Podcast Summary
New Income-Driven Student Loan Repayment Plan: SAVE Approach: The SAVE approach, a new income-driven student loan repayment plan, aims to save borrowers a minimum of $1,000 annually, potentially allowing some to make $0 payments, and takes effect in October 2021.
The SAVE approach is a new income-driven student loan repayment plan aimed at reducing monthly payments and potentially allowing some borrowers to make $0 payments. This plan is designed to prevent balances from growing due to unpaid interest. The SAVE approach is intended to save borrowers a minimum of $1,000 per year. The plan will take effect when student loan repayments resume in October, after a pause during the pandemic. This new plan replaces the previous Pay As You Earn plan, which was struck down. The SAVE approach is an important development for student loan borrowers, as it aims to provide relief and financial flexibility.
New Student Loan Repayment Plan: Save: The Save plan lowers monthly student loan payments for eligible borrowers to 5% of discretionary income, with no payments required for those under federal poverty level. Interest won't accrue during this time, and it starts August 1, 2023.
The U.S. Department of Education is implementing a new student loan repayment plan called "Save," which aims to lower monthly payments for eligible borrowers. This plan reduces the percentage of discretionary income required for payments from 10% to 5%, and borrowers earning under 225% of the federal poverty level will not have to make any payments. Additionally, unpaid monthly interest will not accrue while borrowers are making their monthly payments, even if those payments are $0. This plan is currently in beta testing and eligible borrowers can enroll starting August 1, 2023, at studentaid.gov/idr. Existing borrowers in the Revised Pay As You Earn or Repay plan will be automatically enrolled in Save once it's implemented. For borrowers already making payments that mostly go towards interest, their interest owed will not change, but their loan balance will not grow due to unpaid interest. This plan is expected to impact a large number of borrowers and could significantly reduce their monthly payments.
New student loan repayment plan caps monthly interest growth: The new student loan repayment plan limits monthly interest growth to 5% of discretionary income, preventing loan balances from increasing over time. Starting in 2024, borrowers with smaller balances will begin to see forgiveness.
The new student loan repayment plan will cap the amount of interest that accrues each month to be equal to 5% of the borrower's discretionary income. This means that the loan balance will not continue to grow over time, providing relief to borrowers. Additionally, starting in July 2024, borrowers with lower balances will begin to see forgiveness after a certain period of time, with payments made before and after 2024 counting towards the forgiveness timeline. The Public Service Loan Forgiveness program is still in effect and payments made under the new repayment plan will count towards it. However, it's important to note that this new plan applies only to federal student loans, and private student loan providers may have different repayment options. Always check with your loan provider for the most accurate information.
New student loan repayment plan applies to borrowers with federally held loans: Borrowers with federally held student loans can consider the opportunity cost of paying off debt vs. investing, while those with PLUS loans for parents are not eligible.
The new student loan repayment plan only applies to borrowers with federally held student loans, including direct subsidized, unsubsidized, consolidated loans, and PLUS loans made to graduate students. Parents who took out Federal Plus loans to help their child pay for college are not eligible for this plan. While the Department of Education has the legal right to make these changes, there could still be potential legal issues. If you have the means to pay off your student loans in full, it's essential to consider the opportunity cost of the money and whether it would be more beneficial to keep it invested or pay off the debt. Ultimately, if the interest rate on your student loans is lower than the potential return on your investments, it might be worth continuing to make monthly payments and taking advantage of the student loan interest deduction on your taxes. However, if the interest rate is significantly higher, it may be more prudent to pay off the debt as quickly as possible. With ongoing measures being put in place to forgive portions of student debt or prevent interest accrual, it's essential to stay informed about any updates that may impact your repayment plan.
Factors influencing student loan repayment strategies: Consider interest rates, debt-to-income ratio, potential loan forgiveness programs, and stay informed for updates from official sources.
When considering student loan repayment strategies, the interest rate plays a significant role in determining the speed and aggression with which one should pay off their loans. However, there are other factors to consider, such as debt-to-income ratio and potential loan forgiveness programs. It's essential to stay informed by checking official sources like studentaid.gov, whitehouse.gov, and your student loan provider for the latest updates. Previous loan forgiveness programs have seen borrowers reimbursed if they paid off their loans before forgiveness, but this is not guaranteed and subject to change. Ultimately, the decision to pay off student loans quickly or not depends on individual circumstances and financial goals.
Challenging lender's chain of title to eliminate student loan debt: A lawyer suggests suing debt buyers for lack of proper documentation to potentially wipe out student loan debt. This involves sending a demand letter, filing a complaint, and requesting proof of debt ownership. If the lender fails to respond, a default judgment can be obtained.
A lawyer has shared a unique method to potentially wipe out student loan debt by challenging the lender's chain of title. He tweeted about suing debt buyers who lack proper documentation, resulting in default judgments and debt elimination. This method could apply to individuals with lenders that have changed multiple times. The steps involve sending a demand letter to the lender, filing a complaint for declaratory relief in local circuit court, and requesting proof of debt ownership. If the lender fails to respond within 30 days, a default judgment can be obtained. This strategy has received mixed reactions from legal professionals, but some claim it has worked. It's essential to remember that this is not financial advice and should be researched thoroughly before attempting.
Requesting proof of debt ownership: Asking for proof of debt ownership from loan providers may help clarify collection efforts, potentially reducing stress and uncertainty.
A listener shared an intriguing solution about challenging debt collection efforts from past loan providers. This method, which they claimed worked for both federal and private loans, involves requesting proof of ownership of the debt. If the provider cannot provide this proof, they may not be able to enforce the debt. The listener suggested trying this approach, emphasizing that it's free and could potentially bring clarity to the situation. However, it's important to note that this is not legal advice, and individuals should consult a lawyer for professional guidance. We'll share the thread and resources related to this topic in the show notes for those interested in exploring this option further. This discussion underscores the importance of understanding your rights when dealing with debt collection and the potential impact of asking for proof of debt ownership.
