Navigating the Shifting Student Loan Landscape

We are closely monitoring the developments in the federal government as the current administration attempts to consolidate its power and downsize the federal workforce. One such development that we are paying particular attention to is the downsizing of the Department of Education. After about half of its employees were abruptly fired on March 11, and as rumors swirl of an executive order shutting down the department entirely, student loan borrowers have expressed concerns over the status of their loans.

This uncertainty extends beyond the Department of Education. Last year, two lawsuits were filed in an attempt to block, limit, or strike down student loan forgiveness with a particular focus on the new SAVE Plan, which President Biden had created via Executive Order. These lawsuits argued that, because the SAVE Plan was not created by an act of Congress, any loan forgiveness offered by the plan would constitute overreach as the Executive branch administers Congress’s power of the purse. This has prompted the question from some legal experts about whether income-driven repayment plans or loan forgiveness are constitutional in the first place, throwing the entire student loan landscape into flux. At present, the Department of Education is under a “stop work order”, and all loan forgiveness has been temporarily stopped.

Because of the shakeups at the Department of Education, and because of the increased legal scrutiny on all forms of loan forgiveness, borrowers are encouraged to be their own advocates. We recommend taking the following steps:

1.) Even while forgiveness is paused, we recommend that you continue making payments for as long as you are able.

• As you continue to make payments, keep detailed records of your payment history.
• You can download a plain text (.txt) file of your federal loan, grant, enrollment, and contact information by logging in to StudentAid.gov. (Find step-by-step instructions here.)
• This is particularly important if you are on an income-driven repayment plan. No one can be certain, but there is a risk that if the Department of Education is shut down, many of the records related to qualifying payments toward forgiveness could be lost, too.

2.) In addition to downloading your payment history, we recommend that you download all of the terms & conditions for your loans, including all of the “legalese” that came with the initial loan paperwork.

• Experts say that the terms and conditions of your federal student loans cannot change even if the agency overseeing them does. Your rights were guaranteed when you signed the master promissory note when your loans were originated.
• Therefore, it is important to keep a record of what those rights are so that you can push back against any unfavorable changes to your loan terms.

3.) If you are approaching your forgiveness date under the PAYE plan or any other Income-Contingent Repayment (ICR) plan, we suggest looking into a different repayment plan in order to qualify for forgiveness.

• Income-Based Repayment (IBR) is a safer option compared to others, but the other options are still viable long-term. In order to utilize the PAYE or ICR repayment plans, you just might have to wait out this administration.
• Don’t take any irreversible action until we’ve had a chance to think it through together.

Most borrowers are likely to experience a bump in the road as the Department of Education downsizes. Potential issues include:

• Longer wait times on the phone.
• Slower website access and longer processing times on applications and other paperwork submissions.
• Inaccurate or outdated information related to your loans and income-driven repayment plans on federal government websites.

While these are uncertain times, you can remain in control of your situation by maintaining clear records and being your own advocate. Your Yeske Buie team is also here to help. If you have questions about any communication you receive from your student loan servicer or from the Department of Education, please pass them along and we’ll be happy to think through it with you. Let’s chat before you make any final decisions if action is required.