Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
So 7.7 million borrowers are in a SAVE forbearance. That means no payment, no interest since the courts applied the SAVE injunction last July (2024).
Lots of questions about what borrowers should do now. We just did an interview with ABC Action News this a.m. that will run tonight about this.
If you can’t afford to make any payment now, then stay on the SAVE forbearance as long as you can. Servicers are beginning to shift people off SAVE forbearance but it may be another month or two before they can get to you. It’s incredibly unlikely that someone can just stay on a SAVE forbearance long term. SAVE has ended. No doubt about that.
Consider bankruptcy – that would clear the deck of other consumer debt, and let you tackle student loan debt. Not just that, we often can partially or fully discharge student loan debt in a bankruptcy or settle at a drastically reduced principal and interest. The goal is to make sure you have a sustainable path forward with an end in sight. Use all available tools to do so.
If you can afford a payment, then consider getting on another IDR plan. Remember, IDR is a category header, an umbrella so to speak. The actual plans read like alphabet soup, IBR, IBR for new borrowers, PAYE, SAVE which used to be REPAYE, ICR, even ISR. Right now, IBR remains available and it will continue to exist going forward. IBR is a 25 year term – pay based upon your income for 25 years, than forgiveness. You should have some built up credit toward the 25 years already but there will be a taxable event at the end. That’s gonna be a problem for many.
If you are looking for a reduced payment, perhaps your loans are eligible for PAYE or IBR for new borrowers. You would end up paying 10% of your adjusted gross income, rather than 15%. Both PAYE and IBR allow you to file married filing separate tax returns to exclude your spouse’s income, and both use a 150% of poverty rate deduction to offset your expenses.
ICR is being phased out. It’s a higher payment anyway and we’re glad to see it go.
Parent Plus loans — get consolidated now! To be eligible for IBR going forward. While the new Repayment Assistance Plan (RAP) won’t be available to those with Parent Plus loans, but if you get a consolidation funded before July 1, 2026, you will be able to get into IBR.
Now switching IDRs is a capitalization event (that leads to higher interest), and consolidation erases any prior IDR accrued months toward forgiveness, and a million other little rules exist. So it’s important to know those rules, or talk with someone who does BEFORE YOU TAKE ANY ACTION.
Eventually it will be simpler. But right now, it’s about as complicated as it can get.
I’d really suggest that anyone with student loan debt reach out to us or another student debt advisor. Trusting your servicer to tell you what you need to know is just nuts. More nuts than usual.
Good luck out there!
