Hello everyone,
I hope you are all doing well as summertime comes to a close here in the US.
I have a trio of important student loan updates to share today, plus a bonus update regarding the IBR program.
It’s a mix of good news and not-so-good news, so read on below to learn the latest in student loans.
Big Changes for Mohela
Big changes for Mohela are now underway. The US Department of Education will soon be transferring a significant amount of Mohela’s federal student loan accounts to one of the other federal Direct loan servicers (such as Edfinancial, Aidvantage, CRI or Nelnet).
For those who have suffered endlessly due to Mohela’s outrageous wait times at their customer care centers (i.e. 5 hours+), abundant amounts of dropped calls, processing issues, credit reporting errors, etc. this is VERY good news.
Any borrower who gets their loans transferred, no matter where, will experience an improvement in customer experience. All of the other loan servicers are in better shape, relatively speaking.
Borrowers that do not get their loans transferred away from Mohela may also benefit from this action. Hopefully, lightening Mohela’s workload may prompt them to improve their ways. One can only hope!
Don’t Bank on Buyback
The PSLF Buyback program is moving at a snail’s pace lately, with a mountain of decline letters being sent to eager applicants.
Borrowers can’t apply for PSLF Buyback until the months they are buying back brings their total to 120 PSLF qualified months.
Once you reach this total, you must first submit another Employment Certification Form, wait for it to be approved, and THEN you can submit your Buyback request.
If you are already at, or close to, the 120 total with Buyback, then go ahead and try to get it—but please don’t count on it. If you are in SAVE, and can afford to switch to another IDR, such as PAYE or IBR, then it’s likely a good idea to switch plans so you can get guaranteed credit in real time, instead of relying on Buyback.
If you’re one of the lucky borrowers who is presently approaching the 120 milestone, yet is still in SAVE, I recommend you set up a call with me, so we can walk through the steps of switching to another IDR program, what to expect from the process, and what to do if your IDR application is not processed correctly.
Haywire IDR Processing
IDR processing is a little haywire right now—but sometimes, it’s to your benefit.
On the bright side, IDR application processing is happening at lightning speed. In some cases, I see approvals as quickly as 1-2 weeks after application submission.
Also, there are some weird quirks happening in terms of accuracy.
Many times, the amount of your payment on the Payment Preview page (within the studentaid.gov IDR application flow) and the Loan Simulator might be incorrect. And when it is wrong, it’s often too low.
I’ve seen the preview show a borrower that they’ll be getting a $0.00 payment, and then the servicer approves the IDR request a few weeks later… for $300/month!
I’ve also seen studentaid.gov indicate within the online IDR application that the payment is going to be over $3,000 and then the approval comes back from the loan servicer… at just over $1,000/month.
I’ve also seen the Loan Details of studentaid.gov show a different IDR program than the one the borrower is in, as well as the IDR selection page also show a borrower is enrolled in a program that’s not accurate.
Long story short, if your new monthly amount looks too high, please let me know. If it’s too low, you can just let it be.
IBR Income Cap
If your income is above the cap for the IBR program, you can still apply for, or switch to, IBR.
From the creation of the IBR program in 2007 until July of this year (2025), the IBR program had a built in payment cap and hardship threshold. This payment cap was equal to the payment it would take to pay off the loan based on your balance at the time you entered the program.
The payment cap, the hardship threshold, the payment ceiling, the permanent 10-year standard, or 10-year Level, repayment amount are all the same amount. This usually comes out to about 1% of your balance for Old IBR and about 0.67% of your balance for new IBR borrowers (give or take given your family size and interest rate, of course).
For borrowers already in the IBR program, no matter how much money you make, your payment cannot exceed this amount. However, if you were not yet enrolled in the IBR program, and your income created a payment above this amount, you would not be able to enroll in or switch to the IBR plan, at all.
The Big Beautiful Bill (passed July 4th, 2025) removed the enrollment cap so that borrowers with high incomes can still get into the IBR program while keeping the payment ceiling, so that the payment does not exceed this amount.
This is great news for those of you with a yearly income greater than your debt who are not yet in the IBR plan. Eventually, you’ll need to enroll or switch to it.
For example, if you owe $90,000 and your hardship threshold is $900, but your income is $200,000 per year, you’ll still be able to enroll in or switch to IBR, and your payment will not exceed $900/month.
This is the new rule; However, the studentaid.gov online application has not yet implemented this change. As a result, if your income is above the cap, the IBR plan might not even be listed as an option in the online application at studentaid.gov.
You can handle this in 1 of 4 different ways:
- Wait until the system updates, which may take a while.
- Complete an IDR pdf application manually and upload or fax the form with proof of income to your loan servicer.
- *Decline approval for the IRS to transfer your information within the IDR application.
- *While completing the application online, simply answer the question: “Has your income significantly decreased since your last tax return?” as YES. Then, for the question, “Would you prefer to base your calculated payments on your imported information or have your loan servicer manually calculate them?” Answer, “No, have my loan servicer calculate my payment amounts.” And yes, mark that you do have taxable income. At this point, the application will ask you to upload your proof of income. Go ahead and complete that step.
*If you do #3 or #4, the IBR repayment program will appear as an option. However, it will not tell you what your payment is going to be. You won’t find that information out until you are approved.
That wraps up our updates for today.
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