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Happy Wednesday readers, hope everyone had a nice long weekend. Coming at you on Wednesday this week due to the holiday.

On today’s newsletter:

• Why the Supreme Court’s Student Loan decision may have helped you

• Detailing the Dept. of Ed’s new SAVE repayment plan

• Looking ahead at the state of student loans

I won’t lie — If you had under $10k in student loans (which yes, I understand is a lot of folks, and the vast majority of people have under $20k too), the Supreme Court did not do you a solid this past Friday. Thankfully, $10k is not an astronomical amount of coin, relative to a lot of other kinds of debts out there. However, I’ll discuss onward how the new repayment plan that was announced may help you.

But I’m not click-baiting either. If you’re a large student debt holder (way way over $20k), what the Supreme Court did helped you. Read on to see what I mean. If President Biden got his way with Student Debt Forgiveness, that would have been it. Likely no new repayment plan would have been established since Joe would have had his way.

Alright, so yes, there’s some caveats on if it benefits you or not. Undeniably there are certain groups of folks who are better off. Let’s detail how and why that is.

Why it’s good:

• Some states (like Wisconsin) would have taxed the forgiveness as regular income. Even if you saw no material benefit from the forgiveness.

  • Get this — let’s say you were already on an IDR plan (Income Driven Repayment). Your income isn’t that high, and your monthly payment is not even covering the accruing interest on your high amount of loans. You don’t mind though because after 20 years, it’s forgiven.

  • You see where this is going? $10k or even $20k doesn’t help you out here. The interest keeps accruing regardless, and your loan is forgiven after that time anyways. You end up paying taxes for the hell of it.

• High Amount Borrowers

  • The above bullet points apply here.

• New Repayment Plan!

  • That’s right, if the $10k would have gone through, we wouldn’t be here.

• Parent PLUS Borrowers

  • Statistically speaking, borrowers of Parent PLUS loans have higher balances and come from disadvantaged backgrounds. The new repayment plan detailed below can provide more realized benefits than forgiveness could. Source: What’s the Average Parent PLUS Loan Debt? - NerdWallet

• PSLF borrowers (Public Service Loan Forgiveness)

  • Going off of the first bullet point, the benefits apply to you if you are in PSLF repayment.

• Married Borrowers

  • Currently, there are two IDR methods that are best suited for married people PAYE and REPAYE. The new plan will not count spouse’s income in repayment or in family size when filed separately. Keep in mind whether or not you live in a community property state, but this is good news.

• Lower Income Borrowers

  • The new repayment plan changes rules pertaining to interest accumulation and the discretionary income threshold, helping lower income borrowers. Your payment may even be $0.

• Retired Borrowers

  • If you’re retired or want to, and hold a Parent PLUS loan for your kid, this is going to benefit you more than the one-time forgiveness, provided the balance is high enough.

Detailing the new SAVE Plan:

Here’s a link to the specific details. Main points are below.

Doubling the Discretionary Income Threshold - Lower payments!

Married Borrowers

Interest Accumulation - Nice!

Loan Balances Under $12K - Kinda like PSLF

The Dept of Education says that people will be able to enroll in the plan later this summer. I don’t know how repayment can get any better than this. Is it immune to lawsuits? Probably not. However, the Dept of Education has the authority to create new repayment plans. As with everything, the specifics are open to interpretation in court and have a lot of dependencies.

Not a borrower? No problem. Share this with someone who will benefit!

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Stay Frosty Out There,

Andrew

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