Below are the most common questions we have received regarding the CARES Act and how it may affect participant’s LIPP assistance.
If I choose to utilize the loan suspension and not make payments for any of the months in which my lender is not requiring a monthly payment, what impact will this have on me for LIPP purposes?
If you do not make payments during months for which LIPP assistance was provided to you, your eligibility for the assistance you received for those months will be reduced accordingly and you may either send a payment or have the amount deducted from your next LIPP award when you resume repayment. If you choose to send a repayment, please note it may take 2-3 weeks to process as we are currently remote and not collecting the mail daily. Should you decide to suspend your payments through September you will continue to be considered a current LIPP participant during those months for the purposes of the longevity allowance, however, months past September 2020 will not be included.
If I choose to utilize the suspension being offered on federal loans or otherwise opt to not make a loan payment, how do I notify LIPP of this?
If you receive a LIPP award, then opt to suspend your payments please submit an Adjustment Application via the SFS Self-Service Portal. We will adjust your current LIPP award and send you an updated award notification which will detail your eligibility and the amount of the repayment you will owe. The repayment can either be deducted from your next award if you plan to re-enter in the near future or sent via check.
If I am able to continue to make my typical monthly payments in the amounts required by my servicers pre-suspension, how will these payments affect my overall repayment in conjunction with LIPP benefits?
Since no interest is charged during the suspension, your typical monthly payment amount will go entirely towards paying down principal. Effectively, this will shorten your overall repayment term to less than 10 years (120 payments). LIPP requires loans be on a 10 year repayment term, however, the change in your repayment due to this suspension will not affect your LIPP eligibility. Please note, once your loans are paid in full, or once your monthly participant contribution exceeds your monthly loan payments, you will no longer be eligible for assistance from LIPP.
If I choose to utilize the suspension on my federal loan payments and only make payments on my private and/or bar loans, will I still be eligible for LIPP?
If the total of any private loan payments you may be making drops below your participant contribution level, you would not be eligible for assistance on those loans.
Can I make a lump sum payment during this period, or do my payments still need to be monthly?
We advise against lump sum payments for a few reasons. Administratively loan payments made on schedule are easier to track for the purpose of verifying eligibility in upcoming award periods. The more significant reason to pay monthly is that, in case an unexpected shift in employment occurs, and you are no longer eligible for the funds you are awarded, you would still have the remaining LIPP funds on hand to return. If you used those funds to make a lump sum payment you would then need to repay LIPP out-of-pocket in a time when your finances may be especially strained.
To continue making my standard monthly payments, should I call my servicer to opt-out of the forbearance or should I just make monthly manual payments on my loans?
Whether you formally keep the loans in forbearance or opt out of it to re-instate your required monthly payment is up to you; we will treat both options the same as long as you pay the same dollar amount as you have been. It is our understanding that auto-payments will be cancelled so we recommend you closely monitor your accounts to ensure your payments are processed as intended. Participants from the class of 2020 will need to pull their federal loans out of suspension in order to receive a required payment amount.
I have multiple loans held by the same federal loan servicer, and some of these, like my Grad PLUS loans, have a higher interest rate. Since no payment is required on any of these loans during the suspension, can I allocate the total of my usual monthly required payment to the higher interest loans?
As long as the total payment amount is the same as it has been, how you allocate the payment is up to you during the next six months. LIPP will continue to calculate eligibility based on the total amount that you were paying before the suspension until the loan is paid off or your monthly participant contribution exceeds your total monthly loan payments. This means that although one or more of the individual loans under the same servicer will be paid off before the others, the total amount will still be honored and just redistributed to the other loans under that servicer. In order to structure your payments this way you will need to proactively manage your payments with your lenders.
If I am laid off or furloughed in the coming months, what are my options for LIPP assistance if I want to continue making my loan payments?
Graduates can qualify for LIPP assistance during any type of leave or transition between positions for which they are eligible and receiving a LIPP benefit. The assistance provided during the transition is calculated using the average of the two incomes surrounding the break in employment. Additional details about Transition Assistance may be found on our Eligible Employment page.
Beyond the standard transition assistance, we are making available additional transition assistance to current LIPP participants laid off or furloughed between now and December 31st, due to the economic disruption arising from the COVID-19 pandemic. LIPP participants can request up to 12 weeks of COVID-19 related transition assistance and can utilize the benefit through the end of March 2021. This additional COVID-19 transition assistance will not be counted against the total number of transition weeks otherwise available to you.
If I received a stimulus check, will that be considered income for LIPP purposes?
We will not be including these funds in the calculation of your LIPP income.
What if I opt to refinance my loans after the loan suspension, will you continue to provide coverage at the higher loan payment amount?
If you refinance your loans we will use your new required loan payment on the refinanced loan when calculating your eligibility for LIPP assistance.
Will my spouse’s loan payments continue to be deducted from their income for the period in which they are in forbearance and not required to make payments?
Spouse loan payments will only be factored in the LIPP income calculation if the payments are required by the servicer, not if they opt to make payments throughout the suspension.