Millennial Debt This Week: June 26

The U.S. Department of Education’s office of Federal Student Aid (FSA) has signed contracts with five companies to provide enhanced customer support for student loan borrowers
The nine current servicers (Nelnet, FedLoan, Greatlakes, etc), appear that they will be left out of the process once the current contracts expire in December of 2020, or 2021, if extended.

Borrowers have been plagued by a litany of problems when dealing with the student loan debt servicers. While everyone I've personally dealt with at Great Lakes has always been personable and polite, the information I've received has varied wildly, making an already complex space even more difficult to navigate.
On a somewhat related note, I wouldn't be surprised if the deferment of federal student loan payments through the CARES act gets extended as the transition will likely involve some unforeseen hurdles.

The most interesting part of the announcement was the use of a "centralized loan processing platform"

This should mean that those seeking Public Service Loan Forgiveness won't have to change their loans over to a single servicer (traditionally FedLoan), and that all servicers should have the same process and program in place for counting qualified payments.
I've advised my wife (who's a nurse at a non-profit hospital), to wait to switch her loans to FedLoan until after the effects of the CARES act ends. With this new announcement, it might be a good idea for her to wait until after this process is complete. As long as we keep a detailed record of her qualified payments, I don't feel like we need to complicate the process any further for a group of servicers who are

Mortgage rates are at an all time low
Now might be a good time to think about purchasing your first home, or refinancing a mortgage that's at least a few years old.
5 of the experts expect mortgage rates either decrease a little or stay near historic lows
The 6th expert didn't make much of a prediction at all
I don't think it's worth worrying about timing mortgage rates, but interest rates are low enough that I will try to refinance our oldest property this summer.

This article has almost nothing to do with the headline, but I thought it was intriguing, even if it seemingly rambles without a point.
It starts by illustrating the story of Taylor who has $70,000 in student loan debt largely from a master's degree with little economic value (possibly literature), and has an annual adjusted gross income of about $47,000 from a for-profit employer (income backed into using the loan simulator at studentaid.gov).
The basis of the introduction is that she cannot afford to pay her loans back at the standard ten year repayment rate ($770/month, $93,257 total)
Refinancing her loans would only decrease her monthly payment to $700, which is still unaffordable for her.
She could possibly afford to pay her loans back at the extended rate over 25 years ($451/month), but that would entail payments for 25 years, and a total repayment of $135,303.

Assuming her income increases 2% each year, her lowest payment and total amount paid would be through one of the income-driven repayment plans (IDR) ($174-$235/month, $48,624 total).

I played with the simulator a little to see how different increases in income would impact her repayment rate below:

These are probably where IDR would start to break down for Taylor. If her income quickly increases to the point where her annual salary is about the same as her loan balance, then she might spend a little less buy simply paying her loan balance off, but the fact remains that her current standard payment is unaffordable, so IDR is likely her best option regardless.

In the original scenario with an annual increase in income of 2% the author estimated that Taylor would face a forgiven loan balance of $105,344 after 20 years of repayment. When I ran it through the simulator, I saw a forgiven balance of $87, 688, but regardless, that would be unaffordable for her as well.

Her estimated income 20 years from now would be about $70,000 annually, so it's unlikely she would be able to repay $90,000-100,000 in additional income tax.

This will be a massive problem for many borrowers in her same situation, and will likely lead to changes in how that debt is handled as the situation develops.

The most insightful aspect of the entire article is in the 3rd to last section, where the author is able to fit this case into the bigger picture.

Taylor's parents likely feel like they wasted money paying for any of her college education.
Taylor's payments are exactly the same on IDR, regardless of whether she has $70,000 in student loan debt, or $170,000
Taylor probably wishes she had taken out as much in federal student loan debt as possible while in school.

Income-driven repayment and student loan forgiveness are half solutions that only increase the total cost, and encourage students to take as much in student loans as possible.

Millennial Debt Doctor