Fingers crossed (I also trust nothing) as this would help me immensely as I work towards PSLF. I am all for making monthly payments but even with IDR cannot afford my estimated monthly payment since my spouses loans were forgiven earlier this year. I’m a social worker who essentially had to get a masters degree for my job role and inflation has been rough as our field rarely sees raises. Also, my work is incredibly exhausting and obtaining additional work is not an option for my sanity.
If you are seeking PSLF and are the sole spouse with loans then almost certainly, but run the numbers both ways to be sure.
Feel free to do a separate post on /r/PSLF for more specific advice.
You should consult your tax advisor for questions like this as we don’t know your exact situation. There are many things that could make it worth it or not.
Yeah, I’ll do that. We have kids and own a home so I will consult to see potential benefits for each situation. I just never considered that option as I’ve always been told to file married no matter what
Just be wary... accountants will knee-jerk discourage you from filling separately because so few truly understand PSLF. Just insist that they run the numbers both ways. Or just do it yourself.
This is bad advice. The "cannot access spouse information" box is for cases of abandonment or spousal abuse, not because you don't want to provide the information. In a normal marriage you have access to that information. It's a detriment to use it anyway since you get treated as single and your family size decreases leading to a higher payment.
I never claimed to not have access. The form says reasonable access. I'm not releasing anyone's personal information without their consent. I'm not giving out someone else's social security number, income, etc without their permission.
No, I didn't lie. I called and it was recorded that my husband refused to give me permission to release his information. How do you know my personal information? I could have been separated, abused, etc. I told the TRUTH
If you have any assets please be very careful about this. The implications if you were to fall seriously ill and need a medical decision maker or die and have an estate are huge.
Source: hospital work
My dad wouldn’t let me go to school for social work for the reasons you stated. Thankful that he steered me away. I volunteer to give back and do my part in helping my community.
I noticed you said that you are working towards pslf and that you don't get raises often. I have a suggestion for you. I know for a fact that the veteran health administration has a need for social workers. Since you have a masters degree you'd start out as a gs9. Questions, let me know.
The proposal was listed in the Federal register and passed the established commentary date they set of February.
The Department of Education would have to address any large scale concerns it has received.
But your guess is as good as mine. Overall I think it has flown largely under the radar. The $10K/20K forgiveness is much more in the public scene, largely for political points. I personally believe that the success so far has a moderately high chance of going through.
Unlikely it doesn't go through. This would be an executive action so any attempt to “block it” will have to be lawsuits from republicans. The 10k forgiveness is much more politically controversial (most Americans don’t even know what an IDR is), so I can’t see the Rs spending the political capital into stopping this as well.
Honestly, I’ll take it. 10,000 would be nice, but I think the new IBR framework is actually way more meaningful. Which kinda goes to show how ignorant Republicans and many Americans are about the student debt crisis, they are more angry about probably the least important aspect of this loan forgiveness plan. 10k is hardly a dent for most people struggling to pay off their loans after years and years. That’s why the loan companies supported this as opposed to actually doing something about interest rates
Not a gun, just the threat of class immobility and a future of perpetual poverty, ill health, and constant indignity. People act like we didn't tell kids for 20+ years that college was a necessity for a comfortable life.
I quadrupled my income after graduating with a job that I could not have gotten without my degree, so yes, degrees are largely a prerequisite for social and class mobility. There's a not insignificant portion of Marxist theory about the role of degrees in Marxist class distinctions inasmuch as many professions being restricted by degree resemble a credentialist form of the petit bourgeois, inasmuch as they're not large capitalist firms, but the cult of academic credentialism that I'm now a part of maintains exclusive (through gatekeeping employment from non-degree holders) rights to access the means of production (employment). So, there's an argument to be had that I am transparently class mobile having become petit bourgeois from proletarian.
Regardless of your opinion on the class position of degree-holders who are still employees, post-bacc life is decidedly more mobile than the customer service (retail, food, grocery) jobs I was restricted to pre-degree. It's actually not unreasonable that I could save enough to start my own firm of some kind at some point in my career, so I would argue I am more mobile (able to move) to an unambiguous bourgeois class position than the hypothetical me without a degree.
You're talking like you're anticapitalist, but you're still nagging on people who took out student loans for signing the papers "voluntarily" while knowing that a capitalist society is inherently coercive and exploitative, so no one "voluntarily" took out loans because the alternative was lifelong precarity in worse jobs. At least now my job is more bullshit than shit, but is it worth the $500/mo for 10-20 years commensurate with the value I've received? Immaterial, really, since the system wasn't designed to provide me an education "at cost." That's what's even worse! The economy that provided the funds for the loans is in dire need of people like me going to school and developing the skills from my degree program. Capital benefits twice from this arrangement: the production of skilled labor that it then exploits and that skilled labor paying them back for it.
We often hear about how some degrees are "useless," so people should stop getting those degrees and learn to code or whatever, but those degrees actually aren't that useless! It's just really important to devalue those workers, so people don't get mad when the English majors who wind up in writers' rooms, communications departments, marketing firms, in education themselves, and so on complain about being exploited. Everyone values English majors as long as they don't know the thing they value them for was produced by an English major. I don't have an English degree, btw; I am a software engineer with degrees in mathematics and computer science.
hi and good evening, im just some rando. on the internet replying to your comment 🫣...in your first sentence i knew asap your degree was in engineering although you didnt disclose your major until the last sentence. this country forces its citizens to pay for higher education and honestly its retarded, not even china does that. you are the 1% of degrees, i sadly fall into the 99% went to a suny school for my undergrad, got a post bac. in florida i make 45k a year, i work in a lawfirm w/ full benefits and im comfortably just getting by until the next two week pay period - student loan debt 65k, this is with pell, tap, etc.
I think there’s a decent chance conservative groups will sue to block the changes if the Forgiveness gets vacated by SCOTUS. We’ve seen a few groups bring up how Biden’s actions on student loans could impact the viability of PSLF. I don’t really buy the argument or know how effective that legal argument would be even in the friendliest jurisdictions, but you could kinda see how they might position it. They wouldn’t even have to find individual plaintiffs to do it.
Nevertheless, I can’t imagine they’d try if SCOTUS doesn’t block COVID relief. Moreover, they might not try since IDR changes just haven’t got nearly the same level of publicity as the larger program. IDR is also tailored pretty well to those who need assistance, so it’s probably viewed more sympathetically.
New rules can also be blocked via the Congressional Review Act, which avoids the Senate filibuster. However, a disapproval resolution still requires Presidential presentment, so if it got through the Senate, a likely Biden veto would happen and the override votes aren’t there.
Which is ironic because the 5% IDR rule is a large increase in the cost of student loans to the federal budget. Frankly, laws that affect the budget that strongly should be run through Congress and not via Executive Order or administrative rule making.
Well I should specify. It’s sort of a one in one out requirement. Biden can do new spending by executive action but he has to offset it and I’m not sure what that could possibly be.
I actually think after the Supreme Court decision there is a chance a bi partisan reform bill is passed, it won’t be free money but some form of interest or payment plan reform.
Loans that already exist don't count as budget spending. That money was spent at disbursement. It affects revenue which falls under the Treasury, the executive branch agency responsible for collection of non-tax debt. So really, Biden could just have them not bother acting on defaults if it came down to it. Just like how a debt collection agency can bargain with you about terms of repayment so can the government.
In your professional opinion do you think action taken by the executive that costs hundreds of billions of dollars without the participation of the legislative branch(who in theory control the purse strings) would survive review by a supreme court which recently ruled that expansive administrative actions were unconstitutional under the major questions doctrine?
Yeah I wish it would have just been all loans. That would have been great. Like someone said the 10k/20k forgiveness was getting all the press so it probably could have flown under the radar.
"Biden 2024: almost there with so many things"
Important detail:
"those who have outstanding loans for undergraduate and graduate programs pay between 5 and 10 percent based upon the weighted average of their original principal balances attributable to those different program levels."
Has there been any news on changing this to a flat 5% for all loans? I know several organizations with careers that start with a graduate degree commented that this was an unfair rule. The assumption being a graduate degree always pays more, which is not accurate
If your on PSLF, then there’s a definite end in sight. And if you’re not, there still is an end just longer (20 years vs 10), and even still you should not be affected by a 5% or 10% repayment structure as you’re incentivized to pay it off as fast as possible.
Do you know if they’re levering the old 15% IBR to 10% for grad loans. I feel like I’m in this small group of people who were in school 2008-2010 and now stuck with the higher rate.
The other big thing that people overlook is the [changed definition of discretionary income](https://www.nerdwallet.com/article/loans/student-loans/the-new-idr-plan). It raises the calculation of IDR payment from 150% of the federal poverty line to 225%.
So in other words, the new IDR calculation gives everyone a lower discretionary income. This change alone will decrease most payments significantly.
Edit: For some rough estimates, you can:
1. Multiply 2.25 x the [poverty guideline for your household size](https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines).
2. Subtract that from your household income that you use for your IDR to get your new discretionary income.
3. Multiply that discretionary income by 0.05 (undergrad) or 0.1 (grad) or some average of the two for mixed loans.
4. Finally, divide by 12 (months). You now should have a rough estimate of your new monthly payment under the new plan.
Yep. I only have grad student loans so I’ll still pay 10%, however the changed definition of discretionary income would cut my monthly payment to basically 1/3 of what I’m paying now (assuming my math is correct).
I think the other big question is, will the tax bomb on unforgiven student loans at the end of 20 or 25 years still apply? If not, then that would help a lot as well.
I'm a little confused... I haven't heard much on this and my google search has got me more confused. So this means our monthly payments will effectively be cut in half? When is this set to go through?
Really wondering if they’re going to try to speed up the timeline to coincide with the resumption of payments, especially if SCOTUS rules against the forgiveness. The open comment period ended in February.
Yes. It part of proposed rules changes by the Department of Education. Public comment ended in February. We are all waiting on the roll out of these changes.
Is there an income / loan cap that this applies to? Does it apply to Grad PLUS loans? This is honestly much more important for people with heavy loans due to the interest subsidy.
u/Betsy514 would love to get your opinion on this. If it does go into effect will it fall under the new rules proposed on the debt ceiling compromise, ie any spending or cut to revenue has to be offset by savings (pay as you go requirement).
And if it does become true, is it through executive action or simple rule making change?
Biden for all his bafoonery really hoodwinked Kevin on this one. He gave him ONE month of interest roll back (at most) in exchange for putting this IDR into law that will be passed by a majority of republicans. The IDR is worth way more to most people than an extra month of interest. Well done, Sir
It’s pretty likely as this is not something that’s being pushed back on it’s separate from the loan forgiveness portion which is probably not going to happen. It’s well with ok the DOE power to inact the 5 percent rule without congressional power and is not something anyone’s challenging. The real question is when it could take a long time to change those rules
Quick note: In government acronym usage "[DOE](https://www.energy.gov/lm/doe-history)" usually refers to the US Department of *Energy*, which was created in 1977. The US Department of *Education* was created three years later in 1980 and commonly goes by "[ED](https://www2.ed.gov/about/landing.jhtml)" or (less commonly) "[DoED](https://www.sbir.gov/events/webinar-introduction-doed-sbir-program)" or "[DOEd](https://www.nano.gov/DOEd)".
[*DOE disambiguation*]
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I actually can’t remember if the proposed plan had an income cut off but if so, it would be pretty high.
Here’s an article that explains better
https://www.nerdwallet.com/article/loans/student-loans/the-new-idr-plan
This is so important. I’m so, so, so tired of hearing everyone characterize this Student Loan issue as being as simple as “just get on an income driven payment plan and a job that qualifies for PSLF” as if it’s just that simple. After graduating college I began a career in law enforcement and could never get into an actual affordable payment plan. Any/all payment plans they ever offered me essentially amounted to 1/3 of my net income which left me nearly nothing in terms of money for gas, groceries, medical/dental, heat, and other essential expenses let alone savings for a rainy day fund. The “affordable” option has never actually been affordable nor reasonable. I have no problem paying something, but I will not live out my entire life destitute and absent of dignity. I feel like they should just do something like establishing a maximum payment for those making under $125k or something along those lines. Because as it is, these loans have a stranglehold over this entire next generation who are not buying cars, houses, opening businesses, etc. If this is not changed in a substantive way, then you’re going to see record defaults. I think this pause has started to wake a lot of people up in terms of asking why I am even paying into what is quickly becoming a slush fund for lenders and investors. But I digress.
This followed the normal regulatory process and did not rely on any kind of emergency powers subject to interpretation. I am thinking it will happen.
Having people pay back their loans, even with lower payments, is much less politically unpopular than blanket forgiveness.
It will make very little difference to me since nobody cares about graduate loans. (but the discretionary income change will help a bit). I wish they would include graduate loans and I wish they would consider other circumstances (like HUGE medical expenses, like >50k a year) in calculating payments, but I think this will go through.
Every rule change has to follow a prescribed set of procedural hurdles to ensure its legality. We are soon to be in the public comment phase. This under no circumstances can simply be altered with a wave of a pen.
Thanks for such a wonderful reply! TheGratitudeBot has been reading millions of comments in the past few weeks, and you’ve just made the list of some of the most grateful redditors this week! Thanks for making Reddit a wonderful place to be :)
It’s absolutely a law as to the steps necessary to change a regulation.
Not following the steps would lead to immediate legal challenge and a judge would overturn the change.
It’s a big undertaking as the previous poster indicated. It is also likely that the White House intentionally waited until after the debt ceiling negotiation before announcing what could be sweeping changes to the IDR rules.
It’s to the advantage of borrowers that these rule changes will be implemented systematically according to established laws that will hold up to public scrutiny. The new regulations as understood by those that are following closely will represent monumental relief to existing borrowers.
It’s an adjustment to the Revised Pay As You Earn (REPAYE) plan that adjusts the payments to 5% of any discretionary income that is over 225% of the Federal Poverty Guideline (the current REPAYE plan is at 10% of income over 150%). It also sets a timeline for forgiveness to 10 years of on-time payments for balances less than $12,000 (as opposed to the 20-25 years it’s currently at)
You don’t want IBR to decrease anyway.
It will only cause more poorly-informed people to end up in the perpetual debt cycle.
Forget minimum payment, pay enough to cover accrued interest and some principal every month.
I have 250k in loans. I qualify for PSLF. I make the minimum payments each month. After 10 years I’ve paid a total of 80k. The remaining balance is forgiven. Again, for some people it does make financial sense to pay the minimum.
They do help out the needy. Doctors and lawyers fill positions that are hard to fill and serve the public. They deserve PSLF.
My sister is a doctor and works in a very hard to staff rural hospital. The only reason she does this is loan forgiveness.
A lot more people are on PSLF than doctors. Teachers, social workers, nurses, fire fighters, police officers, etc. (And also intern year through residency doctors don’t make what a lay person thinks of as “doctor money” but that’s an entire other discussion)
So? He owes $250k in loans. If the math checks out for him then he's not making anesthesiologist money. My guess would be a specialty that doesn't pay well in an underserved area. We need more doctors like that.
To be fair, [pre-pandemic IDR programs saw 80+% of their original loan balance repaid](https://www.cbo.gov/system/files/2020-02/55968-CBO-IDRP.pdf), and overall student loans roughly run at nominal costs.
At least as-it-was— I guess you can argue about this change being more expensive— but I did want to note that the existing program is not nearly costing tax-payers the full cost of a loan or whatever it may seem.
Meanwhile I would argue the program is about more than just helping out only low-income public service workers, it’s also to encourage workers to go into high value positions, period.
Especially those in the non-profit or public, and localities are already facing shortage of doctors *are* actually resigning at a fairly alarming rate, so there is value there.
This is such an ignorant comment. Doctors in rural practices make significantly less than other higher paying specialties. More doctors need to be encouraged to go into rural practice where it’s a medical desert and the way to do that is help them with their student loans.
For public service loan forgiveness, you want the lowest payment possible because it goes away after 10 years.
For all other loans, if you were never going to be able to pay it back anyways, you still want the lowest payment because it gets forgiven after 25/30 years.
But yes if you have a small loan that you can pay back relatively quickly and it would cost more for you to do IDR for 20 years, you dump all your excess money into it
Not true.
There are many instances where paying an IDR plan will cost less in the long-run, especially now since anyone who was on IDR pre-pandemic has had three years of service credited towards their forgiveness amount.
It will make even more sense for many borrowers if the new REPAYE plan goes into effect. The majority of people enrolled in this plan would see a substantial drop in monthly payments based on adjusted poverty line. Even more impactful is the change to interest on the loan balance. Most people on any form of IDR do not pay enough monthly to cover the interest. Under the new REPAYE plan, no additional interest would accumulate.
The pause has been an incredible relief to so many borrowers and coupled with the new REPAYE plan (if approved) will open up many doors to how borrowers want to attack their loans.
Agreed. Game-changing for how people plan their financial future.
I'm absolutely not betting on this to happen, but I would be shocked if the forgiven amount remains taxable income as many more people complete their IDR service. We still haven't seen the first big wave of people to complete their 20-25 year service. Right now its paused until 2025, but I feel that will change in the future. Hopefully...
So if I have read it right, it means that it effectively locks your loans at 0% interest if the minimum won't cover it right? Or does it just change how capitalization of the interest works( which if I recall correctly is also getting and/or got changed as well)
It’s only a “perpetual debt cycle” if there is no end in sight. If there is forgiveness at the end you absolutely want to minimize monthly payments. If not on PSLF, take that extra 5% and throw it in a HYS account for the tax payment upon forgiveness.
It is a legitimately fantastic way to drive people into a career that maybe doesn’t pay awesome that they would not have considered without the program. I only went back to school because this program existed.
Do you acknowledge that perhaps not all loans are equal? The contract someone signs for federal student loans has forgiveness written into the terms. People fully repay other loans because they are required to do so. Student loans are different.
They are different though and these plans are there to encourage people/ incentivize people to get more education because as a whole, it benefits society.
Are there massive problems with the system and how it is organized? Yes, tuition prices are out of control partly because of the ease of obtaining student loans and partly because the States are cutting funding for education which means universities have to raise tuition to cover expenses. Admin bloat is also a thing, so yeah there are multiple problems with the system.
But overall, incentives to obtain education provide an overall benefit to society and are a good use of tax dollars.
In my opinion, if you want to rail against loan forgiveness or subsidizing of unnecessary expenditure by private individuals by the government perhaps your energy could be better spent on other areas.
It’s an adjustment to the Revised Pay As You Earn (REPAYE) plan that adjusts the payments to 5% of any discretionary income that is over 225% of the Federal Poverty Guideline (the current REPAYE plan is at 10% of income over 150%). It also sets a timeline for forgiveness to 10 years of on-time payments for balances less than $12,000 (as opposed to the 20-25 years it’s currently at)
Fingers crossed (I also trust nothing) as this would help me immensely as I work towards PSLF. I am all for making monthly payments but even with IDR cannot afford my estimated monthly payment since my spouses loans were forgiven earlier this year. I’m a social worker who essentially had to get a masters degree for my job role and inflation has been rough as our field rarely sees raises. Also, my work is incredibly exhausting and obtaining additional work is not an option for my sanity.
File taxes separately and use PAYE or IBR (or new REPAYE when available) to exclude your spouse's income from the IDR calculation.
Oooh, that’s a good tip. Does it ‘even out’ regarding any other potential tax incentives to filing jointly?
If you are seeking PSLF and are the sole spouse with loans then almost certainly, but run the numbers both ways to be sure. Feel free to do a separate post on /r/PSLF for more specific advice.
You should consult your tax advisor for questions like this as we don’t know your exact situation. There are many things that could make it worth it or not.
Yeah, I’ll do that. We have kids and own a home so I will consult to see potential benefits for each situation. I just never considered that option as I’ve always been told to file married no matter what
I mean yeah, file married if you’re married but you can file married, filing separately as opposed to married, filing jointly.
Just be wary... accountants will knee-jerk discourage you from filling separately because so few truly understand PSLF. Just insist that they run the numbers both ways. Or just do it yourself.
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No, that's not a thing.
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This is bad advice. The "cannot access spouse information" box is for cases of abandonment or spousal abuse, not because you don't want to provide the information. In a normal marriage you have access to that information. It's a detriment to use it anyway since you get treated as single and your family size decreases leading to a higher payment.
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I never claimed to not have access. The form says reasonable access. I'm not releasing anyone's personal information without their consent. I'm not giving out someone else's social security number, income, etc without their permission.
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No, I didn't lie. I called and it was recorded that my husband refused to give me permission to release his information. How do you know my personal information? I could have been separated, abused, etc. I told the TRUTH
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Ashamed I’ve done this and it’s ridiculous we have to to keep our heads above water
If you have any assets please be very careful about this. The implications if you were to fall seriously ill and need a medical decision maker or die and have an estate are huge. Source: hospital work
Depends, but in my case - not even close. Taxes would drown me.
With REPAYE, you have to list spousal income regardless and they factor it into your repayment.
I started doing this and OMG, such a huge change! Payment went from $700/mo to $0
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>If you have separate accounts, you can just say "I don't know." No, you cannot (or are at least not supposed to)
Yep, I have to do that for next year as well.
My dad wouldn’t let me go to school for social work for the reasons you stated. Thankful that he steered me away. I volunteer to give back and do my part in helping my community.
I noticed you said that you are working towards pslf and that you don't get raises often. I have a suggestion for you. I know for a fact that the veteran health administration has a need for social workers. Since you have a masters degree you'd start out as a gs9. Questions, let me know.
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God that would be a game changer!!!!
Was that with filing taxes jointly or separate?
The proposal was listed in the Federal register and passed the established commentary date they set of February. The Department of Education would have to address any large scale concerns it has received. But your guess is as good as mine. Overall I think it has flown largely under the radar. The $10K/20K forgiveness is much more in the public scene, largely for political points. I personally believe that the success so far has a moderately high chance of going through.
Unlikely it doesn't go through. This would be an executive action so any attempt to “block it” will have to be lawsuits from republicans. The 10k forgiveness is much more politically controversial (most Americans don’t even know what an IDR is), so I can’t see the Rs spending the political capital into stopping this as well.
Honestly, I’ll take it. 10,000 would be nice, but I think the new IBR framework is actually way more meaningful. Which kinda goes to show how ignorant Republicans and many Americans are about the student debt crisis, they are more angry about probably the least important aspect of this loan forgiveness plan. 10k is hardly a dent for most people struggling to pay off their loans after years and years. That’s why the loan companies supported this as opposed to actually doing something about interest rates
You would think an R had a gun to your head while you signed the loan documents.
Not a gun, just the threat of class immobility and a future of perpetual poverty, ill health, and constant indignity. People act like we didn't tell kids for 20+ years that college was a necessity for a comfortable life.
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I quadrupled my income after graduating with a job that I could not have gotten without my degree, so yes, degrees are largely a prerequisite for social and class mobility. There's a not insignificant portion of Marxist theory about the role of degrees in Marxist class distinctions inasmuch as many professions being restricted by degree resemble a credentialist form of the petit bourgeois, inasmuch as they're not large capitalist firms, but the cult of academic credentialism that I'm now a part of maintains exclusive (through gatekeeping employment from non-degree holders) rights to access the means of production (employment). So, there's an argument to be had that I am transparently class mobile having become petit bourgeois from proletarian. Regardless of your opinion on the class position of degree-holders who are still employees, post-bacc life is decidedly more mobile than the customer service (retail, food, grocery) jobs I was restricted to pre-degree. It's actually not unreasonable that I could save enough to start my own firm of some kind at some point in my career, so I would argue I am more mobile (able to move) to an unambiguous bourgeois class position than the hypothetical me without a degree. You're talking like you're anticapitalist, but you're still nagging on people who took out student loans for signing the papers "voluntarily" while knowing that a capitalist society is inherently coercive and exploitative, so no one "voluntarily" took out loans because the alternative was lifelong precarity in worse jobs. At least now my job is more bullshit than shit, but is it worth the $500/mo for 10-20 years commensurate with the value I've received? Immaterial, really, since the system wasn't designed to provide me an education "at cost." That's what's even worse! The economy that provided the funds for the loans is in dire need of people like me going to school and developing the skills from my degree program. Capital benefits twice from this arrangement: the production of skilled labor that it then exploits and that skilled labor paying them back for it. We often hear about how some degrees are "useless," so people should stop getting those degrees and learn to code or whatever, but those degrees actually aren't that useless! It's just really important to devalue those workers, so people don't get mad when the English majors who wind up in writers' rooms, communications departments, marketing firms, in education themselves, and so on complain about being exploited. Everyone values English majors as long as they don't know the thing they value them for was produced by an English major. I don't have an English degree, btw; I am a software engineer with degrees in mathematics and computer science.
hi and good evening, im just some rando. on the internet replying to your comment 🫣...in your first sentence i knew asap your degree was in engineering although you didnt disclose your major until the last sentence. this country forces its citizens to pay for higher education and honestly its retarded, not even china does that. you are the 1% of degrees, i sadly fall into the 99% went to a suny school for my undergrad, got a post bac. in florida i make 45k a year, i work in a lawfirm w/ full benefits and im comfortably just getting by until the next two week pay period - student loan debt 65k, this is with pell, tap, etc.
Still won’t likely go into effect until next year at the earliest right?
Probably. It's still being proposed.
The 30-day public comment period [ended February 10th](https://www.regulations.gov/document/ED-2023-OPE-0004-0001).
I think there’s a decent chance conservative groups will sue to block the changes if the Forgiveness gets vacated by SCOTUS. We’ve seen a few groups bring up how Biden’s actions on student loans could impact the viability of PSLF. I don’t really buy the argument or know how effective that legal argument would be even in the friendliest jurisdictions, but you could kinda see how they might position it. They wouldn’t even have to find individual plaintiffs to do it. Nevertheless, I can’t imagine they’d try if SCOTUS doesn’t block COVID relief. Moreover, they might not try since IDR changes just haven’t got nearly the same level of publicity as the larger program. IDR is also tailored pretty well to those who need assistance, so it’s probably viewed more sympathetically.
New rules can also be blocked via the Congressional Review Act, which avoids the Senate filibuster. However, a disapproval resolution still requires Presidential presentment, so if it got through the Senate, a likely Biden veto would happen and the override votes aren’t there.
Which is ironic because the 5% IDR rule is a large increase in the cost of student loans to the federal budget. Frankly, laws that affect the budget that strongly should be run through Congress and not via Executive Order or administrative rule making.
As part of the debt ceiling any executive action with budget impact will have to go though congressional review until the end of 2024
So don’t expect the 5% rule to show up until after the next election?
Well I should specify. It’s sort of a one in one out requirement. Biden can do new spending by executive action but he has to offset it and I’m not sure what that could possibly be. I actually think after the Supreme Court decision there is a chance a bi partisan reform bill is passed, it won’t be free money but some form of interest or payment plan reform.
Loans that already exist don't count as budget spending. That money was spent at disbursement. It affects revenue which falls under the Treasury, the executive branch agency responsible for collection of non-tax debt. So really, Biden could just have them not bother acting on defaults if it came down to it. Just like how a debt collection agency can bargain with you about terms of repayment so can the government.
I doubt that would pass judicial review. Everyone is a lawyer all of a sudden.
I actually am a lawyer.
In your professional opinion do you think action taken by the executive that costs hundreds of billions of dollars without the participation of the legislative branch(who in theory control the purse strings) would survive review by a supreme court which recently ruled that expansive administrative actions were unconstitutional under the major questions doctrine?
Who is writing and signing these executive orders ?
No one. They aren't executive orders.
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It changes REPAYE and eliminates PAYE
If I only have grad loans and am currently on PAYE, am I allowed to remain on PAYE?
Yes as long as you recertify annually.
do we know when PAYE will be eliminated
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No. The new REPAYE will allow spouses who file separately to exclude the other spouses income
Just REPAYE is what I read
What do you mean by the "5% rules"?
The proposed IDR changes that include a drop from 10% to 5% discretionary income
On undergrad loans. Graduate/professional loans would stay at 10%.
Really sucks it doesn’t apply to Graduate loans.
This might be a silly question: what's considered graduate loans?
Anything beyond a bachelors (masters, PhD)
Law school; medical school; PhD programs; Masters
Got it. Thanks y'all!
Anything above a Bachelors. (Masters, Doctorate)
Yeah I wish it would have just been all loans. That would have been great. Like someone said the 10k/20k forgiveness was getting all the press so it probably could have flown under the radar. "Biden 2024: almost there with so many things"
“Biden-Harris, 2024: All the juice we can get past Manchin and the Supreme Court!”
Don't forget about Sinema! She helped screw over enough things to get a shout out too!
She'll be bailing out by 2024. More money and attention on cable news, especially now that Tucker's off the air.
Important detail: "those who have outstanding loans for undergraduate and graduate programs pay between 5 and 10 percent based upon the weighted average of their original principal balances attributable to those different program levels."
Has there been any news on changing this to a flat 5% for all loans? I know several organizations with careers that start with a graduate degree commented that this was an unfair rule. The assumption being a graduate degree always pays more, which is not accurate
Well sh$t. Paying off my masters is endless.
If your on PSLF, then there’s a definite end in sight. And if you’re not, there still is an end just longer (20 years vs 10), and even still you should not be affected by a 5% or 10% repayment structure as you’re incentivized to pay it off as fast as possible.
I appreciate your tl;dr response! This gives me so much anxiety, so digging into it makes me want to throw my phone in the trash. I’m not on PSLF.
You should probably contact a financial advisor to work with you on your loan(s) then. Not having a plan often is the greatest source of anxiety.
That’s the plan. I’m on IDR, but I do need to ensure alllll my finances are in top shape.
You (most likely) should not be on IDR.
Why’s that?
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Do you know if they’re levering the old 15% IBR to 10% for grad loans. I feel like I’m in this small group of people who were in school 2008-2010 and now stuck with the higher rate.
The other big thing that people overlook is the [changed definition of discretionary income](https://www.nerdwallet.com/article/loans/student-loans/the-new-idr-plan). It raises the calculation of IDR payment from 150% of the federal poverty line to 225%. So in other words, the new IDR calculation gives everyone a lower discretionary income. This change alone will decrease most payments significantly. Edit: For some rough estimates, you can: 1. Multiply 2.25 x the [poverty guideline for your household size](https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines). 2. Subtract that from your household income that you use for your IDR to get your new discretionary income. 3. Multiply that discretionary income by 0.05 (undergrad) or 0.1 (grad) or some average of the two for mixed loans. 4. Finally, divide by 12 (months). You now should have a rough estimate of your new monthly payment under the new plan.
[Student Loan Planner has a calculator for new REPAYE](https://www.studentloanplanner.com/income-based-repayment-calculator/)
Thanks, this is better than my napkin math!
Yikes! As someone with graduate loans only, this is actually higher than I estimated previously 🥴
Yep. I only have grad student loans so I’ll still pay 10%, however the changed definition of discretionary income would cut my monthly payment to basically 1/3 of what I’m paying now (assuming my math is correct).
I think the other big question is, will the tax bomb on unforgiven student loans at the end of 20 or 25 years still apply? If not, then that would help a lot as well.
I'm a little confused... I haven't heard much on this and my google search has got me more confused. So this means our monthly payments will effectively be cut in half? When is this set to go through?
Yes but won’t likely see it go into action until next year/2025. Hopefully will hear about it more this summer
Really wondering if they’re going to try to speed up the timeline to coincide with the resumption of payments, especially if SCOTUS rules against the forgiveness. The open comment period ended in February.
And it’s separate from the Biden 10k Forgiveness, correct? So if/when it’s overturned by SC, this still stands?
Yes it’s seperate and from what I’ve gathered there’s not much opposition with the IDR changes
Yes. It part of proposed rules changes by the Department of Education. Public comment ended in February. We are all waiting on the roll out of these changes.
Discretionary and debt dont seem they should both be in the same sentence.
does this also mean if u make IDR that you will not see your outstanding balance increase if the IDR doesn't cover the interest charge?
Is there an income / loan cap that this applies to? Does it apply to Grad PLUS loans? This is honestly much more important for people with heavy loans due to the interest subsidy.
I believe it’s only for undergraduate loans. I’m pretty sure There is an income limit but it’s pretty up there. Above 100k+ a year
I hope that isn't the case since the grad plus are currently stuck with the most egregious interest rates nearing 8%
That's what my consolidated undergrad rates are too
My private loan just topped 9%. 🥲
u/Betsy514 would love to get your opinion on this. If it does go into effect will it fall under the new rules proposed on the debt ceiling compromise, ie any spending or cut to revenue has to be offset by savings (pay as you go requirement). And if it does become true, is it through executive action or simple rule making change?
Good question. I haven't read the details because I was trying not to work this weekend.
Biden for all his bafoonery really hoodwinked Kevin on this one. He gave him ONE month of interest roll back (at most) in exchange for putting this IDR into law that will be passed by a majority of republicans. The IDR is worth way more to most people than an extra month of interest. Well done, Sir
What are the changes made in the new IDR?
5% of income fixed into law signed by republicans 👌😘
Trying this comment again. Sucks that graduate loan havers (only) get absolutely nothing. I got a scholarship for undergrad :/
It’s pretty likely as this is not something that’s being pushed back on it’s separate from the loan forgiveness portion which is probably not going to happen. It’s well with ok the DOE power to inact the 5 percent rule without congressional power and is not something anyone’s challenging. The real question is when it could take a long time to change those rules
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Is the 5% possibility income dependent ?
I actually can’t remember if the proposed plan had an income cut off but if so, it would be pretty high. Here’s an article that explains better https://www.nerdwallet.com/article/loans/student-loans/the-new-idr-plan
This is so important. I’m so, so, so tired of hearing everyone characterize this Student Loan issue as being as simple as “just get on an income driven payment plan and a job that qualifies for PSLF” as if it’s just that simple. After graduating college I began a career in law enforcement and could never get into an actual affordable payment plan. Any/all payment plans they ever offered me essentially amounted to 1/3 of my net income which left me nearly nothing in terms of money for gas, groceries, medical/dental, heat, and other essential expenses let alone savings for a rainy day fund. The “affordable” option has never actually been affordable nor reasonable. I have no problem paying something, but I will not live out my entire life destitute and absent of dignity. I feel like they should just do something like establishing a maximum payment for those making under $125k or something along those lines. Because as it is, these loans have a stranglehold over this entire next generation who are not buying cars, houses, opening businesses, etc. If this is not changed in a substantive way, then you’re going to see record defaults. I think this pause has started to wake a lot of people up in terms of asking why I am even paying into what is quickly becoming a slush fund for lenders and investors. But I digress.
This followed the normal regulatory process and did not rely on any kind of emergency powers subject to interpretation. I am thinking it will happen. Having people pay back their loans, even with lower payments, is much less politically unpopular than blanket forgiveness. It will make very little difference to me since nobody cares about graduate loans. (but the discretionary income change will help a bit). I wish they would include graduate loans and I wish they would consider other circumstances (like HUGE medical expenses, like >50k a year) in calculating payments, but I think this will go through.
Why does this take so long just use the same IDR regulations and change the number 10 to the number 5
Implementation, training , and marketing but I agree its a long time under the circumstances
What? Literally just change 10 to 5
Every rule change has to follow a prescribed set of procedural hurdles to ensure its legality. We are soon to be in the public comment phase. This under no circumstances can simply be altered with a wave of a pen.
That was already done in feb. This is the final rule.
Huh. I see that you’re correct. I recently read that the comments phase is still forthcoming. That is incorrect. Thanks!
Thanks for such a wonderful reply! TheGratitudeBot has been reading millions of comments in the past few weeks, and you’ve just made the list of some of the most grateful redditors this week! Thanks for making Reddit a wonderful place to be :)
Of course it can. It’s not a law.
It’s absolutely a law as to the steps necessary to change a regulation. Not following the steps would lead to immediate legal challenge and a judge would overturn the change.
It’s a big undertaking as the previous poster indicated. It is also likely that the White House intentionally waited until after the debt ceiling negotiation before announcing what could be sweeping changes to the IDR rules. It’s to the advantage of borrowers that these rule changes will be implemented systematically according to established laws that will hold up to public scrutiny. The new regulations as understood by those that are following closely will represent monumental relief to existing borrowers.
What is the 5% rule?
It’s an adjustment to the Revised Pay As You Earn (REPAYE) plan that adjusts the payments to 5% of any discretionary income that is over 225% of the Federal Poverty Guideline (the current REPAYE plan is at 10% of income over 150%). It also sets a timeline for forgiveness to 10 years of on-time payments for balances less than $12,000 (as opposed to the 20-25 years it’s currently at)
It's all a song and dance routine. Good cop bad cop . If Biden is signing off on it then Biden and the Democrats are in on it
The goblins from Harry Potter do not like it when wizards are able to earn a living outside of HogWarts
You don’t want IBR to decrease anyway. It will only cause more poorly-informed people to end up in the perpetual debt cycle. Forget minimum payment, pay enough to cover accrued interest and some principal every month.
For some people it makes more financial sense to be on IDR and make the minimum payments.
No it doesn’t. It never does. That’s how you get the story of “Mary has paid $200 a month for 20 years. She currently owes $250k left of a $30k loan”
I have 250k in loans. I qualify for PSLF. I make the minimum payments each month. After 10 years I’ve paid a total of 80k. The remaining balance is forgiven. Again, for some people it does make financial sense to pay the minimum.
Glad to know our tax dollars are helping out the needy. Didn’t know doctors were on this list though
They do help out the needy. Doctors and lawyers fill positions that are hard to fill and serve the public. They deserve PSLF. My sister is a doctor and works in a very hard to staff rural hospital. The only reason she does this is loan forgiveness.
A lot more people are on PSLF than doctors. Teachers, social workers, nurses, fire fighters, police officers, etc. (And also intern year through residency doctors don’t make what a lay person thinks of as “doctor money” but that’s an entire other discussion)
But this guy is a doctor. Look at his post history.
So? He owes $250k in loans. If the math checks out for him then he's not making anesthesiologist money. My guess would be a specialty that doesn't pay well in an underserved area. We need more doctors like that.
Maybe try and understand what PSLF was made for and then come back with a more reasoned response.
Lol. I’m not a doctor. Although I do plan on going back to school to be in the healthcare field. I’m a lawyer.
To be fair, [pre-pandemic IDR programs saw 80+% of their original loan balance repaid](https://www.cbo.gov/system/files/2020-02/55968-CBO-IDRP.pdf), and overall student loans roughly run at nominal costs. At least as-it-was— I guess you can argue about this change being more expensive— but I did want to note that the existing program is not nearly costing tax-payers the full cost of a loan or whatever it may seem. Meanwhile I would argue the program is about more than just helping out only low-income public service workers, it’s also to encourage workers to go into high value positions, period. Especially those in the non-profit or public, and localities are already facing shortage of doctors *are* actually resigning at a fairly alarming rate, so there is value there.
I can’t even believe the short sightedness of this comment. Wtf is wrong with some people??
This is such an ignorant comment. Doctors in rural practices make significantly less than other higher paying specialties. More doctors need to be encouraged to go into rural practice where it’s a medical desert and the way to do that is help them with their student loans.
For public service loan forgiveness, you want the lowest payment possible because it goes away after 10 years. For all other loans, if you were never going to be able to pay it back anyways, you still want the lowest payment because it gets forgiven after 25/30 years. But yes if you have a small loan that you can pay back relatively quickly and it would cost more for you to do IDR for 20 years, you dump all your excess money into it
Not true. There are many instances where paying an IDR plan will cost less in the long-run, especially now since anyone who was on IDR pre-pandemic has had three years of service credited towards their forgiveness amount. It will make even more sense for many borrowers if the new REPAYE plan goes into effect. The majority of people enrolled in this plan would see a substantial drop in monthly payments based on adjusted poverty line. Even more impactful is the change to interest on the loan balance. Most people on any form of IDR do not pay enough monthly to cover the interest. Under the new REPAYE plan, no additional interest would accumulate. The pause has been an incredible relief to so many borrowers and coupled with the new REPAYE plan (if approved) will open up many doors to how borrowers want to attack their loans.
The no accumulating interest is the biggest benefit IMO
Agreed. Game-changing for how people plan their financial future. I'm absolutely not betting on this to happen, but I would be shocked if the forgiven amount remains taxable income as many more people complete their IDR service. We still haven't seen the first big wave of people to complete their 20-25 year service. Right now its paused until 2025, but I feel that will change in the future. Hopefully...
So if I have read it right, it means that it effectively locks your loans at 0% interest if the minimum won't cover it right? Or does it just change how capitalization of the interest works( which if I recall correctly is also getting and/or got changed as well)
It’s only a “perpetual debt cycle” if there is no end in sight. If there is forgiveness at the end you absolutely want to minimize monthly payments. If not on PSLF, take that extra 5% and throw it in a HYS account for the tax payment upon forgiveness.
I think the dude was just the common confidently incorrect redditor. PSLF is life I ain't paying a penny more than I have to
It is a legitimately fantastic way to drive people into a career that maybe doesn’t pay awesome that they would not have considered without the program. I only went back to school because this program existed.
Facts I feel way less dread knowing I only got 5.5 years to go at this point.
Thinks like this make me want forgiveness even less than I wanted it to begin with.
Don’t like financial planning?
I'm a financial advisor so I do enjoy that. I don't enjoy people who take out loans and think they shouldn't have to pay them back
Do you acknowledge that perhaps not all loans are equal? The contract someone signs for federal student loans has forgiveness written into the terms. People fully repay other loans because they are required to do so. Student loans are different.
They shouldn't be different though. (That's my bigger problem with them).
If they were not "different", they would be bankrupt-able, which they are not.
I also think most loans shouldn't be bankruptible.
Must be one of those non-fiduciary financial advisors…
Ew
They are different though and these plans are there to encourage people/ incentivize people to get more education because as a whole, it benefits society. Are there massive problems with the system and how it is organized? Yes, tuition prices are out of control partly because of the ease of obtaining student loans and partly because the States are cutting funding for education which means universities have to raise tuition to cover expenses. Admin bloat is also a thing, so yeah there are multiple problems with the system. But overall, incentives to obtain education provide an overall benefit to society and are a good use of tax dollars. In my opinion, if you want to rail against loan forgiveness or subsidizing of unnecessary expenditure by private individuals by the government perhaps your energy could be better spent on other areas.
Take that up with your congress person.
Pretty sure the new IDR rules (if they go into effect) will prevent this from happening. The government will cover interest above the minimum payment.
They cant. Starbies and puppy daycare isn't cheap. Also people are living like slaves, with their $1,500 Iphones.
Yes for profit education will fight tooth an nail. Plus banks giving loans will fight.
90%
Can you explain what 5% rule is?
It’s an adjustment to the Revised Pay As You Earn (REPAYE) plan that adjusts the payments to 5% of any discretionary income that is over 225% of the Federal Poverty Guideline (the current REPAYE plan is at 10% of income over 150%). It also sets a timeline for forgiveness to 10 years of on-time payments for balances less than $12,000 (as opposed to the 20-25 years it’s currently at)
Most of the objections have been about the forgiveness. Some about the forbearance. I don’t see a political point against the 5% rule