proposed PSLF and PAYE changes

[user3]

from the allo forum:

"This budget won't be passed but the text of it will surely be appropriated into whatever budget does get passed because neither Dems or Repubs care about PAYE/PSLF. So here's what it means for you:

• PAYE is now 25 year repayment period instead of 20 year
  
• PAYE payments for married borrowers filing separately would be calculated on their combined household adjusted gross income (so if you have a huge loan and a husband/wife who makes decent coin, don't get married!)
  
• Eliminates maximum PAYE monthly installment of standard 10-year repayment amount (now it would be 10% of your discretionary income regardless of income, screwing over high earners who were previously capped at whatever 10-year monthly repayment rate there was when they signed their repayment plan coming out of medical school)
  
• PSLF is now just a $57,500 coupon off your total loan indebtedness instead of loan forgiveness (also applies to current residents and attendings who graduated less than 10 years ago -- there's no grandfathering into PSLF -- so say goodbye to getting that 300k loan amount forgiven in 10 years)

Here's the DOE overview for those who want to see more:http://www2.ed.gov/about/overview/budget/budget15/justifications/s-loansoverview.pdf "

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[happypremed1]

Ha! that PSLF seems like a loophole--not many people know about it. Well it was too good to be true that you'll get loan forgiveness for working 10 years at a non-profit hospital. Almost all the hospitals are non-profit!!!

 

[NontradCA]

Rich get richer poor get poorer. That's how the world operates.

 

[Bill Brasky]

I was counting on PSLF. I should have know we'd get screwed by the austerity monster.

 

[sazerac]

These changes would only apply to those who take out their first student loan in 2015 (according to the post in the pharmD board and other sources) so these changes wouldn't apply to us.

Of course if you don't have a student loan yet, you could be royally screwed as your peers get hundreds of thousands of dollars in loans forgiven tax-free soon after residency, while you toil away under the burden of student loans for the next 25 years (e.g. when your children are taking out their own student loans).

If I was in high school I would seriously consider enrolling in a community college for a semester and getting a token loan just to qualify for the old PSLF program.

 

[doctorobvious]

These changes would only apply to those who take out their first student loan in 2015 (according to the post in the pharmD board and other sources) so these changes wouldn't apply to us.

I don't know if this is true. Here's what the bill says on page S-13:

Students who borrowed their first loans prior to July 1, 2015, would continue to be able to select among the existing repayment plans (for plans for which they now qualify and for loans originated through their current course of study), in addition to the modified PAYE.

That's the only mention of 2015 that I could find, and it's all about selecting IBR vs PAYE. It doesn't really state explicitly whether students with loans prior to 2015 would be grandfathered into the old PSLF. Seems doubtful to me.

 

[guylewis]

I don't know if this is true. Here's what the bill says on page S-13:



That's the only mention of 2015 that I could find, and it's all about selecting IBR vs PAYE. It doesn't really state explicitly whether students with loans prior to 2015 would be grandfathered into the old PSLF. Seems doubtful to me.

PSLF is a repayment plan so it would fall under "would continue to be able to select among the existing repayment plans". regardless this budget is a symbolic thing that has no chance of being passed. it's already been considered dead in the water

 

[DrBowtie]

PSLF is a repayment plan so it would fall under "would continue to be able to select among the existing repayment plans". regardless this budget is a symbolic thing that has no chance of being passed. it's already been considered dead in the water

PSLF is not a repayment plan. It is a loan forgiveness program after 120 payments made on the IBR payment plan.

 

[guylewis]

PSLF is not a repayment plan. It is a loan forgiveness program after 120 payments made on the IBR payment plan.

Well then if it falls under IBR then it should encompass what that quote was saying and thus include the PSLF to grandfather in those with loans taken out prior to 2015. Most people who I've read analyze this (dead on arrival) budget proposal have agreed that PSLF will be unchanged for those who have started taking out student loans before July 2015. Doesn't matter anyways, it's all moot, this budget ain't going nowhere

 

[DrBowtie]

Well then if it falls under IBR then it should encompass what that quote was saying and thus include the PSLF to grandfather in those with loans taken out prior to 2015. Most people who I've read analyze this (dead on arrival) budget proposal have agreed that PSLF will be unchanged for those who have started taking out student loans before July 2015. Doesn't matter anyways, it's all moot, this budget ain't going nowhere

It doesn't fall under IBR. They are completely separate.

PSLF is only APPLIED for after 120 payments with the earliest application to be made in 2017.

 

[guylewis]

It doesn't fall under IBR. They are completely separate.

PSLF is only APPLIED for after 120 payments with the earliest application to be made in 2017.

learned something new today

 

[DrBowtie]

learned something new today

It may be 2015 actually. It's been a while since I last looked at that stuff. (If I pretend my loans don't exist, they go away right?)

 

[guylewis]

It may be 2015 actually. It's been a while since I last looked at that stuff. (If I pretend my loans don't exist, they go away right?)

believe that's the "HItS" or Head In the Sand loan repayment program

 

[TheWeeIceMan]

It may be 2015 actually. It's been a while since I last looked at that stuff. (If I pretend my loans don't exist, they go away right?)

I think you were right the first time. PSLF was created in 2007.

 

[DrBowtie]

I think you were right the first time. PSLF was created in 2007.

Gotcha. The takeaway is that it may or may not be grandfathered.

I don't think I've seen any convincing evidence either way.

 

[guylewis]

Gotcha. The takeaway is that it may or may not be grandfathered.

I don't think I've seen any convincing evidence either way.

here's the official answer from the Department of Education when someone posed this question:
Question:
1) Will the Proposed PSLF cap ($57,500) only apply to New Borrowers after July 1, 2015 (and those who opt into the new program)? Or to all borrowers? Or all borrowers that use PAYE as a repayment plan (see question #2 for clarification)? This has been an issue of great concern for current borrowers and official clarification would be helpful. See [AskHeatherJarvis] [Boston Student Loan Lawyer Adam Minsky] and Comments in [New America Foundation]. Also, PSLF is a separate statute from PAYE, so how would ED/Congress change PSLF to only effect future PAYE borrowers? Would it create a new time period for PSLF or create new language in the PAYE program for a new PSLF program? If the PSLF statute (20 USC 1087e(m)) is changed to include the cap (without clarification), then it would appear to apply to all borrowers. Any guidance on this would help.

Answer: "For all new borrowers (with minor exceptions) starting with the 2015-2016 academic year the new expanded PAYE program will be the only income-based repayment plan available so the cap applies. For any other existing borrowers they retain the income-based repayment plan in their promissory note but if they choose to switch to the new expanded PAYE program, they have to accept all the conditions including the caps."

Source: http://educatedrisk.org/analysis/of...ed-budget-pslf-caps-paye-benefits-limitations



does anyone know if there is any mention of PSLF in the medical school promissory notes?

 

[happypremed1]

By April 5, 2014, Congress will vote on whether to cap the amount of direct student loans eligible for the Public Interest Loan Forgiveness program (also known as the Public Service Loan Forgiveness program) to $57, 500. Many students and loan recipients that currently work in public service and hope to take advantage of the program’s benefits have direct loans that exceed this limit significantly. However, if 10,000 signatures are collected by the April 5th deadline, then the cap will not be added. Please take the time to sign in to Whitehouse.gov and sign the petition – IT IS A VERY SHORT AND EASY PROCESS TO CREATE AN ACCOUNT AND SIGN. The link to the petition (@Whitehouse.gov) is:

https://petitions.whitehouse.gov/pe...orm-forgiving-all-qualifying-student/wkqnqBCH

PLEASE PASS THIS INFORMATION ALONG ON OTHER SCHOOL BOARDS AND SOCIAL MEDIA SITES TO GET THE WORD OUT – THERE ARE ONLY A COUPLE OF WEEKS LEFT!!!

For more information about the Public Service Loan Forgiveness program, go to:

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

I just signed the petition--first one in my life.

 

[guylewis]

By April 5, 2014, Congress will vote on whether to cap the amount of direct student loans eligible for the Public Interest Loan Forgiveness program (also known as the Public Service Loan Forgiveness program) to $57, 500. Many students and loan recipients that currently work in public service and hope to take advantage of the program’s benefits have direct loans that exceed this limit significantly. However, if 10,000 signatures are collected by the April 5th deadline, then the cap will not be added. Please take the time to sign in to Whitehouse.gov and sign the petition – IT IS A VERY SHORT AND EASY PROCESS TO CREATE AN ACCOUNT AND SIGN. The link to the petition (@Whitehouse.gov) is:

https://petitions.whitehouse.gov/pe...orm-forgiving-all-qualifying-student/wkqnqBCH

PLEASE PASS THIS INFORMATION ALONG ON OTHER SCHOOL BOARDS AND SOCIAL MEDIA SITES TO GET THE WORD OUT – THERE ARE ONLY A COUPLE OF WEEKS LEFT!!!

For more information about the Public Service Loan Forgiveness program, go to:

http://studentaid.ed.gov/repay-loans/forgiveness-cancellation/charts/public-service

I'm pretty sure no one in the administration nor the congress agreed that if a We The People petition reaches 10,000 signatures they will stop that part of the budget proposal. that's highly dubious. not to mention, the petition you link to already has close to 28,000 signatures on it. We The People petitions work like this: if you get 100,000 people to sign on to the petition within 30 days, that means that the White House has to make a comment on the issue being petitioned. just a comment from the white house, nothing more. they aren't a binding contract where 100k signatures means that the proposed legislation will change (it certainly will get the attention of the legislators that we are interested in a certain subject but nothing more than that).

previous We The People petitions that reach 100,000 signatures that required a white house response include:
building a Death Star (damn that would've been cool)
deporting Justin Bieber (I'm really sad this one wasn't legally binding)

by all means people, petition our government! but please don't believe that getting 10k signatures on this petition will mean that they will leave PSLF untouched.
with all that said, I will still sign onto this petition in hopes that it gives more attention to this important issue

 

[IlDestriero]

[*]PAYE is now 25 year repayment period instead of 20 year

[*]Eliminates maximum PAYE monthly installment of standard 10-year repayment amount (now it would be 10% of your discretionary income regardless of income, screwing over high earners who were previously capped at whatever 10-year monthly repayment rate there was when they signed their repayment plan coming out of medical school)

So, people that can afford to pay their loans should have to? WTF! That is pure horse shiet!
Revolution! Revolution!


I want my Obama phone too!

 

[rob554]

Wait, in what world did you guys see congress will take up this issue by April 5th? There's no chance a vote would happen that soon. There isn't even legislation that's been drafted.

 

[confettiflyer]

If it wasn't obvious already to anyone reading this, that post makes no sense and is factually incorrect on pretty much all levels. The person who posted it is spamming every forum with the link.

 

[DocEspana]

Wait, in what world did you guys see congress will take up this issue by April 5th? There's no chance a vote would happen that soon. There isn't even legislation that's been drafted.

This is correct.

The congress has to vote on the BUDGET on April 5th. That does NOT mean a single thing in the budget becomes law. It means that everything in the budget must then be actively debated (nothing can be ignored). Most budgets are passed without an issue. The republicans recently held the budger hostage by refusing to pass it because then they would have to theoretically "agree" to certain things. The reality is that you can go and vote down this thing when it actually comes to vote this particular passage down. Which will probably hgappen months from now.

The government has only the requirement to pass a budget. They have no requirement to adhere to it and ironically have a requirement to vote down any part of the passed budget that they later feel they dont like. The only thing they dont have the right to do is never entertain debate on a part of the budget (which, to be fair, is relevant. Debated things can pass or gain unexpected momentum, unlike the thousands of bills which die in committee and never see actual debate). Most washington analysits say this has a pretty low, but not impossible, chance of passing, but they have been totally wrong on similar things before (the elimination of subsidized loans for example).

 

[DocEspana]

Also the education department already released a comment that everyone who takes out their loans and sets up a repayment plan prior to the law's enactment (if its enacted at all) will have their repayment plan (including PSLF and PAYE timeframes) honored.

 

[user3]

Also the education department already released a comment that everyone who takes out their loans and sets up a repayment plan prior to the law's enactment (if its enacted at all) will have their repayment plan (including PSLF and PAYE timeframes) honored.

takes out loans AND sets up a repayment plan? does that mean anyone who does not graduate before this law takes effect will NOT have access to PSLF or 20 year PAYE?

 

[DocEspana]

takes out loans AND sets up a repayment plan? does that mean anyone who does not graduate before this law takes effect will NOT have access to PSLF or 20 year PAYE?

Honestly idk. Its tied to your master promisorry note, which is signed when you take OUT the loan. It does seem like it would be easier to connect it to when you begin repayment, but the education dept comment mentioned it would honor the options available in a promissory note. So its unclear to me.

 

[guylewis]

Honestly idk. Its tied to your master promisorry note, which is signed when you take OUT the loan. It does seem like it would be easier to connect it to when you begin repayment, but the education dept comment mentioned it would honor the options available in a promissory note. So its unclear to me.

well, the question I posed is this: is PSLF mentioned on the promissory note? because the dept. of ed. comment only states that PAYE and whatever is on your promissory note prior to 2015 will be honored. if PSLF is not on the note then that means that we might not be exempt from the change and that we will be subject to the 57k cap. again, this is all assuming that the budget even passes (which it won't).

 

[rob554]

The Education Department has responded and says under this proposal, the PSLF cap would not apply to current borrowers provided they do not change to the new repayment plan options.

http://educatedrisk.org/analysis/ed...oposals-combined-incomes-pslf-caps-paye-terms


3) Will existing borrowers on legacy (pre-7/1/2015) IBR, ICR, and PAYE payment plans who choose to stay on those plans and NOT convert to the new (post-7/1/2015) PAYE plan face the $57,500 cap on PSLF?
There was still a lot of confusion about whether the proposed Public Service Loan Forgiveness cap would apply to current borrowers, even with ED's previous statements. A reader suggested rephrasing the question to make ED's response clearer (see above).

According to a U.S. Department of Education spokesperson, current borrowers will not be subject to the proposed $57,500 cap on Public Service Loan Forgiveness. This cap will only apply to new borrowers after July 1, 2015 (if legislation mirrors the proposal). Current borrowers will only be subject to the $57,500 cap if they affirmatively opt into the new PAYE program. Borrowers repaying or applying for PAYE right now will not be subject to the cap.

Based on this explanation, it would appear that a current borrower would be able to apply for PAYE with current terms after July 1, 2015 so long as the loans were disbursed prior to July 1, 2015. Thus, current borrowers would be grandfathered-in for the life of their repayment. For a borrower that has some loans prior to July 1, 2015 and some loans after that date, then it could become confusing because some of the loans would subject to the cap while others would not.

 

[wjs010]

Good god this stuff is confusing.