the economics and disparities in student loans? 

Student loans are the consumer finance issue of our times.  Whether you have student loans or not, you are likely affected by mounting debt loads, which topped 1.5 trillion this year.  Moreover, student loans mirror the disparities of race and gender that we see across the economy.  You can read more about the economics of student loans here, here, here, here and here.

Have you been affected by the delay in processing borrower defense applications? Have your story heard.

Screen Shot 2019-06-27 at 3.23.44 PM

Borrower Defense Application from the Department of Education

There are tens of thousands of borrowers have applied for what is called “borrower defense.”  These borrowers are arguing that they shouldn’t have to pay back their student loans because of fraud, forgery, or, in many cases, because of misdeeds by their school.

These borrowers went to places like ITT Tech or Corinthian Colleges, which were ultimately revealed to have a long track record of misleading their students.  These schools claimed the educations they offered would lead to better jobs and better salaries.  Instead, these for-profit schools left students in debt without the needed credentials to pursue their career.

Under federal law, borrowers have the option to apply for discharge because of these misdeeds, but the Department of Education hasn’t processed a single borrower defense application in more than a year.

Earlier this week, the Harvard Project on Predatory Student Lending sued the Department of Education this week for their failure to process applications.

Have you been affected by this issue? If so, you can participate in the lawsuit by submitting your testimony about your experiences with borrower defense. 

 

Should you stop paying your student loans because of the Sanders or Warren forgiveness plans?

No.

.

.

.

.

.

.

.

Okay, it’s not quite that simple.  Yes, you can absolutely use the suite of tools available to you to lower your monthly payments if that is what you need for your household budget, or if that is what makes sense for PSLF.  But, please, don’t stop paying your loans altogether — let alone go into deferment or forbearance or default — on the hopes of one of these plans passing.  It’s just too far in the future to bank your finances on.

Pro Bono Work on Housing and Lead Poisoning in Cleveland

Maurer Law LLC is proud to serve the Cleveland community through housing advocacy and pro bono eviction defense, particularly focused on lead poisoning.

Because of Cleveland’s older housing stock, the City has the highest rates of lead poisoning in the state and among the highest rates anywhere in the country.  Currently more than a quarter of Cleveland kindergartners come to school with a positive lead test above the CDC’s recommended levels.  Even low levels of lead can cause cognitive and behavioral problems that last a lifetime.

In 2017, while working at the Legal Aid Society of Cleveland, Rebecca Maurer was one of the attorneys who sued the City of Cleveland for its handling of lead poisoning cases, resulting in a victory that helped Cleveland tenants identify homes that had previously poisoned a child.

In 2019, Maurer worked with a community advocacy group that hoped to pass a law making Cleveland’s housing stock lead safe.  Coverage of their progress is available here and here.

Maurer continues to take pro bono eviction defense cases referred through community partners including Slavic Village Development, the Housing Center, and the Legal Aid Society of Cleveland.

What happens if SLS considers integrating its LRAP program with federal public service loan forgiveness?

I recently heard from an SLS ’18 graduate that Stanford Law School might consider integrating it’s LRAP program into the federal public service loan forgiveness (PSLF) program.  The current 2019 LRAP program manual does not mention this transition, so hopefully it is a long way off, if it is planned at all.

Nevertheless, current students and recent graduates might want a primer on what such a change would mean.  In my work, I help borrowers who are hoping to qualify for federal public service loan forgiveness (PSLF) and I’ve also helped other SLS alumni who are enrolled in our LRAP program.  Since I’m well versed in both programs, I want to explain both programs and lay out the issues the SLS administration would face if they want to transition to PSLF for future graduates.

The bottom line is that SLS’s current LRAP program is more generous and flexible than PSLF.  However, PSLF might save SLS and students some money if they end up with mid-range salaries and they are committed to staying in the program for the full 10 years.

Stanford’s Current LRAP Program

Stanford’s current LRAP program assumes that students will pay off their entire loan balance in 10 years.  Stanford calculates the amount you would have to pay each month to pay everything off in 10 years, subtracts an expected contribution based on the your salary, and then gives the you the difference as a lump sum.  You can read more about the program here.

Public Service Loan Forgiveness 

Public service loan forgiveness is a federal program that will forgive student loan balances on eligible loans after borrowers make 120 on-time payments while (1) enrolled in the right type of repayment plan and (2) working for a 501(c)(3), government entity, or other specified organization.

Generally speaking, borrowers who utilize PSLF will enroll in an income-driven repayment plan, which will peg their monthly payment to their salary, regardless of their loan balance.  As a result, loan balances can grow over the course of 10 years.  But so long as borrowers stay in eligible employment, the entire balance will be forgiven at the end of the 120 payments.

PSLF vs. LRAP

Here is the simples set of assumptions you can use to compare Stanford’s LRAP program with the federal PSLF program.  Here, we assume that the graduate is single and her salary stays relatively low for 10 years.  We are assuming she has $150,000 in debt at an average interest rate of 6.8%.

As you can see, Stanford current LRAP program helps the graduate pay down her loans over 10 years.  However, the PSLF program is negatively amortizing — meaning the loan balance continues to grow until the borrower reaches the 10th year and gets forgiveness.

Screen Shot 2018-10-29 at 5.38.47 PM.png

(Technically the loan balance under PSLF might not rise quite that quickly because of various interest subsidies, particularly available in the first three years.  But the long story short is that the loan balance will grow under PSLF)

Update: When I first posted this, I heard from another recent graduate who explained a little bit more about how SLS is thinking of combining PSLF and LRAP.  If I’m understanding correctly, SLS will cap the monthly amount at the PSLF-eligible income-driven plan but will not pay more than they would have paid under traditional LRAP.

If the student ends up with a higher starting salary, this certainly lead to long-term savings, so long as the student abides by all the PSLF rules for 10 years.

Screen Shot 2018-10-29 at 11.46.14 PM

Particular Issues

I don’t have any more details about how, if at all, the administration would want to integrate PSLF into LRAP.  There are numerous issues to consider.  But I want to focus on a few of the most important ones.

(1) How would SLS handle students who leave PSLF-eligible employment midway through the 10 year repayment period?

Currently, Stanford’s LRAP program supports graduates who spend as little as 1 year in public service.  However, transitioning to a PSLF program would penalize any student who did not stay in public service for at least 10 years unless some type of lump sum payment was available.  Because the PSLF program is often negatively amortizing, an alumni could owe more money upon leaving public service than when they graduated.

How will SLS handle students who leave qualifying public service after one, two, five, or even nine years of service?

Currently SLS’s administration believes that even one year of public interest work is worth supporting and they demonstrate that support through LRAP funding on a year-to-year basis.  By comparison, other schools require that you stay for a minimum of 3 or 5 years to get LRAP funding.

If the administration still holds this believe, it will need to outline a plan for how handle students who leave a PSLF-based program before they qualify for forgiveness.  If SLS no longer wants to support students who wish to spend less than 10 years in public service, then that is a sharp narrowing of the program’s guidelines.

(2) How will SLS handle servicing errors by FedLoans?

I have yet to work with a PSLF borrower who hasn’t had some type of disagreement with FedLoan Servicing, the federal servicer that handles all PSLF-eligible federal loans.

FedLoan’s numerous problems have been documented elsewhere.  But for starters, FedLoans frequently miscounts the number of qualifying months and delays processing annual recertifications, causing borrowers to lose months of eligible repayment time.  Moreover, FedLoans dings borrowers who try to pay extra onto their loans and are put into “paid ahead” status.  The 120 PSLF payments are supposed to be on time, and FedLoans will count it against you if you’re either late or early.

Is SLS prepared to continue paying graduates’ monthly fees if FedLoans’ errors cause a delay in forgiveness?  I would bet that at some point in an PSLF-based LRAP program, a student would believe they are eligible for forgiveness, and FedLoans would say that more months’ worth of payments are required.

(3) How will SLS handle students enrolled in private public interest law firms?

Currently the SLS administration supports students who work at private public interest law firms.  However, these students would not be eligible for PSLF because a private public interest law firm is not qualifying employment for the federal program.  Is the administration still willing to support this type of public interest work with LRAP money? If so, will private public interest graduates stay in the traditional LRAP program while other students are moved over to PSLF?  I think this raises many fairness issues.

Again, if the administration no longer wishes to support work at private public interest law firms, that will be another narrowing of the LRAP program.

Conclusion

I wrote this as a primer for people who were interested to learn more about LRAP vs. PSLF.  If the administration decides to to move in the direction of a PSLF-based LRAP program, I want students to be conversant enough in the issues to get answers to these questions.

5 Questions to Ask if Your Company is Considering a Student Loan HR Benefit

Recruiting and retaining top talent means offering a competitive benefits package, and increasingly that means offering a student loan benefit. However, in my conversations with EAP providers and others in the HR benefits industry, I find that few groups are familiar with the ins-and-outs of the various benefits and platforms available.

In the coming weeks, I will be writing more about what to look for when analyzing student loan benefits platforms. But before beginning the procurement process, companies should do some introspective work to figure out what they might be looking for.

Any company considering a student loan HR benefit should ask themselves these questions to get started.

1) What financial resources do you have to dedicate to a student loan benefit?

Student loan benefits range significantly in how expensive they might be. The first thing you need to decide is what type of money you have to invest in a student loan benefit.

If funds are limited, you may want to look at non-monetary options like refinancing partnerships (i.e. contracts with banks that will help your employees refinance to lower interest rates). However, as discussed below, refinancing partnerships come with drawbacks.

Alternately, if you already have a retirement plan in place, one way to lower the net expense is to institute a program that diverts funds from a retirement matching program to a student loan matching program. However, there are tax implications for both the company and the employee to doing so. I’ll be discussing these issues more in depth in future posts.

2) Are you willing to re-write your retirement plan or would you like to keep your student loan benefit separate from retirement savings?

Some companies are making 401(k) contributions based entirely on their employees student loan payments. This match can be an extremely attractive offer from a recruiting perspective. Additionally, this structure can help you keep your expenses low because employees can take advantage of the match either through student loan contributions or through 401(k) contributions, but not both. However, implementing a 401(k)-based student loan benefit requires re-writing your retirement plan and preparing for IRS oversight of the program.

3) Do your employees tend to need better interest rates or better knowledge of the federal programs?

Private refinancing is all the rage in the student loan benefit space. In recent years a swarm of refinancing options have popped up, offering borrowers competitive interest rates that are sometimes 4-5 percentage points lower than their federal student loans. Some companies have partnered with these refinancing entities to offer even more competitive rates to their employees.

To figure out whether you should emphasize private refinancing in your student loan benefit, ask yourself whether your employees tend to need better interest rates or better knowledge of the federal program.

If your company pays competitive salaries in high-demand fields such as technology or law, it is very likely that the majority of your employees will be hoping to pay off their loans as quickly as possible to lower the interest they pay over the life of the loan. If this is the case, a private refinancing partnership will help your employees to save money.

Of course, employees lose access to federal benefits when they privately refinance, so it is not always the best option, even for highly-compensated borrowers. Financial counseling and advice may be preferable to a refinancing option (or an addition to a refinancing option) if your employees would benefit from staying within the federal program.

4) Is stress relief and employee wellness a goal of your student loan benefit?

Twenty years ago, health and physical wellness outside of work were not a concern for HR departments. These days you would be hard-pressed to find a competitive HR department that isn’t thinking through stress, health, and wellness inside and out of the workplace.

Student loans can absolutely be a stressor for the modern-day workforce. 81% of employees with significant student loan debt report being stressed about their financials. 55% of those same employees report being distracted by their finances at work.

If these numbers are concerning to you and you see the student loan benefit as a wellness benefit, be sure to include financial counseling and advice as part of whatever platform you choose. While a monetary benefit can be a huge help, for borrowers buried under a mountain of debt, control and empowerment can be just as needed as a bit of extra cash.

5) Do you want to use your student loan benefit as an incentive for retention?

A student loan benefit can be an opportunity for both recruitment and retention. In an effort to incentivize long-term commitment to a company, some HR departments have offered vesting student loan benefits. For instance, a company might offer to make 20% of a student loan payment in an employee’s first year, 40% in the next year, and so on.

This structure can be a powerful retention tool. Alternately, it can disincentivize new hires who will not immediately reap financial benefits — or anger veteran employees who had to pay their student loans on their own.

Deciding internally how you want to balance the various goals of your student loan benefit will drive your procurement process and help shape your evaluation of the platforms and programs available.