What we’ve all heard by now is that the US Supreme Court has officially struck down Biden’s plan to forgive millions of borrowers of their student loan debt. In the wake of that ruling, what do the coming months look like?
SAVE
The Saving on a Valuable Education (SAVE) Plan replaces the existing Revised Pay As You Earn (REPAYE) Plan. You don’t need to take any action to convert to SAVE; this will happen automatically.
The biggest key change is you will not see your balance grow if you’re paying the minimum payment. The plan eliminates 100% of remaining interest for both subsidized and unsubsidized loans after a scheduled payment is made under the SAVE Plan.
Benefits taking effect right away:
Payment calculation goes from 150% to 225% of the poverty line. This might reduce your payment slightly. No monthly interest accrual, if you’re making your minimum payments. You do not have to account for spousal income in your payment calculations. Dependents are included.
Benefit taking effect July 2024:
Payments on undergraduate loans will be cut in half (reduced from 10% to 5% of income above 225% of the poverty line). Borrowers who have undergraduate and graduate loans will pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.
Borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed.
This is a big benefit to so many doctors and dentists. Talk to your advisor about revisiting your payment plan to see if SAVE is a better fit than your current program.
CONTACT US
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Josh Lantz, CRPC®, CIO and Financial Advisor at MD Financial works diligently with all our teams to coordinate the services we provide for our clients. He wants to make sure all our clients have sound, fiscally responsible, financial plans and feel more comfortable about their future. He can be reached at Josh@mdfinancialadvisors.com.