What ODs need to know about the Student Loan Payment Re-start & Debt Cancellation

This article was edited on 11/9/22 to include a link to the Workshop recording.

On August 24, President Biden announced the extension of the student loan payment holiday through December 31, 2022, along with up to $10,000 in student loan forgiveness for borrowers making less than $125,000 (for individuals) and $250,000 (for married couples or heads of households).

This means, thousands of AOA members may be required to resume payment and may begin accruing interest on federally held student loans for the first time in over 2 years. AOAExcel has teamed up with Laurel Road to provide a free workshop to assist AOA members in navigating the end of the student loan payment re-start.

This live-event workshop will cover topics such as:

• How ODs can position their student loans during interest rate uncertainty
• What the federal student loan payment & interest pause means for ODs
• Explanation of the federal student loan forgiveness as it pertains to ODs
• What is student loan refinancing – are you eligible? Could you save by refinancing? Will refinancing affect your credit score?
• How AOA members can save up to 0.25% by refinancing with Laurel Road ¹

AOA members are encouraged to bring their own individual questions about student loans and have them answered live during the workshop. AOAExcel will also be giving away an attendance prize of a Nike Dri-Fit® Zip-Up!

VIEW WORKSHOP RECORDING

This workshop has aired since this article was published. You may view the workshop by clicking the button above and utilizing passcode: *%nsSs0f

What is the Student Loan Payment Re-start?

Back in March 2020 Congress passed the CARES Act which suspended student loan payments, stopped the collection on defaulted loans and reduced the interest rate to zero on qualifying federal student loans (sometimes referred to as the Student Loan Payment Holiday, Student Loan Federal Interest Pause, or Student Loan Payment Freeze) in order to provide relief during the start of the pandemic. Originally, this payment & interest freeze was set to expire on September 30, 2020. However, this deadline has been extended several times throughout 2021 & 2022 with the final extension ending on December 31, 2022.

What Happens Next?

On January 1, 2023, all payments on federal student loans will resume their pre-pandemic schedule and interest will once again begin accruing on these loans. All student loan holders will be expected to resume their repayment plans. If you were enrolled in an auto-pay plan you will need to check with your lender to see if there are additional steps that need to be taken to re-start your payments. In addition, borrowers will no longer be protected if they miss a payment and default on a loan.

What steps should I take to prepare for the student loan payment re-start?

Below are a few steps Optometrists can take to prepare for the re-start of student loan payments in 2023.

1. Determine your loan service provider. Last year, three of the largest student loan servicers did not renew their governmental contracts with the Department of Education. This means there is a good chance that your federally held student loan has changed loan servicers since you last made a payment. You can find your loan service provider by logging in to studentaid.gov and clicking “My Loan Servicers” or calling the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
2. Log in to your account. Make certain you know the correct username and password for your loan service provider now so you are not scrambling to gain access to your account next year.
3. Update your contact information. A lot has changed in the last 2 years and your address may be one of them. Be sure to update you contact information within your studentaid.gov profile as well as your loan service provider’s website to ensure you stay up to date with the latest information.
4. Re-start your auto-pay plan. Depending on your servicer, it is possible that previously set-up auto-payments have been disabled. Log in to your account ahead of time and find out if your auto-pay plan needs to be set up again or if any additional steps need to be taken.
5. Avoid student loan debt scams. Since the recent announcement, there has been an uptick in student loan debt scams via phone & through the mail. Borrowers receive a phone call or letter promising relief through programs that do not exist such as a “pandemic grant.” Do not accept or give out any personal information to unexpected offers of financial aid.

Do optometrists qualify for the student loan debt cancellation?

Yes, depending on an individual’s income level, an optometrist may qualify for student loan debt cancellation.

• In order to qualify for up to $10,000 of debt cancellation an individual must have an annual income below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
• If you received a Pell Grant and meet the above income threshold you will be eligible for up to $20,000 in student loan debt cancellation

Do I need to do anything in order to receive the debt cancellation?

If the U.S. Department of Education already has your income data (you filed taxes over the last 2 years) you will receive your relief automatically. If the Department of Education does not have your income data, you will need to submit it via an application on the Federal Student Aid website. According to the Department of Education, a borrower should expect to receive the relief within 4-6 weeks after submitting the application and has encouraged everyone to submit an application, regardless of whether the Department may already have your income data.

What if I don’t qualify for debt cancellation – what can I do to control my student loan debt?

If you do not qualify for student loan debt cancellation – or the cancellation does not apply to your entire student loan balance – there are still some great options to assist you in taking control of your student loan debt.

First, if you are looking to improve your student loan interest rate and repayment terms, refinancing your student loans may be the best option for you. Refinancing enables you to pay off your original student loans and obtain a new loan under a different, potentially lower, interest rate & repayment term. AOA members receive a 0.25% rate discount ¹ by refinancing with AOAExcel’s partner, Laurel Road. You can apply now or check your rates in a matter of minutes. ²

You can also lower your monthly payments by utilizing Income-Driven Repayment (IDR) options such as Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE) and Income-Contingent Repayment (ICR) which are all based on your adjusted gross income and family size. You can learn more about these options from our partner Laurel Road here.

If you currently work at, or plan to work at, a non-profit or government entity enrolling in Public Service Loan Forgiveness (PSLF) may be right for you. PSLF allows borrowers to have their Federal Direct Loans forgiven after 10 years of on-time payments. You can learn more about PSLF here.

Finally, if your student loans were in default at the time of the pause, now is a great time to get them out of default status. The CARES Act provided protections against borrowers who had loans in default that will no longer apply after December 31, 2022. There are a few options to help you get back on track including Loan rehabilitation, Loan consolidation, and Paying in full.

Have additional questions? Be sure to attend AOAExcel’s Navigating the Student Loan Payment Re-start with Confidence Workshop on Wednesday, November 2, 2022 at 8PM ET. AOAExcel & Laurel Road encourage AOA members to bring their own questions to the workshop or email questions to webinars@laurelroad.com ahead of time.

Are you ready to refinance now? Check your rates without any effect on your credit score ² or easily apply online today.

_{All credit products are subject to credit approval. Laurel Road is a brand of KeyBank National Association. All products offered by KeyBank N.A.}

_{IMPORTANT INFORMATION: The U.S. Department of Education recently announced a student loan debt relief plan which includes forgiveness of up to $10,000 for qualifying federal student loans and up to $20,000 for qualifying Pell Grant recipients. For more information, please visit: /studentaid.gov/debt-relief-announcement.}

_{Please note that if you refinance qualifying federal student loans with Laurel Road, you may no longer be eligible for certain benefits or programs and waive your right to future benefits or programs offered on those loans. Please carefully consider your options when refinancing federal student loans and consult https://studentaid.gov for the most current information.}

_{¹The 0.25% AOA member interest rate discount is offered on new student loan refinance applications from active AOA member. The AOA discount is applied to your monthly payment and will be reflected in your billing statement. The discount will end if the AOA notifies Laurel Road that the borrower is no longer a member. This offer cannot be combined with other member or employee discounts.}

_{²Checking your rate with Laurel Road only requires a soft credit pull, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.}