Once in IDR/IBR/PAYE/REPAYE, Always in IDR/IBR/PAYE/REPAYE

“I got married” or “My income went up” and “they MADE me change repayment plan because I didn’t qualify anymore.”

No no no. They cannot make you do this. You are never forced to leave a federal repayment plan once you have been accepted for it, ever (unless you are not making your payments or don’t submit your annual income certification).

When in an Income-Driven Repayment (IDR) plan like IBR, PAYE, or REPAYE, payments may change annually—but the plan does not. People are more aggressive in negotiating their cable bill than they are in dealing with student loans servicers! Switching the acronym of your payment plan not only capitalizes your accrued interest but can easily cost could thousands or even tens of thousands of dollars.

If you lose your personal financial hardship while enrolled in IBR or PAYE, your interest capitalizes, but you’re not kicked out of the plan, and you are not forced to choose a new plan. Because you “no longer qualify” for the plan, your payments are capped at the 10-year standard repayment amount. “No longer qualify” is deliberating confusing phrasing. Yes, at this point, if you were to freshly apply, you would not qualify and would not be accepted into the plan. But guess what? You’re not applying, you’re just recertifying your income to determine your monthly payment amount. It doesn’t matter if you get married or if you win the lottery. Your plan is your plan until you choose otherwise. You don’t need to “qualify” anymore: once in IBR, always in IBR. Once in PAYE, always in PAYE.

People are being told during their annual income recertification that they need to switch from IBR and PAYE to REPAYE once they lose a PFH, and that is incorrect. All switching does is unnecessarily subject borrowers to uncapped higher monthly payments. The problem is, once you’ve switched to REPAYE on this bad advice, you can’t switch back (because you don’t qualify, see what they did there?).

You can never tell if this is ignorance or malevolence, but given that this is generally coming from FedLoan in the context of borrowers planning for PSLF, a “mistake” like this that results in borrowers spending more per month and getting less forgiven does look pretty suspicious.

Bottom line: This is just wrong. If you file your forms on time and make your monthly payments, your plan will never change.

Don’t let anyone tell you otherwise.

Utopia for Realists

Rutger Bregman, author of Utopia for Realists and the Dutch historian from the viral video calling out billionaires at Davos (“taxes taxes taxes, all the rest is bullshit in my opinion”), talking to Ezra Klein in Vox:

We should never underestimate capitalism’s extraordinary ability to come up with new bullshit jobs.

We could theoretically live in some kind of dystopia where we’re all just pretending to work and sending emails and writing unnecessary reports, and the robots are doing all the real, valuable work.

Now, who are these people? They often have wonderful LinkedIn profiles, went to Ivy League universities, have excellent salaries. They work in marketing, finance, etc. Still, at the end of the day, if you give them a beer or two, they’ll admit that their job is perfectly useless. If we actually rewarded people for the value of the work they do, I think that many bankers would earn a negative salary while many nurses and teachers will be millionaires.

And then dovetailing healthcare into this pretty wide-ranging discussion on automation, universal basic income, and the depressing way we value/pay people who are essentially a drain on the system (not through welfare but through wealth extraction):

Economists talk about how it’s some kind of problem that government is not efficient enough compared to the private sector, but I think that’s actually the point. The point of the future is that we can have a huge amount of inefficiency because that’s what makes life meaningful. Good care is inefficient. You actually have to talk some to someone to have the meaningful relationship. If you want to make health care more efficient, you usually destroy it.

What if healthcare didn’t have to be an industry anymore? It’s really a mind-blasting thought.

Measles is the original measles vaccine

Measles is the original measles vaccine. It’s a natural method that’s been around for centuries. It was good enough for my mother and my mother’s mother and her mother before her.

Unlike synthetic vaccines, which are modified by scientists in underground labs to reduce their potency, measles is completely organic.

From “I’m vaccinating my child the natural way–with measles” in McSweeney’s.

This may be excellent satire, but it could just have easily been lifted from an actual blog written by an actual flesh-and-blood idiot.

FedLoans instructs borrowers to commit fraud

I keep hearing of cases of FedLoan Servicing providing blatantly false and dangerously misleading advice to borrowers when it comes to submitting their annual income recertification.

In fact, it’s so clearly wrong that I wondered if the people reporting it were simply mistaken or confused until I’d heard it repeated so many times. It concerns how to file your recertification when utilizing the Married Filing Separately “loophole” in IBR or PAYE.

The quick background: as you may know, federal student loan borrowers must submit their income annually in order to partake in any of the income-driven repayment plans including IBR, PAYE, and REPAYE. If the borrower is married and files their taxes jointly with their spouse (which is the common choice), then their family income is used to calculate their monthly payments. But if they file their taxes separately, then their payments under IBR or PAYE would be based on just their own income and ignore their spouses. This is considered a bit of a loophole, which is why the newest payment plan REPAYE takes into account household income regardless of tax filing status.

So here’s the fraud part. There’s generalized incompetence, and then there is this: FedLoan is actually telling borrowers who have correctly filed their taxes separately that in order to ignore spousal income–even in IBR or PAYE–that they need to check a box saying that they are “married but cannot reasonably access [their] spouse’s information.”

This is simply not true and does not follow any of the rules. What it does do is clearly misuse a niche box that was provided to help estranged spouses or sufferers of domestic violence.

In fact, this very kind of fraud was anticipated by commenters and addressed by the government, because some folks were worried that simply allowing for “self-certification” of spousal status would give people the chance to reopen the MFS loophole that REPAYE closed by simply pretending that they’re not really married.

From the Federal Register:

The commenter also suggested that borrowers who want to evade the requirement will not bother to have their spouse keep separate income information, but will falsely claim that they have no access to such information instead. According to the commenter, if the Department simply accepts such claims, some borrowers will unfairly benefit, and if the Department contests borrower claims that their spouse’s income information cannot be accessed, it will lead to controversies and lawsuits at great expense to taxpayers.

We note that the strategies suggested by the commenter who raised concerns that some borrowers might try to evade higher payments by hiding income or falsifying the certification form would be fraudulent. We expect that most borrowers would be deterred from falsifying information on a Federal application form by the significant penalties that can be applied.

So there you have it. FedLoans is–for absolutely no reason–essentially forcing borrowers to commit fraud in order to rightfully exclude spousal income. People have been submitting their annual recertifications incorrectly under this specific direction for years and repeatedly so, and FedLoan is apparently still giving this advice on a regular basis.

My personal advice (as an individual citizen who thinks fraud is a thing to be actively avoided) is to simply not follow whatever particular variant of this incorrect advice you receive from whatever random representative you speak to. Instead, ask for someone higher up to set things right. There are definitely people in the organization that know that this is incorrect, so don’t give in and do the wrong thing. I would hope that this practice will become universally known as the fault of the loan servicers and not your personal failing, but the risk isn’t worth it.

Now, if you file taxes jointly and think you are being clever by checking that box in order to lower your payments, don’t do that. That’s definitely unequivocally fraud.

In a broader context, this is just another example of why you should not get your loan advice from a loan servicer. They have no fiduciary duty to actually help you, have been and continue to be sued for being awful at doing just that, and the current administration has done everything in their power to remove all momentum in addressing this problem.

Read a (free) book. Scour the web. Talk to an advisor. Whatever. Just don’t trust a servicer at face value.

You don’t need to submit a PSLF ECF when you first start a new job

You need at least one Employment Certification Form per employer for PSLF. A good rule of thumb is to submit annually to help make sure that FedLoan is counting your eligible payments correctly, and it’s a perfectly good idea to submit your first ECF a few months into a new job.

 


But, as you can see on the form, its purpose is to describe a period of qualifying employment that has already occurred and that FedLoan can thus use to mark each payment you made during the same period as eligible for and counting toward the 120 needed for PSLF.

As such, you need not try to submit a form the second you start a new eligible job such as your intern year. I’m looking at you, interns in July. You totally can, but it’s sorta meaningless outside of initiating the transfer to FedLoans if they’re not already servicing your loans. The main exception is if you’ve taken a job that you’re not sure qualifies and you want some official guidance before you keep working there. In which case, sure, fire away. In general, it makes sense to submit your first ECF after making a few months of qualifying payments.

Note that switching servicers can sometimes make other bureaucratic things like switching repayment plans complicated, so it’s advisable not to submit your first ECF near when your income recertification is due. Wait until that’s fully processed first. So, if you entered repayment in June or July and want to make sure things are moving in the right direction, then you could file an ECF sometime in the fall if you’re eager for some news.

You should absolutely submit your ECFs annually, but you should at the very least submit one at end of your tenure with each institution. You don’t want to be trying to get old employers to fill out things retrospectively or to have FedLoan reach back into the distant past to try to count up your payments for the first time. Experience has shown that counting is not really their strong suit.