• Debt Negotiation App Lever is Payitoff’s Newest Partner

    Debt Negotiation App Lever is Payitoff’s Newest Partner

    We couldn’t be more excited to announce our latest partner is Lever, an Australian debt negotiation app making its US market debut. 

    Powered by our API and smart debt guidance, in the US market Lever will be assisting borrowers specifically with student loan debt to help optimize their student payments. 

    Meet Lever

    Lever started in Australia, where they help consumers negotiate with debt collectors through legal channels on their easy-to-use mobile app. The Lever app empowers consumers with the tools and guidance they need to settle their debt in a legal, transparent, and simplified way. Australian consumers have primarily used the app for help with paying down debt like utilities, phone bills, and loans. 

    While Australians don’t necessarily struggle with student loan debt the same way Americans do, of course debt still weighs heavily on people: 55% of Australians are struggling to pay their electricity and gas bills on time, 45% are struggling to pay their credit card bills and 39% their phone and internet bills. 

    After much success- Lever has saved Australian borrowers $54k in average loan lifetime savings- they’re aiming to help bring clarity to American borrowers with a struggle we at Payitoff consider every day: $1.6 trillion in outstanding student loan debt. Lever will support 98% of federal student loans.

    “Our partnership with Lever will empower student loan borrowers to communicate directly with lenders and take control of their finances in an easy, accessible way.”

    -Bobby Matson, Payitoff CEO

    Financial clarity for borrowers is the key

    Like Payitoff, Lever has a similar driving philosophy: borrowers need to be able to attain clarity when it comes to financial decision making, especially when it comes to their debts.

    Lever founder and CEO Trent McKendrick commented, “The number one thing consumers can do to lower their debt is communicate with the parties they owe, but that’s incredibly difficult and intimidating to do if you don’t know your legal rights or what to ask for.”  By “making an emotional situation more positive by giving consumers the tools and support they need,” Lever hopes to empower consumers facing the pressure and costly, temporary quick-fixes that too often result from outstanding debt.


    With the power of Lever and Payitoff together, we hope student loan borrowers nationwide can look forward to a new level of clarity and access to their lenders as they navigate a complex and evolving system. Check out https://www.leverdebt.com/ for more information on Lever’s app. And of course, ask us more about industry-leading debt API, smart debt guidance, third-party payments, and other debt tools anytime at www.payitoff.io.

  • We Raised $8.5M to Prepare the Financial Services Industry for the Student Loan Tsunami

    We Raised $8.5M to Prepare the Financial Services Industry for the Student Loan Tsunami

    We’re beyond excited to announce that Payitoff has successfully raised an $8.5M seed round led by Lightspeed Venture Partners with participation from Sound VenturesStruck Capital and Social Leverage. This puts our total raised to date at $11M, with support from incredible investors like Lachy Groom, Ayo Omojola, Jim Esposito, Rohini Pandhi, Russ Fradin, Ryan Nece, Gokul Rajaram, Todd Jackson and many more.

    Why Now?

    At Payitoff, we’re building infrastructure to automate and optimize every aspect of debt management, starting with student loans.

    This funding comes at a critically important time for our technology as the Student Loan Tsunami is coming in just a few short months: on February 1, 2022, the post-COVID resumption of student loan payments will hit over 43 million borrowers in the US all at once.

    This will have massive impacts on our economy: saving, investing and spending across the board will be tighter for the average American. Every financial application will be affected in one way or another by the Tsunami.

    The Root of It All

    I know firsthand how debilitating this debt can be for borrowers because I lived the student loan nightmare myself. For over a decade, my wife and I were weighed down by six-figure student debt and unsure if we’d ever be able to start a family or own a home.

    Frustrated with the status quo, I spent nights and weekends codifying student loan regulations and building a prototype to help us navigate our personal student debt crisis.

    This technology, which in time would become core to Payitoff’s algorithm, helped us gain what every borrower seeks: clarity to make the best financial decision. We saved thousands of dollars — empowering us to start a family and move forward with our lives. Now we have a beautiful 3 year old, Mila!

    Soon after, I realized we weren’t alone: every borrower could leverage this technology to gain the same insight we did.

    Taking our Technology to the Masses

    Our team has been working overtime to get our API infrastructure and technology into the hands of as many fintechs, financial institutions, and workplace providers as possible before the Student Loan Tsunami hits. Even though student loans are inherently the most complex debt in existence, Payitoff is dead simple to implement into a financial services platform and provides immediately impactful outcomes for both borrowers and the apps they use every day.

    In fact, partners using Payitoff save the average borrower $240 a month on their student loan payments. This isn’t money they have to pay back either — much of the savings comes from federal and state assistance programs which are a headache to navigate independently, but can be instantly enrolled in using Payitoff.

    By the way — we’re still the only provider whose API allows for electronic enrollments into these programs, which means borrowers can be approved for better outcomes in just 10 days, versus the industry standard of 6 weeks.

    For the businesses using our technology, this means:

    • increased spending, investing and ADB
    • incredible retention and account primacy
    • improved debt-to-income ratios within a month

    Optimized for Impact

    Our mission is to build a balanced borrower ecosystem, where incentives are aligned across the entire industry.

    Our partners are motivated to adopt Payitoff because they, too, see the need to help borrowers in the face of the student debt crisis. After all, servicers want more borrowers in repayment and financial institutions want to empower borrowers to achieve financial goals like buying a car or home. Payitoff is changing the game fundamentally by creating a win-win-win for everyone involved.

    In fact, partners using Payitoff save the average borrower $240 a month on their student loan payments.

    To the Next Chapter

    With this new seed capital, we’ll onboard dozens more fintechs and institutions in advance of 43 million student loan borrowers re-entering repayment on February 1, 2022. This unprecedented event is an opportunity to both expand our reach and make a positive difference in the lives of millions of borrowers who are struggling just like my wife and I were.

    Thanks to our talented team, incredible investors and everyone who has helped Payitoff in our journey so far. We couldn’t have done this without you.

    Tackling the oncoming Student Loan Tsunami is just the beginning of how we plan to help financial services empower borrowers in the future, with expansion into more debt verticals and financial products on the horizon.

    To the next chapter — I’m looking forward to sharing more with you as Payitoff continues to shake up what’s possible in this space.

    P.S. Interested in saving borrowers billions? Apply to our open roles in engineering, sales, customer success and operations here.

    About Payitoff

    Payitoff is building infrastructure to automate and optimize every aspect of debt management, starting with student loans. The company partners with fintechs, workplace providers and financial institutions to provide technology solutions that produce better financial outcomes for their customers, the borrowers. Payitoff was founded by Bobby Matson in 2017 and the company is headquartered in New York, with a remote-first team dispersed across the country. To-date, Payitoff has raised a total of $11M in funding, from Lachy Groom, Lightspeed Venture Partners, Social Leverage, Sound Ventures and Struck Capital, as well as angel investors, including: Ayo Omojola, Jim Esposito, Rohini Pandhi, Russ Fradin, Ryan Nece and Todd Jackson.

    Follow Payitoff on Twitter and Linkedin, and learn more at www.payitoff.io.

  • 10% of student loan borrowers are newly unemployed

    10% of student loan borrowers are newly unemployed
    Credit: New York Times and the U.S Department of Labor

    According to the U.S Department of Labor, over 22 million Americans have filed for unemployment over the past month. Obviously, this is an unheard-of amount of job loss, but how does it affect student loan borrowers?

    Roughly 1 in 5 Americans have student debt, so a conservative estimate would suggest that 4.4 million student loan borrowers have recently lost their jobs completely.

    10% of all student loan borrowers are recently unemployed — and that’s a conservative estimate!

    We know these borrowers are the most vulnerable financially, so these numbers could easily be much higher.

    What can we do?

    Borrowers who have no taxable income and are not yet receiving unemployments benefits can request an income-driven plan right now that will lock in $0 / payments for the year.

    Borrowers need to act on this now while it’s still available to them — there’s no better time.

    For most income-driven plans, large government subsidies cover the interest charges, even outside the current forbearance enacted by the CARES ACT.

    If you work at a company whose customers have student debt, schedule a 30-min session with our team to discuss how we can help level-up your suite of financial wellness tools and help your customers solve student debt for good.

  • CARES Act: The Reality For Borrowers

    CARES Act: The Reality For Borrowers

    On March 27th, the CARES Act was signed into law and had far reaching changes to the existing COVID-19 rules for borrowers. For all federally-held student loans:

    • Monthly payments are automatically suspended
    • Interest is set to 0%
    • Wage garnishment of defaulted loans is halted

    This “suspension period” is in effect from March 13th — September 30th and these changes are applied retroactively. The “suspension” periods count towards forgiveness programs (including PSLF) and are registered with the credit bureaus as on-time payments. Anyone who has made a payment after March 13th can request a refund.

    Servicers have their work cut out for them. Similar to the PPP loans for businesses, the guidelines are fluid and ever-changing. We want to share what we know and how the student loan ecosystem at large is going to be affected.

    TLDR: These changes are great news for borrowers in general. The government basically put in place a new loan status that is very similar to natural disaster forbearance, but honors those periods as counting towards forgiveness. Now is a great time for borrowers to evaluate repayment options and switch, especially if they’ve lost income recently. Many can lock in $0 payments for the year.

    6.5 month COVID-19 suspension

    Without any action from a borrower, they will enter a COVID-19 specific status where $0 payments are the new normal until September 30th. Servicers are required to rollout these changes starting April 11th per the regulation in the CARES Act.

    Borrowers can still voluntarily make payments, but we’re not sure who in their right mind would. Possibly PSLF candidates who are worried about FedLoan messing up their PSLF count? Or someone who wants to accelerate prepayment on a fixed payment loan? Either case would be financially unwise since the loans are at 0% interest, making this an actual pause where you can build up cash reserves.

    Servicers are expected to stop collecting direct deposit payments at the end of this week. If borrowers want to make sure they don’t have to pay during this suspension, they can turn off auto-pay to make sure funds aren’t being withdrawn.

    Interest set at 0% — for longer

    The CARES Act extended Trump’s interest waiver where the government is giving up roughly $6.7 billion in interest income per month.

    Given the duration of this suspension period (6.5 months), the grand total in lost income to the government is $43.55 billion.

    So the bill was actually closer to $2.24 trillion 😁


    If a borrower has made a payment since March 13th, they can request a refund — if they don’t, the payment will be applied first to outstanding interest then principal.

    Requesting a refund will always be preferable since the payment still counts. Also, borrowers on income-driven plans (in many cases with outstanding interest) are relying on a forgiveness event. Paying more today means less forgiveness for them tomorrow, so they’ll want to keep payments from being applied to their outstanding interest.

    The good news: servicers are great at refunding borrowers. They already have solid processes in place so borrowers can feel comfortable that if they ask for the refund they will get it.

    However…. getting on the phone with a servicer is going to be extra tricky right now. We’ve seen several examples of call center shortages given the overwhelming call volume of inquiries. Lots of servicers are communicating closed call centers and relying on alternative channels to connect (social media, email, etc):

    FedLoan Homepage a few weeks back

    The best move if a payment was made after March 13th: contact a servicer to confirm that the payment will be refunded (typically this takes 60 days).

    Wage garnishment of defaulted loans is halted

    Borrowers who are in default for more than a year on federally-held loans start to have their wages garnished, tax refunds withheld and / or social security benefits taken to help repay the debt.

    The default process deserves its own post, but borrowers in this category have opportunities to recover through either rehabilitation or consolidation.

    The CARES Act puts this process on hold — prohibiting ED from garnishing wages, tax refunds or Social Security benefits to collect defaulted loans during the suspension period. Any action that was currently in progress is halted and any wages garnished through an employer after March 13th are refunded.

    Open Questions

    The “suspension” period begins March 13th. What about borrowers who have already entered the COVID-19 administrative forbearance?

    It would seem that the servicers are planning to evaluate the status of a borrower’s account on March 13th, halt each loan’s status, then rewind it once the period ends October 1st.

    Curiously, we’re hearing conflicting guidance on what happens if you’ve made changes to your plan since March 13th. Having the “frozen” version start April 11th could be disastrous for many borrowers.

    As an example: if you’re a candidate for Public Service Loan Forgiveness and you entered administrative forbearance last month, it’s possible your account will be considered in “forbearance” when the servicer freezes the account. In order for the suspension period to count for forgiveness, you need to be in repayment!

    We’ve seen borrowers wait years for an accurate count of their PSLF payments — so we’re not exactly confident this process is going to go smoothly. We’re keeping a careful eye on how this is being executed so we can share insights as we digest them.

    Moving Forward

    16.6 million Americans filed for unemployment in the last three weeks. With 1 in 5 Americans having some kind of student debt, there’s at least 3.3 million borrowers who just became unemployed in the last 21 days.

    There has never been a more important time for borrowers to get great guidance on what do here. For borrowers who are experiencing a sudden drop or loss of income, enrolling in income-driven plans ASAP can lock in low payments (many at $0 / month) for the year while still taking advantage of the “suspension” period. Borrowers making adjustments now can lead to large savings down the line.

    We’re happy to see these measures put in place for borrowers — now it’s all about how the servicers execute on that promise. We’ll be here to provide clarity and transparency through what is going to inevitably be a stressful and uncertain time for all student loan borrowers.

    If you’re a borrower or a company that helps borrowers, follow us to keep up on the latest in student loan tech and policy reform.

  • The Student Loan Response to COVID-19

    The Student Loan Response to COVID-19

    Yesterday, the Department of Education announced the following in response to the COVID-19 crisis:

    • All federally held student loans will have interest rates set to 0% for a period of 60 days.
    • Federal loan borrowers will have the option to suspend payments for at least two months — this is called administrative forbearance. To request forbearance, borrowers contact their loan servicer online or by phone.
    • Secretary DeVos authorized an automatic suspension of payments for any borrower more than 31 days delinquent as of March 13, 2020, or who becomes more than 31 days delinquent in the next 60 days.

    A Slightly Helpful Interest Waiver

    The good news: the government is footing the bill for all interest on federal loans for 60 days. As we wrote about last week, this means the government is giving up roughly $13.39 billion in expected interest income to help borrowers.

    The problem: this 60 day interest waiver has very little impact. Payments won’t change so there’s no immediate relief. If a borrower has outstanding interest, payments will be applied to that interest first then principal. If the borrower is on an income-driven plan, they end up owing a slightly smaller tax on the forgiven amount in the future (1 in 4 borrowers are in this camp).

    The Waiver in Practice

    We took an anonymized sample borrower from our system (let’s call her Alice) to determine what the impact of the waiver looks like in the real world.

    Alice is four years into an income-driven plan (PAYE) paying $173 / month. Her AGI is $40k / year, she has $100k in outstanding principal and $30k in outstanding interest on her federal student debt.

    At 6%, her monthly interest charge is $500. Normally, she pays $173 then the rest is added to her outstanding interest ($327). The government already pays $98 / month of that interest for Alice since some of her loans are subsidized.

    With the waiver, the net benefit is $500 less the $98: $402 / month. With the 2 month waiver, that’s $804 off her forgiven amount, not her total cost.

    Alice’s Outcome

    To translate: $804 less will be forgiven down the line, meaning her estimated tax on that forgiven amount has decreased $281 — 16 years from now — assuming a 35% federal tax rate.

    GREAT! The 60 day waiver saved her $281, 16 years from now.

    That’s nothing in the short or long run. This change feels very immaterial for most borrowers despite the immediate income hit for the government.

    Aren’t most borrowers on fixed payment plans though?

    Nope, most are on income-driven plans, graduated repayment plans or not paying at all. According to the FSA data center, only 30% of borrowers are on fixed payment plans.

    It’s unclear how servicers are going to process this change too — from what we can tell, the quickest way to implement the change is to treat all federally backed loans as subsidized in their system (a process that already exists).

    Unclear Administrative Forbearance

    Last week we discussed the benefits of having the US declared a “disaster area” and allowing borrowers to voluntarily enter natural disaster forbearance. In this scenario, borrowers could pause payments, no interest would accrue during the forbearance and most importantly no interest would capitalize at the end of the period.

    These types of scenarios happen from time to time — for hurricane relief, tornadoes and even the California wildfires. Most importantly, servicers understand how to apply this type of forbearance automatically so a process is already in place to handle it.

    What Secretary DeVos has authorized yesterday is similar to natural disaster forbearance, without the guarantee that interest won’t capitalize.

    What’s the big deal with interest capitalizing?

    Alice has $30k in outstanding interest. If she enters forbearance, her payments do not count towards forgiveness (meaning she has to wait 16 years and 2 months for forgiveness) and the $30k is added to her principal. Any future interest charges are based on $130k in principal instead of $100k.

    For Alice, her annual interest charge would increase by $1,800 once the pandemic ends. Assuming a 3% increase in AGI and staying single, Alice entering administrative forbearance right now would increase her forgiven amount by $26,391 and total cost by $9,236.

    This is financially devastating for many borrowers. If Alice elects for this forbearance right now, she’ll pay over $9k for it later. And that’s assuming that she re-enters her current plan in 60 days.

    Makes that interest waiver seem even more frivolous, wouldn’t you say?

    Suspending Payments for Delinquent Borrowers

    Not much to see here. This just stops the bleeding — if you’re delinquent, you are already suspending your payment 😅

    Who benefits from this response?

    There are borrowers who will benefit from this type of forbearance. If you have an income that is significantly higher than your student debt principal and you are on the Standard or Extended fixed payment plan, pausing payments for a few months can help your cash flow. Since you don’t have outstanding interest, this forbearance gives you time to save your cash or spend on necessities instead of worrying about your loan payment.

    The truth is that most borrowers are not in this scenario. Most are losing their jobs and need help navigating to an income-driven option while collecting unemployment.

    Millions of borrowers are in need of guidance and these measures are not enough. We need voluntary natural disaster forbearance that counts paused periods as eligible for forgiveness — this one policy would cover all the bases and provide immediate relief for every single borrower.

    If you’re a borrower or a company that helps borrowers, follow us to keep up on the latest in student loan tech and policy reform.

  • WTH is Trump’s Student Loan Interest Waiver?

    WTH is Trump’s Student Loan Interest Waiver?

    Yesterday, Trump announced a sudden change to student loan repayment in response to COVID-19: the government is “waiving federal loan interest” until further notice.

    What does this mean?

    While there’s still many unanswered questions, the TLDR is: if you have student loans that are federally-held, any interest charges are subsidized by the government starting 3/13/20. Monthly payments remain the same but are (supposedly) applied directly to principal.

    The loan types affected by this are:

    • Direct Stafford Subsidized / Unsubsidized
    • Direct Grad PLUS / Parent PLUS
    • Federally Backed FFEL and Perkins

    These loan types represent $1.339 trillion of the outstanding student loan principal in America! (based on the FSA data center)

    Most FFEL or Perkins loans won’t be affected by the change — they are largely backed by private institutions and universities. Same deal for refinanced or private student loans.

    How long will this last?

    It’s unclear how long this situation will last, but we can expect the freeze on interest charges to continue until the COVID-19 situation is resolved — this could be a month, 6 months, a year or more.

    The cost to the government is pretty significant here: assuming a 6% weighted average interest rate, the government is losing $6.695 billion in interest income per month.

    Also, servicers will see a 2x increase in call center costs the next few months given the possible call volume. If only 5% of borrowers call to ask about this change, you’re looking at an additional 2.25 million inbound calls — more than double the monthly call center volume for federal loan servicers (via TIVAS / NFP).

    Once they sniff out these costs, my spidey sense says they’ll revert or change this policy pretty quickly.

    Should borrowers keep making payments?

    Definitely! If you’re a student loan borrower, this does not affect your monthly payment — it may help lower the total interest paid over time but you won’t feel an immediate impact on your wallet.

    If you’ve had a sudden drop in income and need help making payments, you should apply for an income-driven repayment plan so you can take advantage of the subsidies (especially if the loan is negatively amortizing).

    Was this a good idea?

    While this is a net positive for borrowers (slightly less interest paid over time), it’s unlikely to make much of an impact — especially in the short term. Those on income-driven plans already rely on a forgiveness event in the future, so these subsidies slightly lower their tax bill (unless they are on PSLF, where forgiveness is tax free). Most borrowers will barely feel this change, if at all.

    My friend Travis from Student Loan Planner alluded to this in a recent post, but a better idea would be to offer voluntary natural disaster forbearance. This provides instant relief to people who are having trouble making payments by allowing them to pause payments for 90 days.

    Servicers already have a workflow in place to process these claims and all Trump would have needed to do is declare the U.S a “disaster area”. Even better, interest doesn’t capitalize under that type of forbearance.

    We need to make this type of forbearance voluntary so borrowers whose payments count towards forgiveness (PSLF, IDR, etc) can continue on their plans uninterrupted.

    Voluntary natural disaster forbearance would have an immediate and tangible impact on borrowers who could pause payments in their time of need. It would also save servicers millions of dollars in call center costs.

    Instead, millions of borrowers are going to call their servicers for answers and be under-serviced due to the volume.

    How does this affect the Payitoff API?

    We’re keeping a careful eye on the way this will be executed. Right now, student loan servicers have to build a process for applying these subsidies and it will likely take months to be applied to accounts.

    We’re going to incorporate the subsidies into our system once the Department of Education announces an approximate duration for change. In reality, the effect for borrowers is relatively minor since the average repayment period is 21 years — a few months of interest subsidies means a slightly lower overall total paid.

    Directionally, the guidance will remain consistent. You can still rely on Payitoff to power incredible insights on the fintech platforms millions know and love — saving the average borrower $60k+ over the life of their loans.

    If you’re a borrower or a company that helps borrowers, follow us to keep up on the latest in student loan tech and policy reform.

  • Married With Student Loans

    Married With Student Loans

    For student loan borrowers on income-driven plans, getting married can have a huge impact on their monthly payments.

    Important Questions To Ask

    Before tying the knot, there’s two important questions to ask a future spouse about their financial situation:

    What was their adjusted gross income last year? Their AGI may be used to determine future monthly payments.

    Do they have federal student loans? In most cases, the government will look at the total household federal debt and apply the percentage share to future monthly payments.*

    As an example, if Lucy has $300k in federal debt and marries Steph with $100k in debt, Lucy’s share is 75% of the total burden ($300k / $400k). Both their incomes are used to determine the couple’s income-driven payment and multiplied by 0.75 for “Lucy’s share”, regardless of whether Steph is even on an income-driven plan.

    Two Crucial Rules

    There’s two important rules to keep in mind about income-driven plans:

    1. REPAYE will always use spouse AGI regardless of tax filing status.
    2. REPAYE has no monthly payment cap. Income spikes always affect the monthly payments on this plan.

    While REPAYE has great subsidizing features when loans are negatively amortizing, it can be a real drag for folks who want to get married.

    The other main income-driven plans — PAYE and IBR — both have monthly payment caps and allow the borrower to not include spouse income or federal debt if they filing taxes separately. It’s a good idea to consider these plans for borrowers who are planning to get married down the line.

    Estimating Future Monthly Payments for Married Student Loan Borrowers

    There are a myriad of complex rules determining how monthly payments are calculated for married borrowers on income-driven repayment plans.

    Luckily, we’ve made it super simple for financial advisors using Payitoff to estimate changes to a borrower’s income-driven monthly payments over time.

    Situation #1: Already Married

    For folks who are already married, you can easily connect spouse accounts by creating a separate client, linking them and including the spouse’s current AGI.

    Let’s say Lucy and Steph are already married. For this case, we can link Steph’s account and AGI from the Client Information tab:

    Monthly payments automatically factor in the spouse’s federal loans and AGI:

    Given their combined AGI ($107k), Lucy’s monthly payment in Feb 2020 under REPAYE should technically be $772.66. Since Lucy has 75% of the federal debt in the household, her monthly payment ends up being $579.50.

    Situation #2: Getting Married

    For single clients on income-driven plans, you can also show how getting married in the future will affect their monthly payment.

    Let’s say that Lucy and Steph are planning to get married this year (2019). Lucy has graduate loans, files taxes as single and is currently 5 years into the REPAYE repayment plan.

    Here are her income-driven options assuming annual AGI growth of 4%:

    It looks like her current plan will cost $92,292.60 in monthly payments and incur a federal tax bomb at forgiveness of $106,027.40, bringing her total nominal cost on REPAYE to $198,320.

    Since they’re planning to get married this year, their change in filing status will affect monthly payments in 2020 (the subsequent year). Let’s jump into the REPAYE timeline and add some new future scenarios to account for this.

    We’ll change their tax filing status to married filing jointly and include a future spouse AGI of $50k in 2020 to see what happens to her payments.

    There’s definitely a spike in monthly payments, moving from $243.19 to $567 on REPAYE. This changes the total cost of her plan from $198,320 to $299,254.45, an increase of $100,934.45!

    That’s pricier than any wedding I’ve been to 💒

    Filing their taxes separately won’t help her on REPAYE, since Steph’s AGI and federal debt will be included either way (see rule #1 above).

    Let’s see what else we can do.

    Situation #3: Spouse Gets A Promotion

    What if Steph is a doctor in a fellowship and her AGI jumps to $400,000 on her 2022 tax return?

    Whoa! What a big spike! Lucy’s monthly payments have gone from $616.42 in 2022 to $2,791.47 in 2023.

    The total cost of REPAYE is now $559,892.00 and she can’t take advantage of forgiveness since the high monthly payments actually repay the full debt before the term is over.

    We may want to consider having Lucy enter PAYE so we can take advantage of the monthly payment cap (see rule #2 above).

    On PAYE, the total cost is $514,873.90, her monthly payment caps off at $3,451.63 in 2030 and Lucy can take advantage of forgiveness. Her payments still jump in 2023, but she has a ceiling on how high her payments can go.

    As long as she switches plans before the income jump happens, Lucy will meet partial financial hardship requirements and save $45,018.10 on PAYE.

    Situation #4: Filing Taxes Separately vs. Jointly

    Lucy and Steph want to see whether the cost to filing taxes separately is worth the savings they’ll see in their student loan payments. You can now tell them!

    Let’s say Lucy wants to compare the cost of PAYE vs. REPAYE if they filed taxes separately when they get married.

    You can remove any future scenarios by selecting the “x” next to each one:

    On PAYE, her total cost is changes from $514,873.90 to $217,160.53, saving $297,713.37 compared to filing taxes jointly. She avoids any monthly payment jumps unless she’s expecting AGI jumps of her own.

    All her income-driven options are automatically updated so you can confirm PAYE as the most affordable option given these circumstances:

    Awesome! Compared to her current schedule on REPAYE, we’ve found that Lucy saves $342,731.47 by filing separately and moving to PAYE.

    Now, we can have a conversation with her CPA about whether this move would make sense given their tax situation.

    Situation #5: Getting Divorced

    Divorce has an immense impact on income-driven repayment and it’s really important to help provide clarity in these cases.

    Let’s say Lucy and Steph want to explore what a divorce would mean for Lucy’s student loan payments if they’re filing jointly and she stays on REPAYE.

    If they were divorced in 2026, Lucy’s monthly payments would drop from $3,145.64 to $464.96. The total nominal cost of REPAYE changes from $559,892.00 to $341,017.49, saving her $218,874.51 as a result.

    Obviously, couples are never planning on getting divorced, so this functionality is more appropriate for cases where a divorce is in progress.

    Thoughts to Consider

    For borrowers who are on income-driven plans, there’s another consideration to take into account:

    When will their spouse pay off their federal debt?

    It’s important to keep in mind that the borrower’s share of federal debt changes year over year. If their spouse is on PSLF, their federal debt is completely forgiven after 10 years. Once that happens, you can expect the borrower’s payments to increase depending on how much of their spouse’s debt is forgiven.

    The same goes for refinancing. If a spouse refinances their federal debt, it is no longer taken into consideration when estimating a borrower’s income-driven monthly payment.

    A lot of folks get this wrong, so make sure you always run the numbers before considering any sort of refinancing offer.

    We’re still working on a way to easily account for this future scenario in Payitoff, so stay tuned 🙂

    Thanks for reading this far! We hope this has been a helpful illustration of a usually massively complex situation.

    If you have questions or ideas, feel free to shoot us an email!

    We love love love feedback. 😃


    *A spouse’s AGI and federal debt is not considered for borrowers filing taxes separately on PAYE or IBR income-driven repayment plans.

  • Anglia Advisors Improves Holistic Offering with Student Debt Repayment (Case Study)

    Anglia Advisors Improves Holistic Offering with Student Debt Repayment (Case Study)

    Anglia Advisors offers comprehensive financial planning services to their clients. Over the past few years, they’ve seen an increasing number of prospective and existing clients with significant student debt. The burden is extremely high for anyone with a graduate degree, especially legal and medical professionals.

    When Anglia Advisors began to research programs available to student loan borrowers, they found a minefield of regulatory nuances. Repayment options felt impossible to forecast with any accuracy. Most available resources were in the form of scattered spreadsheets and online calculators.

    They needed an accurate, simple resource — and fast.

    Using Payitoff, Anglia Advisors saw a dramatic increase in efficiency delivering financial plans for clients with student loans. Some client cases used to take hours — now they could get answers in minutes.

    In this case study, you’ll learn how Anglia Advisors used Payitoff to:

    • Put their clients on a faster path to asset generation
    • Leverage opportunities with Public Service Loan Forgiveness and additional federal programs
    • Attract new clients to their service
    • Find incredible saving opportunities, including a single client saving $599,192 based on findings within the platform

    Download the Case Study Here

  • Saving $32k with Teacher Loan Forgiveness

    Saving $32k with Teacher Loan Forgiveness

    It’s hard to keep track of all the alternative forgiveness options available to student loan borrowers. Many exist based on occupation, state and type of loan. The nuances of each program are confusing, especially when it comes to federal teacher loan forgiveness.

    TLDR: You can now check eligibility for Teacher Loan Forgiveness and see an estimate of savings on Payitoff.


    To qualify, you need to:

    • have Direct or FFEL student loans
    • be a “highly qualified teacher” in a school or agency categorized as low-income or Title I
    • teach for five consecutive years

    Up to $17,500 will be forgiven after five years depending on the subject taught and the type of schooling (secondary vs. elementary).


    If a borrower elects to do both PSLF and Teacher forgiveness, it will take 15 years to complete the program from start to finish.

    When is this program useful?

    Teacher Loan Forgiveness is a game changer in a number of cases:

    1. Teachers who don’t want to teach for more than five years in a PSLF-eligible employer
    2. Teachers who have a small amount of loans (less than $17k)
    3. Teachers in the Standard, Extended or Graduated plans
    4. Teachers whose Adjusted Gross Income is higher than their debt burden.

    As an example, let’s take a look at Clint — a science teacher working in a low-income middle school in Arizona. He makes $75k / year, has $40k in Direct loans and started teaching in late 2016.

    He’s on the Extended Repayment Plan, which will take 25 years to pay off and cost him $79,283.63 in the process.

    With Teacher Loan Forgiveness, Clint will have $17,500 of his loans forgiven June, 2021, saving him $32,410.60 compared to his original payment plan. That is a massive difference!

    Running Clint’s numbers on Payitoff

    We’ve made it dead simple to determine eligibility and savings for the Teacher Loan Forgiveness program.

    Navigate to “Forgiveness Programs” and enter the teaching history. You can also search for the school to confirm that it’s eligible for the program:

    We’ll determine the teaching requirements for that state, which of their loans are eligible, and how much will be forgiven.

    Direct and FFEL loan types are eligible (unless they are PLUS loans)

    You’ll automatically see the savings once you generate a report:

    Clint saves big!

    Applying for Teacher Loan Forgiveness

    After five consecutive academic years, fill out this form to apply for the Teacher Loan Forgiveness program.

    Make sure you specify which loans you want forgiven, otherwise the servicer will choose for you. On Payitoff, our forecasts apply forgiveness to eligible loans starting with the highest interest rate unless you specify a different order.

    If you are applying for forgiveness of loans that are with different loan servicers, you must submit a separate form to each of them.


    We hope this feature set helps you save time when determining the tradeoffs of Teacher Loan Forgiveness. If you have questions or product ideas, feel free to shoot us an email! We love love love feedback. 😃


    Thanks to Nicolle Matson

  • Federal Direct Loan Consolidation

    Federal Direct Loan Consolidation

    The skinny on a “not-so-normal” consolidation option

    The word “consolidation” has a pretty consistent definition in lending: take a set of loans and group them into a single loan, using the weighted average interest rate for the new loan.

    In Student Loan Land, consolidation usually comes to mind when refinancing a bunch of student loans into a single private loan at a lower interest rate. There are huge tradeoffs to refinancing — mainly the loss of deferment protections and income-driven options if the loans are federal.

    As it turns out, there’s a way to consolidate the loans with the government and do the opposite — open up further repayment options!

    Direct Consolidation can give the borrower more room to repay!

    The Basics

    Federal Direct Loan Consolidation works the same way as a normal consolidation with a few differences:

    👍 The new loan is a Direct Loan. This qualifies the borrower for new income-driven repayment options such as REPAYE and PAYE.

    👍 Direct Consolidation Loans are eligible for PSLF. You can read more about the benefits of Public Service Loan Forgiveness here.

    ❗️ The repayment schedule is reset. If payments were made on a forgiveness plan with old FFEL loans, those are wiped from the record.

    ❗️Any outstanding interest is capitalized. If interest has been accruing on the consolidated loans, it’s immediately added to the balance.

    Two other interesting things happen:

    ✅ If any of the consolidated loans are Parent or Graduate loans, the new Consolidated loan keeps track of it for estimating repayment terms.

    ✅ If any of the consolidated loans were subsidized, the government will break the Direct Consolidation into two loans: Subsidized and Unsubsidized.

    You can choose the repayment plan for the new loan — 10-Year Standard is the default. The term on the Direct Consolidation Loan could be different depending on the amount of student debt the borrower has.

    When It’s Useful

    There are two common cases where a Direct Consolidation makes sense:

    1. The borrower is going for PSLF and has old FFEL loans from undergraduate years.
    2. The borrower wants to switch to a different income-driven plan.

    We’ve seen borrowers consolidate just a single loan to help achieve one of these outcomes!

    NOTE: #2 should absolutely never happen unless you’ve run the numbers on switching plans (including capitalizing interest).

    For example, if you do a Direct Consolidation of FFEL loans which are midway through IBR 2009, you’ll be resetting the forgiveness clock on those loans. Instead of seeing forgiveness in 12 years, you’ll have to wait 20 years on PAYE.

    This action can dramatically increase the total paid on the debt over time. Please proceed with caution!

    Don’t do Direct Consolidation without running the numbers!

    Simulating Direct Consolidation

    At Payitoff, we recently found a way for you to run these numbers. If we detect an older loan that could benefit from Direct Consolidation, we’ll flag it in the opportunities section of the Overview:

    Once you click on “Consolidate FFEL loans into Direct Loans”, you’ll see all the loans that are eligible:

    After clicking “Consolidate”, these loans will enter the Standard 10-Year plan and simulate all the actions described above, including interest capitalization, the subsidization split, repayment schedule reset and more. You’ll be able to compare all the repayment options with the newly consolidated loan.

    At the moment, we don’t have “undo” functionality for simulations. We recommend running a report without Direct Consolidation first then comparing that to the simulated version!

    The Process

    Once you’ve found whether it makes sense for the borrower to apply for a Federal Direct Consolidation Loan, there are a few steps:

    1. Fill out the Federal Direct Consolidation Loan Application Form. Be very clear when filing out “Loans to Consolidate” and “Loans to not Consolidate” sections of the form.
    2. Request a repayment plan to accompany the Direct Consolidation application. For income-driven options, the borrower needs to fill out an IDR Plan Request instead.

    This can all happen online as well.

    We hope this was a helpful primer to Federal Direct Loan Consolidation. If you have questions, feel free to shoot us an email! We’re here to help 😃