(Ep. 241) Introducing the SAVE Plan: The Biggest Change to Student Loans Ever

Hello and welcome to another episode of the Student Loan Planner Podcast. I'm your host, Travis Wornsby, and we've got a ton for you in the show today. We're going to talk about the save plan. Saving on a valuable education. This is the plan that is supposed to be the one plan to rule them all, but it's not. And it is a replacement, completely, of the repay plan. So, the old repay plan can't come to the phone right now because it's dead. Yes, this is going to be a fun show. We're going to talk a lot about all the implications of the brand new 427 pages of IDR plan rules. Sorry, I have been hopped on caffeine trying to get through all of this so we can translate all of this for you. So, if I sound a little too excited, apologies in advance. One thing that I want to call out is, you probably have your own personal questions about this, right? I would love for you to just leave a quick message, a voice message, about what is on your mind about these new regulations and this new save plan. To do that, remember you can go to studentloanplanner.com slash voicemail. And to remind you that you can do this, I wanted to start today's show off with just a general question before we dive into the details of what the save plan means for you. So, first, a question from a listener we'll call Kelsey. Hi, I have a question about the most effective strategy for managing our debt. Both my husband and myself have student loans. I am eligible for public service loan forgiveness. He is not. We currently have enough funds to pay off almost half of his loans when the student loan pause ends. We have been paying our mortgage every other week to pay down our mortgage faster and build up home equity. But now with the student loan pause ending, we're wondering if it would be more financially appropriate to shift those resources to paying off his student loans faster rather than paying down our mortgage. Thanks so much for thinking through my question. So, great question. So, you know, a lot of financial decision making is getting moved around because student loans are starting again, right? You're going from 0% interest to suddenly 5, 6, 7, 8% interest rates. And there's a lot of stuff you were doing about your finances as a borrower that probably needs to be re-evaluated. So, the way I would think about this first is, you know, this couple thinks that the spouse's loans need to get paid down. That might not be true. And the reason for that is the new save plan, which we'll talk more about, allows undergrad-only borrowers to pay 5% of your income. So, let me just give you a quick back-of-the-napkin example as to what I mean for this. So, just to really try to simplify this, let's say that this is a family of four that called in, right? And let's say, again, just trying to simplify things, and if, you know, the math feels weird, just press that rewind button, right? So, let's say you've got two individuals making $60,000 each. They're married, 120K combined income, 60K income each, and they've got two kids each. So, let's say that one person's going for the PSLF plan. We'll say that maybe she's the one with the, Kelsey, the one with the bigger debt. But what about her spouse? So, if they're each making 60K, one's going for PSLF, one's not, right? So, the one who's not, let's just say he's got a typical undergrad-sized debt of $30,000. So, you might say, okay, well, obviously he needs to pay that back. But, in fact, if you file taxes married filing separately under these new SAVE rules, you have to then look at what 225% of the poverty line deduction is. So, they're changing the way they do things for married filing separately with these new IDR regulations. So, what they do is they're going to count your family size minus one if you file taxes separately. It used to be that you could kind of double dip. You could both count a family size of whatever your family size is. But that was back when the poverty line deduction was 150%. So, they realized, obviously, that everybody in the world would file separately for taxes if you could do the same family size and 225% of the poverty line. That would be enormously generous. So, what they did is they said, let's have a formula of family size minus one. In other words, you're excluding your spouse for the family size, right? So, if they both file separately, Kelsey and her husband, then each of them would get to do a 225% of the poverty line deduction of their family size minus one. So, if their family size is four, then each of them would have a family size deduction based off of a family size of three. And so, for a family size of three, 225% of the poverty line works out to about 50, I think off the top of my head, it's about $55,000. So, if each of them makes 60K, right, you could contribute 10% to a pre-tax 401K, for example. And if you do that, your AGI is like 54,000 each, right? See where I'm going with this? And the 225% of the poverty line deduction is now 55,000, where it used to be much lower. And now, her husband's income-based repayment amount under save is actually zero. And it's not just zero with having to deal with all of the usual growing interest stuff. Under this new plan, the save plan, all of the interest that your required payment doesn't cover is paid for by the government and it doesn't hang out somewhere where it's going to get tacked on eventually. So, in other words, not only is her husband's payment $0 a month, but also the interest is fully subsidized because his required payment is zero, so all of the interest in this case is left over and 100% of that interest is subsidized. So now, you tack on the fact that the COVID forbearance, everybody gets three and a half years of credit towards their 20 or 25 years if you're not doing PSLF and you get that credit for PSLF too if you happen to be working at a qualifying employer during that time. So, if he has undergrad-only debt, and let's say that he's never been paying at all until the pandemic, so then he's only got 16.5 years left to go, right? Now, let's factor in that individuals that are calling into this podcast about their loans maybe have more likely than not been paying for a few years before COVID, let's just say. And I'm really saying this because I guess most people that, in this hypothetical example I came up with, I don't know if this is true of the listener, but if they have two kids, a house, I guess they did mention having a mortgage, so presumably, let's say they're in their 30s, right? Probably, or 40s, right? So, probably they've been paying on loans for several years before the pandemic and under the terms of the IDR waiver, you get credit for that too. Let's not forget that, right? So now, let's just say hypothetically that you've got even more credit because of that. So maybe you only have 10 to 15 years left to go if you have undergrad-only debt. So that's like, oh my gosh, and there's some new rules too with consolidations, which is kind of weird, where the 5% of your income rule, that's going to get phased in in July of 2024, but for undergrad-only loans. For consolidation loans, it sounds like, we have to confirm this, it sounds like they're going to treat it as a 10% calculation of your income on consolidated loans until proven otherwise. So that's also going to be interesting. So in other words, you might have to get a manual review to get your payment on a consolidation loan to reflect the amount of undergrad loans that you had that you put into it. So a lot of complexity here, goodness sakes, right? So this couple, if you think about it, let's say the husband has like 10 to 15 years left to go on the save plan. So what do you want to do on this, right? You could pay off your loans, but let's be real, if you're getting 0% interest, you're better off taking that money and continuing to pour it into your mortgage. Or you're better off taking that money and continuing to pour it into a money market mutual fund that's getting 5% interest right now. And that's really staggering. It's really shocking that kind of, just it totally turns, I'm going to channel my inner Hamilton backup singer and say it's the world turned upside down, right? It's the world of payments turned upside down, where it used to be that only one in five undergrad borrowers would be able to get some kind of forgiveness on their loans. Now we think it's at least three in five. So you've gone from a case where most undergrad borrowers, the vast majority of undergrad borrowers, should try to just go for, you know, payoff. That's the best thing for most people to do. So then cue the 185 ways to pay down your student loans with side hustling, door dash, and picking up shifts, tending bar, or something like that, you know, articles, right? So that was like the typical way people did things. And then employers would respond to that by saying, okay, what does my typical borrower look like? Somebody needs to pay down their loans. Okay, let's do a, let's show that we're caring and do a thousand a year loan benefit, you know, instead of giving people a thousand a year in wages so we don't have to give it to everybody, right? So that was the world that we lived in prior to COVID. Now what the Biden administration is trying to do, and it's actually quite interesting, is essentially what they're arguing is the reason why these new IDR plan rules were necessary, particularly for undergrad borrowers, is because grad borrowers, and I'm using their words or paraphrasing their words, have a sweet deal right now where you can borrow as much as you want and effectively pay back, you know, a controllable percent of your income where the amount of your debt is not all that connected to what your payment is. Your payment is based on your income, but you could have way more debt than what your payment looks like, right? So what they wanted to do is instead of saying, hey, that's too generous, let's rein that in, which is probably what the Republican Party would say, their play was to say, you know, hey, let's take undergrad borrowers and raise them up to the level of generosity of grad school and professional borrowers. So in other words, the problem is not that grad borrowers are paying too much, or sorry, too little, but that undergrad borrowers don't also get to pay too little. And so, you know, basically that's what the SAVE plan, that's kind of what the genesis is about, is saying how do we get all these undergrad borrowers onto income-based and push them onto this plan too so that we can get everybody on income-based? And I think that if you, you know, this is a lot of what's going on here, it's just setting up for a ferocious political fight at some point, because I think, you know, if you are more of a progressive, you believe that college is too expensive, that it should be free, you're at least heavily subsidized, and that this is just a step in that, you know, step along the road to free public college, right? You can't do free public college through executive action, but you can make IDR extremely generous, and you might say, why didn't they go further, right? Like, why didn't they do, you know, extremely generous IDR? What's this business with not including grad borrowers, which is not totally true, by the way, and we'll talk about why that's the case in a second, but, you know, you might say, why did they sort of mealy-mouth it, or something like that? Basically, the reason is they're trying to survive the Supreme Court. So, if you read the Heroes Act shutdown case, the case that blocked suit on cancellation, the Chief Justice Roberts says that they invoked the Major Questions Doctrine on a case that was one-tenth the cost of cancellation. Well, the CBO says this is a $230 billion action, right? And I'm not sure, but I think that that was pre, or that was assuming cancellation happened. I'm not sure about that, actually. I have to double-check that. But the $150 billion price tag the Biden administration's put out there, I mean, that's their price tag, and I believe that's assuming cancellation does happen, so it'll be revised upwards with it not happening. But, you know, so this case, I mean, this IDR rule is very much subject to a legal challenge at the Supreme Court, and the Supreme Court basically showed that they will just jump to the merits if they can come up with any kind of, you know, plaintiff that has even a remotely sensible argument for standing, they'll jump to the merits. You know, it's interesting, some of the footnotes of that case, you know, Roberts sort of was talking about the dissent, and the dissent, they basically said, hey, wait a second, you know, if you do, if you say that, you know, this is standing and you can shut this rule down, then maybe the, you know, maybe the student loan pause was illegal, too. And Roberts deflected and just said, we're only deciding on this case, right? But based off of the way he read that, like, people that oppose this are definitely gonna try to sue over it, there's no question. I'm not gonna go into the details as to how I think they would sue, because I don't wanna be responsible for giving anybody any ideas that they're not already gonna figure out themselves, right? So I will just say that expect a lot of lawsuits about this, about this new IDR plan. I mostly think it's a done deal, but never say never in this business, right? So there is a chance that we're gonna see some lawsuits. The question is, are we gonna see lawsuits that are serious, brought by well-funded, you know, Republican groups that are really coming from the state level, right? Elected officials really, you know, directing this versus like big conservative donor groups. If it's just big conservative taxpayer type of groups, then I think you're gonna see this stand, just because it's like, you know, there was a shutdown of another student loan case that was unanimous against the people suing, saying essentially no standing, go away, right? So I wanna talk a lot more about SAVE, because I just used that, you know, listener example just to kind of introduce it a little bit. So why are they calling it SAVE? S-A-V-E stands for Saving on a Valuable Education, right? So why did they rebrand it? I think they felt like it would be confusing to call it repay, which is what the old thing was. But they also are concerned about creating a brand new plan, because they are trying to have the talking point of reducing complexity. Much like the Republican sort of 2017 Trump tax cuts, that claimed that they were simplifying taxes when they actually made it more complicated and made it more ways of saving people money, if you were working with the CPA. This student loan regulations, it does the exact same thing. It claims things are simpler, but it's totally not more simple at all. So they're replacing the repay plan. So if you're already on the repay plan, you will get the SAVE plan automatically. Luckily, this plan, the way they came out with it, is the same thing that we modeled in January 2023 for clients when they announced their first version. So there's really not any significant changes from that first version they released for the new repay plan, which is now supposed to be just called the SAVE plan. So if you're on repay, again, you will get the SAVE plan enacted for you automatically. It's not gonna be something that you're going to have to actively do. Now, the provisions of the SAVE plan, some of them have already gone into effect. And I say already gone into effect, the only reason that they can say that, Department of Ed, is because they don't have anybody that are making payments yet. So essentially, they're ordering their servicers to do a mad scramble to implement the calculations for this in time for payment restart in October 1st, which they have no money for. So that's gonna be interesting. So I will highlight the details of this plan in a second, just for people who don't remember what we talked about with the new repay plan. But I wanna cover just a couple other things that Biden is doing in response to losing on cancellation. So Biden is issuing a rule saying that you can have up to 12 months after payment start when they will not refer you to collections agencies, they will not report you not making payments to credit bureaus, and so there will be essentially no consequences of not making a payment. Now, you will not get forgiveness credit. You will not get zero interest. And this interest will continue to be accruing. So this is just a normal forbearance, really. And they're just basically calling it like a special on-ramp forbearance. So presumably, this would be in addition to the three years of forbearance that you would normally get on a direct loan. And there could be strategic applications of this that we're gonna be working through with our clients over the coming months, where if your payment is expected to go way down on the repay plan, so for example, that case from earlier, the hypothetical husband with 30K of undergrad loans, his payment on the existing repay plan might be sky high, but his payment on the new repay plan or the save plan might be very, very low, if not nothing. So there might be a case to be made for a strategic forbearance on his loans and to make maximum use of this payment on-ramp where he could wait to apply for this new plan where his payments will be much lower and he'd be getting credit for forgiveness and not making unnecessary payments on loans that are gonna be forgiven. So that's actually quite interesting, I think, different planning opportunities there. Also, Biden's gonna try cancellation again. So I think that this is a doomed-to-fail effort and maybe even intended-to-fail effort. I say intended-to-fail because they could have just done cancellation immediately, not subject to any negotiated rulemaking. Now, that would have certainly gotten a emergency injunction that would have been blocked. And so what is the theory behind this? I've talked to a lot of people about why is Biden trying to cancel loans through the Higher Education Act using a negotiated rulemaking thing, which is basically like you have a bunch of experts in a room, you have them spitball different ideas, and you try to come to a consensus. And if you can't come to a consensus, Department of Education just puts out whatever it wants and then has to have public comment, and then those regulations are issued in the official register, and then people can sue over it. So this is gonna take several months, and so what's the point of this, right? You're in July of 2024. The way this probably will work is they will probably try to drop some sort of Higher Education Act cancellation around, like, the holidays. There will be some sort of emergency injunction. Mojito will sue again, or I should say Missouri, really, on behalf of Mojito will sue again because this court has already found that Mojito has standing, and Missouri can sue on behalf of Mojito due to the economic injury of losing customers from cancellation. So 100% you'll have standing with Missouri suing on behalf of Mojito with this new cancellation program. So then you'll go to the merits, right? So right away you're going to the merits with a court that says that, you know, that you absolutely cannot rewrite the statute from the ground up, right? That's what their words were. So with the Higher Education Act, you know, what are the merits of the secretary being able to just waive, you know, a ton of debt? So I think that really you could see one of a couple different things happening here. If Biden wants to go straight up campaign document, then he could cancel the same amount of debt, you know, hundreds of billions of dollars, knowing that it'll get blocked. Doesn't care because that case would probably get brought up and argued, you know, sometime in the, like, probably early winter of 2024. And then it's probably going to get released around, like, June of 2024, would be that, you know, that decision saying that there's no cancellation. That's right in time for the presidential campaign season of 2024, right? So that's, like, part of the reason I think they're doing this. And then if he wanted to legitimately just try to get as much relief to borrowers as possible, which, actually, this SAVE plan shows a very good example of that, because I'll get into it more in a second, but the reason that they did not go bigger on the SAVE plan is I think that they thought that this version of SAVE was the absolute maximum they could go without having the Supreme Court strike it down. So that's what I'm thinking on that, in that regard. So this cancellation thing, I think that what they could do is say, well, we're going to cancel 10,000 of debt, but it's only going to be for people who have been in long-term default, right? It's only going to be for people who have been in default more than X number of years or people who have X amount of income below the poverty line, right? I think that you're going to see some sort of very extreme targeting they're going to try to do. And the Supreme Court has already declined to interfere with a bunch of for-profit schools suing to block cancellation by the Department of Ed in the Sweet V. Cardona case. So the Supreme Court actually has already shown that they're willing to not block something. And really, I think what this comes down to is what gets covered in the Wall Street Journal and what doesn't? I'm just being real honest here. Because they talk about the major questions doctrine, an issue has to be of significant political and economic significance. So apparently canceling $6 billion of loans that people took out is not economically or politically significant, is what you can read in between the lines. But canceling $430 billion is economically and politically significant. So is the IDR plan significant? That's a big test. Is this cancellation significant? I guess if I was trying to protect, if I was Biden trying to protect my new IDR plan, I'd probably go out as big as I possibly could with Higher Education Act and try to get voters mad at the Supreme Court again because it worked pretty well, most analysts say, in 2022 when they were essentially running against the Supreme Court for striking down Roe v. Wade. So a lot of stuff going on. Expect, I think, this is really going to be I think mostly political theater with this cancellation effort that they're doing next. So I would really feel comfortable telling somebody who absolutely knew they were supposed to pay back their loans when interest restarts again, I would not feel for a moment hesitant about telling somebody to refinance the whole thing. Some people might say, whoa, leave 10K behind. I don't think you need to do that with this new Higher Education Act cancellation that's doomed from the start. So now I will say, though, that a lot of people that used to need to refinance shouldn't be because of this new save plan. So I'll definitely talk more about that. I actually think if you're a grad or professional borrower, in most cases, not all, of course, but in most cases, if you have debt that's smaller than what you're earning every year, then that debt needs to get paid back because you don't get the 5% of income benefit. You're not going to really get much in the way of interest subsidies. So if you have to pay back the debt and it's at 7% interest, the only thing you're giving up by refinancing is some sort of future thing that comes out, like another payment and interest pause. I think, though, that that's extremely unlikely for a variety of reasons. I don't think that you, hopefully, knock on wood, will see another pandemic like COVID for many years. And in terms of if there's just simply a recession, I also think that based off of the case that just happened with the Supreme Court, if that recession happens in the next 10 years, the court's probably still going to be a 5-4 or 6-3 conservative majority court, and this decision was 6-3. I think you would see another lawsuit, essentially some sort of lawsuit from a private lender or something like that, like a SoFi lawsuit or something that would essentially say that that's not an actual national emergency that's covered in the HEROES Act. So I really don't think that we'll see another payment and interest pause the way we did with COVID. So let's talk about the SAVE plan. Let's talk about what's in the 427 pages of regulations for income-driven repayment and other rule changes that they are doing. So let's talk about what is that SAVE plan just basically. What is it basically, right? SAVE plan is going to pay 100% of all the interest that your required IDR payment doesn't cover. So this is a change from what it used to be with the repay plan where it covered 50% of all your interest that the required payment doesn't cover. Now this has a huge interaction to married filing separately, if you're a married borrower. So recall that pay in IBR allows married filing separately, but repay did not historically. Well, they're changing that so that repay does allow it. And that interacts with the interest subsidy in a huge way. So keep in mind that the interest subsidy is based off of how much interest is over and above what you have to pay on your IDR payment. But if you do married filing separately, to get your payment much lower, that also means that your interest subsidy could go higher. So a lot of married borrowers, I think, are going to be totally unaware of this. And also we talk about the breadwinner loophole in community property states, right? Where if you have a spouse earning a lot less, you can reduce your payment that way. So there's going to be a whole bunch of tricks that are going to be in place that groups like ours are going to take advantage of based off of what the rules say, where you can strategically do things with your taxes or based off of the state you live in, or with your retirement savings, or with your AGI, where you can reduce your taxable income, which is going to reduce your IDR payment, and that's going to save you a bunch of money in interest. So that's exciting. And I will say that the period for forgiveness is actually the same as the existing repay plan, with a couple of big exceptions. Well, it's the same as the repay plan, 20 years for undergrads, 25 years for grads. If you have less than 12,000 of debt, then it's 10 years. Now, that's kind of a random provision, but it will save some people a significant amount of money. The pay and the new IBR plan stay at 20 years, though. So if you're a grad professional borrower, you might say, okay, definitely, save plan, best plan for me, right? Not so fast. So it's really the save plan and all the interest subsidies that you have in 25 years till forgiveness, or the pay slash new IBR plan in 20 years for forgiveness, or paying it off. So there's still the three kind of different paths. If you're doing like a private practice or private sector type of job and you're not PSLF eligible, then you might say, okay, I'm a PSLF borrower, right? So save plan, definitely need to do the save plan if I'm a PSLF borrower, right? And the answer there is also no. So if you're a PSLF borrower, and I didn't mean to make PSLF borrowers sound like bro-y by the way or something like that, I don't know. I'm just having some fun here today, folks. So the save plan for PSLF borrowers, in most cases, yes, it'll save PSLF borrowers more money than other plans, but I'll give an example why it wouldn't. So let's say you have 100,000 of student loans and you are a, I'm gonna do an extreme example, you're a brain surgeon, and you're like, oh my gosh, there's no way that I'm going to get loan forgiveness, right? Not so fast. The save plan says that you can get that subsidy on your interest while you're in training, and you can do that for up to five years and still switch plans. So you could do the save plan for five years. Now brain surgeons have a longer training period than five years, but you could switch from save to let's say, let's say pay or new IBR. It would really, in this case, you'd have to switch to new IBR if you're hoping for a payment cap and you're waiting a long time because pay is getting phased out. I'll talk about that in a second. Pay for new borrowers, I mean, getting phased out. But your 100K of loans, let's say you're making a gazillion dollars a year, let's say you're making 800,000 a year, and you're at a, let's say you're at a, I don't know, a not-for-profit hospital, right? So the thing is, is the pay plan and new IBR, they have a payment cap. So if you have 100K of loans, you never pay more than $1,000 a month. Whereas with the save plan, there is no payment cap. So you would pay five or six, 7,000 a month and not be able to get any forgiveness. So if you are going to work at a not-for-profit hospital just anyway, then you, on your 100K of loans, you might actually be able to only pay back maybe like 20 or 30,000 of your 100K of loans. So even for PSLF borrowers, it's not so simple as to say sign up for the save plan. Now I want to talk about the prohibition on switching plans. So they're saying that July 2024 and onwards, if you've been on the save plan slash repay, right? It's remember that repay is being replaced by save. So if you're on repay, just think save, the save plan. So if you've been on the save plan for at least five years of payments, then you will not be able to switch into other plans. Now the, you know, let's talk about that a little bit. So this really depends on when you borrowed as to how this impacts you. I will say that if you borrowed your first loan before 2007, the only options you have are IBR, old IBR, right? Old IBR and the save plan. So the only time you would not want to switch to the save plan would be if you needed a payment cap on IBR, like for example, say you were finishing out PSLF. That would be the only case you wouldn't switch. If you borrowed for the first time between 2007 and 2014, the pay plan is the only option you have that's 20 years till forgiveness if you're a grad borrower because you cannot access new IBR because you're not a new borrower as of July 2014, right? So you would have to make the decision literally by July of 2024 as to whether or not you should switch onto the pay as you earn repayment plan before that payment plan gets blocked for new enrollments. Now the past 2014 new borrowers, if you borrowed your first loan after July 2014, then you're considered a new borrower for the purposes of income-based repayment. And that is basically the exact same thing as the pay as you earn plan. So it's 20 years till forgiveness, 10% of income, 150% of the poverty line. And that is what they're saying you're blocked from signing up for if you've been on the save plan for at least five years. So you really can see some examples where some people do the save plan and maybe have long fellowship trainings, for example, and then can't switch off of it and then can't get PSLF because they have a payment that's too high because it's not capped. And let's say their debt is more modest rather than really large, right? So there's gonna be a ton of planning for non-PSLF borrowers, PSLF borrowers, undergrads, grads. There's also a bunch of stuff for Parent PLUS borrowers. So this is really unfortunate that they put this in the rules, but they did, so I have to talk about it. The double consolidation loophole for Parent PLUS borrowers, first of all, the good news is it's legitimized because they say it specifically in the regs that people can use it. But they also say that they are shutting it down for anyone that's trying to access it after 2025 July. So what does that mean? So there's like a 60 to 90 day window after a Parent PLUS loan is dispersed. After that point, you can consolidate it. So you have to really have some time in between the consolidations, right, just to make sure everything goes through right. You send your paperwork for your first one, then you do the second one. You might need at least a couple months there to make that happen. So realistically, if you are somebody that has kids in school right now, this is really, I'm gonna be honest, it's a gut punch. Because if you have kids in school, let's say you have kids in school past 2025, if you're borrowing for spring semester 2025 and beyond, then your only option on those new loans is going to be the ICR plan. So there's going to be a ton of planning to happen that needs to happen between now and then. First of all, to get anybody in the world out there with Parent PLUS loans onto the double consolidation to get access to this new save plan. That's what's amazing, is you can literally get access to the save plan if you do the double consolidation on Parent PLUS loans before July 2025. That's a, I can't even explain how big of a savings that is. So to give an example, the 60K borrower married family kind of thing I was modeling, I'm not gonna put it into our calculator, but it's probably an ICR payment of like four or 500 a month. And then it's a payment of close to zero a month on the save plan with infrasubsidies. So this is absolutely massive. Anybody in the world with Parent PLUS loans needs to get in touch with us as soon as possible to just talk through the game plan, whether you have more loans to borrow, whether you don't, like you gotta get this done before July 2025. And this is just pretty shocking that they're essentially saying that you can't access this past that date. And I think that the way they're doing the regulations is going to cause some problems for future administrations that don't agree with this current one ideologically, that it's going to put some of their reforms at big risk, frankly. So we'll talk about that in a second. Before I do, I wanna talk about the parts of the save plan that are phased in immediately and the ones that are not gonna be phased in immediately. So the ones that are phased in immediately are the ones that they could easily do. So 225% of the poverty line, that's easy, right? You just change 1.5 to 2.25 for your models, right? So they're phasing that in immediately. The interest subsidy part, well, that's pretty easy. You just undo the 50% subsidy and just type in 100% subsidy into your service or platforms. And so that's getting phased in immediately. So you'll be able to access both of those things right away. The married filing separately part. So if you filed your 2022 taxes married filing separately, then you will be able to utilize that calculation for the new save plan automatically as well. So that's gonna be something that you will be able to access right away. The thing you won't be able to access right away is the 5% or the weighted average payment calculation for the save plan. And that's rolling out in July, 2024. So we have a calculator on the website that you can use to model this. So I would just encourage you to check that out. If you wanna get the full details for your situation, you can see that on our site for free. So we talked about some of the different characteristics of people that are affected by this. The other big thing I wanted to talk about is the PSLF rules and the deferment forbearance rules have also been changed. So I was thinking that residency forbearance would count for PSLF, but now it looks like it's not gonna count for PSLF. So that makes it a little bit simpler for people that are in training that you'll wanna get on an income-based plan if you wanna get PSLF credit. So that's one thing. Another thing is like certain types of deferment like cancer deferment, economic hardship deferment, unemployment deferment, active duty deployment deferment, those kind of things are going to be counted for loan forgiveness and some of the other sort of stuff like mandatory administrative forbearance. I think that counts. I have to double check that. But anything that's discretionary that's not connected to a very specific type of deferment or forbearance, it's not gonna count. So that's interesting. We'll have to work through our way through those rules, but there's no immediate impacts of that. The immediate impacts are all with deferments and forbearances due to the IDR waiver. So that's the big opportunity there for people that need to consolidate to get those credits applied. And the PSLF rules changed. So specifically they're saying that anyone who's a contractor or who works at a for-profit group but that's actually working at a not-for-profit group, specifically in California and Texas, can now get PSLF. So who does this really impact? Kaiser Permanente is one of the biggest health systems in California. That's an example of a group that used to not get PSLF that now all gets PSLF. Huge change. Affects tens of thousands of people. Massive opportunity. If anyone's listening to this that works at Kaiser or knows someone that works at Kaiser, please reach out to us, help at studentloanplanner.com. We would love to try to see if we couldn't do a virtual presentation for somebody at Kaiser or a group at Kaiser because my guess is people are really not gonna understand that this opportunity is happening. There's also a little bit of a deadline to it because the California Hospital Association, or I think it might be the California Medical Association, one of the two, claims that this is also gonna be retroactive going back 10 years, which is interesting. That could very well be true but really most of this stuff needs to happen before the end of the year because of all the waivers and flexibilities around the IDR waiver. I think it's gonna be quite difficult to get credit applied, especially on unconsolidated loans, the loans that are in the wrong kind of status and everything need to get consolidated and applied for under the terms of the PSLF waiver and IDR waiver that have been out there for a while, which you can still do thanks to the IDR waiver and there's really a closing window on that. We would love to try to get in front of Kaiser or somebody there that knows somebody that we could spread that word out as much as we possibly can because that could mean life-changing forgiveness for a lot of people. We have, in rare cases, I think we've had at least one example of somebody who was successfully able to get refinanced loans reinstated that they refinanced during the COVID pause. I think that's pretty rare and it sometimes doesn't work but it's also worth a try if you have already refinanced your loans and you did that anytime between March 2020 and today. That's something to also give it a shot because there's no reason not to give it a try if you have $300,000, $400,000 at stake. So that's the, insert breath here, that's the big things happening with all these new regulations. I will say, let me talk about some of my concerns about them. This is the first time ever that any administration has tried to place restrictions on benefits available to borrowers that are available in statute. I think this really is going to come back to potentially bite these reforms in the butt and the reason I say that is, think about it like this. Okay, let's put a different administration's hat on and think about the way the Biden administration is applying these reforms to try to deliver maximum relief to borrowers, right? You're saying in these rules that you can replace an existing plan with a new plan. That's never been done before. They're replacing repay with this save plan. Now their argument is, well, that's because it benefits everyone more than the old plan. Well, it doesn't. There's a technicality where the proportional payments loophole where somebody could be filing separately and on pay and another spouse could be doing repay filing joint, that was the double debt loophole. That got killed off by this reform, but those borrowers are actually worse off with this change. And so you can't say that borrowers will be, you can only make replacements of IDR plans if borrowers are better off. You can't say that because there are a small group of borrowers that are worse off by this change. So a Republican administration might argue that, hey, this is a precedent, and they might even ignore that technicality. They might just say, well, this is a precedent that you can change. Any administration can replace a plan if they want to. Now that would certainly get lawsuits, but again, remember the Supreme Court composition. I mean, we have to live in the reality of what the current constraints of the system are. Now, a couple other thoughts. They're saying that if you are on the repay plan slash save plan for five years after 2024, then you cannot switch onto the IVR plan. The IVR plan is listed in the law. The IVR is in the statute, and they're putting a prohibition on somebody signing up for it. Now, sure, that maybe makes, you might argue, well, that makes sense that they restricted it that way, because blah, blah, blah. But think about it like this. What if a future administration puts prohibitions on anyone signing up for this IVR plan, and they make the save plan the unsafe plan, or the, you know, I mean, I'm being a little facetious here, but the, or the pay your loans plan, or something like that. You know what I mean? And then they restrict people from signing up to a cheaper plan. Again, that'd be subject to lawsuits, but that's something that is potentially possible here. Now, I'll say the good news is Republicans like winning elections as much as Democrats, and so there's a reason that you saw broad support for continuing the student loan pause. Even among establishment Republicans, it was zero pushback, like in 2021 kind of timeframe, and it only became more significant when there was a new president, and they were going into their second midterm election since they had enacted it, right? So I think that the reality is as a future administration is not going to want to really make borrowers angry, then they might certainly make changes. I'm not saying I don't think they might try to do that, but they have a lot of options here, and so it really kind of, you really have to ask yourself, what does the future look like with these new regs? Because, you know, the Republican senators put forward their version of IDR, which is essentially just repeating the old version of repay, and saying, this is what we should force on everybody. And the House Republicans essentially said, no, we should create a system where people have to pay back the principal plus interest that they owe and no more. So for some people, that'd result in cancellation right away, because they've paid multiples of principal and interest over many years already. And then some people, they would be in debt for decades, because there was no time-based limitation on the forgiveness. So those plans were reforms put forward by these two different groups. The Biden administration is just saying, well, we're just going to use our administrative power, because we don't need you. And that's true, unless somebody sues over this IDR plan and blocks it, and you're back to the drawing board with the current system that we have. So, you know, I will say that, if you think about the IDR waiver and the PSLF waiver, those could have been sued over. There was lots of places with, or lots of entities with potential standing that could have sued to block that. Nobody did. Why? I think partly it's because the Biden administration was super smart at how they projected the cost of this to make it look like that wasn't very expensive. And it was only until a deep expert on the student loan world and research world, I won't share their name, because I don't have permission necessarily to share their name, but it was only after they published their really interesting research that people realized, wow, this IDR waiver, PSLF waiver is really expensive. But by that point, it was too late. And so I guess what I'm saying is, if it's $400 billion, it gets a lawsuit. If it's $100 billion, probably not. If it's in between, we don't really know what happens. Where's the threshold where it's worth a giant lawsuit to try to get attention, to try to stand up for what you believe your principles are, or to try to use it for whatever purposes you want to use it for. I think, I don't know, I think a lot of times people ask, is it worth it? Well, yeah, cancellation, easy to understand, big price tag. You sue to block it, maybe that gets you some future opportunities to move up the ladder in this electoral system we have. But yeah, if you sue to block Sweet V. Cardona, it's $6 billion, nobody cares, doesn't get you anything. So that's one of the reasons nobody sues. So you gotta think about the incentives going on as to why certain things, people try to block it and other things, people don't block it. But you know, we will see. I think that this probably goes into effect. There are, like I said, a ton of opportunities to save money. I am somebody that, I don't know, I don't think I'm that good at sales necessarily because I'm just kind of an Excel spreadsheet nerd. But I guess in some ways that helps me being salesy right now in the sense that I just know that I'm very confident that we will save you multiples of our student loan consult costs in probably 90 plus percent of cases. With all these rules, it's the most complicated period that I've ever been doing student loan planning since 2016. And you know, we've got a very experienced team. They know the rules backwards and forwards. They've all done tons of consults. And at a minimum, we're either going to get you some clarity as to what all this means for you. If you need to make any changes, we'll just verify, you know, yeah, there's no changes you need to make. You might say, is that worth a few hundred dollars? Well, the reason I think it is is because in the more likely scenario where there are changes that you need to make, the potential savings are in the thousands or tens of thousands or even hundreds of thousands of dollars level. So a lot of times, people assume, I've got to pay this 30K back or I've got to pay this 100K back. And then if you knew the rules in great detail, you would find out that suddenly, no, you don't. And if you take that, let's just take a very low amount of debt, 30,000, if you take that 30,000 that you would have paid off and you put it in a money market mutual fund for a year and get zero interest with some loopholes that we show you, like the ones I mentioned in the earlier part of today's podcast, there's $1,500 of interest income and oh, by the way, our cost is a few hundred bucks. So that's just one example of how you pay for it. It pays for itself and it gets you that expert team on your team to make sure that you're not missing out on anything. So if you know that you need to book a consult, either a new one for new clients or a follow-up consult for existing clients, you can do that at studentloanplanner.com slash book. So studentloanplanner.com slash book. And then the other thing I'd say is, again, we love trying to make this show useful and fun for you. And so maybe there's a question on your mind that you'd like to ask and have it featured on the show. Maybe it's about the expanded PSLF rules. Maybe it's on how this new save plan works. Maybe it's on IDR waiver, loose ends, whatever it is, we'd love to hear it. So to do that, just go to studentloanplanner.com slash voicemail and just like press the record button and record a 30 second to minute question about something in your life. So again, if you do need that custom plan though, studentloanplanner.com slash book. I'm Travis with Student Loan Planner. Thank you for listening to today's show.