She is saying they don't have any legislative authority to do it wit h the IDR, so don't get your hopes up high. There is a sordid history of government programs overly benefitting us as being frowned upon by whites. Many of these programs excluded us such as Social Security and that is the only way it was able to pass in Congress.UPDATED Summary of SAVE/REPAYE Plan Final Rules
Please please please read the OP before asking a question. If you ask and it's here I'm just not going to answer you. Not trying to be cranky but there's just too much volume right now to repeat something that's already here.
SAVE Plan You can read the federal register here https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/nfridrriapra.pdf
You can read the fact sheet here https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/idrfactsheetfinal.pdf
REPAYE and SAVE are now the same plan and the names will be used interchangeably in the real world. For our purposes to avoid confusion I’m going to use repaye to talk about the current plan, and SAVE the new one. So SAVE is not an additional plan - it's a renamed and revised REPAYE. This renamed plan will continue to count for PSLF.
SAVE PLAN ELIGIBILITY
All Direct Loans (Direct subsidized and unsubsidized Stafford, Direct Graduate Plus, Direct consolidation in most cases) other than Parent Plus loans or consolidated PP loans are eligible – regardless of when the loan was made. Double consolidated PP loans are eligible – but only if the double consolidation was completed before July 1, 2025. Defaulted loans, FFEL loans and Perkins loans are not eligible – but can be made eligible by getting out of default and/or consolidating into the Direct Loan program at www.studentaid.gov
SAVE PLAN PAYMENT CALCULATION
Under the SAVE plan, 225% of the poverty level for the borrower’s state and family size will be subtracted from their AGI/income. The repaye plan subtracts 150%, as does paye and both new and old ibr. ICR uses 100%.
Only SAVE/REPAYE are changing in these areas.
Under the SAVE program, payments are calculated as follows:
-5% of discretionary income if the borrower only has undergraduate loans -10% of discretionary income if the borrower only has graduate loans -a proportionate percentage if the borrower has both. So for example, if a borrower had $50K in undergraduate and 50% in graduate they would use 7.5%. They are basing the proportion on ORIGNAL total loan balance - which I'm going to have to dig down on that clause as it begs a bunch of questions for me. Payments under all of the IDR plans can be zero dollars if that's how the calculation works out. Zero dollar payments under these plans count towards both IDR and PSLF forgiveness. This is not a change. SAVE PLAN INTEREST Under the SAVE plan, any interest not covered by the calculated monthly payment is waived. This includes times when the borrower pays more than what is billed. So if your payment is 100 a month and your interest is 200, the ED will forgive the 100 - even if you decide to pay 300. This applies to all loans eligible for SAVE. Yes that includes graduate loans. If your billed payment amount covers your monthly interest you will not get any interest forgiven. To be crystal clear – this benefit is based on what you are BILLED - not what you actually pay. So not paying won’t mean interest forgiveness if your billed payment covers that interest. And you don’t get the benefit if you don’t make the payment. Zero dollar calculated payments excluded of course.
SAVE FORGIVENESS Under SAVE, forgiveness occurs after 300 months on the plan for graduate loans and consolidation loans that contain graduate loans. Under SAVE forgiveness occurs after 240 months on the plan for undergraduate loans and consolidation loans that contain undergraduate loans. If the borrower has both graduate and undergraduate - consolidated or not - the forgiveness is after 300 months. You cannot be on different plans for different loan types. Under SAVE, if your original principal was $12K or less, forgiveness is after 120 payments. This is total - not per loan. so if you have three $10K loans this doesn't apply to you. After $12K they add a year of required payments under the plan for ever $1K over the 12 you owe. So if you owe $13K, you get forgiveness if you still have a balance after 11 years on SAVE.
PERIODS THAT COUNT TOWARDS FORGIVENESS You get credit towards the forgiveness count for: -payments made under an IDR ($0 payments count) -payments made under a ten year standard or equivalent -cancer, unemployment, rehabilitation, military and economic deferment periods -Americorps forbearance periods -national guard forbearance -Department of defense forbearance -bankruptcy forbearance on or after July 1, 2024 if the borrower made the required payments Other deferments and forbearances, including in school deferment, grace and financial hardship forbearance do NOT count - however see below for a hold harmless option for these periods. If the borrower consolidates loans with different counts after the end of this year, they will get a weighted average of the underlying loans counts. If they consolidate before that they will get the highest count due to the one time IDR adjustment. See my post history if you don’t know what that is. A borrower may obtain credit toward forgiveness for any months in which a borrower was in a deferment or forbearance not listed above by making an additional payment equal to or greater than their current IDR payment, including a payment of $0, for a deferment or forbearance that ended within 3 years of the additional repayment date and occurred after July 1, 2024.
TREATMENT Of SPOUSAL INCOME Only the borrowers income will be used in the calculation of repaye/SAVE, IBR, ICR and Paye if they are single or married and filing separately. But they will also exclude the spouse from the borrowers family size in this situation. For repaye/SAVE, IBR and paye - if both spouse's have loans and both incomes are provided the payment will be adjusted based on the spouse's loans (and income). Both spouse's do not have to be on an IDR or the same plan for this. For ICR, both spouse's have to be on ICR specifically if both debts and income are to be used in the payment calculation. In situations where both spouse's loans and income are being considered in the calculation - they will portion it as follows "Dividing the outstanding principal and interest balance of the borrower’s eligible loans by the couple’s combined outstanding principal and interest balance on eligible loans;" So they will determine a payment based on the combined income. Say it comes out to $1000. If spouse A has 70% of the total debt their payment will be $700 and spouse B's payment will be $300
AVAILABILITY OF OTHER PLANS The PAYE plan is being sunsetted. If you aren't enrolled in that plan on July 1, 2024 you never can. If you are and then change plans after that date you can never go back
The ICR plan is being sunsetted except for consolidated PP. If you aren't enrolled in that plan on July 1, 2024 you never can. If you are and then change plans after that date you can never go back. To repeat - this sunset doesn't apply to Parent Plus - ICR will still be available indefinitely for consolidated PP loans.
If as of July 1, 2024 you've made sixty or more payments under repaye you may not switch to the IBR plan. This is to prevent borrowers with graduate loans to be able to game the system and get forgiveness sooner.
Sunset of the Parent Plus double consolidation loophole The double consolidation loophole for Parent Plus borrowers will expire July 1, 2025. They have specifically said they will honor those already made and those fully made by that date. After that date, even double consolidated PP loans will only be eligible for ICR, graduated repayment and extended repayment. They can still qualify for PSLF,but will only have ICR as an option to do so. (I'm particularly salty about this and their long argument as to the why is full of nonsense IMO.)
If you don’t know that is or want to learn more about it while it’s still available see the consolidation page on the TISLA site, towards the bottom.
Automatic IDR Enrollment and Recertification Borrowers will be able to give blanket permission to access tax information via future IDR applications and promissory notes – but not until after July of next year or later.. Otherwise they will have to provide it annually themselves. Borrowers will be able to initiate their intent to use an IDR plan and provide that tax info access in their promissory notes in the future. When that happens you’ll go right into the lowest IDR plan as soon as you enter repayment with no action needed by you. Borrowers that initiate their intent for an IDR plan on their promissory note or future IDR application, and provide the blanket permission to access their tax info will automatically be entered into an IDR and recertified annually until they indicate otherwise. They will also auto-enroll borrowers into IDR plans if they are 75 days past due, or some defaulters. But only if the IDR plan would be lower than their current plan. This will mean no need to recertify annually but you’ll need to watch your bills for payment changes - especially those on ACH. You will be able to withdraw this permission at any time.
TIMING Borrowers already on repaye will automatically have their payments recalculated under the new formula – no reapplication needed. For those not enrolled in repaye already – hypothetically you can just apply for repaye now – and you’ll be given the save benefits after July 30th per the below. Normally regulations require a certain time period between final rule posting and implementation. But in some cases the ED can exercise its authority for early implementation. In this case they are doing so for the following pieces, which will be implemented July 30, 2023: • Only using the borrowers income in the repaye/save calculation when the borrowers files taxes separately. • Increasing the income exemption to 225 percent of the applicable poverty guideline in the REPAYE plan • Not charging accrued interest to the borrower after the borrower’s payment on REPAYE is applied • The Secretary also designates the changes to the definition of family size for Direct Loan borrowers in IBR, ICR, PAYE, and REPAYE in § 685.209(a) to exclude the spouse when a borrower is married and files a separate tax return for early implementation on July 30, 2023. Part of this rule also allows for certain deferments to count towards the forgiveness counts prior to July 1, 2024. They are doing early implementation for this as well but don't have a date when they will start counting those. They will publish another notice when that is up and running. Changes to consolidation IDR eligibility will be effective for consolidation loans disbursed on or after July 1, 2025. This is unusual. Usually such changes are effective for applications submitted on or after an effective date. This means anyone looking to take advantage of the Parent Plus double consolidation loophole will essentially need to ensure all steps are completed by that July 1, 2025 date. The rest of the provisions are effective July 1, 2024
DELINQUENT AND DEFAULTED BORROWERS Effective next year, borrowers who are at least 75 days past due on their loans and who have given the ED permission to access their tax information will be automatically enrolled in the lowest IDR plan they are eligible for as long as it’s not a higher payment than their existing payment. This is for future payments and periods only. Borrowers in default but not yet under wage garnishment or tax offset or litigation will be automatically given the IBR plan assuming they have previously given the ed permission to access their tax information. If it turns out they would have had a zero dollar payment at the moment of default they will be taken out of default automatically.
Defaulted borrowers placed on the IBR plan will get credit towards forgiveness when they make payments under that plan while in default – even involuntary payments such as wage garnishment. This includes payments that are equal to or exceed the ten year standard amount. These payments will also count towards loan rehabilitation assuming they are at least $5
For borrowers entering loan rehab not on IBR, rehab payments will be calculated as 10% of discretionary income – but no less than $5. Defaulted parent Plus
The Biden Administration would have to show in aggregate that the government would collect more monies from borrowers under these plans that would be enticed to partipate.
Although the government may forgive amounts owed for some borrowers after 20 years, others will choose to participate that might not have otherwise. In this case, the government is not 'forgiving' any debt.
The debt collection industry frequently makes these offers to settle your debt for 50% versus just asking you to pay the full amount which they have zero chance of getting. Although they 'forgive' 50% for some, other are enticed to participate that would not have payed anything. The debt collection company actually increases the amount it collects from borrowers.
