SAVE, PAYE, ICR Doomed? | Student Loan Forgiveness Update

Student loan forgiveness had a massive twist today as the whole save thing went to court for the first time. And not only did it not provide any real solutions, which we didn't think it was going to, but there were also some big shockers in there that every single one of you that are on an income journey repayment plan need to know about. So with that being said, let's jump into the update. ICR was the first income driven repayment plan ever created. And it is extremely important to understand, even though most of you have never even heard of it. Okay. Not only that, but there wasn't that many borrowers on it. What happened was that Congress put together the law or statutes, and all they said was that the repayment plan for these income driven repayment plans were to be no more than 25 years. They didn't say anything about what would happen after 25 years, meaning they never specified if there was going to be loan forgiveness in them. They just said that they would become due in 25 years. So what the judge ruled today, or what he was saying today, is that ICR would be forgiven in 25 years, but at the end of 25 years, you'd have to repay the entire balance. There would be no forgiveness. Now, the reason why this is important is because pay as you earn, revised pay as you earn, and save were all developed underneath the same rules that ICR was created. Therefore, what the judge is saying from interpretation... Now, let me make a little side note. I'm not a lawyer on this stuff. This is just what a number of lawyers that I highly respect have said, interpreting what the judge was talking about. That on pay as you earn, that your loan's term period might be 20 years, but there's no forgiveness at the end of it. You have to pay the full amount. If that's the case, that is a massive change for a lot of people. Now, I'm just reading some notes in here because I'm going to... You know what? I'm going to talk about more on this in a minute because that's going to be major questions across the board for everybody. But first, I want to talk about IBR, income-based repayment. It is explicitly written by Congress that IBR will be forgiven at the end of the term. So IBR doesn't have any of these questions that we are going through right now, meaning it is going to be forgiven. That is set in stone, set by Congress. That's not even up for debate. Hey, guys, real quick. If you're still watching this video, it's because you're getting value from it. We enjoy making these videos, and when you subscribe to the channel, it helps us grow, which allows us to keep making more and more videos. So if you get a chance, please hit the subscribe button. With that being said, let's jump back into the video. However, I want to go back to pay-as-you-earn because a lot of you are still on pay-as-you-earn, and a lot of you are on save. But the big concern about today is pay-as-you-earn, okay? Question number one that I saw is, if I'm on pay-as-you-earn, does that mean that this time doesn't count for each month that I'm making payments? As of right now, the Department of Education is saying, yes, it still counts. Now, honestly, I'm just not sure at this point if that's actually going to stick up or not. However, pay-as-you-earn, that monthly payment on pay-as-you-earn is the same payment as new IBR. And so I don't see them saying, no, it didn't count, because it would have been the same payment had you been on new IBR, which was passed by Congress anyways. So my hunch is that if you're making payments on pay-as-you-earn, for the time being, keep going with that, because I have a feeling they are going to count towards forgiveness, even if you have to switch to the IBR plan in the future. Question number two, should I switch to IBR if I'm on pay-as-you-earn? I would probably still say it's a little bit too early to tell, unless you're like a year or two away from forgiveness. But it's probably still too early to tell. Just like I put out last week in the update last week, one of the things is, if you're just sick of all this stuff too, then you might as well just switch to IBR, because we know that that's going to be there. You don't have any question marks on that. Question number three, my master promissory note says that they are forgiven under pay-as-you-earn repay and save. Yeah, you are absolutely correct. A lot of the master promissory notes say that. However, that master promissory agreement is between you and the Department of Education. This specific ruling, and I'm reading this strictly from my notes, this ruling is all about if what they did followed the statute or not. Basically, if it was legal or not. If it's that it's illegal, it doesn't really matter. That's all this court case is saying. Now, what does that mean? I could see a major lawsuit happening in the future between people in the Department of Education and the government, because it was like, well, wait, the promissory note says that. That's a whole different legal issue. Now, the other thing that I could potentially see happening, and I don't know how this would happen from a legal standpoint, but I heard a few lawyers bring this up, that in their opinion, anything that this court releases would only affect new borrowers going forward, not the previous borrowers. Basically, we'd be grandfathered in making you not liable or hurt because the government lied to you. How that would play out, I'm not sure, but I want to go on to the question number four. What happens if I'm on PSLF? PSLF was passed by Congress. You are perfectly fine. However, if you're on Pays You Earn and you're on PSLF, and if you're getting close to forgiveness, then I would probably switch to IBR to make sure that you're getting this thing forgiven. Again, just to summarize that, the major thing that I didn't really see it necessarily come in and save might not have any forgiveness associated to it. That's a major change. Again, do you switch to IBR or not? It's still the same question that we had a week ago. If you're getting close to forgiveness, I would probably switch over to IBR. If not, I would just keep going with what is right now because we're going to be having more news over the next, I would say three to six months, which is why the Biden administration extended the save forbearance for another six months because they knew going into this week, it was going to be getting extended. A lot of you, big question mark still up in the air. I know there's still a lot of questions in this, but that's why you need to have a good financial management system in place. If you guys need help, you know where to find us, fitbucks.com. In the meantime, here's some planning videos to help you on your financial journey.