Student Loan Management: A Guide to SAVE, PSLF, and Repayment Plans
Everything you need to know about managing your student loans and choosing the right plan
1Switching from the SAVE Plan
If you're switching from the SAVE plan to another repayment plan, you won't receive an additional forbearance. However, plan switches are generally processed quickly, with 70% completed within one to two weeks. If you need to switch by 10/14, consider applying on 9/29 to take advantage of the auto-pay discount. This can help you save on interest.
2Parent PLUS Loans and Delays
Some institutions, like the University of Arizona, are experiencing delays in accepting Parent PLUS and student loans. While there is a federal-level delay, it doesn’t directly block students. Financial aid offices are facing issues with disbursements, but there are few reports of students being negatively affected. Only graduate students relying on these loans for rent payments might face challenges.
3Down Payment vs. Loan Payments
Depending on your financial goals, you can choose between saving for a home down payment or paying off student loans faster. If you qualify for loan forgiveness, explore that option. Buying a home is a personal choice and often not a mathematically sound investment. Renting may be cheaper, with lower transaction costs.
4PSLF and Incorrect Payments
If Mojila has made an incorrect payment, submitting a new Income-Driven Repayment (IDR) application is recommended. You can request reconsideration, but if no correction is made, a new application is the best step. The PSLF program hasn’t changed recently, so there’s no need for concern.
5Timing Your Repayment Plan Switch
Don’t wait for government instructions to change your repayment plan. Make the best choice for your personal finances. If you’re pursuing PSLF or time-based forgiveness, enroll in the new plan immediately. Delays can increase interest costs (e.g., $300 monthly) and affect your PSLF timeline.
6Administrative Forbearance
The only reason you’d enter administrative forbearance during a plan switch or recertification is if your application isn’t processed within a billing cycle. This is rare nowadays. Timely processing means no forbearance.
7Risks of the 25-Year Graduated Plan
If you have $130k in loans, avoid the 25-year graduated plan. It’s one of the riskiest options, starting with low payments that increase over time. Less than 4% of borrowers use it, and almost none complete it. Years spent on this plan don’t count toward PSLF.
8Financial Aid Delays
It’s common for financial aid to disburse 21-30 days before classes start. Schools typically process refunds after classes begin. The financial aid office handles everything, so don’t worry unless you’re missing something.
9Student Loan Interest Rates
This year, only Parent PLUS loans have a 9% interest rate. Undergraduate loans are at 6.5%, and graduate loans at 8%. Private student loans, based on credit and income, can have rates as high as 9%.
10Strategies for Low-Income Spouses
If your spouse has high student debt and low part-time income, consider filing taxes jointly instead of separately. Separate filing can increase tax costs. If it doesn’t lower loan payments enough, joint filing is better.
11PSLF Reconsideration Timelines
PSLF reconsideration submissions can take months or years to review. If you’re on Social Security and still have student loans, you must keep paying. Otherwise, your benefits could be garnished.
12Repayment Plans for High Earners
High earners should evaluate their options carefully. Income-driven plans adjust payments based on income and suit those pursuing forgiveness (e.g., PSLF). If you’re ineligible for forgiveness, the Standard plan may be best for paying off loans quickly.