Student Loan Update: Heading in the Right Direction

The good news on the last Student Loan Update was that we were put into forbearance instead of being expected to make a $2K a month payment. That was in February.

Since then, we were approved for the SAVE plan and our payment has gone down to $528 a month. We’ve made 3 payments since then and $528 is definitely more manageable.

There’s still work to be done on the Student Loan front though. The biggest issue from here is how long we will be paying before forgiveness. My husband had started paying back his loans after he graduated in 2007. He probably started payments in 2008. He went back to school for a PhD and graduated in 2014, then started payments in 2015.

In 2023, then, we had 7 years of payments down. (I’m not sure why it wasn’t 8 since 2015 to 2023 is 8 years, but maybe we hadn’t reached 8 full years). Since the required amount of time for payments for graduate school is 25 years and since we thought payments started over upon graduation, we thought were down to 18 years of payments. This is incredibly daunting since we’d be in our mid 60’s by then. We’d basically have been paying back student loans for most if not all of our working years.

When we were first put on the SAVE plan, I think our Aidvantage account showed our payments started over and we had 25 years of payments left. A few months later, Aidvantage showed we had 12 years left. Since we thought it was 18 years, moving to 12 is great.

When we talked to our Student Loan Planner, Jason, he said we should have 7 years left total. There’s something called a one-time adjustment where either the Dept. of Ed or loan servicers will look at the history of the loan and calculate the amount of time left for payment.

I’ve received an email from Aidvantage that said our one-time adjustment didn’t happen yet, so it could be that we are down to 7 years.  Jason has been right on everything else so far, so I am hoping this is the case. The adjustments are supposed to happen by Sept. 1.  

Having the loans forgiven after 7 more years would be great. That’d be 11 years sooner than the 18 we thought we had and we’d be able to put more money into retirement, house updates and/or vacations if all goes well. We may just be able to keep up with inflation and health care if things continue as they are in the US recently.  

Overall, things are heading in the right direction. There are a few more things I am doing, though, that can support us financially.

First, I’ve asked Jason if he had any thoughts on why Aidvantage may have said we have 12 years left instead of 7. I know the adjustment should happen by the end of the summer, but I thought I’d see if he had insight. If Aidvantage doesn’t do the one-time adjustment correctly, I can email them. (Since we had a consult with Jason, we are able to email him questions for a year. Since I am so curious about our student loan situation, Jason has been my best friend since our consult in October.)

The second thing I am working on is figuring out if I should ask the Dept. of Ed. to use our 2023 taxes instead of what they used to figure out our current payment, which is based on our 2022 taxes.

Our AGI in 2022 was: 107,800

Our AGI in 2023 was: 91,300

Since our AGI is $16K less in 2023 than it was in 2022, our payment should be lower—I think by about $100 since Jason let us know that every 10K my husband’s income decreased, we’d save about $65. I’ve emailed Jason just to make sure there aren’t any financial reasons we shouldn’t ask for our payment to be recalculated.

Some things I keep in mind, though, are that if Trump is elected president, the SAVE plan could be repealed and whatever replaced it could be worse for us financially. And when the loans are forgiven, we are currently slotted to pay taxes on that amount. Since we have nearly 300K in loans, this tax bomb would be a big chunk of change. Anyone who has had their loans forgiven these last few years (up until 2025, I believe) will not have to pay taxes on amounts forgiven. Of course, I’d like to see that extended. If it’s extended through 2031, it’d benefit us. Even if Biden becomes president for the next 4 years (2025-2029), though, we’d likely have a republican president after that and things could change again. Change takes time, though, so we might slip through. That’s quite a ways away though.  

I hope things keep moving in a positive direction for us (and others of course), and I really hope the government is working on some better plans for future students.

Peace Out (and In),

Julie

PS. Photos were taken on a hike through Allerton Park, Monticello IL.