Student Loan Expert Q&A: Navigating the SAVE Plan Exit, Parent PLUS Loans, and PSLF

What do we do now that the save plan is ending?

Rachel, you got to choose a new repayment plan. You can choose IBR today. You can wait until this summer and choose RAP.

When is the RAP going to be available?

And it’s going to be available in July. So those are your two options.

My student loan was forgiven January 25th. And it’s in furlough and added 20K.

I don’t know if you mean January 2025 or January 25th of 2026. And it’s in furlough and added 20K. I’m not quite sure what you mean. Either your loan was forgiven or it wasn’t forgiven. Furlough is not a term we use. So I’m really curious. Do you mean it’s in safe forbearance? Do you mean it’s in deferment, default? 

What’s going on with that one?  applying for borrower defense to repayment and ending up in forbearance for it doesn’t mean your student loans are forgiven. Were you part of the exhibit post-class that’s just went through on March 31st or April 15th?

 If you were not part of those lawsuits and you simply filed a borrower defense to repayment application, you do go into forbearance, but that doesn’t change the fact that they haven’t adjudicated your claim yet and you might not be forgiven.

Do I think Columbia University is worth it to take out student loans?

I think Columbia University is worth it if you are not going to spend more than $80,000 in total. So if you’re borrowing $20,000 a year over the next four years because you got a generous financial aid package, Sin, sure, go for it. 

But if you’re borrowing more than $80,000 for college, there’s like a 0% chance that’s going to work out for you and your family financially over the next 20 years of your financial life.

If I have a bunch of Parent Plus loans at a high rate, would it best to be just consolidate with SoFi?

Well, the highest rate your Parent Plus loan would ever be is 9%. You know, most likely if you’ve taken out a bunch of different loans, you’re like 7, 8, 9%, like all in that range. 

And if your credit is really good and your income is really good and you don’t need any type of income driven repayment plan and you don’t need any type of public service loan forgiveness thing, sure, refinance with SoFi or any lender. 

Honestly, I have no brand preference. SoFi, you should definitely get like 3 to 5 quotes. SoFi can be one of them. I’ll tell you that they are great at marketing, but doesn’t necessarily mean they’re going to have the best rates. With that being said, I don’t know if you’re going to save that much. You might be surprised. You might be surprised that you’re still going to get a 7% loan. And so do you want to give up things like income driven repayment plans, things like that.

What’s the best thing to do with $100,000 inheritance?

Invest it, put in the S&P 500 or a low cost index fund and watch it grow so that in 20 or 30 years, it’s $500,000.

Any recommendations for doctoral scholarships?

It’s a tough one because most PhD doctoral programs include fellowships and assistantships as part of the offer for college. So I don’t know what you’re getting your PhD in and what field they are. that looks like for you, but you should really be knocking on that school’s door to see what kind of packages they’re going to offer you. 

And then there’s also industry associations. So again, I don’t know what fields you’re talking about, but like. every kind of industry and trade association has scholarships. I’m thinking like the American Medical Association and American Psychological Association and all these different industry groups all offer scholarship programs as well.

Do you think hospitals will still be qualifying employers for PSLF in the future?

I generally think they will red-haired haven. 

I mean, that is one of the risks with the upcoming PSLF rule that could disqualify employers that are found to conduct substantially illegal activity because there’s an argument to be made that providing gender-affirming care and things like that could be classified as that. 

But I also think that there’s so many lawsuits that I think are going to shoot that rule down before it goes into effect. So I’m not actually, I don’t think it’s gonna be a thing.

My son wants 100K for an MBA. I know we would have to co-sign. I can’t convince him otherwise.

An MBA is the riskiest graduate degree that exists. And what I mean by that is 50% of them have a negative return on investment financially. another 40% of them break even financially and only 10% of them pay off with $1,000,000 or more in lifetime earnings return. 

The big thing with the MBA is the MBA is almost always only worth it for politics in the workplace or for finance if you want to get into a very specific career field that you should already have the connections and tentacles into. 

It’s not going to be your ticket to unlock something that you don’t already have connections to. So with an MBA, my number one recommendation is employers should pay for it if it’s a political game or it should be part of some salary negotiation package of employer reimbursement programs and bonuses and compensation offset the cost so that you can go bounce to another employer or something as well. 

An MBA is almost never beneficial for someone that just graduated college and has no real world work experience yet. It doesn’t help you navigate anything. So, and I have an MBA, bien, so I can tell you firsthand on that one.

I’m in the save plan and I need to switch. What do you recommend? Also married.

Well, congrats on being married. With that being said, Alita, I’m just joking around. It’s A Tuesday night. You have a couple options. You got IBR today. 

You can wait till the repayment assistance plan comes out this summer. My recommendation, Alita, is just go run the calculators on our website, see which payment plan you can afford, and then make the switch. 

I think it used to be a lot more complicated when we had all these repayment plans, and now you got two options. Unless you want to repay your student loans in full, you got the standard plan as well. So don’t want to dismiss the standard plan. It’s just most people in save were in save for a purpose, and the standard plan was usually not that purpose.

Going back to your Columbia thing, not repayment, but is there any way to lower your cost?

You can appeal your financial aid award, but it’s very late in the game to do so.

VOO in my Roth, what would be a good compliment?

I don’t know the exact ticker symbol, but it’s the Vanguard XUS. So the international stocks that don’t have the United States in them would be my recommendation on that front. The real reason is that you don’t need bonds. 

You’re trying to grow your Roth IRA. So look at some international exposure or increase that international exposure, I can say, because you do get a little bit in VOO.

Would you recommend looking outside the United States for college?

Wizard, totally not against it, but there’s a lot to that one, including lifestyle and costs and visas, and there’s a bunch to it. 

So if you are a world traveler and you feel comfortable with that and it’s something that you’re into, sure, go for it. A lot of programs in Europe and different things have very low cost or at par cost to the United States and you get a whole different experience. But there’s a lot to that one.

Does it make sense to transfer from save to the pay plan for a lower payment temporarily?

Jackie, if you’re pay eligible and pay is lower than your IBR plan, Sure, there is a subset of borrowers, a few 100,000, that took out student loans between 2011 and 2014 where pay is better than IBR. 

And if that’s you, go for it. Write out pay for another two years until they kick you off of pay, and then you can choose IBR or RAP. However, Jackie, if pay and IBR are identical for you, I just go to IBR and save yourself a second step.

Can you still get PSLF even if all of your PSLF qualifying payments go exclusively to the interest?

Yes, Sout, the thing for PSLF is direct student loan, qualifying repayment plan. Your qualifying repayment plan, as long as it’s IBR, pay as you earn, or the upcoming RAP plan, could be $0 a month, zero, and that counts for PSLF. certify your employment using the PSLF tool and do that for 120 payments, right? 

And so that’s how you get PSLF. Doesn’t matter what your balance grows too. The goal with PSLF is always 100% of the time to make the lowest qualifying monthly payment legally allowed by law.

Daughter is a rising senior and I have parent plus loans for all three years. We’ll get another this year. Do I consolidate?

Shelly, if you consolidate, you can’t borrow another one again. I mean, you technically can, but it basically makes your whole consolidation pathway moot. So what I mean by that is the reason you’re consolidating your Parent PLUS Loan, 

Shelly, is because you want to have access to income driven repayment plans or public service loan forgiveness or and public service loan forgiveness, right? If you don’t consolidate, you will only be able to repay these loans under the standard plan and you’ll never have access to public service loan forgiveness. 

With that being said, if you also borrow a new student loan this fall, All of your existing Parent PLUS loans will also now only be available to have the standard repayment plan and public service loan forgiveness. Taking a new loan this fall contaminates your existing loans. And so, Shelly, the real tough question you find yourself is, do I need access to IBR and public service loan forgiveness? 

If the answer is 100% unequivocally yes, then you need to consolidate and not borrow again. And I don’t know what that conversation looks like with your daughter, but you’re going to have to either look at private student loans. 

Your daughter is a senior, so she could probably get a no co-signer private student loan. You need to look at alternative funding sources. If the answer is, I don’t care, I can pay under the standard plan just fine, makes no difference, don’t have access, don’t need PSLF, well then cool. You don’t need to do anything because you don’t need to do anything. So yeah.

Is $25,000 a year for political science at UC Irvine too much?

Yes, it is, Jay. So my rule of thumb, and I made a video on this and there’s a lot of data to back it up, is about $80,000. I guess there’s two parts to this, Jay. 

Is $25,000 a year what you’re paying out of pocket, whether you’re writing the check for it or borrowing? If you have all the cash in the world and that’s where you want to go to school, and you’re not borrowing and you just want it and you’re paying cash, go for it. 

Is it worth it? Technically, no. Technically, the cutoff is about $80,000 for a bachelor’s degree out of pocket. You know, that is an average. 

You could probably sneak past it. You know, it’s like, you know, some people do above average, some people do it below average. But once you go past $80,000, it’s not worth it. With that being said, that really applies for borrowing because it’s like a car. I view college like a car. It’s transportation. It’s a mode to get you from being in high school to getting to your career. 

And you guys, it’s a lot about money, but it’s not all about money. It’s also about growing up and doing all those other things. But guess what? That’s gonna happen whether you spend 100,000 or spend 50,000. 

Like all those things will be true. So with that being said, if you wanna buy the fancy car, I don’t know if we call UC Irvine fancy, but hey, it’s 100,000 bucks, so it’s a Porsche, right? You’re buying the Porsche to get from point A to point B. Or do we want to see how we can, if we’re borrowing especially, borrow the much cheaper car, still gets me from point A to point B and go from there. 

So Jay, that’s the real question you have to ask yourself. If you’re borrowing, I’m a hands down bar none, no. If you’re paying cash, sure. I would also question if that’s the out-of-pocket cost, because I’m guessing maybe, are you living on campus? 

That’s going to be the one that does it for you, especially if you’re in state, because in state’s like 7,000. So then you got your other like 18,000 for the dorms. Yeah. If you’re paying out of pocket, Jay, then do what you want to do, man. Like that’s what that’s what giving you money allows you to do. You can buy things that aren’t necessarily the best financial ROIs because you have a personal preference for it. And that’s how college is.

Is it smarter to pay off my loans as fast as possible rather than over 20 years?

Kibble, the smartest thing to do is figure out a plan. So 50% of borrowers qualify for loan forgiveness, 50% don’t. If you are in the 50% that don’t qualify for any type of the 80 different ways to get loan forgiveness, including employer tuition assistance and reimbursement, all the things, yeah, snowball that loan, get it paid off as fast as possible. It will save you money because the interest doesn’t accrue. And a big part of interest accruing is time, right? 

Compound interest works for you when you invest and it works against you when you have debt. So yes. 

However, if you’re one of the 50% of people that qualify for any type of loan forgiveness program, especially things like public service loan forgiveness or employer student loan repayment assistance programs or any of the state-based programs, then your job should be to maximize your free money to the extent possible. So public service loan forgiveness is make the lowest payment possible for 10 years. 

And if you have extra money, you should be contributing to things that lower your AGI, traditional IRA, 403b, HSA, things like that. So you invest and save for yourself and lower your student loan payment and in turn maximize your loan forgiveness. So Kibble Cone, it really makes, it’s about having the right plan.

If I plan to pursue PA schooling, approximately 100K in private loans be a horrible choice.

Foo, it is definitely not the most horrible choice because I know in PA school that you generally will get a positive ROI on that. 

I don’t know if I’d go much beyond that. And I don’t know if you’re already coming to the table with a significant amount of loans. And I would also try to maximize your federal loans before your private loans. 

Right? So even currently with the PA school is that you could borrow $41,000 two years, $20,500 a year in federal loans and then supplement with private in case you go be a PA at any type of nonprofit healthcare provider group or things like that. You could at least get a good chunk of that forgiven through PSLF and you could spend your extra money on the private loans. It’s not the end of the world, but I wouldn’t go much beyond that. And it really depends on what other types of debt you have.

Is it true it will be more expensive to go to school in the future I am 27 and I’m scared to go back.

Jason, it’s always true. Prices will always rise. School costs, college costs are rising 3 to 8% a year depending on the school. And the question at 27 is, do you need to go back? Can your employer pay for you to go back? 

Can you get a job that unlocks employer tuition assistance for you? Like there’s so many pathways to getting a degree or going back to school and getting a master’s degree. I think a lot of people dismiss them and I think they’re more valuable than ever. So don’t be scared, but also make sure you’re going back with a purpose. 

Because the one thing I do see a lot as well is that college is, or people run the risk of being overeducated and underemployed. And so they go on and take all these extra degrees thinking that’s somehow going to unlock financial success. 

But really these extra degrees go hand in hand with your experience and your knowledge and what you’re doing in the workforce. And that’s how you really unlock the extra financial rewards. 

And so if you don’t have the two kind of working together for you, going back to school can be a detriment because you get all this extra debt potentially and costs and you don’t necessarily get the financial benefit because you’re not comboing it with your experience.

Should I consolidate my loans before switching from PAYE to IBR?

Absolutely not, Pat. Absolutely not. You should never consolidate your loans unless you are in default, which you’re not because you’re in PAYE. Number 2 is you are a Parent PLUS loan borrower trying to make the June 30th deadline. Those are the only two reasons to consolidate. Pat, you should just like never think of the word consolidate again because it will get you into trouble and it gets more people into trouble than it helps.

Should I stay in forbearance until I can’t or should I switch now to get onto IBR?

Honestly, Gingy, it depends on your plan. One of my big pushes just like two months ago was to get everybody on using their 2024 taxes. But now that we’ve passed the tax deadline, everyone’s already filed their 2025 taxes, or most people have. 

So it’s kind of moot. Your loan will grow a little bit. So like you do get a little bit of benefit by enrolling in an IBR plan right now. You’re going to save yourself like 3 extra months of your loan balance growing. So you kind of missed like the quick push window that I was doing. It’s still better, I think, in the long term, but if you really need that extra three months to save, get your budget in order, it’s not going to make a huge difference over the course of your loan repayment.

I’m in the SAVE plan and I need to switch. What do you recommend?

It’s not what I recommend, it’s what you need. You got IBR, you got RAP coming this summer, and you got the standard plan. If you’re trying to pay off your loans, go on the standard plan. If you’re trying to get loan forgiveness, get on IBR or RAP. If you’re going for PSLF, you should be on IBR already. There shouldn’t even be a question. If you don’t know, student loan calculators, link in bio. You can go run the calculators, see what your payments are, all the things.

Do you think they will change the Parent PLUS loan rules?

Rebecca, no, I don’t think they will change the Parent PLUS loan rules. It’s already set in effect. With that being said, I think it’s also important, Rebecca, that you realize that Parent PLUS loans are very specifically created by Congress. 

And like we wrote, we have the documentation on our website and I’m going to misquote it, but like it’s very clear that Congress intended Parent PLUS loans to be issued to parents and the parents repay it and the parents take out the loans based on their current ability to repay based on their salaries and their careers and whatnot. 

So one of the reasons why Parent PLUS loans have continually been excluded from things like income driven repayment and a lot of the forgiveness programs is because Congress created them with the expectation that parents would borrow based on what they can afford today, and they would repay them given that knowledge. And so they have purposely excluded them all along the journey, and that’s been their definition for it.

How can I forgive my loan? I finished school three years ago.

Nice. The best, quote unquote, student loan forgiveness programs are public service loan forgiveness. So nice if you work in public service, 10 years, you can get your loans forgiven. There is a teacher loan forgiveness program, five years, but it only does 5,000 or 17,500, depending on what type of teacher and where you teach at. 

So don’t really recommend it for most teachers, public service loan forgiveness. That’s better. You have time-based loan forgiveness, 20, 25, or 30 years. So if you continually pay under one of the income-driven repayment plans for those periods of time based on your plan, you can get your loans forgiven. 

Of course, you have like total and permanent disability. Hopefully that doesn’t apply to you. Then you also have all the state-based programs, nice. 47 states offer loan forgiveness for doing something though, right? Moving to an area, working in a certain field, working a certain job, usually in the rural areas, they will give you loan forgiveness or at least student loan repayment assistance. 

Then we up to like 15% of like the S&P 500 employers are now offering student loan repayment assistance as an employer benefit. So nice if you’re not in public service, right? You don’t work for a public service entity. Maybe you work at a large company. A lot of large companies now are offering student loan repayment assistance programs to their employees as an employee benefit. So a lot of ways to get loan forgiveness. 

It’s estimated that about 50% of all federal student loan borrowers qualify for either total or partial student loan forgiveness programs. And so I highly suggest that you look into it.

I’m 40 and going to re-enroll in community college. Staying in school is cheaper.

Justin, I’ll just tell you from my 20 years of history, a lot of people do that. A lot of people sometimes execute it for longer periods of time. The most I’ve really ever seen someone drag that out is about three to four years. 

And then life gets in the way, time gets in the way. Of course, it’s harder to like increase your job and your salary. And meanwhile, your loans are growing. So like I get the short term. I do. I sympathize with it. But Justin, if your goal is to retire at 65, I’d rather you take another course of action when it comes to your student loans because it’s a short-term strategy and I’ve never seen it work out long-term. 

And what are you going to do? I mean, I’m sure you plan on trying to go another 40 plus years in your life. You’re not going to be able to take community college classes that whole time. So let’s think through that one.

If a Parent PLUS loan can get my daughter public service loan forgiveness since it’s in my name?

No, Kel Rod. So a Parent PLUS loan is your loan as the parent. Your daughter has no legal responsibility to the debt. And public service loan forgiveness would be based on your employment as a parent. Are you in public service? And also, of course, you have to meet the other criteria of qualifying repayment plans. So have you consolidated and are you on an income driven repayment plan?

My son is graduating early and wants to go to trade school for electrical.

Fantastic, Durango. I’m not against that at all. I think there is a high demand for those fields right now. I have a very, you know, a lot of family experience with electricians, linemans, working for the utilities, the salaries, the payments. 

I would just say a couple things on that one is it’s great money up front, but make sure he starts saving and investing very responsibly early on. Because one of the big problems that a lot of people don’t talk about with the trades is that it’s hard on your body. And so you don’t see a lot of 60-year-olds doing the work, right? And it gets very difficult, whereas you can still see plenty of people in their 60s working in the office and at Fortune 500 companies and all that. And so a big thing with going into the trades is it’s great money, especially early on, but you’ve got to start saving and investing and building that nest egg because injuries and accidents happen a lot, a lot. And some of them can be life-changing in the way that, hopefully it’s never too bad, but you might not be able to continue in that line of work and you need to be mindful of the financial costs of that. So just be very mindful. Definitely all for the trades.

Do you feel like they will ever lower the interest for student loans?

Cam, I don’t. For a few reasons. Number one is interest actually really isn’t the problem for most borrowers. And if you wanted to design a student loan program that kind of breaks even, doesn’t help wealthy borrowers as much, right? Because we say tax the rich and everything, and does it matter for low-income borrowers? 

Well then the student loan interest rates are exactly that. Because if you’re on an income-driven repayment plan, your interest really doesn’t make a difference. It has no impact on your monthly payment. And if you’re one of the 50% of folks getting any type of loan forgiveness, again, interest rate doesn’t really matter. The only people that interest rate really matters for, the most part, and there’s nuance here, guys. 

I know this isn’t like a perfect analogy, but the nuance is only the people that are repaying those loans are the ones that are feeling it, the ones on the standard repayment plan. And generally, student loan interest rates are below average compared to other market-based interest products. And the student loan portfolio as a whole loses money anyway, so it’s not like it’s even making a profit with what it is. 

And you have to realize that the government’s paying interest to borrow to give you that money, right? So remember how it works is they’re issuing treasury bills to investors and they’re having to pay them 4 or 5%. And then they’re lending it to you on this side and getting 6.%, but plus we have to pay for the treasury and the Department of Education. And a bunch of people don’t pay back their loans and there’s defaults and everything. So it’s not even a break even system as it is. And so I don’t think that’s going to be one that we see, Cam.

My child is almost four years out, 63,000 with Sallie Mae. My husband and I as the co-signer. How can we help her lower her monthly payment?

So Julie, private student loans really have not really a ton of options. You just got to pay that thing off as fast as you can and or look at refinancing. I don’t know what interest rate it’s at. When it comes to private student loans, your only option is to take out a new private student loan, hopefully a lower interest rate. 

You can also get a private loan at a longer term, right? So if you took out a 10 year loan, you can get a 15 or a 20 year loan. I say it kind of like because it does, those extra years make it more expensive, but if you need that lower payment today and that’s the must that you need to accomplish today, that’s an option as well.

22 years on a private student loan will never pay it off. What do you advise?

There’s a lot to that story. I don’t know why, you’re not paying it off. What’s happening? What’s the rest of your financial picture look like? You know, student loans are dischargeable in bankruptcy, but that really goes in the whole rest of your financial picture. I don’t know.

Was in SAVE, need to switch. I’m currently a federal employee, which I switched to.

Sin, you should be in IBR like today. You’re just costing yourself months that you could have been PSLF, getting those PSLF credits for.

On the IDR plan with zero payment after 20 years, it’s forgiven.

Correct. But V Lou, remember, you have to recertify your income every year for 20 years. So if over 20 years, your income never grows, sure, you’ll keep having a $0 payment and the rest is forgiven.

I’ll tell you that the government’s betting against that. So they have all the data. They know that most people start earning more money over the years. And so at 22, 23, 24, those are your lowest earning years. And then by the time you get to 40, you’re really starting to make good money. 

Most Americans are. So it’s one of the reasons for undergraduate loans. You know, most undergraduate loans are paid off about 18 years and they put the forgiveness marker at 20. So they’re betting against you. But in the short term, if that’s what works for you and that continues, yep, that counts.

Is it true that RAP payments will offer a lower monthly payment?

Keyland, they’re not bad. If you haven’t run the RAP calculator, we have our link in bio. Go check it out. They can be as low as $10 a month, up to 10% of your adjusted gross income. Generally, and I put generally in quotes because there’s always an exception to the generally, but generally if you make less than $100,000 a year, the repayment assistance plan will be better than the IBR plan. 

Generally, because someone’s going to say like, it wasn’t for me. And it’s like, I know, generally, guys. That’s why you got to run your numbers.

I’m still in SAVE paying off one of the seven loans for committing to pay. Is this a good idea?

Welcome. It’s not a bad idea, but I like to answer that question in the context of your whole financial plan. So if your entire financial plan is to pay off your student loans and you’re not going to achieve any type of loan forgiveness, fantastic. 

Go for it. I would recommend you get on the standard plan though, if that’s really your goal, because the standard plan guarantees execution, income driven repayment plans leave the gray area for you to make the extra payments. And I know people like feel like that works and it does, but I’m a more of a like back against the wall. 

I like to know my payments come and do to get it done. And that’s the motivation that I need. You might be different. With that being said, welcome to the 4th floor. If you have any type of loan forgiveness, like you’re going for public service loan forgiveness, it’s a terrible idea because you don’t want to ever pay extra on your student loans if you’re going for any type of loan forgiveness program. So again, context matters. Not a bad idea. Just make sure that aligns with your entire financial plan so that it all works out.

Decided to file bankruptcy. How do I protect my home and then later build credit quickly?

Maddie, I’m not your bankruptcy expert. If bankruptcy is in your wheelhouse, go check out Jay, the student loan lawyer. He is a bankruptcy lawyer. That’s what he does. He makes great content here on TikTok. He is your guy for bankruptcy.

Best option for covering a $10,000 gap for a year of college.

I don’t know if the gap is before loans or after loans. If it is before loans, of course, the student can have $5,500, $6,500, $7,500, so that covers half that gap. You can set up a payment plan for the rest. You can pay as you go. 

You could go work. If this is for a freshman, I would say student loan for the freshman, $5,500, and then working from now through August will earn you another $5,000, and there you go, you’ve covered that gap, plus working while you’re in school to pay for books and supplies, all that.

Is there anything specific we should look for when getting private student loans?

Honestly, first off, please make sure you borrow your federal loans first and you’re only supplementing with private student loans. Second, don’t borrow too much, right? Literally, this whole entire thread of comments is about over borrowing. A lot of it is. Number 3, Kieran, is it is all about the interest rate. 

Literally, we’re just talking to Julie here. Get three to five quotes and see who offers you the lowest interest rate. And that’s the name of the game. The name doesn’t matter. Every educational loan that’s private has no origination fees and no prepayment penalties. They all offer cosigner release, though most of them won’t honor it. Like you just need to get three to five quotes and figure out who’s giving you the lowest interest rate.

I’m in the SAVE plan, single mom. I have 18K left. What IDR plan do I choose?

Again, just run the numbers. You have IBR, you have RAP, we have calculators.

My monthly payment went up. Why do I still owe the same number of payments?

Jay Quellen, I’m guessing it’s because, well, for PSLF, you just owe what, you have to have 120 payments. And if you’re on an income driven repayment plan, your payment’s not based on your loan balance and it’s not designed to pay off your loan. It’s designed to be based on your monthly income. 

So yeah, your payment went up and you still have whatever you have left for PSLF and your loan balance doesn’t matter, Jake Wellen, because you’re going for PSLF. Your goal for PSLF, guys, is always 100% of the time, lowest legal repayment plan. Who cares? Let that loan balance grow. You have extra money, you go invest that for yourself.

How long does it take to get your student loans removed after filing for bankruptcy?

Well, I’m assuming that you filed an adverse proceeding for your student loans because it’s a separate process than bankruptcy. And there’s a whole process to it, Tyno. Again, I’m not your bankruptcy guy, but I know enough to be dangerous, but Jay, the student loan lawyer, is your bankruptcy guy.

How do I ask for more money for housing and food plan for dorms as incoming freshman?

You don’t ask for more money. You appeal your financial aid offer if you have a change of circumstance or you have some reason to get more merit aid. That’s a tough one because, you know, I don’t know what we’re talking about, what dollars, what schools. But room and board is honestly the killer for a lot of families and it’s a big part of the student loan crisis. It’s not the tuition.

Do you have to pay your loans for 10 years and work for Fed to qualify for PSLF?

Well, I will say pay your loans is relative. You have to be enrolled and making payments on a qualifying repayment plan. The qualifying repayment plans are IBR, ICR, PAYE, and the upcoming RAP plan. Technically, you could have a $0 a month payment and ride that for 10 years and you get your loans forgiven through PSLF. So you never actually paid, but you were enrolled in a qualifying repayment plan. So hopefully that makes sense, KG.

Living overseas and making 70,000 EUR. Does that count as months of 120 payments?

Cam, probably not going to qualify for public service loan forgiveness because you’re not working in qualifying public service. Maybe you are. I don’t know what you’re doing. But Cam, what you can do is you can file the foreign earned income exclusion on your US tax return and 70,000 EUR, I don’t know what that translates to dollars, honestly, maybe 90,000, $100,000 is less than the cap. 

So your US tax return will show as $0 adjusted gross income. And you could use that $0 adjusted gross income to have a $0 IBR payment while you’re living overseas. And that will count for time-based loan forgiveness. So IBR is 20 years.

The only way you qualify for PSLF is if you’re working at like a foreign embassy or something like in the government. I don’t know what you’re doing overseas, but that would be how you could get some PSLF for that. But I don’t know if they’d pay you in Euros because you’re still working in the US, technically.

I consolidated some student loans and my PSLF stopped. Is this because I consolidated?

I don’t know why you consolidated, but your new consolidation loan will have the weighted average of your existing payment counts. And so that sucks. But you also need to submit a new employment certification for all the periods. Like just resend them in again. And then of course, you won’t get new payment counts on the new loan unless you’re on an income driven repayment plan and certifying your employment. So you got to do all the things. I don’t know why you consolidated. I hope there was a good reason.

Do you see going into debt for a degree is worth it at this point?

Johnny, it can be worth it if you don’t spend too much. So Johnny, I think I put the value of college today at $80,000 for a bachelor’s degree. That’s the max. So if you’re spending less than that, you will likely have a positive financial return. And of course, the lower amount you spend, the higher probability that you get a positive financial return. But college is not risk-free. It is not a risk-free path to wealth. 

It’s not a risk-free path to higher earnings. One in three people that start college don’t finish college and they have the worst financial outcomes. You have the fact that we’re in a changing economy. And so how do you hedge that risk? How do you protect that downside risk is you lower the cost, you borrow less, you go to a community college and transfer, you live at home, you don’t go to a dorm. 

You cut the risk down and you borrow as little as possible. So is college worth it? Absolutely. All the data says it is. But any other investment, when you start comparing it to the alternatives, alternatives being going to work right away and not taking on that debt, going into another field, different things like just investing, like if you have cash, like had this conversation the other day, but it’s like, if you were just paying cash, like $200,000 for college, your child would likely be wealthier by not spending $200,000 on college, you putting that in the S&P 500 and giving it to them in 40 years, it’s worth 500 or $5 million.

Their lifetime earnings from even the most expensive or fancy college degree will not outweigh the delta as if you just went to like a local state school. So it’s like, well, what’s the like mindset that you have and what are you valuing it’s worth? Also though, if you have a lot of money and you just want to buy yourself an experience, buy yourself whatever experience you want. Like, that’s cool. You’re more than welcome to.

Is it better to complete the 10 years of public service before signing up for PSLF?

So Mercy, there’s no signing up. You submit your employment certification and you should submit your employment certification every year. And the reason you should do it every year is you want to make sure your payments are tracking. 

And so when you log into student aid, you can see these nice little green banners on the sidebar that say how many payments you have. And that way you know that your payments are counting and things aren’t getting screwed up. Legally, you can wait all 10 years and drop 10 years of employment history on the Department of Education and say, I did it. But that’s risky, and I do not recommend that. I recommend you submit your employment certification at least once a year, if not more, to ensure that your green banners are getting added to your account.

I’m out of school for more than 20 years. Loans were on forbearance.

So Linnea, there’s a lot of student loan repayment plans, but you have to take action. So being in forbearance is not one of the actions that help you with your loan forgiveness. Being enrolled and in repayment in IBR, PAYE, the upcoming RAP plan, all have time-based loan forgiveness. So if you’re making payments for 20, 25, or 30 years, depending on the plan, you get your loans forgiven, you have public service loan forgiveness, you have options. Definitely requires you to take some action and get those loans out of forbearance though.

Can I further explain the tax bomb?

So there is no tax bomb for PSLF unless you’re in Mississippi. PSLF is always tax-free federally, and it’s tax-free in all states except for Mississippi. IDR plans all have time-based loan forgiveness and the tax bomb is that whatever’s forgiven counts as ordinary income for you. It’s just added to your W-2 or your 1040. 

A lot of people though, I would say the vast majority are going to be insolvent and they’re not going to owe anything. If you’re curious, Cam, I have my tax bomb calculator. I think it’s currently linked. Oh, hold on, TikTok’s freaking out here. All right, there we go. We’re back. I think I have my tax bomb calculator currently linked in bio. And so you can check it out and kind of run the numbers and it’ll give you an estimate of what your tax bomb would be.

I’m a fifth year teacher and I have private loans. Anything I could do to get assistance paying them off?

Not on the private loans, Bree. You just got to brute force them out. That’s the only way to do it.

PAYE will be phased out in 2027 and we are forced to switch to another plan. Will it push my forgiveness time?

No, any of your time accrued under PAYE continues on to your new plan. So you’re just going to have to choose IBR or RAP. If you haven’t seen my flow chart, your best bet is probably going to be IBR because RAP would extend your time. Well, it’s a 30-year time frame, so I don’t know, maybe you paid 10 or 15 years already. RAP would, since RAP is 30, you’d have 15 years to go. Since IBR for new borrowers is 20, I’m hoping you only have 5 to go. I hope you’re not one of the couple 100,000 folks that are 2011 to 2014 PAYE borrowers, then you got hosed because you were on a 20 year PAYE plan and IBR is 25 years. So.

How do I qualify to get a student loan when I go back and which loans are the best to apply for?

So Nakiva, federal loans are always the best to do. You fill out the FAFSA and you are awarded a federal student loan. I don’t know what year of college you would be in and if you’ve ever borrowed before, but freshmen can borrow 5,500, 6,500, 7,500 for junior, senior and beyond. And those are the best loans. 

Anything more than that’s private loans. And private loans are just based on your credit and your income. And you might need a co-signer if you don’t have credit or income. And please be careful because there’s no forgiveness options. There’s no income driven repayment plans, all those things.

If you take out a Parent PLUS loan, can you defer until the kids finish school?

Dre T, you can. You have to select that option when you apply. So you do the Parent PLUS Loan application and it’s one of the options. How do you want to repay? Do you want to defer in school or do you want to repay immediately? You got to choose that one up front. Okay.

Can I pull all my federal loans and get them discharged since I’m 100% VA disabled?

Shreya, so yes, so here’s the interesting thing is you can borrow. They’re going to automatically try to forgive your loans after you borrow. You need to opt out and then you could do it a couple more times, finish your school, and then you can get them discharged through total and permanent disability discharge.

What’s the best way to make passive income, not starting a business, thinking of investing something?

So Reagan, passive income always requires one of two things. It requires time or money. If you have money, the easiest, simplest passive income streams are a savings account and earning interest, because your money is earning money, or investing, right? Put it in the S&P 500 or a broad-based index fund and watch it grow. 

Otherwise, you have time-based passive incomes where you’re going to have to invest the time up front and then hopefully it returns money to you in the future. Not starting a business means that you don’t really want to invest time is like the vibe I’m getting. So I hope you have money and the best passive income stream for money is equities and savings.

If I move from SAVE to the graduated extended, will interest capitalize and can I pay extra without penalty?

Leaving the SAVE plan never capitalizes interest. So yes, you can do that. Of course, you can always pay extra on your student loans without penalty. But mitly, this is me begging you. See, I got my begging hands out. 

Do not go into the graduated extended plan. Don’t do it. I know it looks really nice right now and you’re looking at all your options and it’s like the lowest today. But remember, the graduated extended plan does this and then it gets extremely expensive. And so there’s a reason why less than 5% of borrowers are ever on the graduated plan and less than that even finish the graduated plan because most bail. 

So mitly, just get on an income driven repayment plan, get on IBR, or the RAP plan and don’t play these games. And then if your goal is low payments, leave the low payments and I wouldn’t necessarily even pay extra. I would ask myself, am I debt free elsewhere? No credit cards, no car notes, all the things. 

Do I have a Roth IRA this year? Can I contribute more to my 401k or 403b? Like there’s a lot more to your financial life than these student loans. And so just make sure you’re making the right decision in context of everything else that you got going on. All right.

How can I get out of default status sooner?

So Pookie, depends on what you need. You can consolidate your loans gets them out of default immediately when the consolidation is done. However, the default will remain on your credit, and that could be not what you’re looking for. You also have the option to rehabilitate your student loans.

It’s a slower process, takes nine months of payments, but rehabilitation removes the default from your credit report and re-allows you to access federal financial aid programs. So if you need the default wiped off your credit report, rehabilitation is the way to do it, but it takes nine months of payments. So you have options, but you just, at least you know them.

Can I get my loans discharged because the school I went to shut down and they lost their accreditation?

Crafty, I’m going to say maybe. And I know you don’t like that answer, but here’s what you should do. You should apply for borrower defense to repayment. It’s a program that allows you to get your loans forgiven if you were defrauded or misled by your school. Simply because your school lost their accreditation and shut down doesn’t necessarily mean that you personally were defrauded by said school. That being said, maybe you were. And maybe you can prove you were. 

And maybe the reasons they shut down and lost their accreditation applied to you. And you can write that and share those and give that proof and you apply for borrower defense. Now the important thing to realize with borrower defense is it’s not a fast process. It takes time. You do go into forbearance while they’re waiting on, you’re waiting on them to adjudicate your claim, but it is an option for you.

Still in SAVE. When will they start making me pay or move plans?

So Corey, you need to move plans now. If you don’t make a selection yourself, they’re going to default you to the standard plan, likely in September. So you’re going to have a payment due in October or November one way or the other. 

It’s either going to be the payment that you want because you chose a plan, or they’re going to default you to the standard repayment plan and it’s going to be theirs. Just choose now.

File single. Do I still have to pay them if I don’t have income?

So user, you can apply for an income driven repayment plan like IBR or PAYE, or I guess you can’t do PAYE. IBR or the repayment assistance plan that’s coming out this summer. You can do PAYE, I guess. 

You got another year and a half, but just choose IBR. IBR, it’ll base your monthly payment based on your income, which your income is very low or nothing, and you might have a $0 payment as a result. So user, just choose IBR.

46K Parent PLUS loan consolidating. Do I have to consolidate?

So Anne, I cover this a lot. So the only reason you’re consolidating your Parent PLUS loans today is if you need to have access to income-driven repayment and public service loan forgiveness. Otherwise, you will be forced to repay your Parent PLUS loans on the standard repayment plan. 

That’s the only reason to consolidate. I will say that consolidating does not change your overall interest rate. So your new consolidation loan will be the weighted average of all of the underlying loans. 

So mathematically, if we want to go pull out like our high school algebra, you know, they assign, you know, every weight of your loan is weighted and then it comes out. So your new loan has like an average weight of all the other ones. So it doesn’t mathematically change at all. I know it sounds super confusing, but a lot of people get freaked out by it because you might have some loans that are at like 7, you might have some loans that are at 9, and your new one’s going to be at 8, and you’re like, oh my God, but it went up. But not really because your nine ones went down. So keep that in mind. All right.

My mom has a loan in default, but she wants to go back to school. What does she do?

She needs to rehabilitate said loan. Because if she doesn’t rehabilitate, the default will always be on her credit and she’ll never qualify for federal financial aid again. 

So if getting any type of federal financial aid is essential, Nikki, she needs to rehabilitate that loan. She also just needs to get out her default anyways because it’s going to cost her more money. I don’t know if you saw my video today or you read our article today. 

But Treasury is going to start ramping up collections in July. And we knew this was happening. And you have to remember that collections is always more expensive than being in repayment because they garnish 15% of your wages plus take your tax returns plus take any 15% of like disability and things like that. Or you could be on the RAP plan, which is $10 to 10% max. 10% is less than 15%. Just get in repayment.

Does transferring your credit card balance to a new credit card with no interest impact your credit score?

It probably will make it fluctuate in the short term, but like as you magnify your timeout, it’s going to all level itself out over like a three month period of time.

How long does it take for PSLF to be approved after making your last payment?

It’s pretty quick. So once you submit your last employment certification, you’ll get your green banners updated, usually about two to three weeks later. And then you’ll get your golden letter confirming your PSLF forgiveness about a month after that. So pretty darn quick.

Parent PLUS loan has restrictions now. What exactly changed?

Yeah, Sandra, if you have not consolidated and enrolled, well, you have to consolidate. If you don’t have a consolidated Parent PLUS loan by June 30th, you will only be able to repay that Parent PLUS loan under the standard repayment plan. 

That’s the big thing that changed. And also, if you borrow a new Parent PLUS loan, either the first time or again after July 1st, you only can repay all of your Parent PLUS loans under the standard repayment plan. Might not sound like a big deal, but the standard repayment plan is changing, right? It’s this new tiered standard repayment plan, 10 years, 15, 20, 25 years, depending on loan balance. And it also means that there’s no good pathway to public service loan forgiveness, right? 

Because if you have the 10 year standard plan, it pays off at the same time you get forgiveness. And if you’re on any of the other tiers, you don’t get anything because they don’t count. So that’s what makes the difference, Sandra. So if you need access to income driven repayment, public service loan forgiveness, you need to consolidate like now, like literally now.

My husband and I have over 125k between us. We’ve been paying it for over 12 years and barely touched it. Declared chapter 7, but told we can’t claim the debt.

Yeah, so again, it’s what kind of loans are we talking about here? Are we talking about federal loans? I talked about this a bunch on today’s live. 

So the reason why most bankruptcy judges won’t discharge your federal student loans isn’t because they’re not dischargeable. It’s because they look at your income driven repayment plan and they say, well, you’re on an income driven repayment plan. And you know, there’s not a reason to because you can pay it based on your income. 

Your private loans could have potentially been dischargeable, but that’s on the lawyer and they had to file an adversarial proceeding and do a whole separate thing in your bankruptcy process to get the private loans forgiven. 

With that being said, Lace and Light, it’s a question of on your federal student loans, getting on a repayment plan you can afford. Sounds like you got a lot of other debt issues if you declare bankruptcy. So budget, choosing the right repayment plan and then just brute forcing those private loans. Those are your options. I know it’s not a sexy solution, but it’s the mathematically correct solution.

My son is a college student and we are not in the bracket that qualifies for financial aid. Any ideas?

You got to choose a college that you can afford knowing that. You can look for colleges that are generous with merit scholarships. 

I don’t know where we’re at in the process. So my son is a student in college. I’m guessing you’re already there. You have student loans, but you only want to borrow up to about $80,000 in total or it becomes not worth it. There’s a lot of conversations there, Teresa. Your child can work. You can pay from your current work. All the things.

What is time-based loan forgiveness?

Time-based loan forgiveness is what we call loan forgiveness that’s tied to the income-driven repayment plans. So all the income-driven repayment plans, IBR, ICR, PAYE, and the upcoming RAP plan all provide loan forgiveness after a certain period of time in those plans, of making payments in those plans. 

IBR is 20 or 25 years. ICR is 25 years. The repayment assistance plan is 30 years. But if you ride those things out, that’s when your loans are forgiven. And we call that time-based loan forgiveness. It’s kind of like the easiest way to say it.

If you’re late on your payment, do you automatically lose your IBR and revert to the standard repayment plan?

K1234, you don’t automatically lose it. You go through the delinquency process and then you just go into default. You don’t revert out. You just go delinquent and then you go into default.

If I pay the minimum payment for 20 years, will the rest of my loan be forgiven?

If you are on the IBR plan and you first borrowed after 2014, the answer is yes.