Fresh Student Loan News and an Important Discussion of Tradeoffs in Student Loan Decisions

The student loan saga continues. As soon as I put out one piece of content, the next day things change.

Let's dive into the recent updates for student loans and an important discussion of tradeoffs we choose when deciding student loan repayment plans.

Updates to the Federal Student Aid SAVE Guidance

There have been interesting updates to the Federal Student Aid guidance page for the SAVE forbearance.
​
As we've known, since the recent Court of Appeals ruling, the entire SAVE plan rule has been put on pause. What does this mean for you?

It not only impacts the entire SAVE plan as a whole - not just certain features of it - but also may impact:

• Consolidation rules are currently uncertain - under the new rule, consolidating federal loans would have led to a weighted average of payment history for each loan. Old rules erased all past payment history before the consolidation.
• Family size calculations for income-driven repayment (IDR) may revert back to old rules (may be good, we'll see).
• Borrowers need to proceed with caution, especially around loan consolidations
• No forgiveness available under PAYE or SAVE, but payments still count. If you hit the 20/25-year mark, you'd need to switch to IBR.

The guidance also explicitly called out the PSLF buyback option as an opportunity - it's great to see that stated explicitly as an option.

Recertification Dates: Extended Breathing Room

Great news for those feeling overwhelmed:

• Recertification dates have been pushed back to February 2026 for most borrowers for ALL IDR plans.
• This was already the case for those on SAVE.
• If you were supposed to recertify on or before February 20th:
  • Successfully processed recertifications stand as is - that's your payment
  • If you submitted but it never got processed, your recertification date has been pushed back to Feb 2026 at the earliest
  • If you were supposed to recertify before 2/20 but never did, you'd need to do this ASAP
• If you were supposed to recertify after February 20th, then your date is pushed back a year.

For those on SAVE forbearance, I'd keep an eye on this. It's possible that the courts strike down SAVE and you'd need to apply for another IDR plan. If so, it's likely you'd need to recertify your income at that point.

With a few weeks left, I'd be really mindful about when and how you're filing your tax return. If it made sense, I'd talk with your tax and financial advisor about filing an extension to either use 2023's return again or - if married - to give yourself more time to know how to file (married filing joint vs. separate).

IDR Applications: Back Online (Sort of)

Income-driven repayment applications are back online, but with a catch:

• Applications are available on the Federal Student Loan website
• Loan servicers are still not yet processing them (updating their systems, according to the Department of Ed).
• SAVE is no longer an option, but ICR, IBR, and PAYE are.

All in all, great to see these back on. With IBR never at risk, this should have happened long ago.

Important Note on Tradeoffs

Every financial decision involves tradeoffs. Student loan repayment decisions are no different.

there's no one-size-fits-all solution. As financial planners specializing in optometry practices, we often see three primary approaches to tackling student debt:

1. Full Repayment
2. Income-Driven Repayment (IDR) with Forgiveness
3. A Hybrid Approach

The right strategy blends what's mathematically optimal with personal preferences. Here's what you need to know:

When the math favors forgiveness and you're deciding whether to use IDR plans toward forgiveness, you are making a decision of tradeoffs:

• What's likely to be the math-optimal decision, even if it adds more work and uncertainty to your life (IDR plans)
• What's going to give the most certainty, even if it's going to end up more costly (paying down fully).

When going for 20- or 25-year forgiveness, you'll need to recertify your income and family size each year and stay on top of the changing rules and policy - or hire a firm like me to guide you through it all.

Just over 20 years, there could be 5 different presidential administrations and various combination of Congresses, all with vastly different opinions about how it all should work.

Why would you do that? Because you've done the math and it's shown that at certain federal loan-to-income ratios, it makes more sense to take that route.

But that's the math - you have to decide how you feel about the volatility of student loan policy and the work involved.

I've seen many ODs decide to pay it off altogether, regardless of the math, because their personal preference was to take the most certain route possible.

But we can't make that decision from fear - start with the math, then decide how your preferences and values play into that.

If you want to hear me talk through this all in more detail, check out our latest podcast episode below 👇.

Have a great weekend!

New From our Education Hub

Episode 131: Fresh Student Loan News and Tradeoffs I dive into the latest federal student loan news you need to know, as well as the tradeoffs we navigate when deciding student loan repayment options. Listen to the Episode!

Want to Connect?

Here are some other ways to connect and follow along:
​
✅ Ready to start improving your finances? Schedule an Intro Call for a no-pressure consultation.
✅ Respond to this Email to pass on any feedback or questions you have on the newsletter.
✅ Follow us on social media with the buttons below 👇.

Follow us at:

​​​​​