Latest Updates on Private + Federal Student Loans

In this episode, we tell you news you need to know about the state of your private and federal student loans. Let's get started. Are your student loan payments or loan balances a major obstacle in your financial life? Then tune in and let's escape student loan debt. Hello, my name is Brenton Harrison of Escape Student Loan Debt and your host for the Escape Student Loan Debt podcast. This episode is an update episode. I was in a content creation meeting that Danielle and I typically have, and we were talking about what we want to cover on the podcast on this biweekly period, and one of the things that she said is, you know, I think a lot of people who listen to the podcast would appreciate, even if it's not a deep dive into certain topics, literally just an update episode where you tell them about different things they need to know as it relates to their loans. So moving forward, every once in a while, we're gonna do these types of episodes now where we're not going deep into a topic, we're just keeping it high level, telling you some dates you need to know and some comings and goings that might be helpful. So to get started, if you're looking on screen, and we'll put these articles in the show notes, you're looking at an article from the New York Times that says there's a program to cancel private student debt, but most don't know about it. On this podcast, most of the time, I would say, matter of fact, to this point, 100% of the time that we're talking about having student loans forgiven for reasons other than death or disability, we're talking about federal student loans through income driven repayment forgiveness or public service loan forgiveness, even Perkins Loan Forgiveness and the like. But this program that this article is referencing has to do with private student loans specifically held by the loan servicer Navient. And what it's describing is a private student loan forgiveness program that Navient borrowers with private loans could be eligible for, but this program is very similar to the borrower defense loan discharge that you see with the federal government. Without going too deep into the details, with the borrower defense loan discharge, if you can make a case that your school defrauded you, misled you for various reasons, it could be that they gave you false statistics on their career placement, it could be that you feel that they duped you into having a loan, it could just be that the school itself has closed and it was found that they manipulated and deceived all of their students, you can submit an application and have your federal student loans forgiven. We've seen a number of people have these forgiven who went to schools like the Art Institute. As a matter of fact, if you're looking at the article from the New York Times, it tells the story of a woman who had about $40,000 forgiven after she went to the New England Institute of Art. There's also people who went to ITT Tech who have had their loans forgiven on the federal side. Navient has a number of borrowers who were also taking out private student loans to go to these schools that may not have been eligible at a certain time for their students to take out federal student debts and now they can submit a similar application and have their private student loans forgiven. Now the thing about this program, as you can imagine, Navient makes money off of these loans so they have not been open about advertising. In matter of fact, they have not been advertising at all. So an advocacy group in Boston called the Project on Predatory Student Lending recently published on their website the Navient School Application Form. If you're looking on screen, you can see this application and we'll also put this in the show notes. And you can see that it's pretty extensive. Not only does it ask for information about the school that you attended, it asks you to outline all of the instances of misconduct that you feel make the case for you to have your student loans forgiven. Now the problem with this application is on the positive side, the school that you attended doesn't necessarily have to close in order for you to be eligible. So you could try to make the case that a school that's still in existence defrauded you for some of the reasons that's listed in this application. On the negative side, the decision to actually discharge the debt is a subjective decision that Navient makes. There's no set list of things that makes you eligible. And if your school has not closed, it might be harder to make that case than if you have a private institution that is closed to all borrowers and federal student loans have already been discharged for that school as well. But even if it is more difficult and even if it's subjective, even if you think the odds are low, I would go based on the philosophy I use for most questions that I ask. And that is, if you don't ask, the answer is already no. So if you have Navient private student loans, we will put this application in the show notes and you can consider applying. Next up, we have several student loan updates that we have been hearing about from people in our community, but also we wanna let you know how some of these transitions could impact your loans. We've already talked about Navient with their private student loans. Let's stick with them to talk about something that's occurring with their privately backed federal student loans. If you've listened to this podcast in the past, you know that it is possible to have a kind of privately federal loan. And what that essentially means is you have a loan that is backed by the guarantee of the federal government, but it's actually owned and serviced by a private entity. Now, if that's the case, we have encouraged you to consolidate that loan into a direct loan that is both owned and guaranteed by the federal government, because in most cases, these privately owned federal loans are not eligible for some of these temporary forgiveness programs that we've discussed, like the IDR revisions and the public service loan forgiveness. But if you still happen to have a privately owned federal loan through Navient, then your loan servicer will now switch from Navient to Mohila. Now, this is the continuation of Navient getting out of the student loan servicing process in general because a couple of years ago, they actually took their federally owned federal loans and transitioned those to Maximus. And this transition could take place over the next two years. So they're doing it in kind of waves. So even though this is happening, depending on the wave in which you find yourself, it could be a few months before you start to see the activity take place in your account. Sticking with this musical chairs where we kind of bring up the student loan servicer and then shift it around to show you what's happening with people's accounts, you are now looking on screen at an article or I should say a press release from the Department of Education blog. And it announces an update for Mohila student loan borrowers. And that update for Mohila borrowers is that the Department of Education is looking at the high concentration of borrowers who are on certain platforms. So at one point in time, they had a ton of borrowers who are on fed loan servicing. Now they have a ton of borrowers who at Mohila and they're trying to distribute that number of applications more evenly across the servicers. In addition to that, I would argue that they are trying to get away from Mohila itself as quickly as possible. And the reason for that is if you go back and listen to the episodes where we covered why the Biden student loan forgiveness program was struck down, it was mostly struck down because Mohila, which is a loan servicer that's tied to the state of Missouri, saw some conservative attorneys and politicians from Missouri advance a lawsuit up to the Supreme Court arguing on behalf of Mohila, Mohila wasn't even a party to the lawsuit, that the Biden student loan forgiveness program was unlawful because it harmed Mohila by reducing its revenue. And with Mohila being the only federal student loan servicer that is tied to one of these states, the Department of Education sees moving away from Mohila as the safest bet to be able to pass future forgiveness without worrying that some other state politician would be able to advance a case on behalf of one of these servicers. If you can just kind of remove them from the equation, you eliminate that risk. So while some people will stay with Mohila, there are other borrowers who are now getting letters in the mail that says something to the effect of what you see on screen, which says at the top, notice transferring from Mohila to Ed Financial. It says, and I quote, the U.S. Department of Education will soon transfer the customer service of your federal student loan account to Ed Financial, another member of the Education Department's federal loan servicer team. Your loans are not being sold. The Education Department will continue to own your loans. However, a different servicer will manage your loans and assist you on the Education Department's behalf. The Education Department is transferring your loan account to Ed Financial as part of an initiative to keep customer service and repayment support balanced across all federal loan servicers. This change in servicer will not impact the existing terms, conditions, interest rate, or available repayment plans of your federal student loans, end quote. So they're saying we're balancing them. So there's no rhyme or reason to the type of account they're transferring. They're just saying, we're trying to make sure that we spread this out a little more equally. And as such, we're picking and choosing and moving some of these people from Mohila to other servicers. But if you thought those are all of the updates related to Mohila and other loan servicers, you would be mistaken. So after the break, we'll tell you even more developments at this particular service, other things you need to know related to your loans, and we'll bring this thing on home. This is the Escape Student Loan Death Podcast. A show for established professionals whose student loan payments or loan balances are impacting their marriage, their business, their credit, or their dream of achieving home ownership. We'll be right back. Are you interested in learning the tools and techniques we use to get student loans forgiven, reduced, reorganized, or expedited? Well, great news. We're currently updating our flagship course, Escape Student Loan Debt, to reflect the current changes in the student loan landscape. To stay up to date on the launch of the course and opportunities to sit in on our live recording sessions, head to escapestudentloandebt.com and join our email list now. You're listening to the Escape Student Loan Debt Podcast. Subscribe now at escapestudentloandebt.com. Welcome back. All right, before the break, we talked about people with privately-owned federal loans being transferred from Navient to Mojila. We then talked about people who are already with Mojila possibly having their loans transferred to another servicer so the education department could more evenly spread out the number of accounts they have at different servicers. But even if you stay with Mojila, there are still transitions that are happening with your loans in this current service. If you go on the Mojila website, or you might've received an email from Mojila entitled, as you see on screen, Mojila Transitioning to a New Online Account Platform. So the first is the website is changing. So instead of going to mojila.com, you will eventually go to mojila.studentaid.gov to log into your loans. Now, even though Mojila will remain your loan servicer and during the transition, you will still have to make loan payments, you will have to establish a new account when that transition finalizes. So even though you still make payments the entire time, when they say that this new portal is live, you will not have a profile, you'll have to go and register for the site just like you did the first time that you signed up. Now, one of the interesting things about this transition that we've kind of seen in practice but wasn't like publicized on the front end is Mojila is going through this transition and in addition to having a new portal that you have to sign up for, the way that they administer and service the accounts is actually changing as well and they're switching to a new system and it's a system that's currently shared by AidVantage and Ed Financial. And this is actually causing a ton of problems for people in our community because if you think about it, Mojila as it stands now, although that's changing, Mojila has been the servicer in recent years that has been the one that's processed public service loan forgiveness applications. We've also talked about people who have a double consolidation for Parent PLUS loans that they're trying to complete and if those parents are eligible for public service loan forgiveness, the end servicer that they're trying to end up with is Mojila. So you have these people who are trying to consolidate their loans, they're trying to do the double consolidation loophole, maybe they already have public service loan forgiveness and not only is Mojila moving to a new website, they're taking on a entire new servicing database that they don't currently operate. So people are getting letters saying that even though you are trying to apply with Mojila and they will be your servicer at the end of this process, during the process itself, the actual mechanics of the transition will be handled by ADDvantage. As a matter of fact, if you're looking on screen, you're looking at a comment that was left on one of our YouTube videos that says, I did the consolidation with Ed Financial and ADDvantage. I'm now trying to consolidate the two. The loan server that's left for me to consolidate with is Mojila, but when I choose Mojila, it says that ultimately they will be my servicer, but ADDvantage will do the initial processing. Is this gonna mess me up since I already did a consolidation with ADDvantage? So the reason this is happening is because ADDvantage already has the system in place that Mojila is transitioning to, and we've also had people who have looked on their credit report during this transition and seen their student loans show up multiple times, right? It's showing up with Mojila, but it's also showing up with ADDvantage during this transition, and it's just been a real mess. And you can imagine why. Let's say that you're trying to apply for a mortgage or a car loan and they pull your credit report, and maybe you have $50,000 of student loans, but because of this transition, your $50,000 of student loans at Mojila are also showing up a second time with ADDvantage because of how this transition is taking place. So you wanna make sure that you keep records of all your information, especially if you're applying for financing elsewhere, because the goal is to not let student loans interrupt the rest of your wealth-building process. But with all these transitions, it is just setting you up for the high likelihood of there being some errors along the way. So as long as you know what is going on, you can hold these servicers to account if a mistake is made that adversely impacts you financially. And the last news topic of the day is a reminder, actually, of something that we covered in a recent episode, and that is we are currently in the blackout period where, yet again, Mojila comes into play. Mojila, which has been the servicer that processes public service loan applications to date, is being transitioned out in terms of that process, and it's being replaced by the Department of Education itself. So you will still, if you're applying for public service loan forgiveness and already have Mojila, your account's not changing. You will still have a Mojila student loan. You'll still go there to process your payments or look at what you've paid to date. But in terms of submitting new forms for public service loan forgiveness in terms of tracking your progress towards forgiveness, all of that will be housed after this blackout period on the studentaid.gov website itself. Now, that transition is taking place from May to June. So hopefully, if they honor the timeline that they set out when they gave the press release, starting in July, you'll be able to go to the Student Aid website and see up-to-date information as it relates to your public service loan forgiveness progress. But what they also shared with that press release is if you try to go and check your credits in either place, either place being Mojila or studentaid.gov, you will not be able to get accurate information, if any information at all. It may temporarily look like your public service loan forgiveness credits are at zero. Do not flip out. That's just a part of the transition that they already told us to expect. You can submit forms during this period of time. You can submit them directly to the Department of Education through studentaid.gov, but they have also shared that even if you submit them now, those forms will not be processed until after that blackout date. So you're in a hold period until July, both in terms of being able to go and submit new forms that will be processed, but also seeing any accurate information as it pertains to the amount of credits that you have towards your account. But hold tight, we'll be keeping you up to date as that transition takes place in July to let you know of any bumps along the road that you need to be aware of. And we will make sure that you have everything you need to know to have your student loan balance forgiven, reduced, reorganized, or expedited. I'll see you in two weeks. From Escape Student Loan Debt, this was the Escape Student Loan Debt podcast, a show for established professionals whose student loan payments or loan balances are impacting their marriage, their business, their credit, or their dream of achieving home ownership.