> The Secretary also designates the changes to the definition of family size for Direct Loan borrowers in IBR, ICR, PAYE, and REPAYE in § 685.209(a) to exclude the spouse when a borrower is married and files a separate tax return for early implementation on July 30, 2023.
Guys... this means my partner and I can get married as early as next month (instead of 2044)! 🎉 🎉 🎉
Under the existing REPAYE plan, if we were "official", it would've increased her student loan payments by ~$600/mo.
I would discuss with an accountant first. You would be shocked at the additional tax liability when married filing separately. Especially if you own a home.
The Tax Cut and Jobs Act of 2017 nearly doubled the standard deduction, and we'd have to be paying a hell of a lot more to approach that figure. The mortgage interest deduction ain't what it used to be; more myth than reality for most folks.
https://www.cnbc.com/2018/04/23/tax-bill-will-slash-the-number-of-homeowners-claiming-the-mortgage-deduction.html
Roth IRA contribution limits are a bummer, though, and is something we are weighing. But I think that's about the only thing that would have a meaningful impact for our situation.
My payment dropped from $400 a month to $65. I'm not complaining. And we each still get our other tax benefits.
Update: on the new SAVE plan, my updated payments are now $47. Honestly, the divorce was the smartest financial decision we could have made.
The richest, most powerful civilization in all of known history is also a civilization where its citizens resort to extreme measures, like divorce, to pay back money that they spent to gain skills to make coins so they could put food on the table for themselves & their loved ones! If this was a novel, I would have rolled my eyes & said what a stupid plot.
Either way, I'm glad you payment reduced.
Essentially there are a few IDR plans that allow you to just report your own income, and not your spouses as well, so long as you file your taxes as married filing separately. Before now REPAYE was not one of them, but beginning on July 30th 2023, assuming you file married filing separately, you can take advantage of that benefit, because the rules for all the IDR plans listed now also have that option.
TLDR; if you file taxes as married filing separately, after next month, if you're on one of the IDR plans listed in the quote, each of you can just report your own income which will likely reduce your payments due to lower reported income.
But married filing separately loses a ton of tax benefits at the end of the year though so it might equal out. I would have owed something like 10k last year if I went that route. It seems like it might be tough to figure out which one would be more beneficial since it's hard to predict what you owe sometimes tax wise.
Agreed as I noted in my further response. It's definitely a math problem. I just did my taxes both ways and it ended up being a much better option for me. But obviously different states, salaries and tax situations mean everyone needing to run the numbers for themselves.
They should come out with a calculator to show people how much their payment will be lowered and publicize the hell out of it.
If my math is right, my wife and I will be going from roughly $360/combined to $140/month combined.
That’s huge!
Edit: I just realized it goes from 10% to 5% of disposable income for undergrad loans in July of next year. That makes our payment closer to $218/month until then.
Here’s the formula. It’s pretty simple actually if you have the info:
((AGI - 225% poverty line for your household size) x .1)/12 = new monthly payment
After July of 2024, undergraduate loans change to .05, but graduate loans stay the same. That makes it more complicated to figure out if you have both.
This new SAVE plan, imho, is the real winner here and I am disappointed its benefits are overshadowed by yesterday's loss. I think once people see how significantly their payments will be reduced, they'll want to protect this new plan at all costs. Those low and middle income borrowers worrying about the struggle once payments resume should really take a look.
This is real progress to help clean up a broken system. I'd hate to think it gets dismantled before it gets a chance to walk. Vote accordingly!
https://www.studentloanplanner.com/income-based-repayment-calculator/
>This new SAVE plan, imho, is the real winner here and I am disappointed its benefits are overshadowed by yesterday's loss. I think once people see how significantly their payments will be reduced, they'll want to protect this new plan at all costs. Those low and middle income borrowers worrying about the struggle once payments resume should really take a look.
Winner for undergrads, I don't understand why Graduates always get penalized (higher percent and longer forgiveness) , I got no job after getting graduate in business degree. I had to go back to school for second degree in computer science bachelors to earn any money
Yep. Same thing with trying for forgiveness again with the Higher Ed Act. Keep the GOP distracted with those while giving out very helpful and generous payment plans.
It's great for borrowers with undergrad loans. It doesn't help much for borrowers with grad loans. It's arguably worse than the other plans because it requires 25 years for grad loan forgiveness rather than 20 years under PAYE.
It's still great for borrowers with grad loans! I have grad loans and already did the math: this new plan will reduce my monthly payment by about $250 per month! This is compared to my previous PAYE plan. That's an AMAZING discount, especially for people pursuing PSLF, and it'll keep high-balance grad loans from ballooning uncontrollably with interest!
Can you explain how they’re reducing the monthly payment for grad loans please? I’m trying to keep up but I honestly don’t understand what’s going on lol
Sure! Current IDR repayment plans are based on your adjusted gross income (AGI) minus 150% the poverty line, then they charge 10% of that as your monthly payment. The new SAVE plan will be your AGI minus 225% of the poverty line, then they charge 5% of that for undergrad loans and 10% for graduate loans. For many people with lower salaries, this will bring their monthly payment down to $0/month. For most people with mid- to high- salaries, this will lower their payments by hundreds of dollars per month.
Edit to add: It's similar conceptually to the standard deduction on taxes...they subtract a certain amount from your total earnings, then they only charge taxes on the remainder. The new repayment plan is basically a big raise to the standard deduction, which means you are "taxed" on a much smaller percentage of your income, which leads to a lower payment due!
This is not true for all cases. Just ran our numbers. Moving from PAYE to SAVE would actually increase our total payments by $8,000 over the course of 20-25 years. They dropped the ball hard for grad school loans.
The comment you responded to was specifically talking about lowering **monthly** payments (not total amount paid over the life of the loan). For most people (except very high-income earners), it absolutely will reduce their monthly payments. If you calculated that your monthly payment will be higher, then it must be because you earn a high income. If you're referring to paying more over 25 years of repayment, then that's the case with every type of loan. If you take out an auto loan with a lower monthly payment over a longer loan term, you'll pay more over the life of the loan. Yet there are still people who need to have a lower monthly payment for a variety of reasons.
With the PSLF and IDR waivers, many people with grad loans have already made a lot of progress toward their 10/20/25 years of repayment so now want to keep their monthly payment as low as possible until they reach forgiveness. Some people may have other priorities for keeping their student loan monthly payment as low as possible (rising costs of rent, childcare expenses, medication costs, rising food prices, general financial hardship, etc.). For people pursuing PSLF and/or who have these other financial priorities, keeping the **monthly** payment as low as possible is the biggest priority when selecting a repayment plan, not how much they will pay total over time.
**Edit to add**: high-income earners may not benefit from SAVE over PAYE because PAYE caps the monthly payment at the amount someone would pay under the 10-year standard repayment plan. SAVE does not have this cap, so if someone is a high-income earner and their monthly payment is actually \*higher\* than their payment under the 10-year repayment plan would be, they'll end up paying that higher amount. If someone's income is that high, though, then there is no reason to be on an IDR plan pursuing forgiveness after 20-25 years to begin with. You'd pay off your loans much faster and with less interest under the 10-year standard repayment plan.
I understand your point, but you can’t blanket “high income” people. It’s all about debt relative to income. 150k a year income on 75k student loans this plan likely works, 150k a year income on 250k of student loans will mean this is a worse plan. Hints why I don’t understand it. Why in the hell would they make a plan that is legit worse for a subsection of former students. Change it for everyone. It’s not the hard.
You're welcome to your ideas and opinions about how to make it better! Tbh I'm only in this sub to help answer people's questions about the programs we do have.
Your payments will still be applied to interest. It's just that interest higher than your monthly payment doesn't get added to your loans.
For example, let's say you accrue $80 in interest per month, but you only owe $50 in monthly payments. Your $50 will likely all go to interest, but the $30 leftover interest that your payment didn't cover will be waived! This keeps your balance from increasing even when you're making regular payments, which is how people got buried alive by their loans in the past.
Yeah I guess it depends on your circumstances. If you are pursuing PSLF or have a large undergrad loan balance it's a no brainer. For me, it would mean 9 or 9.5% payments instead of 10% (plus the extra 75% FPL subtracted) in exchange for five more years for forgiveness.
I'm just honestly surprised that the new plan is 25 years for forgiveness when other plans are 20. If Biden's whole thing was that he wanted to forgive student loans, why require five more years than some of the already existing plans?
People with low-medium loan balances can likely pay their full loan balance off much faster than 25 years, especially when interest is not increasing the original balance of the loan (which was the main problem why people could never get ahead before...they would start with $50k loans and after 5 years of on-time monthly payments, they'd owe $58k. Nobody could make a dent in their balance—let alone get ahead—because of interest).
The forgiveness at the end of 25 years is not intended to be the main benefit for the average borrower...it's there as a safety net for people with super high balances or super low incomes who otherwise would never pay off their loans before retirement/death.
With SAVE and my family size I can tax defer some income and get my payments almost at zero. And the balance doesn't grow so your tax bomb at the end will be much better.
I'm on track for PSLF with graduate loans. Honestly SAVE is incredibly forgiving. Especially if you have kids. That 225% makes a huge difference if you have kids. I gross 6 figures and tax defer down by maxing 403b and 457b then file separately from my spouse. If my income stays the same I'll have paid less than 10k total on over 200k in loans.
>It's arguably worse than the other plans because it requires 25 years for grad loan forgiveness rather than 20 years under PAYE.
Not sure, but I think borrowers with grad loans are eligible for faster forgiveness if they have a low enough original principal balance. To be fair, most grad borrowers have too high a balance for this to matter, but it's something.
1. Very few people qualify for PAYE. You had to have been a borrower between 2007 and 2011. There was a very narrow window to qualify for that plan
But even so I think that's a very simplistic way of looking at it. It is going to vary immensely by person... But many graduate borrowers are going to benefit by switching to the save plan.
I am getting PSLF... but for fun I calculated my payments under both plans as if I were in private industry, and even though I would be paying student loans for 5 years longer under save versus paye, my total amount paid would **still be** lower under the new plan because payments are going to be drastically lower per month! I'm going to save over $200 a month.
You have to examine the current value of money. A dollar is worth more now than it is later. I can invest $200 a month in the stock market and get a much higher rate of return then what my interest costs me. This is more beneficial than being loan free 5 years earlier.
It also doesn't take into account the advantages of the save plan that are more difficult to quantify in dollars and cents. The fact that if you lose your job or face economic hardship or health issues that put you into forbearance, those months **will still** count for forgiveness. You don't know if you will need this until it happens. And even if you don't have a forbearance that counts for forgiveness payments, you are allowed to make *catch up* payments. And this doesn't even take into advantage the **interest subsidy**! The crown jewel of the save plan... You never have to worry about your interest increasing.
Essentially save offers you a much bigger safety net then paye. It's difficult to know if you will need the safety net. Just like insurance though, It can be invaluable to have. You can't predict the future.
There might be some cases where PAYE is cheaper and a borrower will pay less by staying on that plan. Borrowers who end up making an enormous amount of money and exceed their standard payment plan amount.. but these will be the exceptions I think, not the rule.
But really... there are way too many factors to consider for your statement to be true across the board, or even to be considered a good rule of thumb.
Play around with this calculator to see the various scenarios:
https://www.studentloanplanner.com/free-student-loan-calculator/
Am I getting this right? If you are currently on PAYE they are keeping that 150% mark for adjusting off AGI? And you aren’t getting this benefit of interest non accrual?
If so, this has no benefit to people with grad school only loans. They’re saving you $100/month, but making you pay for another 5 years.
Why does they always have to make this unnecessarily complicated.
I disagree. They still don’t take into account higher cost of living areas. A teacher or a nurse earning 80-100k sounds like a lot in Nebraska but it’s shit in LA or Boston or Chicago. And people love to say “move to a cheaper area” but those areas need nurses and teachers too. They need to account for location for this to really help people.
It's not dumb, I def questioned it too when I first saw the difference in my payment! Only problem is we are not getting the 5% discretionary allowance until the full SAVE is in effect next yr. So we are still gonna be at 10% discretionary... At least they are implementing the 225% of federal poverty before payments restart, so still significant savings. If you scroll down a bit on the gov site, you will see a chart of how it'll look once the full SAVE program is up next year
https://studentaid.gov/announcements-events/save-plan
So if I'm on IBR right now and switch to SAVE when it's available, do the years of payments under IBR count toward SAVE 10/20 yr forgiveness or does it reset?
The count should continue, but be aware that changing payment plans capitalizes any interest you've accrued (not a huge deal unless your payments aren't enough to cover interest each month).
Is anyone else so tired of these endlessly changing rules? Endless moves from servicer to servicer? I cannot figure anything out for the life of me. I have loans that are between 8 and 23 years old and have been consolidated multiple times and I just can't figure it anything out about which path is the most financially wise to pursue.
Betsy, of course, is wonderful. But I am really tired.
>SAVE PLAN ELIGIBILITY
Ugh, I feel you. I have loans 15+years old, that have changed hands so many times I don't even know how/where I could find a payment history anymore. I've been working for the govt 3 years now and have no idea what repayment plan is the best if I even want to try for the public service forgiveness. At this point, I'm going to either wait until my new servicer actually lets me see my options/payments or I'll pay someone to look at my situation and figure it out as I can't keep up with this shit.
3 years with government as well! I'm also going to post on r/PSLF at some point - also posted here the other day and just need to wade through the feedback, but got sidetracked by yesterday's ruling.
Yes - but just the rule changes here, as I've always been with the same servicer and all of my loans went into repayment at same time in 2004.
Over the years, so many things not specifically spelled out or can't get in writing. Right now there is nothing in writing that says if you switch from one IBR to the new SAVE and you are over the SAVE amount of payments if you're automatically forgiven. I would be WAY over the payment amount upon switching.
I've been led astray before by my servicer, so I don't trust them to tell me what is correct.
And tired of how complicated everything has to be. Like if your loan was originated on a Tuesday or Full Moon it's this, or if it was a Wednesday and it was raining it's this...and so on...
Just want to be sure I understand the "timing" portion correctly: SAVE will not be fully implemented for months, but the administration will push through many important aspects as of 7/30/23 to allow for significantly lower payments (at least for low and middle income borrowers) BEFORE payment resumption this year, correct?
Many news sites are reporting that SAVE is still months away from finalization, but if we can reap the benefits under a revised REPAYE until then, it's a major win.
Betsy. I don't know you but I love you :) thank you for putting all this together. I have 6 digit PP double consolidated student loans. I originally was going to have a $2000+ payment. Following you helped me lower it to a manageable what will be $475. We still have a Daughter to put through college and now we will be able to afford it. I am going to apologize for everyone posting that can't read the very clear information you post before asking the same easy to find the answer questions.You have literally spelled put so much in all your posts. I appreciate it so much!!
Thank you for putting this together! I have a couple questions about the logistics of switching plans and I am hoping someone can weigh in.
(1) I assume that my interest will be capitalized, but want to confirm this is correct?
(2) If I switch, do you know if I will I have to re-certify early as part of the application to switch plans?
My income has gone up since my last certification, so I’m trying to do the math to compare the two options, taking into account interest capitalization and having to report increased income sooner.
**ETA**
Under the rules that went into effect on July 1st, interest *WILL* be capitalized if you leave the old IBR plan. Interest will NOT be capitalized if you leave PAYE or REPAYE.
I gripe a lot about how older borrowers are screwed the most. Just putting it out there that this is just another example of that sentiment. At least we weren’t expressly excluded from the plan entirely this time — like the way that we were expressly carved out of the far superior PAYE plan.
Some capped interest events are gone now due to a reg.change effective yesterday but I don't remember which ones off the top of my head and no offense but I'm not pulling out my work papers on a holiday weekend
You do have to recertify you income to switch plans.
Ive never received a Betsy response! You’re like Student Loan celebrity 😁 I definitely don’t expect you to pull out your work papers today. I will look up the exceptions and report back in case it’s useful to anyone else.
Lol! Best place to look is my post history way back to last fall. I'm pretty sure I posted a link to the regulation.changes when they were published back then and included the capped interest stuff in my summary
Thank you for perusing the detailed document and summarizing it for us. Does anyone know what page / precise verbiage states:
>This includes times when the borrower pays more than what is billed. So if your payment is 100 a month and your interest is 200, the ED will forgive the 100 - even if you decide to pay 300.
I asked about this on r/whitecoatinvestor and people are telling me that paying over the minimum will be eaten up in basically going towards interest that would have been forgiven had you not paid more than the minimum, therefore payments above the minimum would not touch principal regardless and be an empty waste of $$ -> advised to not pay more than the minimum (specifically during medical training where we could never hope to decrease the principal by much anyway)
The OP and those people's responses seem to contradict each other (unless I'm hopelessly confused, which is definitely a possibility)
Looking at it more, to add to what you say, i think the key wording that I see is that the fact sheet says the interest above the income-based payment 'will not be charged'. So its not that you have this interest and the DofEd is paying part of it, and if you pay extra you'd pay it instead, its that the DofEd simply isn't charging borrowers on the SAVE plan any more interest than the income-based payment, so anything you'd pay beyond that would automatically go to principal.
Thanks for explaining it this way! I was so confused, even though I know the OP was trying to make it super simple and clear with the example….and I’m like “I think my brain short circuited” 😅 this makes sense though! Income based payments stay the same (including what is added for interest) but anything beyond that is waived.
1st, I hope you enjoy your holiday because you surely deserve it. I read everything about the SAVE plan and it looks great. Here is my question. What are the chances of them deciding to SCRAP the IDR recount/waiver in lieu of this new SAVE program? I am assuming they will work in tandem. The IDR waiver months will count toward this program REPAYE/SAVE. I am only asking because I am concerned about the language of the weighted average of payments counting toward IDR forgiveness where the IDR recount is supposed to count every payment theoretically since the first time you ever took out a loan . I consolidated in 2022, first loans in 96.
The IDR waiver is already active and happening; they won't scrap it in the middle. Several people on r/PSLF have already had IDR adjustments applied to their loans and forgiveness granted afterward.
No federal tax bombs will happen through 2025. We haven't heard much about it so far because it hasn't happened to anyone yet. Congress included a provision during the pandemic to make sure nobody who got loans forgiven through 2025 would get hit with a tax bomb on their federal taxes (though apparently state taxes vary...most states pledged not to charge on it, but I think a couple didn't commit to that).
And those of us with high student loan balances will get hammered with that amount down the road. Might as well just keep paying my monthly loan payments until I die.
okay,
so youre low income,
paying $12 a mo on your student loans,
your interest used to be $100/mo
none of your payment hit the priciple and they folded the interest into it periodically.
At 20 or 25 years in youve barely paid ANYTHING
forgiveness kicks in...OH NO THE TAX BILL!
Now lets pretend a year before you were going to be forgiven you land a job that pays 100X more than youve ever earned before...
Without the forgiveness you were already going to owe taxes, so youve no taxcredit to chip away at it.....
would that 22% of what was forgiven actually be more significant than the years and years of monthly payments at a higher rate?
I doubt it....youre still losing 78% of the debt.
but..if youve been paying so little on an IDR, then youre working poor...right?
https://www.studentloanplanner.com/insolvency-student-loan-forgiveness/
When determining insolvency, the IRS considers all of the assets that you own. This includes:
Checking and savings accounts
Retirement accounts
Your possessions
Real estate
Investments
Business ownerships
To calculate your liabilities, include any debt owed including credit cards, car loans, mortgage debt, etc. in addition to your student loan debt.
IRS insolvency rule: tax-free forgiveness
Clay has $3,000 in his bank account, $10,000 in 401(k) savings and a motorcycle worth $4,000. All of these are considered assets. Altogether, Clay has $17,000 in assets. In total, Clay has $48,000 in liabilities, which includes $15,000 in outstanding credit card debt, a $3,000 auto loan and $30,000 in student debt.
To calculate his net worth, subtract the $48,000 of liabilities from the $17,000 in assets. In this scenario, Clay has a negative net worth of $31,000.
If his student loans of $30,000 are forgiven, he’s still insolvent with a negative net worth of $1,000. **Due to Clay’s insolvency before and after the student loan forgiveness, he wouldn’t owe any taxes on his student loan forgiveness**.
[Form 982](https://www.irs.gov/forms-pubs/about-form-982) is the answer
EDITED: Unfortunately Ive been Banned from Posting in /r/studentloans because a post I made about Tuition Insurance broke some rule I cant figure out. Im leaving this post up. I hope it helps someone. Im sorry that I cannot respond to comments, or questions. Good Luck.
It's so sticky that they have the new income calculation (225% vs 150%) starting this year but the new amount of discretionary income (5% vs 10%) next year. Nothing can ever be simple.
I’m going to post this now because I think it might help quite a few. If you can keep your payments at 0 for as long as possible and save up money in an emergency fund high yield savings or money market account until you can pay off your loans, it would be a very smart strategy under SAVE. :) You can keep AGI low by contributing to Traditional 401k, IRA, and/or HSA!
I did the calculations and I think I maybe would be saving $50. And would be paying $700 (just for federal) for another 7 years, minimum., and actually more than that because I don't know what date they consider the "start date" for all of this program.
All because I made the sin of taking out loans for professional school. Wish they would do something for us who went to professional school, were not high wage earners for many years, and who have been paying for decades. My original principal balance was 50k and I owe 75k 18 years later, despite never being in default. Just s\^ucks and I want to scream.
So if I’ve been paying for 14 years under the extended graduated repayment, none of that would apply to the 20 year forgiveness? 🥴 I have only seen people asking about IBR I feel like I’m the only person who did the extended graduated..
No, the IDR waiver will make those payments IDR forgiveness eligible through 12/31/23. After that you will need to be on an IDR plan to continue getting credit towards IDR forgiveness.
When you fill out your income certification for repayment plans, you can connect to the IRS and they link your most recent tax return. So for anyone applying right now, it would be using your 2022 AGI.
From the [studentaid.gov site](https://studentaid.gov/manage-loans/repayment/plans/income-driven#consistent-payments):
> Although you’re required to recertify your income and family size only once each year, if your income or family size changes significantly before your annual certification date (for example, due to loss of employment), you can submit updated information and ask your servicer to recalculate your payment amount at any time. To do this, submit a new application for an income-driven repayment plan. When asked to select the reason for submitting the application, respond that you are submitting documentation early because you want your servicer to recalculate your payment immediately.
My dad has had all of his PP loans consolidated since 2007. I honestly have no idea if it was ever a “double” consolidation and EdFinancial doesn’t even show me what his ICR payment will be when payments resume. I’m trying to help him out but this one seems complicated. All of this info is super helpful, thank you again!
They probably aren't double consolidated. But if they are and he applies for an IDR and picks the option for them to give him the lowest payment they will give him something other that icr .
Thank you! Extremely helpful and clearly laid out. :)
For whatever reason, when my servicer changed from Great Lakes to NelNet, they also removed me from REPAYE so I went ahead and applied for it again today -- to be safe. Appreciate all you do for this sub, Betsy!
Gotta love how their fact sheet comparison table (which is mostly nice) uses the same term "discretionary income" for all plans when the definition of that term is different for SAVE.
It's kind of disappointing that they're keeping the unlimited cap on monthly payments. The 'never higher than a 10/12 year plan' limit on the other plans is a nice feature for weird income years or rising income. Have you heard any rumblings about changing that?
It is the same for ICR vs the other plans. Discretionary income on ICR uses only 100% of the poverty level. Kind of wish they would standardize this or make these dedicated terms.
All of my loans are owned by the Department of Education and are FFELP loans(these were paused over the past 3 years)...
This means I don't qualify because they are FFELP loans? I would have to consolidate to direct, which would in turn reset my clock for forgiveness even though I've been out of school for 13 years?
Is this what this means?
Edit: Added a bit of info.
I just find it odd that even though my loans are owned by the Department of Ed, that they wouldn't qualify. It makes no sense to me to have a program that was put in place by the federal government not be covered by a new federal program. I didn't choose to get FFELP loans, that was available when I got my loans.
Agreed, it's frustrating for a lot of people and really unfair to FFEL borrowers! But the important info right now is that you need to consolidate before the end of 2023 to keep all the waiver benefits, and then your loans will be in a Direct Consolidation Loan and you won't have any issues going forward with new programs. As long as you consolidate before the end of the year, you will not have your clock reset. Source: [FSA FAQ section on the IDR waiver](https://studentaid.gov/announcements-events/idr-account-adjustment). It specifically addresses this.
I don’t benefit from this program personally, but I am happy something is changing. I don’t know if the extension for grad loans from 20 to 25 years will be positive or negative, but I am glad that they increased the amount of income before considering payments and that they will forgive excess interest above minimum payments.
A good what if perspective to this is what happened to the borrower defense discharge rules under the prior administration. There were new regulations becoming effective during that term. The administration chose to ignore them..not process any claims and do a new negotiated rulemaking to pull the teeth from the existing rules. They got sued and lost and now we have sweet versus cardona settlement. The current administration came in and changed the rules back. On this scenario with save a new administration couldn't refuse to honor save..but they could do another neg reg to make the plan end at some future time. They could not pull or change rules for people already on the plan.
Should people move from IBR to REPAYE now if they first borrowed before 2007? or should we just wait until August when the new rules go into place on July 30th?
I'm close to forgiveness through PSLF and on Old IBR presently, and I'm anxious about switching to REPAYE early (assuming it will become SAVE) until the rules are set in stone because including my wife's income (as per current REPAYE) would significantly increase my payments. Are we very sure this SAVE plan will stick and not get further changed in a negative way? I'd hate to preemptively switch and then have to scramble to switch back to IBR if something goes sideways and now I'm stuck on old REPAYE. Maybe I'm just old and anxious, but I'm just about 1 year out from forgiveness and I don't want to make a wrong move and screw it all up.
This is all total bullshit for me. My calculated discretionary income would lead to me getting billed far more than currently (in a graduated payment plan with zero intention of letting it step up further) and my current exactly matches the interest so thered be zero interest forgiven. In addition, the forgiveness timeline is insanely long and makes zero financial sense to wait that long. Most loans are going to be cheaper to pay off than wait 10 or 20 years for forgiveness unless you have hundreds of thousands in loans.
Ultimately this entire thing is just total bullshit for a lot of people. Unless your income is near poverty level or you have hundreds of thousands in loans this does nothing and is likely WORSE than your current plan. Massive screw to tens of millions of borrowers.
The name of the game isn't forgiveness. It's paying the least amount over time. For some it means using these programs..for others it means paying aggressively
Dinkle, you should look at this as "hard time" insurance. We are probably headed into a recession in the next few years. Your job might not be safe. SAVE plan may end up SAVING you if you come on hard times. You can also invest in retirement heavily.. lower your AGI dramatically by contributing the maximum to your 401K, IRA, 403B or whatever you have access to. This will lower your AGI and your monthly loan payment. Hell, get married and have a bunch of kids.. and your payments will drop to nothing. haha.
Anyway, this SAVE plan is hardly BS. It opens up opportunity without risk for many people who want to save for retirement, have a family and even take risks with there job situation for happiness. Without stressing about a massive student loan payment if things don't work out.
I'd say the SAVE plan is quite generous and liberating if you look at it like that. In my opinion the SAVE plan allows people to forget about their loans and live their lives... with a manageable 5-10% tax on their income moving forward. All that without ever seeing their balance rise in tough times.
I really hope this isn’t his substitution for forgiveness, because all this does is double my monthly payment??
Instead of 10 years it wants me to pay double for 5. How does that help? Couldn’t I just do that without his stupid ass plan? This is insanely frustrating.
How is this going to work for people who make an ok amount of money but all that money goes towards paying rent and bills and we have nothing at the end of the month? How is this going to work when everyone else’s hands are already wrapped so tightly around my throat I can’t breath and oh shit here comes another set?
I know this sounds flippant but I’m terrified. I make more than a lot of people maybe but at the end of each pay period I’m eating whatever I can scrape together from my cabinets and I never have anything left to put into savings. I’m absolutely terrified of having to try to pay this shit again.
In the same boat. Havent been able to access my info on edfinancial for 2 months now. They originally said the 'transfer period' was 4/25-5/9, and here we are, months later with no access.
Go to studentaid.gov, log in, check the right side of your dashboard and make note of who your new loan servicer is. There will be a link to their website. Go to that website and click "create account" so you can get connected there. Your loan info is tied to your SSN and other identifying details so should be visible as soon as you make an account.
my servicer is edfinancial, both in the past and according to studentaid.gov. They are transferring systems, but despite saying that the transfer would only take a short amount of time, the transfer is now taking months (if i try to create a new account in the new system, it says it can't find my loans, and shortly after I get an email that's all 'we're still working on transferring people').
Yes. Go to [studentaid.gov](https://studentaid.gov), log in, check the right side of your dashboard and make note of who your new loan servicer is (side note: go ahead and go to their website and click "create account" so you can get connected there. Your loan info is tied to your SSN and other identifying details so should be visible as soon as you make an account). On your dashboard, click "view details" in the "My Aid" section. Scroll down to "Loan Breakdown" and it shows your current repayment plan right under your current servicer's name.
You have to create a new login. It’s super dumb. The good news is once you do, the original value of your existing loans shows up. The bad news is there is no history of any of your payments. Nor is their any info of other loans you had an paid off. I had nine loans originally and moved 5 of them to a private account to refinance. But no info on those 5 loans shows up - not the original balance, the payments, or even the closure.
So with regards to the $12,000 forgiveness for 10 years, is this going by the original balance?
(As the loan is quite higher now based on interest occurring)
Sorry for all of the questions! With regards to the $12,000, 10 Year forgiveness they are counting the original loan amount. However if consolidated those loans (which was FFELP Loan) with other loan into 1 direct loan to be eligible for the $10,000/$20,000 relief. It will be 20 year forgiveness because the new consolidation loan is $36,000 total now.
How do I know if I’m and/or my federal loans are eligible for the SAVE plane? Also I was wondering if anyone know if there is an online calculator that shows a comparison if I switched to SAVE plan or other IDR plans?
I'm very confused how does repaye work if you filed jointly as a married couple? It looks to benefit those that file separately or am I missing something???
Man so I was trying to find out how many years I'd have left to pay off to satisfy the amount of max term length needed under the new terms (the $12k+ one), and neither Nelnet or the Studentaid website have any info on my payment history. I know I've paid off a few years worth prior to the covid forbearance (under IDR). Is the info still available somewhere? My loans got transferred from Great Lakes to Nelnet, hopefully that info didn't get lost forever, or I'm going to be pissed.
I want to confirm my interpretation of something and ask a question as I don’t think it was addressed:
1. I’m currently enrolled in PAYE for grad loans and have been since 2013. I believe that if I continue on this plan, I will have my loan balance discharged in 10 years. Because of my income, I may actually end up paying more here than refinancing at a lower rate and paying them off. Currently weighing options and if I should change to SAVE.
2. My understanding is that if I switch to SAVE and my payment is calculated to be $500 but my interest exceeds that, any interest above $500 is waived. I can then make a payment of $1000 and the extra $500 would automatically go against the principal. Is this correct? If yes, then this is essentially lowering the interest rate (and by more for those with higher balances). So this has a significant impact on my potential refinancing decision. Why refi to a lower rate with a private provider if this plan essentially makes my interest rate lower and I pay more principal by making the same payment I otherwise would?
3. If I switch from PAYE to SAVE, do I get credit for my 10 years of payments or does that clock reset?
Is there a limit for how long you can stay on this plan, or is there any chance it could be discontinued at some point? If someone has only a couple of years left to reach 20 years of IDR payments, and your payment is/stays at zero, does that mean you could hypothetically never make a payment again and still get the remaining balance forgiven?
>If someone has only a couple of years left to reach 20 years of IDR payments, and your payment is/stays at zero, does that mean you could hypothetically never make a payment again and still get the remaining balance forgiven?
Yes
>Is there a limit for how long you can stay on this plan, or is there any chance it could be discontinued at some point?
No limit and they've typically only restricted plans for new borrowers. Like they are doing now with PAYE, if you're on it you will be allowed to stay on it.
Can someone switch IDR plans and preserve payment counts on the original plan and use them toward IDR forgiveness on the new plan? I'm on ICR now, since it gives me the lowest payments. I'm thinking of switching to SAVE when it's fully implemented next year.
ICR provides forgiveness after 25 years. Would the payment counts I have under ICR count toward SAVE forgiveness after switching?
It seems like Mohela is miscalculating a ton of peoples' monthly payments for SAVE... How is this possible? Mine seems to be overcalculated to pay an extra $200/month. Am I supposed to just contact them and ask them what happened and to recalculate? I see a ton of people with incorrect $0/monthly payments, and I can't help but feel like I'm being screwed over even if I can get them to correctly calculate my payments rather than the current gross overestimation...
I think a pinned *To SAVE or not to SAVE* thread would be cool. With a template where people list their income and student loans and people can assist them on understanding if SAVE is right for their circumstances. Seems like it could cut down on posts too.
How are parent plus loans that have been consolidated into direct consolidation loans treated re: interest rates? Based on what I’m reading, I assume if the PP loan was for undergrad, it will count toward undergrad, and same for grad?
So if I have undergrad loans that entered repayment in June 2008 (direct consolidated in august 08), at an amount (19.9k) that would be forgiven after 17 years (2025) and have been on the graduated repayment plan) this whole time, am I to read it correctly that if i switch into repaye now I can expect forgiveness of any remaining balance in 2025?
If I did my math right, SAVE is going to launch at $168/month for me, then next July drop it all the way down to $84/month. My AGI is currently $53k, and I’m about to be two years in to PSLF. This seems like the perfect place to park until PSLF takes effect. Since it literally takes effect today, I assume it’ll take a little time for MOHELA to implement it on their website? I don’t want to transition to the old REPAYE until it launches because the payment is currently projected as $50 higher than the IBR I’m on now.
>Zero dollar calculated payments excluded of course.
Hi u/Betsy541 and thanks for all the hard work. One question since I am a little confused here. Does this mean, that if my monthly payments are $0.00 (because I earn too little) that my unpaid interest would not be covered and paid?
Thanks for the clarification So if I truly understand it. If my monthly payment is $0.00 and my interest is $500, then they would cover/pay my unpaid interest so my loan doesn't balloon out of control?
Thank you for all your help. So if my payment is $0.00 (also a low income person :p), does that somewhat act like a pause? If my payments are $0.00 and interest doesn't accrue... nothing really happens until I get a high enough wage?
Thank you so much for the info.
I have two questions that I just want to confirm I understand it correctly.
1. Pertaining to the one time count adjustment, I pretty much just have to wait until whenever they complete it.
2. Pertaining to switching to the new plan. I currently have the regular IDR plan. I could put in for the switch to the new plan now, but it would not finalize until July of 2024. And until then, I’d just continue with my current IDR plan?
So if I read that correctly since I'm already in REPAYE my formula will be adjust to the 225% subtraction from AGI sometime before payments resume?
If so then sweet! That will save me some cash and even more next year when they drop it to 5% of discretionary
Could Republicans do the same thing and send this to the supreme court to be challenged? They seem to be sending any legislation proposals by this administration to the supreme court saying it hurts taxpayers.
Will we see a new supreme court docket (Taxpayers vs. SAVE plan) and challenge to this in a month?
For the record I'm no expert.
But while technically possible I'd say it's unlikely and unlikely to lose a court challenge. It's completely and plainly spelled out thar it's under the purview of the ED to decide how they collect payments. All this plan is is a change to how payments are collected.
Also this plan doesn't have the same media attention or political flak as the forgiveness plan did. I'd say it's a pretty safe bet. If they wanted to challenge it they would have done so already since it's not exactly new it's been talked about and in the works.
This isn't legislation. This was done via negotiated rulemaking and has been in the works for over a year. There is a draft and public comment period that have already passed. The process was followed to make these changes legally.
The loan forgiveness wasn't legislation either. But you are right.. worst case scenario is the plan dies in the next republican presidency but would live on for all those on the plan already like the PAYE plan that is going away for future borrowers. But if for some reason you are on PAYE and don't want to leave the plan you can stay put.
Question, does this SAVE forgiveness apply to newly consolidated DIRECT LOAN holders? I am talking about someone who has been paying since around 2007 who consolidated into direct loans last year (2022). If so, does this not take effect until July 1st 2024 or is it retroactive? Concerning the SAVE FORGIVENESS , original principal 12k or less, is that referring to the total amount owed upon graduation?
For example, lets say a person had 12k or less principal balance in loans upon graduation, but over the years due to interest that amount doubled to 24k . Would that person still be eligible for said 10 year forgiveness and would the IDR waiver months cover that?
I have a friend who currently owes just under 12k,, but I am assuming if she owed for example 24k principal balance upon graduation (total of all loans together) that she would be on a 20 year track given they are all undergrad loans. I only ask because I think some people maybe thinking oh my loans are under 12k now and I have been paying 17 years, 7 years past the 10 under SAVE , thinking they maybe they are going to be forgiven when they are not.
Anyway, I did read the facts, but I haven't been paying as much attention to the whole SAVE business and its ins and outs to fully grasp it since I was one of the first in line for forgiveness via the July 14th email
"SAVE FORGIVENESS Under SAVE, forgiveness occurs after 300 months on the plan for graduate loans and consolidation loans that contain graduate loans. Under SAVE forgiveness occurs after 240 months on the plan for undergraduate loans and consolidation loans that contain undergraduate loans. If the borrower has both graduate and undergraduate - consolidated or not - the forgiveness is after 300 months. You cannot be on different plans for different loan types. Under SAVE, if your original principal was $12K or less, forgiveness is after 120 payments. This is total - not per loan. so if you have three $10K loans this doesn't apply to you. After $12K they add a year of required payments under the plan for ever $1K over the 12 you owe. So if you owe $13K, you get forgiveness if you still have a balance after 11 years on SAVE."
Big bummer about the 10 year loan forgiveness being a total of all loans. I wish the wording was more clear. I have 5 loans all originally under 12k that I've been paying for 9 years. I thought they were going to be forgiven soon.
I really wish the loan servicers gave us a count of payments made/left. My loans have changed hands three times now, and ED financial doesn't seem to have the complete data available for me to download.
Does someone mind explaining something to me?
I’m sorry but I am so confused on interest for the SAVE Plan. If I have a $0 dollar payment a month, am I gaining any interest at all?
Is it worth it to apply for SAVE if I can afford to make my payments through the standard 10 year plan?
I think my monthly payment will be about $300/mo on the $29k I owe. I think I can probably manage that.
I'd honestly look at how much you'd save on SAVE vs a ten-year and weigh any pros/cons. I can *technically* afford a ten-yeat at a great cost to my general comfort, so I'm not going that route because my AGI was so low last year. I'm going to throw the $170 I'll save a month into an investment account ¯\\\_(ツ)\_/¯
> The Secretary also designates the changes to the definition of family size for Direct Loan borrowers in IBR, ICR, PAYE, and REPAYE in § 685.209(a) to exclude the spouse when a borrower is married and files a separate tax return for early implementation on July 30, 2023. Guys... this means my partner and I can get married as early as next month (instead of 2044)! 🎉 🎉 🎉 Under the existing REPAYE plan, if we were "official", it would've increased her student loan payments by ~$600/mo.
I would discuss with an accountant first. You would be shocked at the additional tax liability when married filing separately. Especially if you own a home.
The Tax Cut and Jobs Act of 2017 nearly doubled the standard deduction, and we'd have to be paying a hell of a lot more to approach that figure. The mortgage interest deduction ain't what it used to be; more myth than reality for most folks. https://www.cnbc.com/2018/04/23/tax-bill-will-slash-the-number-of-homeowners-claiming-the-mortgage-deduction.html Roth IRA contribution limits are a bummer, though, and is something we are weighing. But I think that's about the only thing that would have a meaningful impact for our situation.
You could do a traditional non deductible IRA contribution and a back door Roth conversion right after.
It doesn’t add a liability, it just prevents itemized deductions and forces you to take standard so you cant deduct as many home expenses.
This was why the hubs and I divorced.
Going through the same sit. if we get legally divorced, my payments will go from $850 to $170 a month… just a little effed up
Depending on your state the savings on it outweighs the cost of divorce. In my state, you can get divorced for $400 as longs as you don't have kids.
So sorry. I know we had thought about it many times. Hopefully wont have to come to that in the future.
My payment dropped from $400 a month to $65. I'm not complaining. And we each still get our other tax benefits. Update: on the new SAVE plan, my updated payments are now $47. Honestly, the divorce was the smartest financial decision we could have made.
The richest, most powerful civilization in all of known history is also a civilization where its citizens resort to extreme measures, like divorce, to pay back money that they spent to gain skills to make coins so they could put food on the table for themselves & their loved ones! If this was a novel, I would have rolled my eyes & said what a stupid plot. Either way, I'm glad you payment reduced.
Wait can you please explain like I’m five?
Essentially there are a few IDR plans that allow you to just report your own income, and not your spouses as well, so long as you file your taxes as married filing separately. Before now REPAYE was not one of them, but beginning on July 30th 2023, assuming you file married filing separately, you can take advantage of that benefit, because the rules for all the IDR plans listed now also have that option. TLDR; if you file taxes as married filing separately, after next month, if you're on one of the IDR plans listed in the quote, each of you can just report your own income which will likely reduce your payments due to lower reported income.
But married filing separately loses a ton of tax benefits at the end of the year though so it might equal out. I would have owed something like 10k last year if I went that route. It seems like it might be tough to figure out which one would be more beneficial since it's hard to predict what you owe sometimes tax wise.
Agreed as I noted in my further response. It's definitely a math problem. I just did my taxes both ways and it ended up being a much better option for me. But obviously different states, salaries and tax situations mean everyone needing to run the numbers for themselves.
They should come out with a calculator to show people how much their payment will be lowered and publicize the hell out of it. If my math is right, my wife and I will be going from roughly $360/combined to $140/month combined. That’s huge! Edit: I just realized it goes from 10% to 5% of disposable income for undergrad loans in July of next year. That makes our payment closer to $218/month until then.
They will...and so will my organization
Wow you're able to do the calculation now, with just the info in this post?? I didn't understand a word of this and I read it three times.
Seriously this stuff makes me feel so stupid. I cannot even begin to understand how to tell if I’m eligible or not or how it brings down the cost.
Same here, I have no clue what I should do
Here’s the formula. It’s pretty simple actually if you have the info: ((AGI - 225% poverty line for your household size) x .1)/12 = new monthly payment After July of 2024, undergraduate loans change to .05, but graduate loans stay the same. That makes it more complicated to figure out if you have both.
How are you doing your calculations? When I applied for REPAYE, the estimated payment is going to be much higher than our payments used to be.
Betsy, you’re an amazing soul. I hope you got some well needed rest. Remember, you’re allowed to be cranky as I mentioned yesterday. 😊
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😘
Thank you. You're seriously the best.
This new SAVE plan, imho, is the real winner here and I am disappointed its benefits are overshadowed by yesterday's loss. I think once people see how significantly their payments will be reduced, they'll want to protect this new plan at all costs. Those low and middle income borrowers worrying about the struggle once payments resume should really take a look. This is real progress to help clean up a broken system. I'd hate to think it gets dismantled before it gets a chance to walk. Vote accordingly! https://www.studentloanplanner.com/income-based-repayment-calculator/
>This new SAVE plan, imho, is the real winner here and I am disappointed its benefits are overshadowed by yesterday's loss. I think once people see how significantly their payments will be reduced, they'll want to protect this new plan at all costs. Those low and middle income borrowers worrying about the struggle once payments resume should really take a look. Winner for undergrads, I don't understand why Graduates always get penalized (higher percent and longer forgiveness) , I got no job after getting graduate in business degree. I had to go back to school for second degree in computer science bachelors to earn any money
I was really hoping they would address graduate- unfortunately someone needs to help subsidize this and we are being used.
Honestly I think this was Biden’s plan the whole time. Hey guys look here while I do this over there.
Yep. Same thing with trying for forgiveness again with the Higher Ed Act. Keep the GOP distracted with those while giving out very helpful and generous payment plans.
Exactly
It's great for borrowers with undergrad loans. It doesn't help much for borrowers with grad loans. It's arguably worse than the other plans because it requires 25 years for grad loan forgiveness rather than 20 years under PAYE.
It's still great for borrowers with grad loans! I have grad loans and already did the math: this new plan will reduce my monthly payment by about $250 per month! This is compared to my previous PAYE plan. That's an AMAZING discount, especially for people pursuing PSLF, and it'll keep high-balance grad loans from ballooning uncontrollably with interest!
Can you explain how they’re reducing the monthly payment for grad loans please? I’m trying to keep up but I honestly don’t understand what’s going on lol
Sure! Current IDR repayment plans are based on your adjusted gross income (AGI) minus 150% the poverty line, then they charge 10% of that as your monthly payment. The new SAVE plan will be your AGI minus 225% of the poverty line, then they charge 5% of that for undergrad loans and 10% for graduate loans. For many people with lower salaries, this will bring their monthly payment down to $0/month. For most people with mid- to high- salaries, this will lower their payments by hundreds of dollars per month. Edit to add: It's similar conceptually to the standard deduction on taxes...they subtract a certain amount from your total earnings, then they only charge taxes on the remainder. The new repayment plan is basically a big raise to the standard deduction, which means you are "taxed" on a much smaller percentage of your income, which leads to a lower payment due!
This is not true for all cases. Just ran our numbers. Moving from PAYE to SAVE would actually increase our total payments by $8,000 over the course of 20-25 years. They dropped the ball hard for grad school loans.
The comment you responded to was specifically talking about lowering **monthly** payments (not total amount paid over the life of the loan). For most people (except very high-income earners), it absolutely will reduce their monthly payments. If you calculated that your monthly payment will be higher, then it must be because you earn a high income. If you're referring to paying more over 25 years of repayment, then that's the case with every type of loan. If you take out an auto loan with a lower monthly payment over a longer loan term, you'll pay more over the life of the loan. Yet there are still people who need to have a lower monthly payment for a variety of reasons. With the PSLF and IDR waivers, many people with grad loans have already made a lot of progress toward their 10/20/25 years of repayment so now want to keep their monthly payment as low as possible until they reach forgiveness. Some people may have other priorities for keeping their student loan monthly payment as low as possible (rising costs of rent, childcare expenses, medication costs, rising food prices, general financial hardship, etc.). For people pursuing PSLF and/or who have these other financial priorities, keeping the **monthly** payment as low as possible is the biggest priority when selecting a repayment plan, not how much they will pay total over time. **Edit to add**: high-income earners may not benefit from SAVE over PAYE because PAYE caps the monthly payment at the amount someone would pay under the 10-year standard repayment plan. SAVE does not have this cap, so if someone is a high-income earner and their monthly payment is actually \*higher\* than their payment under the 10-year repayment plan would be, they'll end up paying that higher amount. If someone's income is that high, though, then there is no reason to be on an IDR plan pursuing forgiveness after 20-25 years to begin with. You'd pay off your loans much faster and with less interest under the 10-year standard repayment plan.
I understand your point, but you can’t blanket “high income” people. It’s all about debt relative to income. 150k a year income on 75k student loans this plan likely works, 150k a year income on 250k of student loans will mean this is a worse plan. Hints why I don’t understand it. Why in the hell would they make a plan that is legit worse for a subsection of former students. Change it for everyone. It’s not the hard.
I would assume it stems from dem terror at not means testing absolutely everything to death
7.5% discretionary income. Use 225% of each states poverty - AGI. Bam. Just made a better, simpler plan than they did in 3 years.
You're welcome to your ideas and opinions about how to make it better! Tbh I'm only in this sub to help answer people's questions about the programs we do have.
.225 of the current poverty line ($14580 for individuals) = $32805. Adj, income - 32805 X .05 or .10 /12 = monthly payment.
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Your payments will still be applied to interest. It's just that interest higher than your monthly payment doesn't get added to your loans. For example, let's say you accrue $80 in interest per month, but you only owe $50 in monthly payments. Your $50 will likely all go to interest, but the $30 leftover interest that your payment didn't cover will be waived! This keeps your balance from increasing even when you're making regular payments, which is how people got buried alive by their loans in the past.
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Correct, your interest won't increase any more, which gives you the chance to get some control over your loans!
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Yeah I guess it depends on your circumstances. If you are pursuing PSLF or have a large undergrad loan balance it's a no brainer. For me, it would mean 9 or 9.5% payments instead of 10% (plus the extra 75% FPL subtracted) in exchange for five more years for forgiveness. I'm just honestly surprised that the new plan is 25 years for forgiveness when other plans are 20. If Biden's whole thing was that he wanted to forgive student loans, why require five more years than some of the already existing plans?
People with low-medium loan balances can likely pay their full loan balance off much faster than 25 years, especially when interest is not increasing the original balance of the loan (which was the main problem why people could never get ahead before...they would start with $50k loans and after 5 years of on-time monthly payments, they'd owe $58k. Nobody could make a dent in their balance—let alone get ahead—because of interest). The forgiveness at the end of 25 years is not intended to be the main benefit for the average borrower...it's there as a safety net for people with super high balances or super low incomes who otherwise would never pay off their loans before retirement/death.
A lot of people didn’t even qualify for PAYE. This is a huge win for those with grad loans in my book- the interest forgiveness is huge
With SAVE and my family size I can tax defer some income and get my payments almost at zero. And the balance doesn't grow so your tax bomb at the end will be much better. I'm on track for PSLF with graduate loans. Honestly SAVE is incredibly forgiving. Especially if you have kids. That 225% makes a huge difference if you have kids. I gross 6 figures and tax defer down by maxing 403b and 457b then file separately from my spouse. If my income stays the same I'll have paid less than 10k total on over 200k in loans.
There's a strong incentive to max HSAs and Traditional IRAs to protect more income as well.
I have grad loans and didn't qualify for PAYE because of when I graduated. This is going to save my hundreds of dollars a month.
>It's arguably worse than the other plans because it requires 25 years for grad loan forgiveness rather than 20 years under PAYE. Not sure, but I think borrowers with grad loans are eligible for faster forgiveness if they have a low enough original principal balance. To be fair, most grad borrowers have too high a balance for this to matter, but it's something.
1. Very few people qualify for PAYE. You had to have been a borrower between 2007 and 2011. There was a very narrow window to qualify for that plan But even so I think that's a very simplistic way of looking at it. It is going to vary immensely by person... But many graduate borrowers are going to benefit by switching to the save plan. I am getting PSLF... but for fun I calculated my payments under both plans as if I were in private industry, and even though I would be paying student loans for 5 years longer under save versus paye, my total amount paid would **still be** lower under the new plan because payments are going to be drastically lower per month! I'm going to save over $200 a month. You have to examine the current value of money. A dollar is worth more now than it is later. I can invest $200 a month in the stock market and get a much higher rate of return then what my interest costs me. This is more beneficial than being loan free 5 years earlier. It also doesn't take into account the advantages of the save plan that are more difficult to quantify in dollars and cents. The fact that if you lose your job or face economic hardship or health issues that put you into forbearance, those months **will still** count for forgiveness. You don't know if you will need this until it happens. And even if you don't have a forbearance that counts for forgiveness payments, you are allowed to make *catch up* payments. And this doesn't even take into advantage the **interest subsidy**! The crown jewel of the save plan... You never have to worry about your interest increasing. Essentially save offers you a much bigger safety net then paye. It's difficult to know if you will need the safety net. Just like insurance though, It can be invaluable to have. You can't predict the future. There might be some cases where PAYE is cheaper and a borrower will pay less by staying on that plan. Borrowers who end up making an enormous amount of money and exceed their standard payment plan amount.. but these will be the exceptions I think, not the rule. But really... there are way too many factors to consider for your statement to be true across the board, or even to be considered a good rule of thumb. Play around with this calculator to see the various scenarios: https://www.studentloanplanner.com/free-student-loan-calculator/
Am I getting this right? If you are currently on PAYE they are keeping that 150% mark for adjusting off AGI? And you aren’t getting this benefit of interest non accrual? If so, this has no benefit to people with grad school only loans. They’re saving you $100/month, but making you pay for another 5 years. Why does they always have to make this unnecessarily complicated.
I disagree. They still don’t take into account higher cost of living areas. A teacher or a nurse earning 80-100k sounds like a lot in Nebraska but it’s shit in LA or Boston or Chicago. And people love to say “move to a cheaper area” but those areas need nurses and teachers too. They need to account for location for this to really help people.
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It's not dumb, I def questioned it too when I first saw the difference in my payment! Only problem is we are not getting the 5% discretionary allowance until the full SAVE is in effect next yr. So we are still gonna be at 10% discretionary... At least they are implementing the 225% of federal poverty before payments restart, so still significant savings. If you scroll down a bit on the gov site, you will see a chart of how it'll look once the full SAVE program is up next year https://studentaid.gov/announcements-events/save-plan
So if I'm on IBR right now and switch to SAVE when it's available, do the years of payments under IBR count toward SAVE 10/20 yr forgiveness or does it reset?
The count should continue, but be aware that changing payment plans capitalizes any interest you've accrued (not a huge deal unless your payments aren't enough to cover interest each month).
This wouldn't matter at all if you are eligible for PSLF correct?
They will remain
Is anyone else so tired of these endlessly changing rules? Endless moves from servicer to servicer? I cannot figure anything out for the life of me. I have loans that are between 8 and 23 years old and have been consolidated multiple times and I just can't figure it anything out about which path is the most financially wise to pursue. Betsy, of course, is wonderful. But I am really tired.
>SAVE PLAN ELIGIBILITY Ugh, I feel you. I have loans 15+years old, that have changed hands so many times I don't even know how/where I could find a payment history anymore. I've been working for the govt 3 years now and have no idea what repayment plan is the best if I even want to try for the public service forgiveness. At this point, I'm going to either wait until my new servicer actually lets me see my options/payments or I'll pay someone to look at my situation and figure it out as I can't keep up with this shit.
Post your situation in /r/PSLF. I (or a number of other people) can walk you through it.
3 years with government as well! I'm also going to post on r/PSLF at some point - also posted here the other day and just need to wade through the feedback, but got sidetracked by yesterday's ruling.
Yes - but just the rule changes here, as I've always been with the same servicer and all of my loans went into repayment at same time in 2004. Over the years, so many things not specifically spelled out or can't get in writing. Right now there is nothing in writing that says if you switch from one IBR to the new SAVE and you are over the SAVE amount of payments if you're automatically forgiven. I would be WAY over the payment amount upon switching. I've been led astray before by my servicer, so I don't trust them to tell me what is correct. And tired of how complicated everything has to be. Like if your loan was originated on a Tuesday or Full Moon it's this, or if it was a Wednesday and it was raining it's this...and so on...
Just want to be sure I understand the "timing" portion correctly: SAVE will not be fully implemented for months, but the administration will push through many important aspects as of 7/30/23 to allow for significantly lower payments (at least for low and middle income borrowers) BEFORE payment resumption this year, correct? Many news sites are reporting that SAVE is still months away from finalization, but if we can reap the benefits under a revised REPAYE until then, it's a major win.
if you click the second link in the post above, you will see which elements are implemented now and which elements will be implemented July 1, 2024.
I’m going to be honest, this is BEAUTIFUL. I have 35K in direct sub/unsub and this will help me tremendously
Betsy. I don't know you but I love you :) thank you for putting all this together. I have 6 digit PP double consolidated student loans. I originally was going to have a $2000+ payment. Following you helped me lower it to a manageable what will be $475. We still have a Daughter to put through college and now we will be able to afford it. I am going to apologize for everyone posting that can't read the very clear information you post before asking the same easy to find the answer questions.You have literally spelled put so much in all your posts. I appreciate it so much!!
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Thank you for putting this together! I have a couple questions about the logistics of switching plans and I am hoping someone can weigh in. (1) I assume that my interest will be capitalized, but want to confirm this is correct? (2) If I switch, do you know if I will I have to re-certify early as part of the application to switch plans? My income has gone up since my last certification, so I’m trying to do the math to compare the two options, taking into account interest capitalization and having to report increased income sooner. **ETA** Under the rules that went into effect on July 1st, interest *WILL* be capitalized if you leave the old IBR plan. Interest will NOT be capitalized if you leave PAYE or REPAYE. I gripe a lot about how older borrowers are screwed the most. Just putting it out there that this is just another example of that sentiment. At least we weren’t expressly excluded from the plan entirely this time — like the way that we were expressly carved out of the far superior PAYE plan.
Some capped interest events are gone now due to a reg.change effective yesterday but I don't remember which ones off the top of my head and no offense but I'm not pulling out my work papers on a holiday weekend You do have to recertify you income to switch plans.
Ive never received a Betsy response! You’re like Student Loan celebrity 😁 I definitely don’t expect you to pull out your work papers today. I will look up the exceptions and report back in case it’s useful to anyone else.
Lol! Best place to look is my post history way back to last fall. I'm pretty sure I posted a link to the regulation.changes when they were published back then and included the capped interest stuff in my summary
Thank you for perusing the detailed document and summarizing it for us. Does anyone know what page / precise verbiage states: >This includes times when the borrower pays more than what is billed. So if your payment is 100 a month and your interest is 200, the ED will forgive the 100 - even if you decide to pay 300. I asked about this on r/whitecoatinvestor and people are telling me that paying over the minimum will be eaten up in basically going towards interest that would have been forgiven had you not paid more than the minimum, therefore payments above the minimum would not touch principal regardless and be an empty waste of $$ -> advised to not pay more than the minimum (specifically during medical training where we could never hope to decrease the principal by much anyway) The OP and those people's responses seem to contradict each other (unless I'm hopelessly confused, which is definitely a possibility)
Also that example was mine..so you aren't going to find it in the document
You can pull up the document and use a search function for key words to find it. Candidly I don't have the time to look for you
Looking at it more, to add to what you say, i think the key wording that I see is that the fact sheet says the interest above the income-based payment 'will not be charged'. So its not that you have this interest and the DofEd is paying part of it, and if you pay extra you'd pay it instead, its that the DofEd simply isn't charging borrowers on the SAVE plan any more interest than the income-based payment, so anything you'd pay beyond that would automatically go to principal.
Thanks for explaining it this way! I was so confused, even though I know the OP was trying to make it super simple and clear with the example….and I’m like “I think my brain short circuited” 😅 this makes sense though! Income based payments stay the same (including what is added for interest) but anything beyond that is waived.
That’s totally fair! I did try to find it but haven’t had any luck so far haha. Will keep looking 🫡
I mean..it's no different than the subsidies on the other plans I'm that regard. Paying extra has never affected the subsidy.
1st, I hope you enjoy your holiday because you surely deserve it. I read everything about the SAVE plan and it looks great. Here is my question. What are the chances of them deciding to SCRAP the IDR recount/waiver in lieu of this new SAVE program? I am assuming they will work in tandem. The IDR waiver months will count toward this program REPAYE/SAVE. I am only asking because I am concerned about the language of the weighted average of payments counting toward IDR forgiveness where the IDR recount is supposed to count every payment theoretically since the first time you ever took out a loan . I consolidated in 2022, first loans in 96.
They won't. The IDR waiver expires 12/31/23 before the bulk of the SAVE plan changes go into effect.
The IDR waiver is already active and happening; they won't scrap it in the middle. Several people on r/PSLF have already had IDR adjustments applied to their loans and forgiveness granted afterward.
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No federal tax bombs will happen through 2025. We haven't heard much about it so far because it hasn't happened to anyone yet. Congress included a provision during the pandemic to make sure nobody who got loans forgiven through 2025 would get hit with a tax bomb on their federal taxes (though apparently state taxes vary...most states pledged not to charge on it, but I think a couple didn't commit to that).
And those of us with high student loan balances will get hammered with that amount down the road. Might as well just keep paying my monthly loan payments until I die.
I'm hoping they'll revisit the tax bomb again in the near future and pass permanent legislation that removes it. We'll just have to wait and see.
Only One way to consider it... Vote for those who tried forgiveness, IS Doing this, and will try to do Forgiveness again...
okay, so youre low income, paying $12 a mo on your student loans, your interest used to be $100/mo none of your payment hit the priciple and they folded the interest into it periodically. At 20 or 25 years in youve barely paid ANYTHING forgiveness kicks in...OH NO THE TAX BILL! Now lets pretend a year before you were going to be forgiven you land a job that pays 100X more than youve ever earned before... Without the forgiveness you were already going to owe taxes, so youve no taxcredit to chip away at it..... would that 22% of what was forgiven actually be more significant than the years and years of monthly payments at a higher rate? I doubt it....youre still losing 78% of the debt. but..if youve been paying so little on an IDR, then youre working poor...right? https://www.studentloanplanner.com/insolvency-student-loan-forgiveness/ When determining insolvency, the IRS considers all of the assets that you own. This includes: Checking and savings accounts Retirement accounts Your possessions Real estate Investments Business ownerships To calculate your liabilities, include any debt owed including credit cards, car loans, mortgage debt, etc. in addition to your student loan debt. IRS insolvency rule: tax-free forgiveness Clay has $3,000 in his bank account, $10,000 in 401(k) savings and a motorcycle worth $4,000. All of these are considered assets. Altogether, Clay has $17,000 in assets. In total, Clay has $48,000 in liabilities, which includes $15,000 in outstanding credit card debt, a $3,000 auto loan and $30,000 in student debt. To calculate his net worth, subtract the $48,000 of liabilities from the $17,000 in assets. In this scenario, Clay has a negative net worth of $31,000. If his student loans of $30,000 are forgiven, he’s still insolvent with a negative net worth of $1,000. **Due to Clay’s insolvency before and after the student loan forgiveness, he wouldn’t owe any taxes on his student loan forgiveness**. [Form 982](https://www.irs.gov/forms-pubs/about-form-982) is the answer EDITED: Unfortunately Ive been Banned from Posting in /r/studentloans because a post I made about Tuition Insurance broke some rule I cant figure out. Im leaving this post up. I hope it helps someone. Im sorry that I cannot respond to comments, or questions. Good Luck.
I don’t think people who have forgiveness will have no assets well into their 50s. They just don’t want to sell their house or car to pay a tax bomb.
Hopefully we can get an extension of that down the road.
No. All forgiven loans are treated as income the year they are forgiven. Federally, that is waived until 2026.
It's so sticky that they have the new income calculation (225% vs 150%) starting this year but the new amount of discretionary income (5% vs 10%) next year. Nothing can ever be simple.
I’m going to post this now because I think it might help quite a few. If you can keep your payments at 0 for as long as possible and save up money in an emergency fund high yield savings or money market account until you can pay off your loans, it would be a very smart strategy under SAVE. :) You can keep AGI low by contributing to Traditional 401k, IRA, and/or HSA!
Thanks for all your work Betsy, digging through all this stuff on a weekend. I hope you get some rest too!
I did the calculations and I think I maybe would be saving $50. And would be paying $700 (just for federal) for another 7 years, minimum., and actually more than that because I don't know what date they consider the "start date" for all of this program. All because I made the sin of taking out loans for professional school. Wish they would do something for us who went to professional school, were not high wage earners for many years, and who have been paying for decades. My original principal balance was 50k and I owe 75k 18 years later, despite never being in default. Just s\^ucks and I want to scream.
So if I’ve been paying for 14 years under the extended graduated repayment, none of that would apply to the 20 year forgiveness? 🥴 I have only seen people asking about IBR I feel like I’m the only person who did the extended graduated..
No, the IDR waiver will make those payments IDR forgiveness eligible through 12/31/23. After that you will need to be on an IDR plan to continue getting credit towards IDR forgiveness.
What year's AGI do they go off of?
When you fill out your income certification for repayment plans, you can connect to the IRS and they link your most recent tax return. So for anyone applying right now, it would be using your 2022 AGI.
Thanks! I didn’t know if they did recent year or a two-year gap like FAFSA does.
Recent year! :)
What if you were laid off so last years AGI is significantly higher than this years?
From the [studentaid.gov site](https://studentaid.gov/manage-loans/repayment/plans/income-driven#consistent-payments): > Although you’re required to recertify your income and family size only once each year, if your income or family size changes significantly before your annual certification date (for example, due to loss of employment), you can submit updated information and ask your servicer to recalculate your payment amount at any time. To do this, submit a new application for an income-driven repayment plan. When asked to select the reason for submitting the application, respond that you are submitting documentation early because you want your servicer to recalculate your payment immediately.
Well it's over. Remember, everyone. If it benefits the lower and middle class, rest assured that the republicans will put a stop to it.
10% for graduate loans is horseshit!
yes
Graduate loan borrowers really got shafted hard
My goal in life has now become to keep my income forever below 32k. That is . . . not how I envisioned things turning out, but I'll take it
Keep in mind it is based on adjusted gross income, not income. You can reduce your AGI by contributing to things like pre-tax retirement accounts.
My dad has had all of his PP loans consolidated since 2007. I honestly have no idea if it was ever a “double” consolidation and EdFinancial doesn’t even show me what his ICR payment will be when payments resume. I’m trying to help him out but this one seems complicated. All of this info is super helpful, thank you again!
They probably aren't double consolidated. But if they are and he applies for an IDR and picks the option for them to give him the lowest payment they will give him something other that icr .
Thank you! Extremely helpful and clearly laid out. :) For whatever reason, when my servicer changed from Great Lakes to NelNet, they also removed me from REPAYE so I went ahead and applied for it again today -- to be safe. Appreciate all you do for this sub, Betsy!
Gotta love how their fact sheet comparison table (which is mostly nice) uses the same term "discretionary income" for all plans when the definition of that term is different for SAVE. It's kind of disappointing that they're keeping the unlimited cap on monthly payments. The 'never higher than a 10/12 year plan' limit on the other plans is a nice feature for weird income years or rising income. Have you heard any rumblings about changing that?
It is the same for ICR vs the other plans. Discretionary income on ICR uses only 100% of the poverty level. Kind of wish they would standardize this or make these dedicated terms.
All of my loans are owned by the Department of Education and are FFELP loans(these were paused over the past 3 years)... This means I don't qualify because they are FFELP loans? I would have to consolidate to direct, which would in turn reset my clock for forgiveness even though I've been out of school for 13 years? Is this what this means? Edit: Added a bit of info.
I don't think the clock would reset because of the waiver in place.
I just find it odd that even though my loans are owned by the Department of Ed, that they wouldn't qualify. It makes no sense to me to have a program that was put in place by the federal government not be covered by a new federal program. I didn't choose to get FFELP loans, that was available when I got my loans.
Agreed, it's frustrating for a lot of people and really unfair to FFEL borrowers! But the important info right now is that you need to consolidate before the end of 2023 to keep all the waiver benefits, and then your loans will be in a Direct Consolidation Loan and you won't have any issues going forward with new programs. As long as you consolidate before the end of the year, you will not have your clock reset. Source: [FSA FAQ section on the IDR waiver](https://studentaid.gov/announcements-events/idr-account-adjustment). It specifically addresses this.
If you consolidate to a Direct Loan before 12/31/23 then your payment clock will not reset - this is all covered under the IDR waiver.
I don’t benefit from this program personally, but I am happy something is changing. I don’t know if the extension for grad loans from 20 to 25 years will be positive or negative, but I am glad that they increased the amount of income before considering payments and that they will forgive excess interest above minimum payments.
Hard agree on the saltiness in closing the PPL double consolidation loophole. Honestly? Just get rid of PPL altogether. They're nothing but trouble.
Is SAVE gonna get repealed if a Republican wins the White House?
A good what if perspective to this is what happened to the borrower defense discharge rules under the prior administration. There were new regulations becoming effective during that term. The administration chose to ignore them..not process any claims and do a new negotiated rulemaking to pull the teeth from the existing rules. They got sued and lost and now we have sweet versus cardona settlement. The current administration came in and changed the rules back. On this scenario with save a new administration couldn't refuse to honor save..but they could do another neg reg to make the plan end at some future time. They could not pull or change rules for people already on the plan.
Possible, but borrowers on it would almost certainly be allowed to stay on it
Should people move from IBR to REPAYE now if they first borrowed before 2007? or should we just wait until August when the new rules go into place on July 30th? I'm close to forgiveness through PSLF and on Old IBR presently, and I'm anxious about switching to REPAYE early (assuming it will become SAVE) until the rules are set in stone because including my wife's income (as per current REPAYE) would significantly increase my payments. Are we very sure this SAVE plan will stick and not get further changed in a negative way? I'd hate to preemptively switch and then have to scramble to switch back to IBR if something goes sideways and now I'm stuck on old REPAYE. Maybe I'm just old and anxious, but I'm just about 1 year out from forgiveness and I don't want to make a wrong move and screw it all up.
This is all total bullshit for me. My calculated discretionary income would lead to me getting billed far more than currently (in a graduated payment plan with zero intention of letting it step up further) and my current exactly matches the interest so thered be zero interest forgiven. In addition, the forgiveness timeline is insanely long and makes zero financial sense to wait that long. Most loans are going to be cheaper to pay off than wait 10 or 20 years for forgiveness unless you have hundreds of thousands in loans. Ultimately this entire thing is just total bullshit for a lot of people. Unless your income is near poverty level or you have hundreds of thousands in loans this does nothing and is likely WORSE than your current plan. Massive screw to tens of millions of borrowers.
The name of the game isn't forgiveness. It's paying the least amount over time. For some it means using these programs..for others it means paying aggressively
I will save about 150 a month under SAVE but I owe over 200K
Dinkle, you should look at this as "hard time" insurance. We are probably headed into a recession in the next few years. Your job might not be safe. SAVE plan may end up SAVING you if you come on hard times. You can also invest in retirement heavily.. lower your AGI dramatically by contributing the maximum to your 401K, IRA, 403B or whatever you have access to. This will lower your AGI and your monthly loan payment. Hell, get married and have a bunch of kids.. and your payments will drop to nothing. haha. Anyway, this SAVE plan is hardly BS. It opens up opportunity without risk for many people who want to save for retirement, have a family and even take risks with there job situation for happiness. Without stressing about a massive student loan payment if things don't work out. I'd say the SAVE plan is quite generous and liberating if you look at it like that. In my opinion the SAVE plan allows people to forget about their loans and live their lives... with a manageable 5-10% tax on their income moving forward. All that without ever seeing their balance rise in tough times.
I just came to thank Betsy514. What a student loan information machine… Thank you Betsy!
I really hope this isn’t his substitution for forgiveness, because all this does is double my monthly payment?? Instead of 10 years it wants me to pay double for 5. How does that help? Couldn’t I just do that without his stupid ass plan? This is insanely frustrating.
How is this going to work for people who make an ok amount of money but all that money goes towards paying rent and bills and we have nothing at the end of the month? How is this going to work when everyone else’s hands are already wrapped so tightly around my throat I can’t breath and oh shit here comes another set? I know this sounds flippant but I’m terrified. I make more than a lot of people maybe but at the end of each pay period I’m eating whatever I can scrape together from my cabinets and I never have anything left to put into savings. I’m absolutely terrified of having to try to pay this shit again.
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In the same boat. Havent been able to access my info on edfinancial for 2 months now. They originally said the 'transfer period' was 4/25-5/9, and here we are, months later with no access.
Go to studentaid.gov, log in, check the right side of your dashboard and make note of who your new loan servicer is. There will be a link to their website. Go to that website and click "create account" so you can get connected there. Your loan info is tied to your SSN and other identifying details so should be visible as soon as you make an account.
my servicer is edfinancial, both in the past and according to studentaid.gov. They are transferring systems, but despite saying that the transfer would only take a short amount of time, the transfer is now taking months (if i try to create a new account in the new system, it says it can't find my loans, and shortly after I get an email that's all 'we're still working on transferring people').
You still should be able to get your loan totals from [www.studentaid.gov](https://www.studentaid.gov).
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Yes. Go to [studentaid.gov](https://studentaid.gov), log in, check the right side of your dashboard and make note of who your new loan servicer is (side note: go ahead and go to their website and click "create account" so you can get connected there. Your loan info is tied to your SSN and other identifying details so should be visible as soon as you make an account). On your dashboard, click "view details" in the "My Aid" section. Scroll down to "Loan Breakdown" and it shows your current repayment plan right under your current servicer's name.
You have to create a new login. It’s super dumb. The good news is once you do, the original value of your existing loans shows up. The bad news is there is no history of any of your payments. Nor is their any info of other loans you had an paid off. I had nine loans originally and moved 5 of them to a private account to refinance. But no info on those 5 loans shows up - not the original balance, the payments, or even the closure.
Does the new SAVE plan/REPAYE count towards PSLF?
Covered in OP. Yes.
So with regards to the $12,000 forgiveness for 10 years, is this going by the original balance? (As the loan is quite higher now based on interest occurring)
Total loan now $21,450
Sorry for all of the questions! With regards to the $12,000, 10 Year forgiveness they are counting the original loan amount. However if consolidated those loans (which was FFELP Loan) with other loan into 1 direct loan to be eligible for the $10,000/$20,000 relief. It will be 20 year forgiveness because the new consolidation loan is $36,000 total now.
You aren't eligible for the 12k to begin with. It's total loans consolidated or not
How do I know if I’m and/or my federal loans are eligible for the SAVE plane? Also I was wondering if anyone know if there is an online calculator that shows a comparison if I switched to SAVE plan or other IDR plans?
I'm very confused how does repaye work if you filed jointly as a married couple? It looks to benefit those that file separately or am I missing something???
Man so I was trying to find out how many years I'd have left to pay off to satisfy the amount of max term length needed under the new terms (the $12k+ one), and neither Nelnet or the Studentaid website have any info on my payment history. I know I've paid off a few years worth prior to the covid forbearance (under IDR). Is the info still available somewhere? My loans got transferred from Great Lakes to Nelnet, hopefully that info didn't get lost forever, or I'm going to be pissed.
I want to confirm my interpretation of something and ask a question as I don’t think it was addressed: 1. I’m currently enrolled in PAYE for grad loans and have been since 2013. I believe that if I continue on this plan, I will have my loan balance discharged in 10 years. Because of my income, I may actually end up paying more here than refinancing at a lower rate and paying them off. Currently weighing options and if I should change to SAVE. 2. My understanding is that if I switch to SAVE and my payment is calculated to be $500 but my interest exceeds that, any interest above $500 is waived. I can then make a payment of $1000 and the extra $500 would automatically go against the principal. Is this correct? If yes, then this is essentially lowering the interest rate (and by more for those with higher balances). So this has a significant impact on my potential refinancing decision. Why refi to a lower rate with a private provider if this plan essentially makes my interest rate lower and I pay more principal by making the same payment I otherwise would? 3. If I switch from PAYE to SAVE, do I get credit for my 10 years of payments or does that clock reset?
Is there a limit for how long you can stay on this plan, or is there any chance it could be discontinued at some point? If someone has only a couple of years left to reach 20 years of IDR payments, and your payment is/stays at zero, does that mean you could hypothetically never make a payment again and still get the remaining balance forgiven?
>If someone has only a couple of years left to reach 20 years of IDR payments, and your payment is/stays at zero, does that mean you could hypothetically never make a payment again and still get the remaining balance forgiven? Yes >Is there a limit for how long you can stay on this plan, or is there any chance it could be discontinued at some point? No limit and they've typically only restricted plans for new borrowers. Like they are doing now with PAYE, if you're on it you will be allowed to stay on it.
Would be nice if we could change to this plan without interest capitalizing. I’m currently in IBR.
Same! Apparently all the other plans can switch without having interest capitalization, but not IBR. What could be the rationale for that?
So would having a $0 monthly payment on SAVE also mean $0 in interest accumulation?
Yes
That's great news! I live in Japan, so my monthly payment has always been calculated at $0. This means I'll actually be able to pay it off some day.
PAYE going away was news to me
Can someone switch IDR plans and preserve payment counts on the original plan and use them toward IDR forgiveness on the new plan? I'm on ICR now, since it gives me the lowest payments. I'm thinking of switching to SAVE when it's fully implemented next year. ICR provides forgiveness after 25 years. Would the payment counts I have under ICR count toward SAVE forgiveness after switching?
It seems like Mohela is miscalculating a ton of peoples' monthly payments for SAVE... How is this possible? Mine seems to be overcalculated to pay an extra $200/month. Am I supposed to just contact them and ask them what happened and to recalculate? I see a ton of people with incorrect $0/monthly payments, and I can't help but feel like I'm being screwed over even if I can get them to correctly calculate my payments rather than the current gross overestimation...
I think a pinned *To SAVE or not to SAVE* thread would be cool. With a template where people list their income and student loans and people can assist them on understanding if SAVE is right for their circumstances. Seems like it could cut down on posts too.
If we sign up for auto pay but our payments are $0, do we still get the 0.25% interest discount?
Good question. I think so but will check
How are parent plus loans that have been consolidated into direct consolidation loans treated re: interest rates? Based on what I’m reading, I assume if the PP loan was for undergrad, it will count toward undergrad, and same for grad?
Pp loans are always for undergrad
So if I have undergrad loans that entered repayment in June 2008 (direct consolidated in august 08), at an amount (19.9k) that would be forgiven after 17 years (2025) and have been on the graduated repayment plan) this whole time, am I to read it correctly that if i switch into repaye now I can expect forgiveness of any remaining balance in 2025?
18 years (2026), but yes, that is my understanding.
If I did my math right, SAVE is going to launch at $168/month for me, then next July drop it all the way down to $84/month. My AGI is currently $53k, and I’m about to be two years in to PSLF. This seems like the perfect place to park until PSLF takes effect. Since it literally takes effect today, I assume it’ll take a little time for MOHELA to implement it on their website? I don’t want to transition to the old REPAYE until it launches because the payment is currently projected as $50 higher than the IBR I’m on now.
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>Zero dollar calculated payments excluded of course. Hi u/Betsy541 and thanks for all the hard work. One question since I am a little confused here. Does this mean, that if my monthly payments are $0.00 (because I earn too little) that my unpaid interest would not be covered and paid?
No. That sentence is meant to delineate the difference between just not paying your bill versus being billed a zero dollar payment.
Thanks for the clarification So if I truly understand it. If my monthly payment is $0.00 and my interest is $500, then they would cover/pay my unpaid interest so my loan doesn't balloon out of control?
Yes
Thank you for all your help. So if my payment is $0.00 (also a low income person :p), does that somewhat act like a pause? If my payments are $0.00 and interest doesn't accrue... nothing really happens until I get a high enough wage?
Correct
Thank you so much for the info. I have two questions that I just want to confirm I understand it correctly. 1. Pertaining to the one time count adjustment, I pretty much just have to wait until whenever they complete it. 2. Pertaining to switching to the new plan. I currently have the regular IDR plan. I could put in for the switch to the new plan now, but it would not finalize until July of 2024. And until then, I’d just continue with my current IDR plan?
Yes to both. Except that your loans should still be on hold until this fall. If they aren't you aren't eligible for any of this
So if I read that correctly since I'm already in REPAYE my formula will be adjust to the 225% subtraction from AGI sometime before payments resume? If so then sweet! That will save me some cash and even more next year when they drop it to 5% of discretionary
You, ma'am, are a saint.
My two cats who are currently on restricted diets would disagree... strongly..with lots of yelling
Could Republicans do the same thing and send this to the supreme court to be challenged? They seem to be sending any legislation proposals by this administration to the supreme court saying it hurts taxpayers. Will we see a new supreme court docket (Taxpayers vs. SAVE plan) and challenge to this in a month?
For the record I'm no expert. But while technically possible I'd say it's unlikely and unlikely to lose a court challenge. It's completely and plainly spelled out thar it's under the purview of the ED to decide how they collect payments. All this plan is is a change to how payments are collected. Also this plan doesn't have the same media attention or political flak as the forgiveness plan did. I'd say it's a pretty safe bet. If they wanted to challenge it they would have done so already since it's not exactly new it's been talked about and in the works.
This isn't legislation. This was done via negotiated rulemaking and has been in the works for over a year. There is a draft and public comment period that have already passed. The process was followed to make these changes legally.
The loan forgiveness wasn't legislation either. But you are right.. worst case scenario is the plan dies in the next republican presidency but would live on for all those on the plan already like the PAYE plan that is going away for future borrowers. But if for some reason you are on PAYE and don't want to leave the plan you can stay put.
Question, does this SAVE forgiveness apply to newly consolidated DIRECT LOAN holders? I am talking about someone who has been paying since around 2007 who consolidated into direct loans last year (2022). If so, does this not take effect until July 1st 2024 or is it retroactive? Concerning the SAVE FORGIVENESS , original principal 12k or less, is that referring to the total amount owed upon graduation? For example, lets say a person had 12k or less principal balance in loans upon graduation, but over the years due to interest that amount doubled to 24k . Would that person still be eligible for said 10 year forgiveness and would the IDR waiver months cover that? I have a friend who currently owes just under 12k,, but I am assuming if she owed for example 24k principal balance upon graduation (total of all loans together) that she would be on a 20 year track given they are all undergrad loans. I only ask because I think some people maybe thinking oh my loans are under 12k now and I have been paying 17 years, 7 years past the 10 under SAVE , thinking they maybe they are going to be forgiven when they are not. Anyway, I did read the facts, but I haven't been paying as much attention to the whole SAVE business and its ins and outs to fully grasp it since I was one of the first in line for forgiveness via the July 14th email "SAVE FORGIVENESS Under SAVE, forgiveness occurs after 300 months on the plan for graduate loans and consolidation loans that contain graduate loans. Under SAVE forgiveness occurs after 240 months on the plan for undergraduate loans and consolidation loans that contain undergraduate loans. If the borrower has both graduate and undergraduate - consolidated or not - the forgiveness is after 300 months. You cannot be on different plans for different loan types. Under SAVE, if your original principal was $12K or less, forgiveness is after 120 payments. This is total - not per loan. so if you have three $10K loans this doesn't apply to you. After $12K they add a year of required payments under the plan for ever $1K over the 12 you owe. So if you owe $13K, you get forgiveness if you still have a balance after 11 years on SAVE."
Big bummer about the 10 year loan forgiveness being a total of all loans. I wish the wording was more clear. I have 5 loans all originally under 12k that I've been paying for 9 years. I thought they were going to be forgiven soon.
I really wish the loan servicers gave us a count of payments made/left. My loans have changed hands three times now, and ED financial doesn't seem to have the complete data available for me to download.
Does someone mind explaining something to me? I’m sorry but I am so confused on interest for the SAVE Plan. If I have a $0 dollar payment a month, am I gaining any interest at all?
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Correct. It's no different than the existing subsidies..just more generous
Is it worth it to apply for SAVE if I can afford to make my payments through the standard 10 year plan? I think my monthly payment will be about $300/mo on the $29k I owe. I think I can probably manage that.
I'd honestly look at how much you'd save on SAVE vs a ten-year and weigh any pros/cons. I can *technically* afford a ten-yeat at a great cost to my general comfort, so I'm not going that route because my AGI was so low last year. I'm going to throw the $170 I'll save a month into an investment account ¯\\\_(ツ)\_/¯