Getting trapped in routines can harm the bottom line

Who doesn’t love a routine? I eat the same thing for breakfast nearly every day, and have for probably 5 years: crunchy whole grain cereal with ice cold milk. It’s refreshing, crunchy, packed with good carbs and protein, and—best of all—easy. But sometimes our routines get interrupted, and sometimes that interruption is just what we need to make a positive change. For years, I bought the same brand of cereal; it was my #1 go-to. With the supply chain disruptions caused by the Covid-19 pandemic, however, it wasn’t always available at my local grocery store and I begrudgingly made a substitution with a similar cereal. To my surprise, I actually liked it better, and—score!—found that it had more protein and less added sugar, all for the same price. Now I have a new go-to cereal with better nutrition, better taste, and no impact on my monthly grocery bill; in short: a way better cost-benefit analysis!

Trade in your old student loans for a new one, then get it forgiven

Student loan servicers love the routine: they send you a bill, you pay it, they make money on a loan they didn’t even make. We hear from clients all the time that they’re sick of paying their student loans, but they’re also uneasy about changing the status quo because they might end up paying more, or—even worse—make a mistake and have to take the time to call their servicer and fix it. That routine, however, isn’t doing you any favors—especially if you’ve been doing it for years! There are programs right now, like the IDR Account Adjustment, that are meant to help borrowers in long-term repayment find a new path forward for their loans, or even get them wiped out completely. 

From many paths to one, to none: Direct Loan Consolidation & PSLF

Let me illustrate how the IDR Account Adjustment is already helping physicians by telling you a little about our real-life client, Dr. W.

Dr. W. is a young veteran physician who’s been working in the field for over ten years. He and his wife just had a baby in the last couple of years, which is shaking things up their routine, and he decided it would be a good time to take a fresh look at his student loans in case he could lower his payments, loosening up some money to start an education fund. He has a number of loans—all federal—from his time in undergraduate and then medical school, including FFELs, some direct loans, and a Perkins Loan that he started making payments on while in residency. With the 9 years he’s been working in non-profit hospitals, Dr. W. was hoping his Direct Loans would be forgiven next year under Public Service Loan Forgiveness, but we were able to give him the good news that his loans are eligible to be forgiven now!

The IDR Account Adjustment looks at your oldest federal loan with qualifying payments and updates the payment count of all of your Direct Loans to match. For Dr. W., that’s his Perkins Loan, which he started paying off in residency. FFELs and Perkins Loans, however, are ineligible for both PSLF and IDR forgiveness, normally. If you consolidate them into a new Direct Consolidation Loan by the end of 2023, they become eligible, and retain the highest existing payment count. When Dr. W. consolidated his Perkins Loan, FFELs, and existing Direct Loans into a new Direct Consolidation Loan, the new payment count was that of his old Perkins Loan, which was over the needed 120 qualifying payments. In short: by consolidating, Dr. W. not only got PSLF a year early on the loans he thought would be forgiven, he got ALL his loans forgiven! 

Routines are hard to break—that’s part of what makes them routine—but that doesn’t mean we shouldn’t be open to new possibilities, even unexpected ones. If you think you may be ready for a new path, give your student loan professional a call and we’ll help you find the best way forward on your student loan journey.