Student Loans Just Changed… Here’s How to Pay Them Off Faster (This Year!)

Transcript:

On this episode of the Personal Finance Podcast, student loans just change. Here's how to pay them off faster.

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance podcast, we're gonna be talking about your student loans. If you guys have any questions. Make sure you join the Master Money Newsletter by going to master money.co/newsletter, and you can respond to any of those newsletters that come out every single week.

And I read every single one of them. And don't forget to follow us on Spotify, apple Podcast, YouTube, or whatever podcast player you love listening to this podcast on. And if you wanna hop out the show, consider leaving a five star rating and review on Apple Podcast, Spotify or your favorite podcast player cannot.

Thank you guys enough for leaving those five star ratings and reviews. Now, first off, before we dive into this episode, I just want you to know that down below the show notes, we created a free guy that you could follow along on this episode. In addition to all the steps that we're gonna be talking about in this episode on how to pay off your Student Loans faster, we're gonna be talking about negotiation tax.

Ticks and ways that you can negotiate your rates. I give you scripts in that free guide that's gonna show you exactly how to negotiate some of these different things that we are talking through in addition to emails and templates and all these different things. And so if you have student loans, if you're looking to pay off your student loans faster, or just navigate the craziness of student loans right now, I want you to make sure that you check out that free guide down below.

Now as we start to dive into this episode, one big thing that a lot of people are struggling with right now is student loans and the default rates are at their highest because a lot of things are shifting within this landscape where some people thought they were gonna get forgiveness and some people thought that they were gonna have a bailout, and then all of the sudden student loans came crashing back down, and now we have these payments that we have to deal with.

So the number one thing I want you to focus on is the thing that you can control. Meaning that you can focus on what you have to pay currently, and we're gonna focus on how we need to. Think about paying these loans down, and specifically if you have a high interest rate loan, we wanna get rid of those loans as fast as we possibly can.

Now, I know for some people out there that income is tight, meaning you're living paycheck to paycheck. It is a difficult world to live in right now when it comes to your financial situation. And so I'm gonna try to help you navigate through that in this episode so that we can go through this entire process.

But first, before we dive into the tactics that we're gonna talk about in this episode, I want to dive into some of the changes that are happening right now so that you are informed. So. As to what may be happening to your student loan as well. And so we're gonna dive into those changes first. Then we're gonna get into how to pay off your student loans faster and some tactics and things that you can use to pay off those loans faster this year.

And then lastly, we will have those scripts available for you. And I'm gonna go through a bunch of rapid fire questions on student loans at the end. So this is an action packed episodes. Without further ado, let's get into it. Alright, so first let's talk about some of the changes that are happening to your student loans.

First is there is an elimination of save pay, IBR and ICR for new borrowers. That is going to be eliminated July 1st, 2026. So what does this mean? These were all income driven repayment plans, where your monthly payments were going to be based on a percentage of your income with forgiveness after 2225 years.

So the way that these were structured is that they looked at your income and said, okay, these payments are gonna be based on a percentage of that income in this given year, and then after 25 years, if you truly can't pay these back, they will be forgiven. So these were governmental loans that were in place based on that.

So starting July 1st, 2026, none of these plans will be available. For new borrowers. And so the government is consolidating options into just two, which is the standard plan. And the standard plan is gonna have fixed monthly payments over 10 to 25 years. And then the repayment assistant plan, which is one to 10% of discretionary income with forgiveness after 30 years.

And so the previous plan was a little better, and so anyone borrowing new federal student loans on or after July 1st, 2026, this is going to impact you. And so if you already have loans, you're safe, nothing is gonna change. You can keep your current plan, they're gonna honor your current plan. But if you're starting school soon, try to take out the loans before July 1st, 2026, to preserve access to IDR plans like IVR now.

Just so you know at the top of the show, I just wanna say this upfront, if you can avoid student loans, I would've tried to avoid them at all costs. Don't take out student loans if you don't need them, and it is really important to make sure that you do that. If you go through life without having student loans, you are going to have a much easier time financially than someone who has to take out student loans.

But the reality is privilege is very real. And some people are privileged to have folks who can help them through college, and some people are not so privileged and they have to take out student loans in order to make sure. That they can pay for college. Now, the second big change that is happening right now is interest resumes on Save plans starting August 1st, 2025.

So this episode is coming out after August 1st, 2025. And so this is something where Save was the most generous repayment plan available, and it eliminated unpaid interest for low income borrowers. So any unpaid interest, it was eliminated. But as of August 1st, interest starts to accrue again. Meaning even if your payments are low, your balance might grow again.

So anyone currently enrolled in the save plan, uh, you need to go and log into your servicer account and check out how much interest is building, and if your balance is growing, consider either making extra payments every single month or switching to IBR if your income has gone up. And then comparing cost projections under save and wrap.

Those are three of the things that I would do first, and then you could figure out what to do next. Number three is there is gonna be a forced transition to the repayment assistant plan where a lot of people call this wrap by July 1st, 2028, so everyone's still on save or older Income re driven payment plans will be automatically enrolled in WRAP by July 1st, 2028.

Now wrap is a new plan that requires payments between 1% to 10% of your income and has a $10 a month minimum and forgives your balance after 30 years. Of payments. Now, anyone who's using save pay, IBR or ICR, you're gonna be moved over to wrap at July 1st, 2028. But if your income is low enough, uh, there is a $10 per month minimum.

Now, don't wait to be auto-enrolled. You can lose forgiveness, progress or end up with higher payments. And so if you're pursuing PSLF or IBR or another strategy, it's time to switch now and then if wrap is your best long-term option, review how those payments are calculated in plan accordingly. Number four.

Is wage garnishment and collections restart. Uh, in August, 2025. So during COVID collections on defaulted loans were paused, and as of August, 2025, those protections are gone. So if you're in default, 270 plus days behind the government can either garnish your wages up to 15%, they can seize your tax refund, or they can report you to credit agencies.

And so borrowers who are in default on these loans, they need to make sure that they enroll in something like the Fresh Start Program, which gives you a one-time chance to get. Out of default and restart some of those payments and then contact your loan servicer via student eight.gov to apply and do this before your wages or refunds are impacted.

You need us to do this beforehand. Don't do it after and wait too long. Do it now. This is one of those things that you can focus on, that you can control. You need to do this now, otherwise they're gonna start taking. Cash outta your paycheck, and you don't want that to start to happen. Number five is new borrowing caps for grad and professional students.

So borrowing limits have been tightened to curb runaway student debts and grad students are $20,500 a year or a hundred thousand dollars total, and professional students are 50,000 a year or $200,000 total with a lifetime cap of $257,000. I like this. I think this is helpful for a lot of people. If you are spending way too much on student loans, it is really hard to recover.

I know a lot of doctors, I know a lot of lawyers who are like, Ooh, I'm gonna be able to make enough money to recoup all this and get by. And a lot of times what they realize is life happens once you start to make money. It is not as easy as you think to pay off debt when it is this big. And if you have a $200,000 debt for example, it is very important to make sure that you are paying that down quickly.

'cause it is very, very difficult to pay it off depending on what that interest rate is. Now this affects anyone who is starting graduate or professional programs after July 1st, 2025. And it is something that I think is honestly positive for a lot of people now, number six is employer paid student loan help is now permanent.

So this is a great thing. So employers can now contribute up to $5,250 per year to your student loans and won't pay income taxes on it. And so employers also get a tax break. So this is a win-win situation. So any borrower, especially those at larger or progressive companies, should make sure that they.

Actually have this available and in our guide that our free PDF guide that we're talking about, I'm gonna give you an email template to send over to your company to see if they will offer this and they'll kind of be able to explain the benefits of this so that they can get that tax break. In addition, you can possibly get $5,250 per year going towards your student loans.

And so that is a great, great benefit. And so what you should do though is ask your HR department, and we'll talk more about this in the episode. If they don't offer it, request it. See if you can request this as part of your package. This is a great thing to throw in during your salary negotiations, is to see if they will offer this, because this is something where if you're not gonna get the salary you want, well this could give you a $5,000 boost somewhere else that can give them a tax deduction.

In addition, help you with your student loan payments. That is a great, great win-win situation. I love utilizing this as a negotiation tool, uh, and it is something I think most people need to be asking for, and I would ask for it frequently. I wouldn't just ask for it one time if they say no. Don't take no for an answer.

Keep on asking in different ways. Alright, number seven is easier access to ibr. So in the past you could only enrolled in income-based requirement if you qualified as having financial hardship. That requirement is now gone. So the financial hardship requirement is now gone, meaning anyone with eligible loans can choose.

IBR. Now, borrowers who were previously blocked from IBR due to high income can now actually apply for this. And so what I would do is I would use some of those student loan calculators to compare IBR versus wrap versus the standard payment. And if you're seeking long-term forgiveness, but don't qualify for P-S-L-F-I-B-R may be your best.

Option. And so these are the seven changes that we're gonna be talking about now. So for most of you out there, these are gonna impact your student loans. And so you need to understand how these work and making sure that you have this in place is gonna be very, very important in choosing the best option for you.

So next what we're gonna get into is how to pay off your student loans faster in 2025. Alright, so we're gonna talk about how to crush your student loans in 2025. Student loans can be crippling to a lot of people and their financial situation. I know how difficult it can be. When my wife and I first got married, that was the first debt that we attacked.

She had about $20,000 in student loans. And so immediately the first thing I did was I got after those student loans and made sure that we paid those off and eventually we were able to pay those off in just over a year, making very modest. Salaries. I was making about 30 something thousand dollars per year at the time, and she was making probably just a little bit more than me at that time, right around 45, $50,000 per year.

And so because we had these entry level jobs, we attacked these student loans and we didn't have those payments anymore. Got rid of those student loans, and then from there, decided. We wanna start to build wealth, and that's where our big journey started was getting rid of those student loans. So I want you to know that no matter what your income is, you can do this.

And I'm gonna teach you how to figure out a plan to pay off your student loans. Faster. And that is our entire goal is to just increase the speed at which we pay off our student loans. Now, if you have a really low income and you look at some of these repayment plans and you think it's gonna be forgiven over the course of 30 years, and you just wanna make those minimum payments short term, then you can do that.

But as your income rises, those repayment plans are going to shift and you may end up paying off the balance anyways. And so talking through this, we're gonna start to look through how to get rid of our student loans. Now, anybody who is thinking about going to college or going. Back to college again. The number one thing that you can do is avoid student loans altogether, is avoiding them is the number one thing because debt is crippling to our financial situation, especially high interest debt, and the rates right now are not very good.

And so making sure that we avoid some of this crippling debt is step one because it is very difficult to get outta these situations. I know people in their fifties and sixties. Who are still paying off their student loans, and so there's gonna be a lot more of those folks in the future because student loans really started to accelerate with the millennial generation, my generation, that's when they really started to accelerate.

And so let's talk through how to get these paid off faster, get it off your plate so that we can start to work towards some of the big impact things like growing our wealth so we can achieve financial freedom. This is part of those steps to achieving financial freedom because once you get these extra dollars.

Back. You could take those extra dollars, put them towards your freedom fund, invest them so they can grow over time, so you don't have to work that job you hate any more. And so that is what we wanna do, is make sure that we are working towards this. So step one is I want you to really have a good understanding of your student loan.

The biggest thing to note is that when you go to war with someone, you wanna understand your enemy inside and out. It's a very important to understand that and your a student loan right now in this situation, that is your enemy. And so I want you to know what you owe and I, I want you to know who you owe it to.

You have no idea how many people I talk to who have no idea who they owe their money to with their student loans before anything else. I want you to get clear. So log into student aid.gov and I want you to go see your loan types. I want you to know your interest rates, and I want you to know your balances.

You need to know those three numbers. That is very important. And so again, go to student aid.gov, see your loan type, your interest rate, and your balances. And then I want you to make note of who your loan servicer is. Maybe it's Navient or MOA or NEL Nets. There's a bunch of 'em out there. Uh, just understand who that is.

And then I want you to do one thing. If you have multiple student loans, maybe you have some federal student loans, but you also have. Private student loans. I want you to separate the two out and figure out what we're gonna do, because the repayment strategies are gonna differ between those two types of student loans.

So say for example, you got a student loan with SoFi in this, you also have some of the federal student loans. Well, those are gonna be something where we are going to think through this. Now, if your loans are in default, I want you to make sure you pay attention to step 11 as we go through this, because that is gonna be a place that is going to help you the most.

Now, step two. Is, I want you to choose the right repayment plan. This is the time where you can change the structure of your repayment plan. And I don't want you to default into the wrong one. And so this is gonna be very important for us to think through. So your repayment plan determines how fast that you can pay off this debt or how long it's going to linger for some of you in these situations.

And so if your goal is speed, you can choose the standard. 10 year repayment plan because this is the fast track and this has fixed payments. The payments are gonna be the same every single month. You know what to expect, and this is going to fast track you to get those paid off in 10 years or even less if you make extra payments, which we'll talk about in a second.

If you need flexibility, but you still want progress, which flexibility is everything when it comes to paying off debt. I really like flexibility and having the ability to be flexible. Then you could consider things like IBR or the repayment assistant program or wrap, uh, based on your income. So you could do this based on your income.

If you're worried about your income and your situation. If you're in an entry level job or you don't make a lot of money currently and you're just struggling to pay your bills as it is, then that might be the way to go, uh, for you and if you're still on save. Review your plan. Now, it's less generous with interest starting again, and so making sure you review your plan if you're on save is gonna be really important.

Now, there's something@studentaid.gov called the Loan Simulator, and it compares monthly payments and total costs across plan. I think that's a really great tool for you all to use when you're comparing these plans so that you can look at this based on your financial situation. And so looking at that loan simulator@studenteight.gov is really, really helpful.

Now, step three. Is I want you to automate your payments and I want you to automate these payments biweekly if you can. So instead of paying once a month, I want you to split your payment into two and pay every two weeks. What's gonna happen here? Now, here's why this works. There are 52 weeks in a given year, and so because there's 52 weeks, paying every two weeks means that you are making 26 half payments.

Well, if you're making 26 half payments, that means you're making 13 full payments every single year. So you have one extra payment that you're making just by changing this to biweekly payments. Now that extra payment is actually going to go to reducing your principle. So it is a principle only payment and it's gonna reduce the interest over that timeframe and it's gonna shorten your loan terms.

So lemme give you an example of this. Let's say for example, you have a $30,000 loan. And your interest rate is 6.5%, and so your standard monthly payment is $341, and in that situation, over the course of 10 years, you'd pay about $11,000. In interest over 10 years. I know it probably makes your stomach turn.

It is one of the worst things in the world. This is why debt is so crippling. That's at a six point a half percent interest rate, but if you make biweekly payments, you're still gonna pay $340 per month overall. But you're gonna make those 13 full payments each year instead of 12. And you'll pay the loan off 10 to 11 months faster.

So it'll be about nine years, and you'll save about $1,200 on interest. So that's, if you just do this one simple thing, you'll save yourself over 10% in interest alone. And the cool thing is it's automatic. It's low effort and accelerates payoff by almost a year. And so that is what we're trying to do is accelerate that payoff.

Now you can pay even more than the minimum, and this is the next thing I'm gonna talk about. Every dollar that goes towards principal not interest is really, really powerful. So if you add 25 to $200 per month that. Extra to your current payments, you're gonna be able to pay that off even faster. See, these things are gonna start to compound.

So let's say you make the extra payments, but in addition to the extra payments you got a little bit of extra cash that you can put towards making sure you get this paid down even faster. If that's the case, you can add a little more, 25 bucks, 50 bucks. I don't care. 200 400. If you're a high earner, you should be adding a lot more to this if it is high interest.

And so because of that, you can tell your servicer to apply the extra payments to your high interest loan, not just the next due date. And this is gonna help you when you are looking at paying this off faster. Now step five is, you have two options here. You have something called the debt snowball. And the debt avalanche.

The debt avalanche is gonna make sure that you can pay off your loans slightly faster, but the debt snowball. If you have a lot of student loan debt and if you have a couple different carriers, then the debt snowball may be the better option for most people psychologically, because you get those wins.

Now, the difference between the two is very simple. The debt snowball, you pay off the lowest balance first. Then you move on to the second lowest balance. Then you move on to the third lowest balance until you reach to that largest balance. And all those payments from the previous balances are then going towards the largest balance.

Now, when you're paying off the lowest balance first, you're making minimum payments on all the rest of your debt. And so because you're making minimum payments on all the rest of your debt, you're at least making sure that those are up to date, and then you're attacking that lowest balance. Now, once that lowest balance is paid off, then all the money that you were sending towards that lowest balance goes towards the second lowest balance, and then you're making minimum payments on the rest of your debt.

And this helps you get those wins and keeps people motivated. Now, studies have shown that the debt snowball, even though mathematically it may not be the best option. Is psychologically the best option for most people and they stick with it way longer. And so this is something where if you are someone who needs the motivation to stick with it longer, the debt snowball is probably for you.

Now, if you're someone out there who loves the hard numbers, you love the math, and you just want to get there as fast as you possibly can, the debt avalanche or what we used to call the debt wrecking ball, because like Miley Cyrus, you come in on that debt like a wrecking ball. That is probably the optimal one for you.

And so between these two, just thinking through which one kind of fits your personality is gonna be really, really important. You could start with the debt avalanche if you want. And if you're like, ah, this is tough. I just wanna get some of these small loans outta the way so I can take this extra money and move it towards the bigger loans, then that may be the better option for you on the debt snowball side.

So avalanche, snowball, both of them are really good. And honestly the end result is not gonna be much different depending on how much debt you have. Uh, I really like the debt snowball for the psychology effect. But the debt avalanche is mathematically the faster way to pay this off. Step six. If you get raises or you get financial windfalls, I want you to utilize those windfalls to help you take money and put it directly towards your loan.

So this is tax refunds. Don't just go blow that tax refund on a vacation in abi. Take half of it, put it towards your student loans to get those paid down. Second is bonuses. If you get a bonus, take half. Put it towards your student loan debt, get that paid down faster. Third is pay increases. When you get an increase, increase the amount that you were paying down on that student loan to get it paid off faster.

Most people take the increase commingles in their checking. They don't make differences when it comes to building wealth. Instead, if your number one goal is to pay off that loan, then taking those increase and paying that down. Also side hustles. So I've talked about this a number of different times when it comes to student loan debt.

I don't like side hustles like Uber Eats or DoorDash, but those are great side hustles. If you've got a big goal that you're trying to accomplish really quickly. So if you have student loan debt and you're trying to get on extra a hundred bucks at 200 bucks a day doing DoorDash or Uber Eats, it may be honestly an awesome option for you while you are in the student loan phase.

Get that thing paid down first, and then after that, then we can worry about everything else. And so ensuring that we get that debt paid down is gonna be a really, really powerful thing, uh, for most people. And then birthday or holiday or gifts, those types of things. I mean, for most of you, I'm not gonna make you take your birthday money or your holiday money and just throw it at your student loans.

But if you are really motivated and want to do that, not a bad idea. And so again, when it comes to windfalls, we talk about the 50 50 rule. I want you to take 50% and enjoy your life. The other 50%. I want you to put it towards wealth building activities and paying down debt is going to increase your net worth.

Hence, it is a wealth building activity. And so really, really important stuff if you want to make sure you get this paid down fast and you are sick of student loans, taking away some of your earning power. Next, we're gonna jump into step seven. Alright, so step seven is to take advantage of employer loan contributions.

Now this is really, really powerful and I want everybody to really push their HR department to try to get this approved because this can be something that could be huge for you and your benefit in terms of making sure that you get some of this stuff paid down faster. So again, at the top of the show we talked about this, but as of 2025, employers can contribute up to $5,250 per year tax free towards your student loans.

Now, why this matters is that you get free money towards your loans, and so this is just like getting a 401k match. You're getting a 100% rate of return on your money, meaning they're. Giving you this money, your employer gets a tax deduction. So that's the benefit to them, is they get this tax deduction and it's a win-win and cost them less than a salary raise.

It's gonna cost them less than a salary raise for you. And so you can even ask for this instead of a raise in some scenarios. But again, if you don't have. A massive amount of student loans. It's not always the best option, but if they won't give you a raise asking for this, if they don't already offer it can be a great, great perk.

And so we have a script to send your HR representative, uh, so that you can send this over to them in a chat version. And we also have it in an email version in the free guide, uh, that is down below in the show notes. And so making sure you look at that, uh, we have that available for you so that you can make that request.

You could tell them what the benefits are and you can adjust that any which way that you think fits your voice. But we have those two scripts down below to help you with that. Now, step eight is to consider refinancing, but only if it's makes sense and it's smart. So if your interest rate is above 6%, refinancing may lower your interest rate in those lower interest rate environments.

So if you're listening to this and you're in a lower interest rate environment, this could help you dramatically. But there are some reasons to refinance and there's some reasons not to refinance. Only refinance if you have a stable income and good credit. Okay, so usually 700 or above so that you can actually get a good, decent enough interest rate.

Uh, secondly, do not refinance if you're pursuing forgiveness. So if you want to have forgiveness over the course of 30 years, not worth it to refinance, and if you don't need federal protections like deferment or income-based options, then you can. Consider refinancing, but if you want the options to have, uh, deferring your student loans or income repayment options, then that's probably not something you wanna refinance to a private loan.

Instead, you wanna make sure that you are looking at some of those other loans. But if you are refinancing, we have a script in that guide that's gonna show you, Hey, here's the questions that you ask the refinancing to figure out what exactly they can offer you. And so it's gonna be things like, what rate can you offer based on my credit and income?

Are there any origination fees or prepayment penalties? Can I select between fixed and variable rates and what happens if I lose my job or have a financial hardship? So in that script or that email that you can send over to the refinancing company, we have a little email there that to help you through that process as we do this.

Now, step nine is to dedicate. A side hustle to student loan payments. So even a small side gig, if you are willing to take on side gigs, putting 100% of those side gigs towards your student loans to pay them all faster can be really, really powerful. So let's say for example, you wanna do gig work, so you wanna do Uber Eats or DoorDash, and so you start to do that and you make a hundred dollars every time you do it for a half a day.

Let's say for example, you wanna do it one week in a month, well that's 400 extra dollars per month that you can put directly towards your student loans. That's really powerful. Or maybe you wanna walk dogs and every dog you walk is 30 bucks. Uh, and you put that towards your student loans every single time that you go and walk a dog because you're really motivated.

That is another really powerful thing that you can do. So if you think about it this way. And you think about those side hustles as something that is reducing your debt liability, it can help you stay motivated to keep doing that over time. And I think it's really powerful. You're never gonna regret being like, gee, I wish I didn't pay down that debt so fast.

Especially high interest debt. You're never gonna say that. And so overall. Really, really important stuff. Now, let's talk about the interest rate for a second here on your student loans. Because if you have a really low interest rate on your student loans and you just got lucky, and we're in a really low interest rate environment, it may not be something that I'm gonna pay off super fast.

It may be something, and instead, I'd rather invest those dollars. So if you have a two and a half, if. 3%, 4% rate on your student loans. Some of those, I'm most likely gonna invest those dollars first before actually paying them down faster. So I just wanna make sure we note that, uh, as we're talking through some of this stuff now, if you hate debt and you still have a low interest rate and you wanna get rid of that debt.

More power to you. There is nothing wrong with that whatsoever. I like it. I like that the idea. Um, but for some of you, if you're more investment minded and you wanna make sure you are achieving financial freedom as fast as you possibly can, that's the trade off that you have to think through. Now, step 10 is to track your progress and making sure you track your total debt balance.

Countdown months remaining, and celebrate every $5,000 milestone is gonna be very important for most people. But just tracking how much you are actually paying down in debt is really, really important. Now step 11, if you're in default right now, I want you to use Fresh Start now. So you need to act immediately and stop wage garnishment or tax refund seizure.

And so enroll in the Fresh Start program@studentaid.gov. Uh, that is the place you need to go, and it removes the default from your credit and get you back into good standing. Getting that default removed is very, very important. You need that off your credit score so that you can have a decent credit score.

In addition. Number two is it means that they're not gonna seize part of your tax return or wage garnishment, and instead you get a fresh start. This is a limited time opportunity, so again, make sure you are doing it right now. Step 12, if you're unsure about forgiveness and then you're torn and you're saying, should I pay it off or should I wait for forgiveness?

Here's a smart hybrid strategy that I would say that you could consider is continue on your forgiveness plan, so IBR or PSLF, or uh, repayment assistant program or wrap. Continue on that plan. Then save extra debt payments in a high yield savings account, meaning. If you think that some way you're gonna get this forgiven, you can take the extra payments, put it in a high yield savings account, which is barely gonna keep up with inflation, but at least you have it somewhere.

And then if forgiveness comes, keep the cash. If it doesn't, you can make a lump sum payoff. I would say right now, how likely is it for you to be able to get forgiveness? Currently it is less likely than it used to be. I'll just put it that way. Um, but in the future, if you think or hope or just want to.

Make sure before you do anything that you can actually get this forgiven, or you wanna make sure that you actually didn't just waste your money and you think it could get forgiven for some whatever reason, maybe you got inside Intel or whatever else. Uh, this gives you the optionality without locking the money into your loan.

And again, you can make that bigger payment later on in the line. Just know you're gonna be paying more in interest over the timeframe. And then again, we give you a bunch of different scripts for folks who want to chat with their lender when it comes to private loans for federal loans. For private lenders when it comes to refinancing and for financial hardships, all in that free guide.

And so just knowing your current score and income and debt income ratio before you enter into some of these conversations can be really, really important. So next we're gonna dive into the top student loan questions and we got a bunch of them. I'm gonna do this in a rapid fire fashion because we have a number of them here that I wanna go through.

So I got a bunch of student loan questions. I'm gonna try to do this in one to two sentence answers to make it easier for everybody. Alright, the first one is, what is the best repayment plan right now? So if you wanna pay off your loans fast, the standard 10 year plan is best. If you need income-based repayments or forgiveness, IBR or wrap may be the best depending on your current situation.

Number two, is the save plan still available? Yes, but the benefits have ended as of August 1st, 2025, and all saved borrowers, we automatically move to wrap in 2028 like we talked about at the top of the show. Should I wait for forgiveness or just pay off my loans? If you're in a program like PSLF. Or if you're in IBR forgiveness, stick with it.

But otherwise, it's most likely smarter to just focus paying off your loans. And for most people, I like to focus on the things I can control and I can control if I get this paid off. So for most of you, I would say yes, go ahead and pay off your loans. You should never, ever wait for the government to do anything When it comes to your finances, that includes everything from paying off your debt to social security.

You always wanna make sure that you are focusing on what you. Can control. Is student loan forgiveness still possible this year? Yes it is, but mostly it's limited to PSLF and IBR forgiveness after 20 to 30 years and targeted programs. But blanket forgiveness for people like people had talked about a couple of years ago is unlikely, and that's probably not gonna ever happen.

Uh, just so you know. And so it's better to just focus on paying 'em off. Can I lower my interest rate on student loans? If you have private loans, refinancing can lower your rate. For federal loans, autopay gives you 0.25% discount, but deeper reductions aren't typically available, so uh, making sure you have your student loans set up on autopay can help you reduce the amount that you're paying in interest and.

Trying to negotiate your rate on the private side is something you could definitely do. Uh, you just need the data to make sure that you understand how to negotiate that. Can I refinance my student loans in 2025? Yes, but only refinance if you're not using federal forgiveness programs. Uh, we just talked about some of those and the considerations to have, what is the difference between IBR and raf.

So IBR capture payments at 10% of discretionary income with forgiveness in 22, 25 years while wrap ranges from one to 10% with a 30 year forgiveness timeline and a $10 minimum. So that's the difference between the two. How do I qualify for public student loan forgiveness? So if you work full-time for a nonprofit or government and you make 120 qualifying payments under an eligible plan like IBR, and submit your employee certification yearly, that's how you can qualify for the public service loan forgiveness program.

Now, what happens if I default on student loans? Well, we talked about this a little bit, but the government can garnish your wages. They can take your tax refund and they can ruin your credit. And so it is not something you ever, ever wanna do as defaults on loans. It will ruin your financial situation short term and probably long term if you do not get that act together.

Can I deduct student loans interest on my taxes? Yes, you can deduct up to $2,500 per year in student loan interest if your income is under the IRS limits. And so what is the IRS limits currently? So at the time, recording this. If you're single, the deduction phases out between 75,000 to 90,000 magi and married filing jointly.

It phases out between 155,000 to 185,000. Um. On your adjusted gross income. So if your income is below those thresholds and you can claim the full deduction even without itemizing your return, and typically even like TurboTax and some of those things, they will be able to calculate this for you. And your CPA mostly, you should have a CPA.

If you're a wealth builder, uh, should be able to claim this for you as well. Will my spouse be responsible for my student loans only if they co-signed, uh, for a private loan. Or if you live in a community property state, otherwise student loan debt stays with the current borrower. So that is something like if your spouse co-signed, then that's something different.

But if they didn't co-sign, then no, it's gonna stay with just you specifically if something ever happened to you. What if I can't afford my payments right now? The. So I would contact your servicer and I would ask about switching to IVR or wrap or request forbearance if it's a short-term hardship. So if you just lost your job and it's a short-term hardship and you know you're gonna get another job, then I would request forbearance.

That's the thing that I would look at doing. So that's all the rapid fire questions that we have on student loans for this episode. Again, if you guys have any questions, make sure that you join that Master Money Newsletter and again. Download the free guide down below, which is gonna be the Ultimate Guide to Paying Off Student Loans Faster.

I hope that's going to help you because we have those free scripts in there that will help you kind of communicate with your HR department or your loan providers to help you get lower rates and save a lot of money. Again, this is one of those big ticket items that we wanna make sure that we are focusing on in getting rid of, to have a big difference maker.

Overall, listen, thank you so much for listening to the Personal Finance Podcast, and if you guys have any questions, again, join the Master Money Newsletter and we will try to answer as many of those questions as we possibly can. And again, sometimes we have those questions answered on the show, on our money q and a episodes.

Thank you so much again, and I'll see you on the next episode.