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New SAVE Student Loan Payment plan EXPLAINED
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- เผยแพร่เมื่อ 16 ส.ค. 2024
- A new student loan payment plan is rolling out this summer - the SAVE student loan payment plan is replacing REPAYE as one of the income driven repayment plans and it's a great way to ...well...save money on your student loan payments. In this video I give you all the big highlights of this new way to pay off your student loans (spoiler alert: student loan forgiveness after 20 or 25 years!)
- What is the SAVE plan? - including what's rolling out this summer and what you'll have to wait for next summer
- SAVE plan and PSLF
-How to enroll in the new SAVE plan
Enjoy!
Links mentioned:
⭐ Student Loan Simulator to calculate your student loan payments: studentaid.gov...
⭐ NordPass Password Manager (affiliate link but I used them for years before becoming an affiliate) go.nordpass.io...
⭐ SAVE Factsheet: www2.ed.gov/po...
⭐ More info on the SAVE plan: studentaid.gov...
⭐ To apply for the SAVE plan: studentaid.gov...
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Chapters:
00:00 - 00:33 Intro
00:34 - 3:39 SAVE student loan plan 2023
3:40 - 5:06 SAVE student loan plan 2024
5:07 - 5:30 SAVE plan and PSLF
5:31 - 6:01 SAVE plan requirements
6:02 - 7:08 How to apply to the SAVE plan
I'm on the PAYE plan currently with about 5 years of qualifying payments so far (undergrad and grad loans). We did some quick math and realized id end up paying about $8k MORE by switching to the SAVE plan than by staying on PAYE. Im sure this is not the norm for everyone but definitely a good reason to review your options for the long term!
Hi @marginator007 - great point, thank you for sharing your situation! Note that they are sunsetting the PAYE program so if you choose to change from that to something else you won’t be able to get back on. Thanks for the comment and thanks for watching! -k
I found the same a ten year plan payment was lower than the save program and it would only be 10 yrs instead of 20
Hi @xterra4hire - sounds like an easy choice for you then 😊 yay!
Thanks for watching! -k
@@xterra4hireWait, you don’t have to pay for a full 20 years, do you? You would just pay until your Balance is paid off, I would think?!?!
@@markcummings6856 yes but so many people will make a payment for 20 years and still have a balance yet - especially when accruing interest
I stumbled upon your channel today, because apparently I’ve been living under a rock and didn’t realize student loan payments are now due again, and had to rush to do some research… I’m SO grateful to have found your channnel!!! I am working towards PSLF, and took your advice to consider the SAVE plan and essentially lowered my monthly payment from $1,240 to $92… 😳🤯🤯🤯 My SAVE plan application is still pending, but if these numbers prove to be true, your videos will have changed my life in a HUGE way! Thank you so much for doing the lords work by simplifying such a complicated process!!! I will definitely keep you posted!!!!
Hi @wendyperez1940 - thank you for your kind words, I’m so happy to hear you’ll be saving so much money every month! I have a recent video that goes into all aspects of PSLF you may find helpful: th-cam.com/video/XrJ0D_uIn-I/w-d-xo.htmlsi=nloKC7EedfQZr9lr
Thanks for watching and congrats! -k
thanks to the covid - 19 student loans on pause I've paid off 33k (including interest). from 51K and now I owe 21K. Happy!
Hi @bivianacoyomani515 - that's great, congratulations!!!! 🎉🎉🎉
Thanks for watching! -k
Thank u I just applied and was surprised my payments are under a $100. ❤❤❤
Hi @theresabell2492 - that’s awesome! Thanks for letting me know and thanks for watching!! -k
Thank you for all the great into, just started watching!
I had 101K in student loans (grad and undergrad over 7 years) and thankfully consolidated them at 1.9% in 2005. I did consolidate again 18 months ago to a Direct Loan (from FFELP from Navient) just in case forgiveness went through.
With my grad loans I know I won’t be eligible anyway for any forgiveness for 6 more years, but I’m thankful they should be finally paid off in a few years.🙏🏻
Hi! So glad you like the vids - you may want to watch this one on the difference between the IDR payment plans as PAYE forgives grad loans after 20 years and may be a better option for you:
Slash Your Student Loan Payments: A Comprehensive Guide to Income-Driven Repayment Plans
th-cam.com/video/Rz38mIVocoA/w-d-xo.html
Your monthly payment probably would be higher, you’ll need to play around with the calculator on studentaid.gov to see what the differences are.
If you decide to get on PAYE, you have to do it ASAP as they’re closing it off to new enrollees after June.
Good luck and let me know how it goes! -k
@@themoneylibrarian okay thank you for the info and quick response!
They have to take that 6.5 % or any interest out and it will help so much. Right now as a married, it gives me an even higher amount than the current one caught if I apply for that plan .. USA has the most expensive for-profit education in the world.. if the government gives loans to people to improve their lives as for education, in this case, the loans should be at least 0 % APR or something very small and symbolical .. otherwise, as we can see we are caught in a system that we can't get out of it, which leads me to the conclusion that the government doesn't want to help the people to improve their lives but the opposite helps them to go more to poverty and dependency.
Hi @stanislavageorgieva-kabaiv6162 - it's certainly an overly-complicated system. It's far too complicated to get into the nuts and bolts of college funding here, but my hope is that we're able to educate the population in a way that allows for more people to get the education they want without suffering years of debt for it. Thanks for watching! -k
This is pretty much a life-changing development for me. Great video
Hi @DBoyTommie - 🥳🎉 glad to hear it, thanks for watching! -k
@@themoneylibrariansorry so when you go to apply you have to connect to the IRS account?
Hi! You don’t have to but it’ll make the process faster and easier. Thanks for watching! -k
Thank you for this video! The end of this student loan pause has left me quite nervous and confused and the info you provided here has helped alleviate some of those worries. If I recall correctly, the DOE is still working on an alternate way to provide relief to most borrowers as well.
The SAVE plan currently sounds perfect for me but the only remaining concern I have is what would happen if I enrolled in it but eventually secured a job with a better salary. If the SAVE plan is contingent on a percentage of discretionary income, I wouldn’t want to be stuck making payments higher than they would be if I had chosen a standard repayment plan. I wonder if it would be possible to switch plans later on or opt out of SAVE in a few years time if that scenario were to ever play out.
Hi @gregbocadella02 - glad you enjoyed the vid! If your income makes going to the 10 year plan the cheaper option you would just log onto studentaid.gov and switch plans there. Thanks for watching! -k
I guess if you found a higher paying job-you won't care about this remaining student loans regardless.
@@themoneylibrarian If you switch plans, would the interest balance carry over also. I know it is forgiven as long as you stay in the SAVE plan.
Hi @premierwealthadvisoryservi3606 - The interest that has already accrued will stay when you switch plans but new interest that may accrue if your loan payment isn't big enough to cover the interest will be waived monthly while on the SAVE plan. Thanks for watching! -k
Thank you for your responses! I just have one more question, regarding interest not accruing anymore, this is huge! Can you better explain this? I for example have a Principle of $300,000.00. Every month I accrue about $1000.00 interest. I've been making a 3k payment every month, so that $1000 covers the interest and the remaining $2000 goes to the Principle. This has been killing me because so much goes to the Interest to make sure it stays at zero and my overall balance doesn't balloon out of control. But now with SAVE this is all different???
Let's say under SAVE my calculated monthly payment is $500 and that's all I pay each month, nothing more. What's happening to the $1000 interest I'm generating every month? And all of the $500 payment goes to the Principle? Please feel free to use your own example if that makes things easier for other viewers to follow. Thank you!
My loans are Direct consolidated unsubsidized loans btw, don't know if that matters.
Hi @alandeasis8705 - I finally found some proof in a Reddit thread by student loan rock star Betsy514 which says if you make the payment, any additional payment will go to the principal. So given your example, although the interest accrued is $1,000, and the required payment is $500, any amount over your $500 payment would go to the principal according to her. Yay! The other $500 of interest is covered by the government. You can read the thread here: reddit.com/r/StudentLoans/s/D9BZ395iXz
Thanks for watching!-k
My daughter graduates in August as a Physician Assistant. Will have both undergrad and grad fed loans. Best way for her to start in order to get on Save Plan on her way to PSLF. Thank You
Hi @neilfleisher4213 - congrats to her, sounds like a solid plan to me! Thanks for watching! -k
I switched to SAVE today. The final agreement page said that the entire current amount of my student loan amount would be forgiven after 20 years and I would have to pay income tax on the entire amount. How in the world is that possibly going to work??? Today I was on hold for 2.5 to discuss this with my loan servicer but of course they were completely clueless.
Hi @AJ-di3xd - forgiven debt is often viewed as income (this makes sense on balance sheets but not to regular humans), this isn't unusual so don't feel like it's a rare attack on students.
Considering the monthly amount you save being on this payment plan, given how much this program is saving people, you're probably still coming out ahead, even having to pay taxes on any amount forgiven.
Lots can change over the next couple decades - including the law, make sure your legislator knows your feelings about this issue.
If you worry about this, maybe it would set your mind at ease to have automatic payments to a high yield savings account for a few dollars a month. Just $10 a month after 20 years, not including interest, is $2,400.
Hope this helps and thanks for watching! -k
Very helpful video ! One point to emphasize is that this is by executive order and not statute, so later administrations might play a major role in the plan.
Hi @alp852 -great point! I found a good PBS article on this in case anyone reading this wants to learn more: www.pbs.org/newshour/politics/how-bidens-alternate-plan-to-cut-student-loan-payments-could-become-another-legal-battle
Thanks for watching! -k
@@themoneylibrarian great article- thx for sharing ! Your videos are very helpful in breaking down complicated topics- I look forward to watching more in the future.
Hi @alp852 - thank you! They take a while to research and make; it's wonderful to hear the effort is appreciated! -k
Hi. Great video! I can't seem to find the loan calculator, though. Can you repost it?
Hi @maryroark1396 - here’s a link to the loan simulator: studentaid.gov/loan-simulator/?sf103848620=1
Thanks for watching! -k
I’m a teacher, and I don’t work at a title 1 school. I’m officially on year three. I have no idea what to do with my loans. I can’t afford large monthly payments, I can’t even afford to have my own apartment😅
Hi @chancer194 - thank you for being a teacher! I have a special place in my heart for teachers!
I'll be publishing a video this week that talks about all the different student loan payment plans, keep an eye out - that said, for *most* people who are having trouble making ends meet, the SAVE plan is probably your least expensive monthly option.
If you work for a public or non-profit school, you may be a strong candidate for PSLF (more about that program here: th-cam.com/video/IgIVIgczSHo/w-d-xo.html and what to do if you want to get PSLF in a few years here: th-cam.com/video/gGX7WOwjMjo/w-d-xo.html)
If you will be going for PSLF, you might be able to get any payments you made during the covid pause reimbursed - more details here: th-cam.com/video/mK0szkBnGYs/w-d-xo.html
Between the SAVE plan lowering your monthly payments (perhaps to $0) and PSLF forgiving the balance after 10 years, you have a lot of positive things to look forward to.
You can also contact your state department of ed and see if there is a state student loan forgiveness program too.
Hope this helps! -k
Move somewhere else where you get paid better. I’m a highschool teacher. Going to hear 6 next year will make 90k with a masters
Given the teacher shortage, and that usually the best way to increase your salary is to switch jobs, it may be worth looking into. Thanks for your input and thanks for watching!
what if you're unemployed at the moment how do you go about it?
Hi @yoyoyoyo321 - I’d give the department of Ed a call and ask them as usually they base your income on last year’s tax return. You can also look into forbearance, but, among other drawbacks, months in forbearance won’t qualify for forgiveness and interest usually accrues during this time.
here’s some info on how that works: studentaid.gov/manage-loans/lower-payments/get-temporary-relief/forbearance
Thanks for watching -k
This was so helpful, thank you! Will your monthly payment amount change if, let's say, you apply for the program now and then in a couple years get a new job that pays you more? Or is the monthly amount locked in for whatever your disposable income is right now?
Hi @Rigly123 - Glad this was helpful! You'll have to recertify every year to let them know what your income and household size is and then they'll change the monthly payment accordingly. Since they're always going to be taking a set percent of your income, no matter what, a raise will still be more for you every month even though the payment amount may go up.
There is a new option to connect your IRS account and student loan account so they can grab the numbers automatically and save you one more thing to do every year.
Thanks for watching! -k
So, the 10 years of payments is only for payments under the save plan, and the 10 years of payments from before the save plan do not count to be forgiven? That sucks, was hoping us who have been 100% on our payments would also fall under the save plan with those years counted towards the forgiveness 10 year mark.
Hi @LavaStormPlays - it was just announced that people will receive forgiveness starting FEB 2024!!!
So if you borrowed less than $12,000 and been paying for 10 years you should receive forgiveness next month, add 1 year for every thousand dollars beyond $12k. If you borrowed $13k and have been in repayment for 11 years, you get forgiveness next month and so on!
This article explains it well: www.npr.org/2024/01/12/1224265472/student-loan-forgiveness-save-plan
Hopefully you’ll get this, read the article for more info and let me know how it goes. Thanks for watching! -k
How to figure out payments for someone that has 4 IBR loans and 4 SAVE loans all undergraduate loans.
HI! I replied to your other comment, see full answer there. Thanks for watching! -k
Thanks for posting this video! When I went to download the 13 student loan repayment cheat sheet, it said my account was canceled and could not take new subscribers.
Hi! That’s super odd. I’ll look into this. In the meantime, you can send me an email at hello (at) msmoodymoney.com and I’ll email it over to you. Thanks for letting me know! -k
could you make a video or maybe explain the different repayment options that are on the FSA website? it’s hard to tell the difference between SAVE or PAYE. thanks!
Hi @sophiafulgoni240 - I've just finished editing the ultimate explainer to the 8 - YES EIGHT - different payment plans. Will post this week, be sure to subscribe and hit that bell so you'll be notified. Thanks for watching! -k
Hello! I do have a video that breaks down all the different repayment options to make it easier to know which is right for you, just want to make sure you saw it: th-cam.com/video/SfuPciHkT1k/w-d-xo.html
No one addresses existing loans and the interest that has been applied prior to the program…everyone is talking about moving forward
How does this address past loans with accrued interest and the remaining years on an existing loan 15 years
Hi @openmind6239 - I don’t believe this can retroactively reduce previously accrued interest, but at least it can stop future interest from piling on. Best of luck and thanks for watching! -k
Thank you for this video. The SAVE student loan payment plan will be a life changer for me.
Hi @TC-pn9bc - So glad it helped you, thanks for watching! -k
I have a Qs you could maybe clarify. Under the new SAVE plan my monthly payment is about $125. I am certainly able to pay more though. Would it be a smart move to sign up for SAVE & just make bigger payments than the minimum? I’m thinking in terms of if money is ever scarce, my payment wouldn’t be so high… so I can meet it and don’t have that stress of having to meet a larger payment under say, the standard plan.
Hi @marcoechavarria7274 - I’ve been looking around and haven’t seen any publications on what they would do with extra payments made on the SAVE plan. I assume, if this is like other payment plans, that you need to inform them to use overpayments towards the principal and not as prepaying future payments.
If they do this, then YES this is a great way to pay down the principal faster and give yourself some breathing room for when money is tight. You are a Smart Pants indeed! Thanks for watching-k
was there a place to calculate the difference in payment for the SAVE plan vs the IDR for example?
Hi @byhislove - I link to the Loan Simulator in the description, you can use that to find out what your payment would be on the different plans. Thanks for watching! -k
I tried to apply for SAVE but they merely recalculated my IDR and it went UP $20 😮🙄🤦🏼♀️ everything they says apply here for SAVE just takes me to reapply to IDR. Help!
Hi @cassandrajackway8517 - oh no! Sounds like a glitch in the system. Are you on your loan servicer's site or studentaid.gov? You may want to give it a day to see if it clears up. If it's not a glitch, it could be your loans aren't applicable if it's not showing up as an option. You may need to call to see if for some reason your loans aren't applicable.
Good luck and let me know how it goes! Thanks for watching -k
What are you taking into consideration when applying for student loan payments - how long it'll take to pay it off or reducing monthly cost? Thanks for watching! 😀
I work for hospital so after 10 years I can apply to have my loan forgiven. Can I use SAVE plan in conjunction with that?
Hi @MaryPonder - yes! The SAVE plan is a qualifying payment plan to get PSLF. You may want to watch my video here on what to do NOW if you plan on getting PSLF to make sure you are doing everything right: th-cam.com/video/gGX7WOwjMjo/w-d-xo.html
Thanks for watching! -k
Hi I’m confused on whether I should consolidate my student loans that are already on a Income Driven Repayment plan. I was told long ago that consolidation of student loans was not good for me for some reason and now I’m being told I should. I just don’t want to make things worse. Also regardless of consolidating, do I still need to apply for Save. Any info is greatly appreciated! Thank you
Hi @@Jecal34! - There are a few different reasons why consolidation may not have been right before but the landscape of student loans has changed dramatically over the past few years.
Whether or not consolidating is right for you depends on many different factors - will it help or hinder your progress towards a forgiveness program? will it allow you access to a lower monthly payment? will it wipe out previous payments towards forgiveness? etc etc.
Here's the student aid website page on what consolidation is and how it works: studentaid.gov/manage-loans/consolidation
Here's a fabulous article on what to take into account before consolidating: studentaid.gov/articles/5-things-before-consolidating-student-loans/
If you want to get on the SAVE plan, you do have to apply, they won't just put you on it. If you use the loan simulator (studentaid.gov/loan-simulator) you can see what your payments would be on the various plans.
Let me know what you decide and thanks for watching! -k
@@themoneylibrarian Thank you so much and I will definitely let you know the outcome. I’m a subscriber now as well!
When I do the calculations the Save plan is way more than all the other plans, makes me feel like I’m doing something wrong. My wife and I both make about $50k each and I owe $20k. In 8 years I can try to get PSLF since I’m a postal worker. I’m confused on which path to follow. I don’t see how any of the plans are getting anything forgiven besides the PSLF being 8 more years before applying. Who knows what the situation will be in eight years. So my main options were like the conventional one at $230 a month, or a ICR that’s slightly less but my wife might get a decent raise soon. The SAVE plan was between $500-$600 a month?!?
Hi @dhhjsjzjzjjhsjsjh - if you’re married filing jointly it could be your SAVE payment is higher than the regular payment since your loan balance is so low (probably doesn’t feel that way to you but in my world, that’s very low!)
I have a video on how to calculate your SAVE payment that might shed light on why your payment is so high: th-cam.com/video/Ek3ak-93vas/w-d-xo.htmlsi=ftLv6jPF_h34EszE
I have a video on PSLF here that may help you: th-cam.com/video/XrJ0D_uIn-I/w-d-xo.htmlsi=faaMX9LyDHIzpDEu
You could do married filing separately so the payment would be based on your income alone but there would be a lot of other implications from that so you’d need to really plan and weigh your options.
Good luck and thanks for watching! -k
When you discuss 10 year forgiveness for principle less than 12k, does that 10 years include all of the payments we have already made? Say a person on a standard plan who is now switching to the SAVE plan?
Hi @lizethmarin6762 - The first people to receive this forgiveness will be next summer, so, yes (but with a caveat).
That said, if you've been on the 10 year plan then there'd be very little to forgive as you only have 1/10th of your loan left.
Still, money is money, so I suggest contacting your student loan servicer to make sure your previous payments will apply and discuss how the SAVE plan will affect your payments, etc. Thanks for watching! -k
Great video, but we are stuck in these stupid FFEL spousal consolidation loans we can't get out of😥
Hi! You may want to contact your loan servicer to find out what your options are. Things get pretty tricky with spousal consolidation loans. Good luck! -k
I just tried applying and it informed me that my interest might go up because I'd be making smaller payments. Which made me terminate the application and do more research
Hi! On SAVE this is possible so they want you to know that. This said, they gov covers the interest your payment may not (like if you have $100 in interest a month but your payment is $25 they’ll cover the $75) so your balance can’t balloon - at worst it’ll stay the same.
You’ll have to weigh how beneficial the lower monthly payment is compared to the lowered impact on your student loan balance and do what’s right for you.
You can always call the Dept of Education and have them explain your options!
Good luck and thanks for watching! -k
@@themoneylibrarian You're awesome, Thanks!
Amazing video thank you!! Subscribed!! Any word on whether on SAVE, the repayment of the total loan after 20 (or 25 years) will still be taxed as income like it would be under REPAYE and PAYE?
Hi @MrMaui38 - if you get forgiveness via SAVE program before the end of 2025 then it is not taxed at the federal level. Some states do tax forgiven student debt, you’ll have to check with your state. After 2025? Right now that will be taxed at the federal level but the law could change between now and then. Let me know if you have other questions, I’m always looking for video ideas. Thanks for watching! -k
@@themoneylibrarian that’s great to know! I couldn’t find that answer online so I appreciate that! That could be a big chunk of change depending on the loan amount and may not end up saving much if someone were to make minimum payments for 20-25 years thinking it would be forgiven in the end 😳
Hello! Yes, it could be a lot and I’m sure it’ll catch many people off-guard. Hopefully they’ll prepare!
@@themoneylibrarian I will be now thanks to your info - I appreciate it!
One thing im confused by, is the SAVE plan 10 year -120 "payments" forgiveness backdated? Or is this only going forward 10 years from 2024 so 2034 is when forgiveness would happen?? I have been on IDRs since 2014 so next year i'll hit 10 years.
Hi @amoredclown1 - That's a great question - I would think it'd be backdated as the SAVE plan is a form of IDR. They are updating everyone's IDR payment counts this year, you can check on studentaid.gov to see what your payment count is at. You could also call the Department of Ed and ask them. If you get an answer, please post here as I'm sure MANY others have the same question. Thanks for watching! -k
Great video, thanks kindly. Question- are any of these plans really SAVING (reducing your balance) in the long run? I just can’t imagine. They are just stretching out the TERM for one to pay their final balance, correct?
Thanks again for your efforts.
Hi @markcummings6856 - I have a video that goes into more depth about the different effect of the various repayment plans on your overall balance. th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=I7kO19hpDUoTXkAq
As for the SAVE plan, this site explains the reasoning - in general, to help low and middle income homes:, www.whitehouse.gov/briefing-room/statements-releases/2023/08/22/fact-sheet-the-biden-harris-administration-launches-the-save-plan-the-most-affordable-student-loan-repayment-plan-ever-to-lower-monthly-payments-for-millions-of-borrowers/
Yes, you are correct that they are stretching the term but they are also greatly reducing monthly costs so, depending on your balance, income, and household size, you may or may not end up paying more in interest.
Thanks for watching! -k
Thank you for the video and all the helpful information! Being that I'm in my 3rd year of college and have both Subsidized & Unsubsidized loans and will obtain a few more before I'm done, should I apply for the SAVE program now while I'm still in school?
Hi @user-on4pp6px2t - Since you don't enter repayment before you graduate, you don't have to pay anything on your loans now. Some people like to pay them down while in school to keep the cost low/reduce interest when they graduate, contact your loan servicer if you'd like to set something like that up. Thanks for watching! -k
Thanks so much!
@@themoneylibrarian
Do you know if there are plans to extend the federal income tax moratorium on forgiven loans beyond 2025. As it stands if your loans are forgiven in 2026 you could owe thousands in federal income tax but if the loans were forgiven in 2025 the federal tax burden would be zero. Hardly seems equitable.
Hi! I'm sure there's lots of chatter about it but I'm not aware of anything concrete coming down the pipeline. If they don't fix it there'll be a LOT of people complaining loudly.
Thanks for watching! -k
Love the channel! Thank you for the info!
Hi @nataliacamargo6913 - thank you so much! Let me know any financial topics you’d like more explanation on! Cheers, -k
Hi! I really love your channel, thanks for making this video!
Currently I’m not working and they said with SAVE my payment is $0, the payback amount is $0, and the full loan ($20K) is forgiven in 2043. How is this possible?! Am I going to be accuring interest if my loan payment is $0? Is my payment really $0? Thanks for any help you can provide!
Hi @freckledfaith3790 - thanks for the kind words, glad you enjoy the channel!
Your monthly payment on SAVE is updated yearly to reflect your current income and household status.
Based on what you said, your *current* discretionary income is below the threshold of requiring payment so your “payment” is $0. Although your current “payment” is $0, it’ll change yearly. I’m putting out a video next week on how to calculate your payment under SAVE, be sure to subscribe!
After 20 years in repayment any balance is forgiven.
On the SAVE plan no interest will accrue - so although the balance isn’t going down, it also isn’t going up.🥳
Hope this helps and thanks for watching! -k
Thank you so much! I was thinking that’s how it was. I’ll definitely be utilizing this plan until I make a steady income. I really hope this can help lots of people!
As I am preparing to sign up for save plan on student aid website, under " view details", there is a list of advantages and disadvantages of the plan. One of the disadvantages states "You may have to pay income tax on any amount that is forgiven, unless the amount is forgiven under the Public Service Loan Forgiveness Plan program (which isn't taxed)."
What do they mean by "you may have"? How do you find out if you do or don't? Also, what monies considered forgiven? Do you know if that would that include "forgiven" interest? Would I be responsible for additional income tax each year for forgiven interest? Or are they talking about forgiven loan balance if not paid off in 20 years? Would I be responsible for income tax on possible 30k balance forgiven in 20 yrs. if I only made minimum payments? If I made monthly payments higher than minimum would it go toward principal balance?
Thank you for helping me understand :)
Hi @ar4863 - I think they’re covering all possible contingencies in the next 20 years. Right now, you don’t have to pay federal income tax on the money forgiven for PSLF but may owe state income taxes depending on your state.
Income driven repayment forgiveness has no federal income taxes through 2025. After that, according to the current rules, you would owe federal and possibly state income taxes on whatever the balance is when it gets forgiven.
On SAVE interest is waived monthly, so it wouldn’t be tacked on before the balance is forgiven.
It doesn’t make sense to pay down the balance so you pay less in taxes - think about it this way, if your actual tax rate is 15%, you’d owe $150 for every $1,000 forgiven - why pay $1,000 to save $150?(I’m making up numbers, yours will be different but you get the point).
Hope this helps and thanks for watching! -k
For some reason your website would not let me download the cheat sheet. When I put the verification code in, it kept saying it was wrong.
Hi! Thats odd, shoot me an email through the contact form and I can email it to you that way. Thanks for watching! -k
If I currently make less than $20K a year and I have about $13.5K in debt, let's just say I apply and get into SAVE. If I suddenly find a job that pays me $100K, will the total of my loans increase from the original amount because I'm making more money?
Let's say I get into SAVE and they say I get $0 of payments, will they ever increase my loan total later on because I found a job that pays more money?
Hi @rukawakaede6573 - on this plan your payment is based solely on your income and household size. The total amount of your loan won’t change but when you recertify (which you have to do yearly) they’ll recalculate your payment based on your new income and household size. Given that scenario, you’d pay more per month because your income went up.
Thanks for watching! -k
So, my monthly payment would go up, but it wouldn't change the original amount of the loan ($13.5K), the interest that was being covered isn't suddenly added, correct? (Also, thank you for the response, I really appreciate it) @@themoneylibrarian
Hi - don’t worry, they won’t add back the past interest!
If your payment minimum is less than the interest accrued the government pays the rest of the interest for you so the balance won’t go up. If your income goes up, at the yearly recertification, they’ll increase your payment amount since your payment amount is based on your income and household size. If your payment amount is more than the interest accrued, it’ll bring down the balance by that much.
It sounds confusing but this should help, as I said to another commenter, “Let's say your balance is $20,000 required payment is $50 but the interest accrued is $75. You'd pay $50, the government would pay in $25 to cover the rest of the interest and your balance would stay at $20,000.
This is light years better than before when the new balance would be $20,025 because the payment didn't cover accrued interest!
Now, same scenario but your required payment is $100 - $75 would go to interest and $25 would go to principal, so the new balance is $19,975.”
Cheers! -k
@@themoneylibrarian Thank you so much, this helped me a lot!
Yay!!
This is really cool. I think it is great how we have all of these options. But I think I know what I will do.
Hi @egrintarg230 - Great, so glad I was able to help! Thanks for watching! -k
Mine says since one of more of my loan servicers don’t participate in the online IDR application process, I must do a few more things. How can I ensure i accurately do this?
Hi @ariah5093 - this is quite odd, are you sure they’re for federal loans? You can’t get on SAVE for private loans, which is the first thing I think of when told your servicer doesn’t participate in the online process.
I’d call them to ask EXACTLY what’s going on. Be prepared to be on hold a while☹️🫠
Thank you for watching, good luck, and let me know how it goes! -k
I'm on the save plan. Currently my payment is $60, which all goes to interest, so my balance never goes down.
Do you have any information on making extra payments toward the principal without having to pay additional interest? (I could do that before on repaye, but would have to send a check with a letter requesting to apply it to principal and not toward future payments, such a hassle).
Hi @st3218 - if you pay above the required minimum payment that can go to the principal as long as you inform the lender that you want overpayments to go to the principal and not the next payment. 🥳
Thanks for watching! -k
my daughter has $67,000 in loans, she graduated during the pause so she just had to make her first payment in October. We signed her up for the SAVE plan , entered her income and her first payment was just $49. We made that payment and since then her payment has been $34 per month. I see it only shows that it goes to interest. I know she has to re register each year with her income and I think it's a 25 year plan. Not sure what to think really but it's not like she has enough money floating around to pay much more, now anyway. Any thoughts?
Hi @mrspunk61 - this is good for her monthly expenses; before SAVE her balance would increase even if she did make her payments since, previously, they don’t cover her interest. On SAVE her balance will remain the same as the gov is covering the rest of the monthly interest accrued. Long term though, she isn’t making any inroads on the balance which she may regret down the line.
If possible, she may want to consider overpaying as anything above her min payment will go to the principal. But I’m sure she has a lot of things she should be putting her money to(retirement, buying a car/home/travel, etc), so it’ll be up to her as to what’s her best move.
Thanks for watching! -k
I would like to see how her payments change as her salary goes up, she will probably have to file separately if she gets married. She is putting in about $ 80 a week into an Acorns account that she has in treasury bills and some times in and and out of the market. I would like her to build up a safety cushion . Not sure about the student loan payments for now. Will it be a 25 year payment and then forgiveness? Isn't that the plan? We'll see about that one. Thanks for your response! @@themoneylibrarian
Hi @mrspunk61 - on this plan she’ll either pay it off or, if there’s still a balance in 25 years, it’ll be forgiven. Thanks for watching! -k
I am currently finishing my last year of medical school. I have both direct unsubsidized and grad plus loans. In order for the interest subsidy under SAVE to be in effect do I have to be graduated/out of school and in repayment?
Hi @LeighHickham - congrats on finishing up med school! You have to be in repayment to get on SAVE and as you're in school you're automatically deferred, but if you do want to pay the interest yourself, you can do that while in school (I realize this is not as ideal as having them pay it but it is an option!).
Alternatively, there are many medical positions once you're out of school that would be PSLF-eligible with non-profit groups or the government. You'd need to weigh the pros/cons and do what's best for you.
Good luck with your last few months of school and thanks for watching! -k
Awesome overview! Thanks!
Hi @iPsychlops - so glad to help! I have another that breaks down the payment plans so you can easily figure out which is best for you: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=BP4-TcYip5oGPBYJ
Thanks for watching! -k
What if you have been on a PAYE plan for several years? Would changing to the SAVE plan mean you have to start over on your qualifying payments for PSLF?
Hi @joeymartinez3760 - it shouldn’t affect your PSLF count, you’re just moving from one IDR plan to another but call your loan servicer to confirm.
I have a vid which may be really useful for you as it outlines important steps to take NOW if you plan on getting PSLF down the road, you can watch it here: th-cam.com/video/gGX7WOwjMjo/w-d-xo.htmlsi=6r7gDz2SQ6zN0u12
Thanks for watching! -k
Why should someone NOT apply for the SAVE plan?
Hi @elee2992 - a couple examples off the top of my head: if you're high income with low loan amounts or if you have loans that don't qualify (Parent PLUS, FFEL, Stafford).
I JUST published a video where I go through all the different student loan plans and explain who they'd be best for - you can check it out here: th-cam.com/video/SfuPciHkT1k/w-d-xo.html
Thanks for watching! -k
Should I take my loan out of deferment or forbearance to enroll in SAVE?
Hi @dr.t.a.neyland8805 - personal finance is personal and only you can answer that.
Here are some things to take into consideration: If they are in deferment or forbearance chances are interest will be accruing on them so they’re growing.
(See more on forbearance here- www.consumerfinance.gov/ask-cfpb/what-is-forbearance-en-631/ and deferment here: www.consumerfinance.gov/ask-cfpb/what-is-deferment-en-629/)
That said, if you start the SAVE plan, your required payment is more than $0, and are having a hard time making ends meet, it could cause real strain.
You can contact your loan servicer or the Department of Education to learn more about your options. Thanks for watching! -k
Please help me I'm having a mental breakdown. ugh My school told me I was applying for a zero-interest loan and they lied. I trying to apply for the IDR repayment program because I'm currently not working (the school promised I'd have a job after graduation). While on the website I have seen a SAVE program I tried reading about it but I'm having a tough time understanding what it is. The repayment plan states that my monthly payments are Zero and my total to be paid is zero, also that my forgiveness amount is the amount of the loan. I guess my question Is should I apply for this? and does that mean I don't have to pay anything?
Hi @Killersoul810 - sorry to hear this has been so stressful!
I don’t know you or your situation well enough to give you a “yes” or “no” as to whether the SAVE plan is right for you but I can help clarify how it works so you feel more confident if you choose it -
For the SAVE plan, If you make below a certain amount then your payment can be $0 a month. This is reassessed yearly so it can change. Any interest that accrues which is above your payment gets waived monthly. After 20 years for undergrad loans (25 for grad) the balance, whatever that is at that time, is forgiven.
Also, if your school promised you’d have a job but you don’t you may want to look into the Defense to Repayment forgiveness program www.nerdwallet.com/article/loans/student-loans/borrower-defense-repayment
Hope this helps and thanks for watching! -k
Does anyone know if your on the new save plan, and monthly payment doesn’t cover interest that government will cover. If I make additional payments will the additional payment go to principle of loans? Or will additional payment just cover the interest (essentially negating government perk of them paying the interest on save plan)? Any help would be greatly appreciated
Hi @angelcolon5467 - I can't say for absolute certain, but from what I've been able to find out, overpayments will go directly to the principal (but you have to let them know to apply overpayments to the principal and not future payments) - - even if your required payment doesn't cover interest.
Example: if the interest is $50, your payment is $25, then the gov waives the other $25 in interest. Let's say you send in $100 and tell them to apply extra to the principal; then $75 would go to the principal.
Thanks for watching! -k
I am currently on the SAVE plan. I have low income right now but if my income increases significantly with a new job, do I need to contact my loan provider and update them? And would that mean I no longer qualify for SAVE and change me to a different repayment plan? Thank you!
Hi @smw4020 - I am unaware of a legal mandate to inform them immediately of increases to your income. You do have to recertify every year and they'll use your taxes to find out your income. At that time your payment could go up.
That said, if your income goes down, you can contact your loan servicer and tell them of the new income and they'll update your payment.
You won't ever not qualify for SAVE but it is possible your income gets high enough where the SAVE monthly payment is more than the 10 year standard repayment plan. You'll have to reassess what's best for you at that time.
Thanks for watching! -k
@@themoneylibrarian Thanks so much! Your videos are very helpful.
Yay! So glad they’re helpful, let me know if there’s anything in particular you’d like a vid on and thanks for watching! -k
If I am 20 years into my IBR program with crazy accruing compound interest. None of my payments went to the principle. Only interest all of these years because I was told I couldn't make it go to the principle unless I paid past the interest amount.
My loans were consolidated however I was told by Nelnet they were commercialized loans now due to the consolidation but still federal loans. Do I qualify to switch to SAVE so the interest stops growing? Or would I have to start over? I think the IBR program I have to be in it for 25 years. However my loan amount is into 6 figures now. It's insane. I borrowed only $40K back in the 90's.
Hi @cordialgreeterdiy - I’m sorry to hear you’ve been paying for so many years and it’s GROWN!🤯
Have you heard of the IDR recount? People who have been on IDR payment plans are starting to get forgiveness - if you go to studentaid.gov it should show your payment count. I don’t know how your consolidation will affect all this. You can contact the department of Ed and they can explain your options.
Here’s more info on the recount: studentaid.gov/announcements-events/idr-account-adjustment
If you get on the SAVE plan it will stop interest from increasing the balance but my hope is that with the recount your balance could be forgiven soon.
Your servicer should be able to help you out 🤞. Good luck, let me know how it goes, and thanks for watching! -k
Hiii, i have a question, but i'm a first-gen second year in my undergraduate right now. When do I need to repay my loans, and when should i apply for this re-payment plan?
Hi @juliannanaag4943 - congrats on being the first in your family to go to school🎉. most people start repaying loans 6 months after they graduate as you have a 6 month grace period before you have to start repaying.
some people like to pay off the interest that’s accruing while they’re in school but if you do this be sure you aren’t hampering your ability to do other things like paying for an apartment/moving after school.
By default they’ll put you on the standard 10 year plan after you graduate and enter repayment but you can apply to be on one of the other payment plans during this time. I have a video on all the different payment plans here: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=VYB5BrnGGHusuJxZ
Thanks for watching and good luck in school! -k
Are there any Cons to signing up for the SAVE plan? Could it negatively affect you in any way?
Hi @Quan-yb9cn - given that there are tens of millions of people with student debt I can't say for sure that there is no situation where it would negatively affect you. People should learn as much as they can about the loan repayment system and the terms of their loan and then decide what's best for them.
In general, since your loans can't increase on this plan as long as you make your monthly payments, it's fairly safe to say you can't get into *more* debt on it than you already are.
as I talk about a bit in this vid (th-cam.com/video/SfuPciHkT1k/w-d-xo.html), it is possible your income could rise so that the 10 year plan becomes cheaper per month and if you switch to it, you'll lose the 20/25 year forgiveness.
Thanks for watching! -k
You are an Angel, but I likely will have questions.
Thanks kindly for your efforts in sharing!
I graduate next year and will have 250k in student loans. As an Optometrist, my expected income will be around 130-140k. Whats your opinion on the SAVE program and my situation? Thanks!
Hi @dinobot8698 - congrats on the degree (a bit early)! Since you’ll be high income you aren’t the target audience with this program, I address the best student loan repayment plans for high income earners in my most recent vid here: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=5qyS0uBTVgjiFQUc
It should help you understand your options better.
Thanks for watching!-k
@@themoneylibrarian Thanks you!
Thank you for the information! Could I still make extra payments a while on SAVE Plan?
Hi @lemonpie1425 - yes you can, just be sure you let them know whether you want the payments to go to the next payment (which is the default) or to the principal. Thanks for watching! -k
@@themoneylibrarian Thank you!
A new subscriber is here. I found your video very informative. I have a good question for you, I have graduate student loans and I'm currently under the income-based driven plan and there is some accrued interest. my question is if I switch from the IBRP TO the NEW save plan. is the accumulated interest will be added to my principal for the switch?
Hi @alaamahmoud2274 - I don’t believe that the interest already accrued would be waived, only future interest. Although I’m sure you would have preferred otherwise, having future interest waived is still great news. Thanks for watching!-k
@@themoneylibrarian thanks for your reply ,I'm asking about the current interest on my accounts,are they going to added to my principal if I switch income driven plans ?
Hello! Yes, any interest *already accrued* from being on a different plan will be added to the balance, but once you're on the SAVE plan any interest not covered by your payment will be covered by the government. Hope that clarifies it! -k
@@themoneylibrarian really appreciate your answer one more last question, if I switch to the save plan, can I switch back to the plan i had before for any reason? i heard that they are trying to block the save plan
Hi @alaamahmoud2274 - you *should* be able to switch plans without any issue.
That said, they are sunsetting the PAYE plan so you may not be able to get back on it if you get off. I’d contact my student loan servicer and ask them directly in case there’s more info I’m not aware of. Good luck!! -k
SO helpful thank you. I applied twice for a teacher loan forgiveness however I was denied both times. Too much red tape
Do you happen to know if qualifications for teacher forgiveness loans have changed?? Thank you in advance
Hi @sophiavega1777 - there are multiple teacher loan forgiveness programs (studentaid.gov/articles/teacher-loan-forgiveness-options/) and a variety of reasons you could have been denied for any of them.
PSLF has gotten more relaxed over the past year. I know it’s a lot of red tape but if your loans can be forgiven it’s worth the time and effort to figure out how to get this done. ❤️
I recommend you contact your loan servicer or the Department of Ed and ask them why you were denied and what you need to do to get your ducks in a row so you can get these loans forgiven.
Good luck, let me know how it goes, and thanks for watching! -k
what if i've had my loans since 2013 but i only made payments the first few years and i've been on an income driven repayment plan ever since where my monthly payments have been $0, due to being low-income (and unemployed the last 3 years)... i haven't been making any payments at all, since they weren't required and i couldn't afford them anyway. im hoping to get a job soon, but idk what plan is best in my current situation??
Hi @nakochips - you can log into studentaid.gov/ to see the status of your loans and how many payments you currently have towards the income driven repayment plan forgiveness. You can also play around with the loan simulator and see what your payments will be on the various plans.
I have a video that helps to explain what plan might be best for you here: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=Kqw3loKTzK_S6dkr
Thanks for watching! -k
Does this still work with the public service loan forgiveness program?
Hi @blakemccabe15 - yes, SAVE is one of the payment plans that works for PSLF. If you're going for PSLF, I recommend these two vids:
What to do NOW if you're going for PSLF later: th-cam.com/video/gGX7WOwjMjo/w-d-xo.html
PSLF explained: th-cam.com/video/XrJ0D_uIn-I/w-d-xo.html
Thanks for watching! -k
Great video! Can you repost the loan calculator? Thanks.
Hi @maryroark1396 - thanks! Here’s a link to the loan calculator: studentaid.gov/loan-simulator/
Thanks for watching! -k
Hello, after 20-25 years of repayment on the new SAVE plan, is the remaining balance fully forgiven, or do you pay a tax on the remaining balance and then it's forgiven?? Thank you!
Hi! Your balance would be forgiven but according to current law the IRS would count this as income and you’d have to pay taxes on it. If you will be getting forgiveness, just set some money aside every month as you get closer to forgiveness so that bill is easy to pay. Thanks for watching! -k
Im looking at taking advantage of the SAVE plan because of the interest rate perk, but am wondering what happens if I go ahead and make additional payments each month in an effort to pay it off sooner! I have a mass amount of grad students and am not trusting this plan to stick around for 25 years :)
Hi @aliciagibson8232 - from what I've been able to glean the default is to apply it to your next payment but if you inform them you want overpayments applied to the principal they'll put every dollar over what you're required to pay towards your principal. Thanks for watching and good luck! -k
Holy shit, I love your vibe. Thanks for the info!
@user-bv2lx6nt1b - *clinks glass* I dig your vibe too (a la Big Lebowski). I try to post on TH-cam every couple weeks but I ALWAYS get my weekly emails out that contain a ton of useful things to help you save money and understand our financial system so you can feel like you’re doing this money thing “right” - you can get all the nerdy goodness direct to you here: msmoodymoney.com/newsletter
Thanks for the kind words and thanks for watching! -k
Hi, do my years of repayment on IDR count towards the 20-25 years of payment on SAVE? Or do I start from scratch again? Thank you!
Hi @alandeasis8705 - yes, your previous payments should count but contact your student loan servicer to double check that there is nothing with your particular situation that could cause issues. Thanks for watching!-k
If my monthly payments are $0 on the SAVE but i wish to pay $200/mo, will interest accrue?
Hi @marissaali24 - nope! The ENTIRE payment will go to the principal. Yay!!
Thanks for watching! -k
if we were to get off of the IDR would that interest that "didnt accrue" come back? also could i pay above the $0 payment if i wanted to ? and put it towards the principal of a specific loan?
Hi @JohnnyDeaux - the SAVE plan is the only IDR plan that covers your interest every month. If you got off that onto a different income driven repayment plan where your payment didn’t cover the interest, you could accrue interest again.
As far as I know, you can pay above your $0 payment and it would go to the principal. You have to tell your loan servicer you want overpayments directed to the principal.
My most recent vid compares all the plans, you may find it helpful: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=QZju7JKmZRpwmiqD
Thanks for watching! -k
Hello I have a question that hopefully you can help me answer I signed up for the save plan and it says my monthly payment is zero I'm guessing because I'm single and make under 32k a year but my question is if my payment is zero and I'm not making monthly payments is my interest still accruing each month?
Hi @xavierpolcano - great question! On SAVE, any interest not covered by your payment will be waived by the federal government every month - so your balance won’t go up or down, which is a lot more than literally millions can say!
Hope this helps and thanks for watching! -k
What is a public service?
Hi @MYVloliDiruJP - I have a video on the PSLF program here: th-cam.com/video/fU2P8UCXyow/w-d-xo.htmlsi=l7ChaluxmlU8jyZF
Thanks for watching! -k
So I started a job that qualifies for PSLF back in 2021. I submitted the paperwork for PSLF and I was granted. I have heard that qualifying payments (even if you were not working a job that qualifies for PSLF) back from 2007 will count towards your qualifying 120 payments. Is this true? I was just starting college back in 2009 and then went on a little hiatus from 2012 to 2018. I was never in default, the payments were just in forbearance.
Hi @SickestFlare - I'm unaware of any policy or program that allows payments made without working a qualifying job to count towards PSLF. There was an issue that people with the "wrong" kind of federal loans could get those payments to count, perhaps that's what you heard?
I have a video that would be useful for you - what to do NOW if you plan on getting PSLF (th-cam.com/video/gGX7WOwjMjo/w-d-xo.html)
Thanks for watching! -k
What if your student loans are already over 10-15 years on a previous IDR plan? If you apply for the SAVE plan, does the time restart and you have to go another 10 years before forgiveness under the SAVE plan? That is the part no one seems to be clear on.
Hi @amyhoogenakker8013 - if you’re already on an IDR plan you’re just switching from one IDR plane to another IDR plan, so the payment counts should transfer without any problems. There can be issues if you consolidate loans after 2023, but from what I’ve found there shouldn’t be any if you’re just switching payment plans.
Still, your loans may have some other things going on, it’s always best to talk to someone at the Department of Ed to make sure all your ducks are ina row.
Thanks for watching! -k
If I am qualified for the $0 monthly payment under the SAVE plan, does it mean they won't accrue any intrest right? Just exactly the same as the covid intrest rate pause period right? Would they secretly accrue intrest that you won;t find out in years? That's what I am worried about joing the SAVE plan. Please help!
Hi @abcdefg12369 - every month the interest will get waived so your balance will stay the same. No “secret interest”🙂
Hope this helps and thanks for watching! -k
would it negatively impact my credit score for having like 40k of student loans for the next 1-2 decades? Will the credit score report detect if the 40k is linked to SAVE plan? @@themoneylibrarian
@@themoneylibrarian one more thing: will the unpaid loan be treated as future income that we need to pay tax on ?
Hi @abcdefg12369 - Length of history is good for your credit score, as long as you are on time with your payments (which won't be an issue when your payments are "$0"). It's possible though that owing large amounts of money will negatively affect you when you apply for loans in the future though - every lender has different qualifications so it's hard to know.
Here's a good article to explain more on student loans and your credit score: www.experian.com/blogs/ask-experian/student-loans-are-debt-obligations-like-any-other-loan/
Thanks for watching! -k
After 2025 the balance forgiven will be treated as income and federal income tax will be due on it. State taxes will vary. (you'll still pay way less, if this is a concern, start stashing away a little bit of money every month so this is easy to cover when the time comes)
Cheers! -k
Does anyone know how long it takes for the SAVE application to be processed/approved?
Hi @ronaldbeasley2575 - I’ve seen anywhere from a couple of days to months. There doesn’t seem to be a consensus.
Wish I had a better answer for you!
Thanks for watching! -k
I haven't seen any clear answer on the loan forgiveness rules. If I have been paying my loads already for 20 years does that mean my loans will be forgiven immediately upon signing up or is the time periods around loan forgivess only start on the date you switch to that repayment plan?
Hi @AlNemec - It's possible if your loans qualify then yes, they could be forgiven via the IDR repayment if you've made the correct number of payments and have qualifying loans (see more info here - - studentaid.gov/announcements-events/idr-account-adjustment)
You can also call the Department of Education and speak with a representative so they can look at YOUR loans and let you know your options.
Good luck and thanks for watching! -k
What about if last year you were barely over the pay amount to qualify for this program (35k for one person), but this year you will be way under because you don’t have the same job? Since you have last years tax returns will they not take this year into account?
Hi @Anordberg233 - anyone with qualifying loans can get into this payment program. You’ll have to call the Department of Ed and explain your income situation is much different now than when you filed tax returns. I assume they can work with this but don’t know. Good luck and thanks for watching! -k
My wife stopped working full time this year so her income is a lot less. Her student loans are due and I want to consider SAVE plan but should we wait until we complete this year's tax return to use her more recent income? Should we file married separate instead?
Hi @danmzuccari1 - I would be one of those financial "gurus" if I bloviated about what tax filing was *definitely* best for you and your wife 😬😆 (wish I could give you easy answers but those have a much higher chance of being wrong)
Married filing jointly/separately will have bigger financial consequences than just what she pays for student loans -- it'll change, potentially drastically, what you pay in income taxes. It could change your ability to put in to a Roth - to list just a couple things.
You'll have to run the numbers to figure out what you'll save in student loan payments vs what you'll pay in taxes.
I've heard that for people whose income has changed since their last tax returns they can call their loan servicer and give them a verbal update to income.
I'm posting a video next week on how to calculate your payment on the SAVE plan. It could be that even with the joint income the SAVE payment won't be that bad and could be a lot less than what you'll pay on taxes.
Wish I had an easy answer for you. Hope this helps and thanks for watching! -k
Will these programs be permanent or can this all change with a new Administration?
Sounds very nice but for how long.
Hi @kevdmiller5150 - no one knows the future so anything can happen but the mechanisms by which this was enacted are far more legally stable than the $10k/$20k forgiveness that was recently overturned. Thanks for watching! -k
2 questions:
I thought if already on IDR and fafsa was currently filed one already qualified for SAVE. Did I misunderstand?
Second question is about PLUS loans. Are you saying they do not qualify for the SAVE program even though IDR is applicable with them?
Hi @jackque5199 - FAFSAs are for people still in school seeking help paying for it. While in school you shouldn’t also be in repayment for Direct loans. Once you are out of school and in repayment, assuming you have Direct loans, you should be able to qualify for the SAVE repayment plan. Grad school PLUS loans qualify. Parent PLUS loans do not qualify even when consolidated. ☹️
Hope this helps and thanks for watching!-k
Thank you SO much for making this video
Hi @bvlgaridiamonds - you're welcome, thanks for watching! -k
Is this for federal student loans only? I have Sallie Mae and they won't work with me at all.
Hi! Yes, SAVE is only available for federal student loans, not private loans but there are many refinancing companies out there who may offer you better terms if Sallie Mae isn’t working out.
Good luck and thanks for watching! -k
For the forgiveness on loans under $12k, if I consolidate all of these loans together and the balance is now over $12k, am I ineligible?
Hi @DivineDarkeness1528 - that’s a great question, I wish I had a solid answer for you but I think you need to contact your student loan servicer or the Department of Education and have them take a look at your loans as I could see this going either way. Don’t forget, add a year for every thousand over $12k, at 11 years you can get forgiveness on an original $13k, 12 years forgiveness on $14k and so on. I’d love to hear what they tell you as I’m sure others have this same question. Thanks for watching and good luck! -k
Before the pandemia i have a payment plant with a company,now this company no more have my account. How i found who have my account?
Hi @janiobermudez7739 - if your have federal loans they should be listed when you log into studentaid.gov
If they are private loans they should be on your credit report which you can access via annualcreditreport.com
This website goes into more detail on your options- www.consumerfinance.gov/ask-cfpb/how-do-i-find-out-information-about-my-student-loans-en-613/
Good luck, thanks for watching! -k
Good Morning, my wife spoke with her student loan provider Aidvantage and we agreed to the SAVE program and they said if we make 120 payments then we would be eligible for PSLF. Do you think that is true? Because you are saying 20-25 years to be forgiven
Hi @ajaymunhoo8582 - that’s great news!
PSLF is a different student loan forgiveness program from SAVE - it forgives balances for people who work for qualifying employers.
I have a video about what it is/how to qualify for PSLF (th-cam.com/video/IgIVIgczSHo/w-d-xo.htmlsi=6BfQGRWojZf2qBim) and another about what to do now if you are going for PSLF (th-cam.com/video/gGX7WOwjMjo/w-d-xo.htmlsi=EReHAycDjzov6Xhm)
These should help you understand the program, how it works, and what to do now to make sure your payments qualify.
Thanks for watching! -k
If you are already on the PAYE plan for 6 years and switch over to the SAVE plan, does the 25 years start over?
Hi @dr.williamvy4243 - the time should count but contact your loan servicer before switching to confirm.
Note that they are sunsetting the PAYE plan so if you get off it you can’t get back on. I have another video that breaks the different payment plans down to make it easier to know which is best for you: th-cam.com/video/SfuPciHkT1k/w-d-xo.htmlsi=TYk1AkNtIih0mrI2
Thanks for watching!-k
If currently enrolled in college with unsub Fed loan, can we still apply now while still in school for SAFE? Hoping applying now with little income, would stop interest accruing till graduation!
Hi @user-zk2tv4uu11 - You can contact your school's student aid department or the Department of Education to find out if/how you can start payments while in school. Be sure to weigh your other financial goals and obligations before putting money down on these loans though. Like: do you have an emergency fund of at least $1,000? Do you have any high-interest debt? That kind of stuff.
Thanks for watching! -k
Hi Kate, thank you for your video! Do you happen to know if interest will acrue for graduate loans? I qualify for SAVE under $0/month.
Hi @PT-cu3td - Grad loans, if the required payment is less than interest accrued, will also have the remaining interest waived monthly. Thanks for watching! -k
Thank you so much for your response! @@themoneylibrarian
Since SAVE will kick next July 24 . What do you do for now till then even if you qualified?
Hi! Not sure what you mean by “since SAVE will kick”, can you clarify? Thanks!-k
Hello dear,
Thanks for the video! If I have not paid any of my perkins loan ( which is at 5% interest) the principal was 11,000 now it's at 15,000 almost. Would the SAVE plan benefit me in terms of lowering the total owed amount?
Hi @girljustwannahavefun1871 - it does not retroactively eliminate interest accrued, only interest above your CURRENT minimum payment on the SAVE plan.
That said, there was a recent announcement about providing relief for people in your situation whose balance is higher than originally owed, so there may be other mechanisms to get rid of the extra amount. 🥳
www.ed.gov/news/press-releases/biden-harris-administration-continues-efforts-provide-debt-relief-more-student-loan-borrowers
I believe they’re looking for citizen input, might be worth your time to follow the links and let them know your story to increase the likelihood this will get through.
Good luck and thanks for watching!!-k
Thank you so much for taking the time to respond and share this helpful link! You are a gem, may God shower you with his blessings.
I will be checking the link. Stay awesome
@@themoneylibrarian
Would the SAVE program still qualify for Teacher loan Forgiveness after 5 years *teaching in a loan income school* also if loans are around 40k would PSLF be the better option?
Thanks Tony
Hi @bigtoeknee11 - TLF payments can go into forbearance while in repayment which is a good idea if your balance is below $17,500/$5000 -BUT since her loan balance is above the amount forgiven chances are PSLF (and being on SAVE in the meantime) is the better option, see this page for more details: studentaid.gov/articles/teacher-loan-forgiveness-options/
Thanks for watching! -k
If your payment is scheduled $0 will that count towards your 120 payment/ 10 year forgiveness?
Hi @user-eb1xf1et8o - yes, i assume you’re talking about PSLF? if that is the required payment under a qualifying plan then that “payment” will qualify for the needed 120.
I recommend watching my vid on PSLF as I talk about this here: th-cam.com/video/XrJ0D_uIn-I/w-d-xo.htmlsi=6IT0Ul5Z3xwtWwY2
Thanks for watching! -k
Can we switch to SAVE plan after July, and still get the 5% payment option? Or do we have to start it now?
Hi @kkoeni113 - you can get on the plan any time you want. Thanks for watching! -k
Does the SAVE program retroactively affect unpaid interest from years of income based loan payments?
Hi @lokmtb8503 - It doesn't appear that this will apply retroactively, but from now on - from the Department of Ed's Factsheet (link in description) "The Department will stop charging any monthly interest not covered by the borrower’s payment on the SAVE plan. As a result, borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest. "
Maybe not the answer you wanted, but still WAY better than interest continuing to accrue. Thanks for watching! - k
i hope you have a video on making better college selection choices, working while in school, getting a useful degree, and graduating debt free --- like so many of the rest of us. hmmmmm
I have a deep-dive interview with an expert about precisely all these things so students can make better college choices, you can watch it here: th-cam.com/video/F8_Kf4JMQ4w/w-d-xo.html
@@themoneylibrarian thats good. i would love to see any video on student loans lead with avoidance of debt as a first off suggestion.
we trully have and epidemic of student loans. Obama ended the private banks from scruitinzing borrowing and degree acquisition -- which was sold as " a more fair system" it was a horrible idea.
And too many college students choose the most expensive path for a degree -- i.e. out of state, private colleges, 4 year vs 2 year, not working, using student loans for non school expenses or in lieu of working.
None of this ever makes the liberal media. its just all sold as victimhood. then biden vows to do forgiveness? without any alterations to the system itself? Stupid on top of stupid just to buy votes from ignorant people.
cheers.
Need help, and a question well a few, is there a direct contact
Hi @pamrousseau4969 - I’m happy to answer general questions here.
For specific questions, I recommend calling the Department of education and speaking with someone there. They have access to all your documentation and should be able to answer your questions. You’ll probably have to wait on hold a long time, so have something to keep you busy while you wait!
Thanks for watching! -k
Hi ML, between my spouse and I, we have $420k debt but $300k AGI. We work in a field of healthcare that does not have many PSLF options, but we want to pay off quickly without losing money via interest. I haven’t yet looked into the monthly payment for us via SAVE but I was wondering if you had insight on the “rules” of early/specifically allocated payments.
My loans are split into 9 groups with varying balances/interest rates. If we are in SAVE and the minimum is let’s say $900 total, could we pay $2000 into a single loan and not accrue monthly interest in the other 8 groups; since we are satisfying the “monthly payment?” I’m not sure if what I’m asking makes sense, but I would love to know what you think!
Appreciate your time so much, thank you!
Hi @Xoyche - For high earners, SAVE often isn't the best route but given your high balance, you can play around with the loan simulator and see what your payments would be studentaid.gov/loan-simulator/
(I talk about who SAVE is right for and who it isn't right for in this video: th-cam.com/video/z4-8nvU8Os4/w-d-xo.html)
On SAVE, your minimum payment would be dispersed across the loan groups, I don't believe there's a way to put the entire payment towards one loan and have the government waive interest on the rest, but you can call your servicer and ask.
If your minimum payment is $900, that would go to all the loans, but the extra $1,100 in your example could be used to pay down the principal of one of the loans - but you have to follow your loan servicer's rules on informing them how to use the overpayment otherwise they apply it to your next month's $900 due.
Nelnet's process is here: nelnet.com/how-payments-are-allocated) and EdFinancial's page here (edfinancial.com/help-center/how-payments-are-applied)
Your servicer (if not one of those) probably has a page that outlines how you have to request overpayments with them.
Good luck, let me know how it goes, and thanks for watching! -k
@@themoneylibrarian I truly appreciate the reply and the time/thought you put into your response. I tried calling Nelnet today and their phone system hung up on me at the 1 hour mark. I will try again tomorrow, but I understand what you're saying, that would be a sweet loophole for keeping costs down.
You make a great point about allocation and them pushing the due date or making overpayment towards next month so I will look into it. I will keep you posted, thank you so much!
Hi @Xoyche - glad to be of help, good luck calling the loan servicer (again🫠)!! -k
Is there any way to factor in your private loan payments to reduce your federal payments under SAVE? In my case, the SAVE payment is 10% of my AGI (grad loans) and my current private loan payments are about 15% of my AGI, meaning my total loan payments would be 25% of AGI.
Hi @OSOPRODUCTIONS - unfortunately private student loans are their own animal and as far as I know there’s no way to combine them with federal loans. It doesn’t help you now, but in July your SAVE payment could drop by as much as half if there are undergrad loans in there.
If your private student loans become too much, you can consult a bankruptcy attorney. It can be possible to get rid of them that way (not that I’m recommending this for you, just informing you as it’s commonly considered impossible) www.consumerfinance.gov/about-us/blog/busting-myths-about-bankruptcy-and-private-student-loans/
Good luck and thanks for watching! -k
God thank you so much for this!! Subscribed!❤❤❤
Hi @skybluebrad2781 - so glad this was helpful!
Here’s a link to my favorite video I’ve ever made and despite it being bonkers 🤯 showing the true math of whether to pay off debt or save (and involves Dolly Parton) it doesn’t get nearly enough love. If that sounds like it could help you, give it a watch! th-cam.com/video/Y6X2SFw0nnY/w-d-xo.htmlsi=HGu5F4Svy4bmbSW9
Thanks for watching! -k
Are there any programs available to help with Parent Plus Loans?
Hi @pattiboilore7898 - unfortunately there aren’t as many. Here’s a link to a great article from the CFPB that may be able to help. www.consumerfinance.gov/paying-for-college/repay-student-debt/federal-parent-plus-loans/
Good luck and thanks for watching! -k
Also, let’s say you pay $30 a month does that go towards interest or towards principal? Yes I get the interest above $30 is cancelled, but nowhere can I find if your loan balance will actually go down or are you just forever paying interest on a loan that will never decrease or increase?
Hi @Anordberg233 - like most loans, all payments go first to the interest accrued and then whatever is leftover goes to the principal. If your payments are less than the interest your loan won’t go up on this plan, unlike with the other IDR plans where you can be paying monthly and still have your principal go up.
It doesn’t go on forever - As long as you make your monthly payment, even if the principal doesn’t drop a cent, after 20 or 25 years the balance is forgiven.
Thanks for watching -k
This is where I’m getting confused! If I pay my required monthly payment, the rest of the interest disappears? And then if I want to make additional payments, that goes toward the loan itself and not toward any interest, right?
Hi! @aliciagibson8232 - if you tell them to apply extra payment to the principal then any money you send in beyond what is required of you will go to the principal!🥳
Thanks for watching! -k
Amazing video. Thanks for posting.
Hi @ryanprasad2090 - Glad you enjoyed it, thanks for watching! -k
Do you think someone going into dentistry should choose this plan?
Hi @traywaters1575 - As this is an income-based repayment plan, their monthly payment (as dentists often make well into the 6-figures), especially over the course of 25 years, may end up higher than the standard 10 year plan.
If they need to reduce their monthly payment they may be better off with an extended or graduated plan (see this vid for more details: th-cam.com/video/SfuPciHkT1k/w-d-xo.html)
They could also go work for a government agency or non-profit for 10 years and have their loans forgiven through PSLF - but they'd have to weigh the benefit of this against the lower income that often comes with working for the gov/non-profits. Hope this helps and thanks for watching! -k
Help!!
I currently make 25k/year, and (based on the Student Loan simulator) my estimated monthly payment if I enroll would be $0-98 for the next 20 years. I have a lot saved, enough to pay my 18k student debt and be comfortable, but obviously I'd rather keep that in my bank account if I'm given this option, especially with my current low salary. Because of my chosen industry, I don't make much at all now, but I will be making a great deal in the future (certainly by the time my 20 year SAVE plan would be up).
My question is, because this is an income-driven plan, what happens when the SAVE plan no longer works for me? Can I just pay off the remaining balance without a "prepayment penalty"? Also, will there by ANY interest accrual that would be tacked onto the balance I have to pay once my salary is high and I no longer qualify for the SAVE plan?
Thank you!!
Hi @AlyssaBotelho - if your income rises to the point where the standard plan is better monthly you can switch to that or pay off the loan in full at any time with no penalty.
Interest is always accruing monthly, but on the SAVE plan it’s guaranteed to be covered (whether that’s by the gov or your payment) so your balance never increases.
Ultimately, I think it is a good thing to be making so much cover the interest yourself since that also means you’re taking home a lot more. (Crazy as this may sound)
Thanks for watching! -k
@@themoneylibrarian thank you so much! So just to clarify your last paragraph so I make sure I’m understanding - should I just pay it off now? Or do you think I should take advantage of the SAVE plan? Thank you again, your video was very informative and helpful!
Hi @AlyssaBotelho - only you can decide your best course of action. According to general personal finance guidelines, you want to make sure other areas of your life are covered - like having an emergency fund, no credit card debt, saving for retirement, etc. I’d be weary of using all your liquid cash up in case something happens. Until your income rises, it sounds like the SAVE plan would be a good idea for you but again, only you can decide what’s best for you.
Cheers -k
@@themoneylibrarian thank you!
Do you recommend consolidation of my federal student loans before signing up for SAVE? I am pursuing PSLF and have 18 qualified payments done.
Hi @ferrismawri6389 - depends on why you’re considering consolidation. If you’re going for PSLF and somehow that will reduce your monthly payment or it’ll include other loans that otherwise weren’t part of those 18 qualifying payments then maybe BUT *call your loan servicer/Dept of Ed* because consolidation *may* effect your PSLF count - as in wipe out those 18 payments and you have to start again. I have a video about what to do if you are working towards PSLF you should watch to make sure your ducks are in a row for now: th-cam.com/video/gGX7WOwjMjo/w-d-xo.html
Thanks for watching! -k