Santa “Pause” Extends CARES Payment Halt
If you haven’t already seen it, President Biden (who we’ll call Santa “Pause” in the spirit of the season) extended the payment and interest halt on federal student loans until August 30th, 2023, or until 60 days after his plan is approved by the Supreme Court, whichever comes first. Now millions of you are back in limbo wondering when payments will resume, and how much you’ll owe.
The extension was a direct response to Biden’s loan cancellation program being struck down in court. This has set off a domino effect impacting several other areas of student loans. Let us explain:
Income-Driven Repayment (IDR) Recertifications
As a result of the CARES extension, borrowers in IDR plans prior to COVID will now have their recertification dates pushed back yet again, potentially all the way out to 2024. This impacts married couples who choose to file Married Filing Separately, or are considering doing so, for lower IDR payments. Since your most recent tax return will determine your monthly payments, if filing Separately is best for your repayment strategy we generally advise to continue doing so during CARES.
Cancellation and Forgiveness are NOT the Same
We’ve noticed the confusion on the part of some borrowers and in the media regarding President Biden’s cancellation plan vs. PSLF. Some are suggesting that positioning for PSLF is pointless because the court is just going to strike down the whole thing. Don’t confuse the programs here; Biden’s student loan cancellation plan has nothing to do with Public Service Loan Forgiveness, which was approved by Congress in 2007 and cannot be ended without legislative action.
A New IDR Plan
Finally, Biden’s big student loan announcement back in August also included the introduction of a new (and nameless as of yet) Income-driven repayment plan. The White House teased the plan highlights and said full details would follow in November, but we’re still waiting for clarity on several items left unanswered about the new plan, such as whether it offers 20- or 25-year forgiveness for grad students, how income will be assessed for married borrowers, and what calculation will be used for consolidated loans. We can only presume that these court battles have stakeholders completely occupied and that the new IDR plan is on the back burner for now.
PSLF Form Digital Signatures
BenElevate has recently upgraded our customer portal to produce PSLF Forms with digital signatures! If you’re an existing client, log in here to check out the new functionality under the “PSLF Forms” section. If you’re not an existing client, what are you waiting for? Register here. Our standard pricing for PSLF strategy, monitoring and compliance is just $30 per year if you register before 12/31.
We’ll continue updating this blog as things develop.