In this episode of “Finance For Physicians,” Daniel Wrenne and student loan expert Jeff Wenger unravel the complications surrounding student loan servicers. As student loan payments resume after a pandemic-induced hiatus, the duo highlights the emerging problems that borrowers, especially physicians, should be wary of.
From unexpected payment changes to incorrect income certifications and IDR anniversary dates, Daniel and Jeff share valuable insights into how to navigate these issues. They offer practical advice on how to handle problems with your student loan servicer and ensure you stay on track for loan forgiveness, particularly for Public Service Loan Forgiveness (PSLF).
If you want to stay informed about the latest student loan servicing challenges and safeguard your finances, this episode is a must-listen. Whether you’re a physician or anyone dealing with student loans, this conversation will provide you with the essential knowledge to avoid costly errors. Tune in now to stay ahead of potential pitfalls in managing your student loans.
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Full Episode Transcript:
Daniel Wrenne: Jeff, what’s up, man? Hey, Daniel. How have you been? I’m good. We got some emergency student loan stuff to talk about. Unfortunately, I was hoping that all of this, first of all, they’ve changed about a zillion things and everything’s turned back on after how many years of being off?
Jeff Wenger: Oh man, it’s been since March of 2020.
So three and a
Daniel Wrenne: half years. Yeah. So it’s like it was off for three years and while it was off, they changed like 8 zillion things. And then it’s just getting all turned back on right now. So, I mean, I was hopeful that there wouldn’t be any problems, but it’s kind of a little bit of a recipe for problems I would say to exist.
So, unfortunately we’re starting to see. Some signs of some problems brewing. So we wanted to make sure and pop on here quick and talk about what those are. So Jeff, you want to kick us off with what you’re seeing?
Jeff Wenger: Yes. So I guess what a [00:01:00] surprise that, You know, Daniel and I, we, we’ve had the pleasure of dealing with student loans for years now, but that a servicers that are trying to hire up a brand new individuals and get payments restarted are not doing things correctly.
Whoa, the prize, right?
Daniel Wrenne: A big surprise. This is orgasm.
Jeff Wenger: So I will hopefully have some patience you deal with your servicer, but there are some issues that we’re seeing right now that I think are very important to and that is payments. Are not always showing up on your new servicer or as they’re being restarted the way that they should be.
In fact, they’re showing up quite a bit higher in many cases right now.
Daniel Wrenne: Yeah. So warning sign or like red flag, if your payment is not what you had expected it to be, that’s like time to dig in. Or another like signal that there’s a problem is like, you’re not paying anything and you thought you were going to.
Cause like maybe they kicked you into forbearance or something like that.
Jeff Wenger: Yes. So [00:02:00] just to give some really brief background, as payments resume, For most individuals should be resuming at the same level that they shut off at. So unless you’ve done anything in between, like go to a new payment plan or consolidated something like that, the payment should be the exact same.
and so if you are looking at you, if you have federal loans, you need to go to your servicer, see what the payment shows. And if it is not what you expect. Now it’s time to do a little bit of research. can I set this up with a quick case study here, Daniel? Sure. Yeah. So, case in point right now, we have one family that we’re working with and it’s not an isolated case by any means.
So I don’t think that this is a one off thing. We see this from a lot of other financial planning and student loan planners across the country, but this individual had 0 payments going into the pandemic. I certainly would be expecting that no other action really had been taken other than [00:03:00] employment was certified for PSLF.
So that’s the only thing that happened. Nothing that would change a payment. No
Daniel Wrenne: income information provided during.
Jeff Wenger: Right. Nothing has changed other than that one item. And so now. In this case, it is Mohela that is the company they’re dealing with, but, and it does sound like there are more issues with Mohela than some of the other ones, maybe because they deal with more loans, but the payment that they received or that they were supposed to start paying was listed at 3, 000 a month, which is quite a bit different and a little bit shocking compared to expecting 0, right?
And so that is the case. Now,
Daniel Wrenne: if you’re going for PSLF, that’s like. Well, it’s kind of shocking to be like, man, I wasn’t ready for 3, 000 a month when I was planning on zero, if you’re going for PSLF, that’s especially disheartening because you’re like, man, I didn’t want to throw 3, 000 out the window every month.
Jeff Wenger: And so here’s the deal though. Here’s the, an issue that we’re seeing is that if you call into Mohila to say, Hey, what’s the deal right now? Uh, you know, I was expecting a much lower payment or no payment at all. The status quo right now is that borrowers are being directed to recalculate their payment based on current income.
So they’ll say, Hey, maybe guess what borrower there is this new plan and maybe we should give our borrowers a name like John and Sally. Hey, Sally, you know, here’s the deal. There’s this new save plan. And yeah, you could probably get a lower payment by applying for that. or, you know, yeah, you’re right.
Now your, your payment plan should be lower than 3, 000 a month. we can recalculate that we can, we can do that for you. The issue right now is that would require updated income information. And so if you [00:05:00] were in this case, I know we’re speaking finance for physicians here. if you were finishing up residency or in residency in 2020, you know, as things were, were shutting down, your payment may have been 0.
But now we’re three to four years into practice and your payment would be much higher. So we don’t want to see that payment increase based on new income right now.
Daniel Wrenne: Yeah. That could be the worst possible thing to recertify to get this cleared up.
Jeff Wenger: But yeah, so the answer that we’re receiving from phone calls or the steering that’s going on there right now is go ahead, let’s recalculate your payment.
We can do that. Yeah. However. That’s not the correct action in many cases right now. I guess maybe it’s helpful to go through what is supposed to happen as student loans resume here. And we said that that should be the same payment that was in place when the pandemic pause began.
Unless there are a few occasions that that may change if you had [00:06:00] recertified income in between and now that payment should be in effect until your next income driven repayment plan anniversary. So when you would normally have to certify income during the pandemic during the pause, no one has been required to recertify their income.
And so what that means is right now on the files that certain servicers are receiving. Some of those dates still show up as August of 2023. There was an income certification anniversary or September of 2022 was the anniversary of that. And my, what we see right now is that that may be triggering the servicer now to say, Hey, you are past due on your certification.
Daniel Wrenne: So what you’re thinking is triggering this whole way. It’s inflated payment coming up.
Jeff Wenger: Yeah. And the cases we’ve seen so far, it’s, there has been a, an old income driven repayment anniversary date in the [00:07:00] file. So I think
Daniel Wrenne: it’s important to say the file. What are you talking
Jeff Wenger: about?
Oh, the file. So there is on studentaid. gov a master file of. Basically your entire federal student loan history called my aid data. And so if you look into that file and if you do find that file, it’s right underneath your profile on studentaid. gov. There’s one that says my data. if you open that up, you were going to say nobody wants to look at this file.
It is a dot TXT document. So most people open that up and like, Oh, what’s this? So you’re in, that’s what you want. But that is the file that has, Basically your entire student loan history there. In a format that is almost unreadable unless you know what you’re looking for, but it does have what your payment plan is, is it has what your scheduled repayment amount is supposed to be.
It has your anniversary for certifying income as well.
Daniel Wrenne: Yep. So you can control F [00:08:00] I tell you do search, right? Control
Jeff Wenger: F. Yeah. At least on windows. I’m not
Daniel Wrenne: cool. Yeah. I don’t know apple, but if you’re windows, you, you do, you open that document, you control F. You could search for what IDR anniversary.
Jeff Wenger: Yeah.
Anniversary would, would get you
Daniel Wrenne: anniversary. And then that’ll show you your date when they have in the system that you’re supposed to recertify income. Right.
Jeff Wenger: And so the rule there right now is no one is required to recertify anything until at least March 1st of 2024. So March 1st of next year. at this point is the earliest that you would have to recertify income.
If you have a date that falls between now and March 1st, or I guess anytime it would actually get pushed out an entire year then. Yep. So it is possible. March 1st is the earliest that you could have, you would have to recertify, but you could still keep the same payment as long as[00:09:00] February 28th, unless it’s a leap year.
I’m not sure what 2025 is. It’s an odd year, so it’s not a leap year. So February 2028 or 2025, you could potentially not have to recertify income to
Daniel Wrenne: until. Well, right. It’s a little concerning that we, that’s what the rules say, but the servicers are like, nah, we’re going to charge you.
Jeff Wenger: Right. And so that’s where I guess, I guess this is a working theory, but from the cases that we’re seeing where this is grossly incorrect, that date is still showing as in the past
Daniel Wrenne: and on the file on the giant student loan file,
Jeff Wenger: right on the giant student loan file.
Daniel Wrenne: so, so you can look for that. That’s another warning sign. If you see, if you go pull that file up and you see that your date is old for your IDR anniversary. That’s a sign that the servicer might not have updated records correctly or have incorrect dating and therefore consider you [00:10:00] overdue or whatever.
Jeff Wenger: Right, right, and to make things more interesting, on studentaid. gov itself, where you can look up when do I have to recertify my IDR plan, there is a FAQ, Frequently Asked Questions section there, that says, it spells out the earliest that you’d have to do this is March 1st, and then it goes on to say, on your account.
My aid page. You may still see a recertification date. That is earlier. We’re working on it And we thank you for your patience. So they know that it’s this is happening at the Department of Education Yeah, you would need go But that communicating to the servicer who has brand new employees that are trying to take care of all this stuff right now is not leading to correct outcomes,
Daniel Wrenne: right?
So, yeah, just, you just want to be super careful because I would hate to see people recertify income, like following the servicer that doesn’t know exactly like the servicer that’s brand new that doesn’t know this [00:11:00] stuff says you need to recertify income to fix this. That’s like the worst thing possible you could do because that kind of like, I don’t know, I mean, that would be a lot harder to undo, I think.
Jeff Wenger: Yeah, that is an, yeah, that’s exactly the issue is once you’ve gone through that process, now you’ve granted access to new income information, to studentaid. gov, and, it’s going to be very hard to get that reversed, uh, maybe not get that reversed because, Technically you have voluntarily recertified your income.
Daniel Wrenne: Yep. So the best thing to do is call the servicer. If you’re noticing you’re having these sorts of issues on your student loans, like the payments, not what it’s supposed to be, or forbearance happened or your, your ID or anniversary. Date is wrong. call the servicer or if you’re working with us, you reach out to us and we can start to look at it for you as well, but calling the servicer and then they’re going to tell you to recertify your income.
It sounds like, and you have to be persistent [00:12:00] about. No, it’s actually, I’m not going to do that because I don’t have to.
Jeff Wenger: Yes. So be kind, but be firm that, yeah, no, I do not want to recertify my income. I do not want to recalculate my payment. And I think probably going in with just a few facts to that conversation is important first of all, I guess, first of all, if the difference is not that big, I do not know that I would be personally making a call.
To get it corrected right now,
Daniel Wrenne: like if it’s five
Jeff Wenger: bucks or 10, it’s five bucks or 10 bucks, or you can place your own value on time or, or payments, but 50 bucks, something like that, if it’s lower, I probably wouldn’t be calling very possible. So under some of the new payment plan or under the new payment plan, it’s possible that your payment was recalculated and it’s lower because of that.
so. I would not argue with that and I wouldn’t call in and try to change that. But if you have [00:13:00] a gross mistake or material mistake here with the payment amounts, thousands of dollars would certainly qualify.
Daniel Wrenne: Like the case study you gave is 3, 000.
Jeff Wenger: Yeah, so this was supposed to be zero coming in at 3, 000.
You need to know what you’re just number one, know that payments are supposed to resume at the pre pandemic paused amount. And so if you know what that payment is, document that you can get your scheduled payment from that file as well. The aid data file for that, you’d actually have to go through each individual loan and add up the total.
Or if you’re working with somebody like us, we’ll we’ll be able to macro that and get it a little bit more readable and take it quickly from there, but no way. Your payment’s supposed to
Daniel Wrenne: be. Yep. So know your payment’s supposed to be. And then also you got to stay firm on this rule that they, that you don’t have to recertify until at the earliest March 1st, probably later.
I mean, it [00:14:00] depends on when you’re. Last date was.
Jeff Wenger: Yeah. At the very least you can go to studentaid. gov or point to it and say, look, it says right here, the earliest we’re required to certify is March 1st, 2024. if you want to have a more certain date, you can go into that file and find it. But you know those two facts, and then you need to be persistent in having them correct it, not recalculate anything.
Daniel Wrenne: Awesome. Alright, well, hopefully this is the last time we have to get on here and talk about problems.
Jeff Wenger: Oh, boy. That wasn’t a joke, Daniel.
Daniel Wrenne: Eh,
Jeff Wenger: But yes, I do hope. I certainly hope. I really, I expect that in the coming months, things will get a little bit better as both new representatives at these companies that are staffing up, get some experience trial by fire, really.
And then also hopefully some of these other issues with the [00:15:00] dates and things being corrected in the files themselves. Lend lend themselves to a better operation
Daniel Wrenne: overall, but yeah, it reminds me, we were talking about this before we started recording. It reminds me it’s the exact same sort of issues that used to happen all the time back, especially back, like in the 2010, 2015 timeframe, like early in on PSLF, the servicers just didn’t really.
Understand it well enough. It was a complicated program that they rolled out, especially ’cause they tied it to income and you call the servicer and they’re like, well you know, I don’t really know how to calculate your income . Or like, I don’t know which plan is best. Like, or you know, I’m not sure why it went in forbearance.
And it was just like, it was mistakes all over the place and the servicers really didn’t know what was going on. ’cause there it was a bunch of, 22 year old straight out of college that there would be no way they would know what was going on. You just can’t learn a complicated system that fast.
Jeff Wenger: Yeah. And that’s why [00:16:00] give them grace, but be firm, um, in, in what you know, and what your facts are, because it’s complicated and it’s not, not easy to navigate.
So know your facts, know what you don’t want to happen when you call in and be, be persistent.
Daniel Wrenne: Awesome. All right, Jeff. Well, it’s been fun as always, and, we’ll look forward to talking next time. All right.
Jeff Wenger: I’ll see you
Daniel Wrenne: soon. All right, Jeff.