Lots of federal student loan borrowers are in the same boat now. Have you consolidated your loans in an effort to get onto SAVE for the lowest possible payment? But it seems to have backfired because your payment is now enormous?
Here’s some tips that you may want to be aware of:
- A new consolidation will always provide an initial payment based upon the 10 year standard. A client today reported her payment was to be $2,000! She knew not to be concerned however because the SAVE review hadn’t yet occurred. It’s a two step process: first, consolidation, then evaluation for SAVE.
- Second, SAVE allows you to file a separate income tax return, but most people haven’t done that for 2022. So if your payment is high now because your spouse has a high income, you could ask for a short forbearance until January and then quickly file your married filing separate tax return.
- SAVE will permit a 5% of discretionary payment next July 2024 for undergrad loans. That alone will shrink your payment by 50% if you have solely undergrad loans.
- If you receive large annual or even quarterly bonuses, you can use alterative pay information such as paystubs to certify your income.
- You can still use your pre-covid income if it was less, as the requirement to recertify your income isn’t until 2024.