THE Cambridge Connection - Episode 8

This is Gordon Oliver, and you’re listening to The Cambridge Connection right here on WHMP. Did you know financially distracted employees are less productive? Hi, I’m Christopher Viale, President of Cambridge Credit Counseling. As a Western Mass non-profit, we can help your employees manage their debts safely and responsibly, and the partnership is free. We already proudly partner with companies like AAA and the Mass Teachers Association.

Public service loan forgiveness overhaul

So call me, Christopher, at 1-800-CAMBRIDGE, and let’s talk about bringing financial peace of mind to your employees. Welcome back. This is Gordon Oliver with The Cambridge Connection, and I’m your host here with Arianne and Martin Lynch from Cambridge Credit Counseling to talk about the recent bombshell announcement about public service loan forgiveness. Bombshell is right, Gordon. So from the New York Times, the sweeping changes will help more than half a million public service workers who had thought they were paying down their debt for years.

So troubled student loan forgiveness program gets an overhaul. Let’s talk about it. Public service loan forgiveness. So just for the listeners, if you haven’t seen this for the time that public service loan forgiveness has been possible, the success rate has been very slow, and people have been very aggravated about thinking that they were going to be getting public service loan forgiveness and not being able to because it’s confusing and convoluted. So Marty, welcome to the show.

Tell us what’s going on. Thanks, Gordon. On October 6th, the Department of Education announced some pretty drastic changes to the public service loan forgiveness program. First thing for listeners to bear in mind is that the changes are temporary. They’re going to last for a year.

So at the end of October 2022, the process will revert to what it always has been. So let’s take a look at what had caused such a low approval rate for public service loan forgiveness applicants. The program was born in October 2007. At that time, they decided that the minimum requirements would be 120 payments through an eligible repayment plan, and there are only a few of those. The loans would have to be in the direct loan system.

Up until then, most loans were made through the Federal Family Education Loan Program or FFEL. For people carrying loans who later discovered that, hey, their loans were FFEL loans all this time, who’ve been making payments faithfully, they discovered that their repayments wouldn’t count toward the 120 that were needed. Okay, if you’re listening and you have family members or friends or you have student loans, it’s important to understand that this is confusing information. So we’re going to break this down in our later segment on all of the things that it takes to be eligible even before this news happened, correct, Marty? Correct.

And it is, again, confusing, so we’re going to be going through it, but it’s important for everyone to understand this is a timed situation where you’ve got to take action now to see what you qualify for. Is that correct? Correct. All right. There are a number of changes that will be automated, where some folks won’t have to do anything, and there are other folks who are going to have to take action between now and next October, so a very wide window, but if they miss that opportunity, it’ll be gone for good.

Marty, automated by who? The Department of Education. Okay. And you’ve been in the industry. You actually are out with the industry as a representative of Cambridge Credit Counseling.

Is that right? Yes. And having the agencies that actually counsel people having these same problems where their people don’t know what’s going on, even though there are resources available, it’s difficult to understand. It’s frustrating. We’re in contact with about 75 other agencies like our own.

Not all of them offer student loan counseling, but all of them encounter those same problems. When you interact with the major federal student loan servicers, there are about eight or nine of those, and a couple of those are leaving the business, but when you do business with them or talk to them, you sometimes get conflicting information. You often get conflicting information, and that doesn’t make anything easier for counselors. If you’re just joining us, this is Gordon Oliver with The Cambridge Connection right here on WHMP with Ariane, my co-pilot, and our special guest, Martin Lynch, the Director of Education at Cambridge Credit Counseling. So we’re talking about public service loan forgiveness.

Eligibility requirements explained

So Martin, for our listeners, let’s break down how it works and how you can be eligible. We mentioned a couple of the requirements previously that you had to have direct loans and that you had to be making payments through an eligible repayment plan. The other two requirements are unchanged by the October 6th announcement from the Department of Ed. You still have to have made 120 payments, and you still have to work for an eligible employer, which means, and buckle your seat belts on this one, folks, it means that if you work for a 501c3 nonprofit, if you work for a state or municipal agency, so if you work for your town hall, if you work in a school in a town, if you work for any kind of state agency, if you work for the police or fire department, you’re eligible. If you work for Cambridge Credit Counseling.

Yes, our own employees are also eligible for this. But a lot of folks don’t know what type of nonprofit they work for, so that’s a little work that they can do on their own. Correct me if I’m wrong. Is there not a form that they can fill out to truly find out where they submit it to HR? HR fills out the paperwork, then they submit it to the servicer to find out if it’s an eligible employer?

There is a form. The PSLF application form, you can Google it and find it online in a heartbeat. It’s a single checkbox in section two. I just want to find out where I stand. You have your HR folks fill out the two or three lines of information in their section.

It would take them all of five minutes, and you can send it off to see if your employer is eligible and how many payments you’ve made that count toward the 120 you need. And for our listeners, please feel free to call 1-800-CAMBRIDGE to speak to a counselor if you have any questions about any of this. They’re on hand to help you with these issues. Even though we’re going to explain this on the show today, feel free to give them a call to get some more advice. So what’s next?

So eligible employer. Eligible employer and 120 qualifying payments. Again, those two elements, those two requirements haven’t changed. What has changed is, number one, payments that were made on the older loans, that is FFEL loans, will now count toward the 120 you need. And any repayment plan that you are in is going to count also.

Covid payment counts and interest rates

Those payments need to be consecutive payments, or what if they’re broken up? You’ve worked for different nonprofits. You can have periods where you didn’t work. If you took time off to start a family and then resumed working for an eligible employer. Or the pandemic.

Yeah, what about COVID? During COVID, people haven’t had to make payments to their loans. Right, and everybody’s getting credit for those payments. So everybody is going to get almost two years worth of payments that count toward the 120 they need. So I, myself, haven’t been making payments throughout the pandemic and really taking advantage of that.

So what happens then? Well, people like you shouldn’t have been making payments. If you worked for an eligible employer, that was the right thing to do. Don’t make payments because those, for lack of a better term, imaginary payments do count toward the 120 you need. So even if you didn’t make payments, you got credit as if you made them.

And what about interest rates? The interest rates have been reduced to 0% since the pandemic started. Also no collection activities should have occurred. So if a collector has been hounding you about federal student loans, or if you’ve been making payments, you can get those refunded. If they took your tax refund based on a student loan amount owed, that too should be refunded.

Loan servicer transitions and confusion

So I know we talked about some of the student loan companies, like I believe it’s Nabian and MyFedLoan servicing companies have kind of dropped out of the game. So do you guys foresee big problems with this as this is happening in this time of student loan unrest? Well, let’s be clear. There were already big problems, right? Thank you.

Yeah, there were already major problems with the way federal student loans are serviced in the country. FedLoan servicing, which is a division of a larger company based in Philadelphia, is exiting the business on the federal student loan side, and they’re going to give up the administration of the Public Service Loan Forgiveness Program. And I can guarantee you from personal experience that they are not walking us through this process whatsoever. I was sent an email that was saying that they were no longer going to be servicing my loans, and I haven’t heard anything from them since. Right.

It’s still unknown which loan servicers are going to pick up that program. The thought last night, we took part in a webinar for counselors only, is that Mohila, a Missouri-based servicer, is going to take over, but that’s not set in stone yet. All right, let’s pull this in for a minute. So we have a lot of listeners that probably have different servicers. So if they don’t know or they’re concerned about the servicer handling their accounts, who should they call?

Right now, they should still reach out to FedLoanServicing or to us at Cambridge. We can confirm or details that they need to know or need to be satisfied about. Or they can still reach out to FedLoanServicing. They’re going to be running this for a... A few more months, at least.

Richard Cordray, who used to run the Consumer Financial Protection Bureau, is overseeing this transition, and he’s a pretty good taskmaster. So while I don’t presume that, you know, between the three entities that are leaving the federal student loan servicing business and who represent at least 20 million accounts, I don’t think that’s gonna be seamless. There’ll be mistakes for sure, but I have more confidence with somebody with his background running this. Okay, so let’s pull this in now. We got, you need 120 eligible payments, you need to be working for an eligible employer, and as far as loan types are concerned, can we inform people how they understand what loan types they have?

Checking loan types and payment history

gov, they can find their loans. It’s a one-stop shop now. It’s a very good website, lots of good information there, but they’ll need to create a federal student aid ID. If they’ve never done that, it’s easy, an ID and a password, and you’re in. You’ll see your loans.

And it lists them, right? It lists if it’s an FFEL loan or if it’s a direct loan, it’ll say... And the interest rates as well, correct? Well, the interest rates will say 0% right now, but yes, they’ll say direct if they are direct loans. They’ll say FFEL if they’re that type of loan.

And whether they say subsidized or unsubsidized, none of that matters now. We’re only talking about, are the loans federal? How long have they been in repayment? Have you reached 120 payments yet? For PSLF, the Public Service Loan Forgiveness.

Okay, so eligible payments, 120 eligible, the types of loans that they have, and their employer. Those are the three things that are important to be eligible for this forgiveness. What if the payment isn’t on time? Late payments traditionally haven’t counted. I think if you have a record of late payments, serious late payments, that may come into play.

Okay. But on paper, they’ve said they’re not going to look at those. They’re going to overlook that also. They’re simply looking for how long was the loan in repayment, assuming you were making them. Previously, the payment had to be on time, within 15 days of its due date.

Private loans and next steps

That’s waived. Wow. Now, I’ve talked to thousands of people about their student loans, and one of the things that I noticed the most was a lot of people we talked to put their head in the sand pretty much and really didn’t pay attention because they thought it was an impossible debt to recover from. So today, what advice would you give the listeners to deal with their student loans at this moment? The first thing to do is to become engaged.

A student loan is a significant part of a family budget, might be the biggest payment within the budget. So they need to get in touch with the full budget and what part the student loan plays. They need to know their balances, they need to know their interest rates, and they need to know what repayment plan they’re in. Anything else? What if a borrower does not have these types of loans?

What if they are dealing with private loans? What would you say that they do at this moment? Private loans are a completely separate game. There are lots of reputable lenders who will refinance a private student loan if your interest rate is this kind of high or if your credit has improved substantially, and refinancing would get you a much lower rate. But they are not eligible for any of the forgiveness programs, never have been, never will be.

And of course, if you are struggling or having problems with your private loan, the best thing to do is what, Marty? Talk to a counselor. Talk to a counselor. 1-800-CAMBRIDGE. All right, coming up, we will have my co-pilot, Arianne, with our Real People, Real Problems segment.

Sponsor jingle and Tina Marie cameo

This is your host, Gordon Oliver, with The Cambridge Connection. We’ll be right back. Hey, Gordy. I guess we’re here to talk to our listeners about Cambridge Credit Counseling, the company in partnership with your new show, The Cambridge Connection. So what should we tell them?

Hold on, Arianne. It’s Tina Marie. I think we should remind everyone that asking for financial wellness advice on student loans, buying a home, or even paying off credit card debt isn’t anything to be embarrassed about. It takes a lot of courage to ask for help. You got it, Tina Marie.

And Cambridge Credit Counseling offers so much more than just helping to manage credit card debt. That’s why Gordon is hosting the Cambridge Connection radio show every week. It’s all about empowering people to pick up the phone and ask for help. Hey, Arianne. Is it my turn now?

Oops. Sorry, Gordy. We’re out of time. But if listeners need some financial wellness advice, there’s always time to call 1-800-CAMBRIDGE. That’s 1-800-CAMBRIDGE.

Real people real problems introduction

Welcome back. This is Gordon Oliver, your host of The Cambridge Connection. And now it’s time to chat with my co-pilot, Arianne, who is Cambridge Credit Counseling’s resident digital maven and education enthusiast. Arianne has been at Cambridge since 2016, and she’s quickly cemented herself as not only the digital brand specialist, but the financial education coordinator as well. And if you’re wondering if she’s qualified, she’s a licensed educator with her master’s in education from Boston University.

Welcome back, Arianne. Hey, hey. We also got Martin Lynch from Cambridge Credit Counseling joining us for the Real People, Real Problems segment. Real People, Real Problems segment. And just so, if you’ve just joined the show, we’re talking about public service loan forgiveness and how to deal with federal loans.

All right, Gordon. So I’m back again for our Real People, Real Problems segment, where each week I pull questions from our social media followers to answer here on the air. We get questions sent in from all over the country on just about every financial topic you can think of. And the topic of student loans is near and dear to my wallet. So public service loan forgiveness is a fan favorite at Cambridge Credit.

In fact, I’m particularly fond of it because I’m on an income-based repayment plan. I work for a qualifying employer, and so far I’ve made 63 out of 120 qualifying payments. Yeah. Cambridge is partnered with teachers unions in Massachusetts, New York, and Connecticut, so educators are always reaching out to us for help. So this week, we’ve got my buddy, Martin Lynch, the Director of Education from Cambridge Credit Counseling, here to set us straight.

So a true professional with real advice, you know, for our Real People with Real Problems. This question came through Facebook Messenger from Jane H. Through the conversation, she let me know that she’s an elementary school art teacher from Tennessee. And she asked, public service loan forgiveness and teacher loan forgiveness are very confusing. Of course, I’d like my loans forgiven either way, but I don’t know which option is the best option.

Teacher loan forgiveness versus PSLF

Can I do both? Could I qualify for one but not the other? All right, short and sweet, what should we tell her? You can use both programs, but they really are quite different. Teacher loan forgiveness is based on your five consecutive years of service at a Title I school.

It has nothing to do with your repayment history. It has everything to do with what you teach. In this case, an art teacher would be eligible for $5,000 in loan forgiveness after completing that fifth year, that fifth consecutive year of eligible employment. Public service loan forgiveness is based on 120 payments with an eligible employer, an eligible repayment plan, and direct loans. Importantly, though, for all our listeners, on October 6th, that all changed for the next year, even people who have older FFEL loans that were issued prior to 2010, those folks can receive consideration for public service loan forgiveness simply by consolidating those loans into the direct program before October 2022, and they will be eligible for public service loan forgiveness.

Were FFEL loans a factor involved in teacher loan forgiveness? Do they have to worry about that? Does that concern them? It doesn’t. Any type of federal loan is eligible for forgiveness through the Teacher Loan Forgiveness Program.

For our listeners. Except Parent PLUS loans, I should say, except Parent PLUS. But any undergrad loan that was issued by the federal government is eligible. For our listeners, Marty, I know we’re doing this Real People, Real Problems segment. Countless mistakes have been made from bad advice, bad actors giving bad advice, not really helping people, even the services themselves not giving great advice here.

So obviously, mistakes can be made. If you don’t know what you’re doing, 1-800-CAMBRIDGE, talk to a counselor, work through your situation. All right. Consolidation is a pretty tricky business. It’s a minefield.

It used to reset the clock toward the 120 payments you need. Right now, consolidation is required for those folks who have FFEL loans so that those loans can be forgiven. And again, that window closes next October. And things can change. Is that not correct?

Right. It’ll take congressional action to extend any kind of relief option beyond that date. There’s an emergency clause that they’re making use of, and that’s why it’s temporary. But Congress is free to make changes permanent if they choose. All right.

Second listener question on loan forgiveness

If you’re just joining us, this is Gordon Oliver with The Cambridge Connection with our Real People, Real Problems segment. Ari, what’s our next question? Our second question is one that Todd, Cambridge Credit student loan counseling manager, received from a caller. Those of you who were listening to our previous show should remember our buddy Todd. Of course, Todd was able to answer her question during a phone call, but he thought it would be a great representation of what a lot of people ask about.

So Mike C. from New York said that he already submitted his application for public service loan forgiveness, and he was denied. He was told that he had the wrong type of loans, and he wanted to know why that was and what he could do about it. Now, this is a particularly interesting question because Mike was sure that he would qualify to have his loans forgiven. But in light of current events, we might have some new insight on his situation.

That’s right, Ari. Actually, because he submitted an application previously and was denied, he doesn’t have to do anything. Because he already has that letter on file, those folks are automatically going to be reconsidered. So he doesn’t have to do anything. For other folks who are holding the older loans, who’ve never made an application for loan forgiveness, they need to consolidate those loans into the direct program, then submit an application, and they’ll receive consideration too.

Very important to keep great records, obviously. So as it relates to teacher loan forgiveness, let’s talk about that. You mentioned it earlier in response to the question, but just to summarize, because it’s a very complicated qualification process for a lot of folks because their school had Title I status at one point, lost it. Where does that fall in their five years of required service? That’s something where they want to talk to Cambridge about it.

But in short, all loans will qualify except Parent PLUS loans and Grad PLUS loans. All your other loans are eligible for teacher loan forgiveness. That’s not true for PSLF, for public service loan forgiveness. We’re talking only direct loans, except for our window of opportunity, which closes again next October. All right.

Closing remarks and sponsor messages

Well, that’s it for me this week. Join us next week, same bat time, same bat channel, for our Real People, Real Problems segment where we answer your questions on the air. org. Let’s talk. Have a great week, everyone.

Stay positive. Test negative. So that’s a wrap for this week. Thank you to my co-pilot, Arianne, and my special guest, Martin Lynch, the Director of Education at Cambridge Credit Counseling. And we miss Tina Marie, but she will be back next week.

And if you missed part of this show or any of our past shows, you can find us where you listen to your favorite podcasts. Thank you to everyone out there tuning in. 5 FM and 1400 AM at 930. org. Follow me on Twitter at Gordon O’Kares.

That’s G-O-R-D-O-N-O-C-A-R-E-S. And at Facebook forward slash Gordon O’Kares. If you’d like a free consultation with a counselor from Cambridge, especially for this information that we shared today, just call 1-800-CAMBRIDGE. Cambridge Credit Counseling has a portfolio of services that include more than credit counseling. Student loan counseling is definitely one of them.

They also offer... Offer debt management plans, housing counseling, reverse mortgage counseling, bankruptcy counseling, and of course, free community education. Counselors are always standing by to answer your credit and debt questions and seriously, people, it’s a free call to ♪ 1-800-CAMBRIDGE ♪ Good day to everyone. This is Christopher Vialli, President of Cambridge Credit Counseling. I wanted to take time to provide you with a quick shout out to Marty Lynch.

He is the Director of Education at Cambridge and has been doing webinars and seminars in the Pioneer Valley for over 20 years. So many companies and groups have had him provide financial education to their members and employees. Financial education and wellness is a huge topic, especially as we come out of the pandemic into 2022. Marty is your resource and all he does is free. Yes, free to the groups and the public.

No cost to an employer or group for this education. Pick up the phone and ask to speak with Marty to learn more. Free financial education? Call 1-800-CAMBRIDGE. ♪ 1-800-CAMBRIDGE ♪ Hey everyone, Gordon Oliver here and I’m the host of the brand new Saturday morning show, The Cambridge Connection.

m. we’ll spend 28 minutes together that will change your relationship with money for the better. I’ve been a financial counselor for 20 years and I’m here to get you excited about being in financial control. Join me next Saturday right here on The Cambridge Connection. Financial wellness is more than a single subject.

From debt management to student loans to first time home ownership, there’s always a lot to learn. m. right here on WHMP.