(Ep. 216) How the Modified REPAYE Plan Could Cut Payments In Half for Millions of Borrowers

What's up everybody. It's Megan and Connor today on the student loan planner podcast. And we are pumped because today we're going to be talking about the revamped repay plan that was just announced. Welcome Connor. Thanks for having me. Yeah, this is an exciting time. Yes, very exciting. So we're going to be talking about this new, uh, uh, repay. Well, it's not a new plan, so let's get that out of the way. So this, uh, new income driven plan that was being talked about for months and months that has been scratched and they decided, Hey, we already have enough income driven plans, which that's true. There's four, technically five, if you include new IBR and they were trying to add another one. Um, so they decided to revamp the already, uh, available repayment plan, revised pay as you earn or repay for short. So today we're going to be referring to this new plan as the new repay plan. And, uh, we'll talk all about the basics about what is this new plan all about? What are some interesting planning opportunities that we could see for folks to be able to save a lot more money here coming up? And, uh, of course, you know, us we'll get into the nitty gritty of the details. So let's kick it off with some of the basics about what this new revamped plan could look like, because it's still in a, um, a period where there could be commentary that's taken in, in the next 30 days, they may make some small adjustments to this, but we think that's unlikely. We think it's possible that this could be implemented as it's been proposed. So we'll talk about, um, how it's been proposed. And then of course we'll have a followup episode if, um, there's been some changes to this. Um, but let's kick it off with some of the details. Yeah. Where should we start? Um, let's, let's start with the number one thing that, that affects most people, right? The poverty line deduction. So under the existing pay as you earn and revised pay as you earn, um, you are entitled to a deduction of 150% of the poverty line for your family size under new repay, you get 225%, which just across the board, lowers payments for, for anybody paying on these income driven plans. Yep. And just to kind of back up and refresh the mechanics of how they calculate these repayment plans. So what they do is they take your adjusted gross income, uh, from your tax return, likely, and they subtract this, uh, this poverty line deduction. And they take previously, they were taking 150% of this poverty line deduction. Now they're upping that to 225%. So it's a big, big deal because it does reduce how much, um, it makes your discretionary income look like, which then directly in fact impacts what your payment is going to be. Right. It is a big impact. And so let's say, I mean, if somebody's single earning, uh, $30,500 or less a year, they pay absolutely nothing now. So they pay $0 per month. Um, that number used to be on, on the existing revised pay as you earn and pay as you earn, um, was just over 20,000 was 20,300. Yeah. So it really adds another like $10,000 kind of deduction off of what that 10% is going to be calculated off of. So let's, let's talk about the percentage of income now. So for, for graduate students, it's still going to be the same 10% of that discretionary income number. So if you went to graduate school, 10% is still the deal, but it's still cheaper because that poverty line deduction was more. If you have undergraduate loans, then those undergraduate loans specifically will be calculated off of 5% of your discretionary income. And there's a lot of folks out there that might have a combination of both undergrad and graduate school loans. So if that's the case, you'll have a weighted average of that calculation. Um, the loans underneath the graduate school programs that you had will be on the 10% calculation, um, undergraduate would be 5%. So the, the combination is this weighted average that they'll come up with for you. All right. So let's talk about the interest subsidy. Cause that's, that is just such a cool part of this. Um, so on the current repay plan right now, you get 50% of your interest waived above and beyond your payment, right? Whatever interest would accrue beyond the payment that you're making that you're required to make each month. On the new repay plan that turns into a 100% interest subsidy, which means you'd never have to pay any interest or you don't have any interest accrue rather above and beyond your required payment each month, which is a huge, huge deal. Right? Like if we think about, you know, like a resident physician, right. Who's got maybe a bigger loan balance comes out, you know, residency, uh, income driven payment is not very high. Uh, they effectively have a low, maybe even a 0% loan, right. For, for a while, while they have that really low or $0 income driven payment, because no interest accrues beyond that. Yep. This is super helpful because a lot of the typical clients we would have tended to go towards repay for versus pay as you earned previously were the folks that, um, may not have been doing forgiveness longterm, like they might be in a position where long, long-term they'd be able to pay off the loans pretty aggressively, but early on their income, you know, is, is, is lower because they're in residency or they're in training or fellowship. So they can't afford a very large payment right now. And repay was a really nice option because it, it at least helped them a little bit more with interest that was accruing over time. Um, so that was a big reason why we, we utilized repay as a tool for these types of folks. And then, you know, if you're single and, um, you borrowed before 2007, repay was maybe the next best option for you for a cheaper forgiveness route. Um, but now, yeah, with this, this a hundred percent interest subsidy, that means if your payment is $300 a month, but your interest costs per month is a thousand, your payment is still going to go to interest. So that $300 is going to go straight to interest, not the principal. Um, but $700 of that unpaid interest is going to be waived and you never have to pay that again. And so that, that is like, as you know, you still make interest payments, maybe if you're someone in that position where your payment is really low early on. Um, but the, the huge benefit is, you know, when you go to pay this loan back later, that interest is not something that you're working up against in the future. You're just working up against that original principal. Um, and another way that I think this could be, um, you know, beneficial for folks is we know that in the future, a longer term forgiveness path could carry a tax implication. We call it the tax bomb. So if our balance is lower at the time of forgiveness in the future, that means we don't have to pay as much tax on that future forgiven balance. So that's how it could also be applicable to those who are working towards longer term forgiveness, not just those who are, who are trying to pay the loans off. Right. And Megan, when, like, let's say like a dentist who, who has a ton of loans coming out, um, you know, the, the interest that they're getting waived maybe in their first few years, right. Well, where they get this a hundred percent interest subsidy, that's not taxable to any extent, right. It is not. So it's just a hundred percent subsidized by the government. From as far as how it's proposed so far, that's pretty great. Yeah. But I think that kind of leads into, I mentioned about longer term forgiveness. So this does not actually change for the most part, the timeline to forgiveness for those who are pursuing the taxable, uh, income driven forgiveness. So for graduate students, it'll be 25 years, uh, for undergraduate students, it'll be 20 years. So for those who just went to undergrad, it would be 20 years. This is not different than how repay is currently set up, but this is important to talk about right now because pay as you earn it, the plan that we have available right now, it is five years shorter, it's 20 years to forgiveness, no matter what graduate or undergraduate students. So this is going to create a really interesting planning opportunity for you, uh, to potentially have to consider if it makes sense for you to, to look at pay as you earn and stay on pay as you earn for your plan to be done in 20 years, if you're doing the longer term forgiveness, or if there's enough benefit to this lower payment with repay and enough benefit to this interest subsidy, to this new repay plan that the five years extra of time makes sense. So that's a really interesting like development. We didn't think we'd have to kind of choose between these plans like that, but the way they've worded this proposal is they, they're going to phase out pay as you earn to where people who are on it, just as we've always told folks, they can't rip anything out from underneath you. So if you're already on the pay as you earn plan, you could still opt in, you could stay on it, but if you were to leave this plan after this new repay plan is, uh, introduced and implemented, um, there's going to be a certain period of time where this is going to happen. Um, if you leave this pay as you earn plan, you're not going to be able to return to it. So that makes there be a big decision here on where, where do we, what do we value here? What is the best, uh, plan of action here? Does that make sense though? Yeah, definitely. Definitely. You got to do a lot of math because you know, you could have lower payments on the new revised pays you were in plan, right? 225% poverty line deduction versus one 50. Um, you know, if you had any type of undergrad loan, you know, possibly paying some portion of your loan balance at the 5% of income instead of 10, right. But then at the same time you pay for five extra years, you know, so you have to weigh that on top of that, you get the interest subsidy. So, you know, what is your loan balance grow to at the end of those five years? Right. Cause that entire balance is going to be taxable to you. No, what's some nuance, but that's taxable to you at the end. So what does your loan balance look like at 25 years versus 20? You know, with no interest subsidies on pay. So I definitely can foresee us having more and more conversations about this because it will be a long-term decision on if we apply for pay as you are now and lock it in and stay on it. Or if you decide to forego pay and know that you can't go back to it. So that's, that's going to be a big deal here coming up. Um, there haven't been like a ton of those, right? Like this is one of those, like you, you do the math, you make the decision and then it's, you know, past this, this summer we're, we're estimating. Right. Past the summer. You, you can't go back to it. Yeah. In a weird way. It's kind of like in a small way, it's kind of like the refinancing decision where like when you go to refinance your student loans, you can't turn back. So you have to feel very confident in that decision. Um, but we help folks with that decision every day. So I think we're, we're definitely going to be equipped to help you with this decision. Um, and what is kind of nice is you could stay on pay for the foreseeable future. And we could also talk through, like in our planning meetings, we, we talk about some scenarios in the future that could change your plan. Um, but you know, in the future. If you're on pay, you've locked, locked into it. You could always choose to switch to repay in the future is what it sounds like. Um, it's just, once you switch, you just can't come back. So you have to feel really confident with that decision. Um, it seems like they kind of want to hold people back from like getting the benefits of pay or of the new repay where, you know, if you're a grad borrower, you have the 25 year forgiveness, they don't want people like getting those benefits and then doing the 20 year forgiveness instead is what it seems like. Yes. But there could be a way to do that to an extent, right? So stay tuned. We'll talk a little bit more about that in the nuances to come. But I wanted to talk also about how, um, you can file taxes separately. We may have, maybe we should have put this more towards the beginning because this is a big deal too. Cause originally repay has not allowed you to exclude spousal income at all, unless you are legally separated. Um, you cannot, uh, separate out your spouse's income from your payment. Now this new repay plan you can, so it's the best of all worlds you're coming in. Um, so that was another big reason why we would have recommended pay over repay in the past because pay was the, you know, the next best plan or the next cheapest plan that was going to allow you to exclude spousal income from your payment, if that was important to you to keep your payment lower, to pursue forgiveness more, more optimally. So now you can do that with this new repay plan, uh, based on its proposal. And that's, that's also a pretty big deal there. But even that got a little bit more complicated, right? It did as we, as we dug into this, we, we found that they do allow the department of ed does want to allow married filing separate, right. To exclude your spouse's income, but previously on the existing pay as you earn and IBR, I guess, for that matter, um, you, when you filed married filing separate, you had a family size for the poverty line deduction of whatever your explicit family size was, right. That includes your spouse includes any kids dependence. Uh, now when you file taxes separately, and this is going to be a change that they're going to make to all of the income driven plans. So no matter what plan you're on, they are removing your spouse from your family size. So now, you know, let's say you're married, you have two kids, family size of four, usually. Now, when you file taxes separate, you have to account for the fact that you're going to drop, you know, to a family size of three. You can still, you know, claim yourself and two kids, but you can no longer claim your spouse in that family size. So it's a, it's a, you know, two steps forward, one step back, or maybe more like three steps forward. One step back. Yeah. Three steps forward, maybe half a step back or so it's still going to be positive. Like overall, these are still going to make your payment cheaper, but this is a factor that was something that, um, it was nice previously you could kind of double count if both spouses were filing taxes separately. Now you can, but just not your spouse, that that one family member will be lost from the poverty line deduction equation. Uh, so that's something to know. And then, um, let's see. I think we're starting to get into some of the nuances of, um, you know, some planning opportunities, right? I think we've covered the basics. Yeah. So let's jump in. Let's start with the first one. We kind of alluded to a moment ago where. Um, we talked about how they're trying to, they're trying to prevent people from being able to kind of double dip with the interest subsidy and with the shorter 20 year timeline. Um, that's why they're not allowing, you know, they're, they're kind of shutting down pay as you earn to be able to, to opt into, into the future. Um, but let's talk about that, that provision that we both saw. And we were like, huh, this is interesting. Uh, where they're saying that after 120 months of being on the new repay plan, you cannot move off of this plan. So historically you've been able to move back and forth between repayment plans or income driven plans rather, uh, freely. You could do that at any point. There could be reasons to do so. Um, now they're, they're actually putting a limit on how much time you have to, to commit or like how much, how much time they're going to allow you to have, to be able to make a change. Right. Um, so how can we take advantage of this though? I'll leave this to you. Cause this was your, uh, finding when we were kind of digging through the nuts and bolts of this. I think it's important to distinguish too, that, you know, with, again, with this, with this new repay plan, we're losing pay as you earn, right. We're, we're losing old. Well, no, we, we keep IBR. Yeah. We keep, we lose ICR though. Income contingent repayment, but not many folks needed to be considering that plan because it's the most expensive one. Yeah. So we're essentially changing to a system where, where we have three income driven options that you can proactively choose. You can choose old IBR, right. Which is a 15% of income plan. You know, that's, that's going to have some nuance as well. Um, then, then you have new IBR, right. If you borrow 24, uh, anytime after 2014, you can switch to new IBR, which has 20 year forgiveness for everybody. Yeah. And we don't talk about this plan often because not a lot of people have been eligible for it. And it's almost identical to pay as you earn. And so, you know, we typically talk about pay as you earn, cause that's, that is available or was available for more people cause you just couldn't have borrowed before 2007. But new IBR was, you couldn't have borrowed before 2014. So it was much more recent. So not a lot of people were eligible, but now with pay not being an option, this kind of makes new IBR a new star in a way, right? Kind of neglected plan is now front and center. Right. Yeah. So yeah, there's, there, there's something they've very specifically called out in this, in this document, um, the department of ed released. Uh, they said that you can pay for 10 years. They said 120 payments on the new repay plan. And anytime before then you can switch over to new IBR, right? So you, you, your first loan came out after 2014. This is relevant to you then. Um, and you can effectively then get the 20 year forgiveness. Whereas let's say you're a grad borrower. You otherwise would be limited to 25 year forgiveness on the new repay. So you basically could get 10 years of the interest subsidy and instead of sticking around for another 15 years, you jump over to IBR at that point in time. And you finish out your last 10 years with no interest subsidy, but, uh, you know, and, and perhaps maybe a little bit higher payments depending on if you had undergrad loans or grad loans or what combination of them, but yeah, um, you get, you get five years less time. Yeah. So this we've talked, this hasn't necessarily been a loophole that we've recommended in the past, but I know we've, we've gotten a question before and we have kind of mentioned it in certain consultations in the past where someone might ask, like, well, with repay how it's originally worked, you know, I like the subsidy. Can I just stay on repay until year 19 and switch to pay as you earn? And the answer previously was, yeah, you could do that if you remember. So make sure you mark it on your calendar or else you'll be trapped on repay. Um, and so people have, have had that mindset of doing this already in the past. And so now with the availability of this new repay plan and the removal of pay as you earn for being able to switch to this in the future, it is going to limit who can do this strategy in the future. Um, so people who did have loans before 2014, uh, like we've mentioned before, you're going to have to decide if it makes more sense for you to just jump on to pay as you are now to lock it in, to have the shorter timeline. If you're someone who borrowed after 2014, then you have access to this new IBR plan that kind of mimics pay as you earn, and you can do this as long as you switch from this new repay plan within 10 years or 120 payments is what it specifically says. Yeah. So, um, very interesting, but. You know, let's not forget the payment cap too, right? Like that's another planning item. You need to make sure that, you know, if you're going to do this switch, right. And get the best of both worlds and you need to know at the time that you make the switch, your income can't be at a point where your, uh, payment on IBR on the new IBR would be greater than or equal to your 10 year standard payment. Right. Which if you have a huge loan balance, then that payment could be really high. But if you, you know, it's, it depends. And so you need to be aware that, Hey, if your income shoots up, this door might close, right? Right. Yeah. So the question for those who might be entertaining this thought right now is, um, you know, again, did you borrow after 2014? If so, this could be an opportunity. But then secondly, is, is there a risk that you may not be eligible for the new IBR plan in the future? So you'd really have to map this out to make sure your timing was appropriate to, to, to do this correctly and successfully. Um, and just like you said a moment ago, that doesn't seem like there's a cap for this new repay plan. So anyone would be eligible for it. Um, so that's a good thing, but the downside to that is the more and more your income grows, the more and more that payment's going to grow. So maybe the new IBR plan could have a benefit to, to higher income individuals who are pursuing forgiveness that might benefit from a stopping point to their payment in the future. Um, so this is definitely going to create some more planning opportunities, just like we assess this for pay as you earn in the past. So this isn't super different than what we've already assessed in the past for folks pursuing forgiveness. Yeah. One thing I want to add on the switch is that, you know, I, we were talking a lot about switching between income driven plans. I don't think there's any, you know, sunset on when you can switch from an income driven plan to a fixed plan. Let's say your income jumps up, you're doing really well. Payments have become a lot higher. It no longer makes sense to work towards forgiveness. I think you can always switch over to a fixed plan. You can. Yeah. So we're, we're definitely talking mostly about these income driven plans and what the potential new ones are going to look like in the future, but you also have access to those amortized fixed plans too. And also the ability to refinance in the future. So it's, you know, we've said, um, you know, quite a bit in our planning conversations that if forgiveness is not going to make sense for you, then refinancing at some point might be a good idea to reduce that interest rate and pay that balance off more efficiently with the lower interest rate. So you'll not be limited to when you can do that. You could always go and refinance in the future. If it makes more sense, you can always switch to a fixed plan if it makes more sense in the future. So, uh, good point though. All right. So we talked about how they're going to be phasing out pay as you earn and income contingent repayment. So that might've perked some Parent PLUS ears up, right? Because the only, um, income driven plan that Parent PLUS loans have access to if they're consolidated wants just altogether in one consolidation loan is income contingent repayment. So you guys are going to be, and continue to be the unicorn of our federal student loan world where ICR will still be available for you, Parent PLUS borrowers. So it's not going to be available to students themselves that borrowed their own loans, but it will be available to Parent PLUS loan borrowers who, um, do a consolidation. They have that access to that one income driven plan, income contingent repayment still, um, but the double consolidation is, is likely still going to be a better option for you. Um, so if you're a Parent PLUS loan borrower and you are someone who is seeking out an income driven option because of payment affordability, or you are pursuing forgiveness towards PSLF or forgiveness in general, because the balance is much greater than your income, the double consolidation is going to be the route that you need to be looking into, and this is a loophole. Again. So I say that every time, because I don't want people to think that it's just a plan that you can easily get on. It's something that you have to kind of force access to. Um, so we've got plenty of podcast episodes where we specifically talk about this and a webinar, but there's a few YouTube videos we have on this too. So check that out if this is a foreign term to you, but the, the double consolidation is still going to be an option and it may, um, be a really sweet option depending on how they look at your loans, right? Cause we were talking about this before Connor. Um, so we know going back to how this new repay plan is going to work, they're going to treat graduate loans, uh, and, and calculate that payment on 10% of discretionary income. Undergraduate loans, they're going to be charging 5%. So where does a double consolidation fall there? We don't know. So we think it could be considered a, uh, graduate type loan because it, it is and was a plus loan. But the point of the double consolidation is to kind of force out that loan code. So in the future, do they consider this an undergraduate loan? We just, there's no way for us to know because this is a loophole. And so we're going to have to have somebody who's already done a double consolidation, apply for this repay plan when it comes out and let us know how they calculate your payment, because that's really the only way we're going to be able to know. Right, right, right. We've got to have somebody go first. I mean, but here, like, even if it's at the 10%, right. Like over ICR or, you know, if you have a big loan balance, if you sent a few kids to school and you have like a ton of, you know, parent plus loans, that's now, that's completely okay. Right. Cause this is going to lower your payments and open up a avenue to forgiveness that was, you know, not even close to there before with ICR. Yeah. So I think the double consolidation is still going to be like, no question. Like that's, that's the way you should go if you're pursuing forgiveness, because ICR is just going to be way more expensive. Um, so it's just, the question is what is the payment going to be calculated at? Is it the 10% but still the lower payment than what repay already has? Um, cause the, the poverty line deduction we've talked about, or is it the 5% and then kind of a followup to that too, is, is it 20 years to forgiveness or 25 years? So we're not quite sure about that yet, but regardless, it's not putting you any worse off if you're a parent plus loan borrower, we're still getting pushed into a positive direction. It's it's just, how is this going to play out for you guys? Since you're taking advantage of a loophole. So stay tuned. We will find out about this for you. So another big deal, which we suspected would come into play because this was part of the PSLF waiver and the IDR waiver is consolidation and how consolidation in the future is not going to erase payment history, which historically that has been a big problem because a lot of times people didn't know that was the case, um, but maybe they consolidated their loans to simplify and in doing that, they didn't realize that they erased their prior payment history and started over on the date of that consolidation loan. So that's no longer going to be the case. And the IDR waiver thankfully goes back and corrects that for the past. So we know that we've talked a little bit about that already on the podcast and in our blog posts. So if you had consolidated in the past and you had prior payment history, they're not going to be counting that against you. Um, but with this new plan going forward, that's going to continue to be the case and they're, they're not going to count everything, right? They're going to do something else. Yeah. And it's, it's been like such a weird time right now, right? Like 22 this or 2022. I say that like it's this year, last year, I guess now, uh, the whole year almost, right, we could, we could do a consolidation with very little consequences, which usually it's so, so serious, right? It's something that you have to be really careful about because wiping your forgiveness credit back to zero, that's, you know, you, you better, you better have a lot of value there. Um, now going forwards, what they're going to do is they're going to take a of any loans that go into a consolidation, what amount of credit that they have towards forgiveness, whether that's income driven forgiveness or PSLF and your resulting consolidation loan will be a weighted average of that, just like it's a weighted average of your interest rate. Now, technically the interest rates rounded up to the nearest one eighth of 1%, but it just makes sense. It's that's, it's such a good change, right? So now you can do a consolidation. You can open up the door to having, you know, three years of general forbearance, if you've already used a bunch of forbearance, um, you know, you can have a simpler loan profile instead of having a hundred loans to keep track of, right. You can just change it to one or two. And, uh, and you don't lose all your forgiveness credit. So it's, it's an awesome change. It is. Yeah. And this, this is relevant to those that maybe didn't consolidate right after school. Like, I think, um, generally it can make a lot of sense if you went to school, let's say you just straight up, went through undergrad graduate, straight through graduated consolidation right after graduation can make a lot of sense, uh, really simplifies your situation at that point, but for those that may not have done that may have left their loans as is maybe had different schooling periods. This is where the consolidation conversation gets a little tricky because there may be some benefits to consolidation, but we used to have to weigh the downsides to consolidation. And we'll still have to weigh some downsides because the weighted average, depending on how much of your balance carries the past history, like that could really affect whether or not we still consolidate. Cause if you have a very small portion of your balance that has credit towards PSLF or towards a longer term forgiveness, but the vast majority of your balance has none, the weighted average will help you kind of, but, um, not, not so much. I don't know. There's a lot of like things that go into our minds when we're thinking about this, obviously. Um, but I think in general, you're exactly right. This was a positive change. Cause it's, it's just not right to like completely erase that history. And I never felt like that was a good provision. And I don't know if they like, I don't know. I don't know if they thought that would have such a big impact on people and it did, but they made it right with the PSLF waiver and the IDR waiver, and they're making it right going forward, which I think is a great thing. Yeah. And you pointed out two really good, like planning items for people, right? So if you're, if your loan balance that has the credit is really, really small, let's say you have like very, very minimal undergrad loans, and then the vast majority of your loan balance is from grad school that you've just finished. Right. And let's say you had a couple of years in between, right? So your undergrad loans have a little bit of credit, but you still might not necessarily want to consolidate because. You know, you, you could, uh, you could feasibly, you know, just finish out forgiveness on, uh, whatever portion, you know, has the credit and then pay off the rest or, you know, I guess that would make more sense. I, I, I suppose if your undergrad balance was much higher than your grad school balance, then you'd want to finish that off and then pay off the part that didn't have the credit. So, yeah. And like timing too. So when you consolidate, you have to update your income. So if you have a very small portion of credit that you could potentially get towards forgiveness by doing the consolidation from like older loans, but that makes you have to update your income now, instead of holding on to like an older payment, then it might just make sense not to consolidate, to make the whole payment go up faster than it needs to. So that, um, timing comes into play too. And when you're going to have to update your income comes into play because you have to update your income when you consolidate. Um, so I'm very, um, man, always nuanced, right? Um, another provision that you pointed out that I think is a very good thing is, um, if someone is in default or, or in, uh, place where they're not making payments for up to 75 days, then the department of ed would automatically enroll you into this new repay plan. So I think they've implemented this to really help. Reduce the default rate, because if you're someone who has not been making payments on your loans, um, uh, for 90 days, up to 180 days, you go into a default status, which is not a good place to be with your federal loans, because they have an extraordinary power to go in and garnish your wages, garnish your tax returns, if you're not up to date on your federal student loans. So I think this is a good change to help people that, you know, maybe moved, um, you know, whatever the reason is, it puts them into maybe an affordable repayment plan based on their income. I think the, the one little asterisk next to this was that they'll do this as long as, um, the borrower has given permission to link to the IRS tax return, which you do every year when you update your income. So I'm interested in seeing how they implement that, but regardless, I think this was a good change to help people have an affordable payment that maybe didn't know about this new plan. Um, keeps them into good, you know, in good standing, protects their credit, um, protects their wages and tax returns from being garnished. Um, and then there was one other about if you fail to recertify, right? Yeah. So if you, if you fail to recertify your income, then usually you, you basically get kicked into a fixed payment plan, right? And the fixed payments are usually not so much fun. Um, they're generally, you know, for most people, quite a bit higher than your income driven payment on the new revised pay as you earn, you still, if you do not recertify your income, you still move into some sort of fixed payment plan. We don't quite know yet, uh, what, what kind of plan or what the terms are. I don't think they specifically call it out, but, um, what the department of did say is up to 12 months of payments on this, you know, fixed payment plan. When you get kicked out of income driven repayment, uh, will count towards forgiveness. So, you know, like in the situation, let's say you're, you're getting real close to the end of your 20 or 25 years on, on new repay, right? You're about to get forgiveness and your income has jumped up a whole bunch. You know, over time you've paid down a little bit of your loan balance and now your, your income driven payments make sense to finish out forgiveness, right? But there may be like a little bit higher than your, what your fixed payments would be on like the standard plan or, or what, what have you. Um, you could, I mean, there's probably some nuance to this, but this is just like a general idea. What we picked up from this document was you could, you know, leave or, or get removed from the income driven plan for not recertifying pay, maybe a cheaper fixed payment perhaps for 12 months and then still get forgiveness at the end. That's a great point. Cause yeah. What if you're someone who does not have access to the new IBR plan that has that cap on the payments? So you're, you're on repay, which has been cheaper than it would have been in the past, allows you to exclude spousal income, but it doesn't have a cap. So like we talked about before your income, the higher and higher your gets, the higher and higher that payment's going to be in the future. And so there might be a reason to strategically not recertify your income in the last 12 months of your payments towards PSLF. If it means that your alternative payment, the capped, you know, that that flat payment is cheaper than what your income driven payment would be. So don't go ahead and implement this immediately. Or like, you know, let's flush this out. We'll, we'll have more conversations about this in the future. Cause again, we're also talking about this proposal, which is not set in stone yet. Right. But this is a very excited about it. Yeah. We're very excited. We're we've already got the wheels turning on like how we're going to be saving people money. So, uh, but that is an interesting thing that maybe, maybe we could take advantage of for those who, um, don't have access to the new, um, IBR plan, but you know, could, could get some benefit out of the, the cap, the forced cap, if you will, maybe that's what we'll call it. The forced cap loophole. That'll be our new, new loophole. We can add to our list of horses. Yeah. Um, I just want to take, can we take a second? Like you're the, the point that you made a minute ago about borrowers who are delinquent automatically getting put into income driven repayment. Isn't it cool over the past two years, it's gone from like servicers barely even know about income driven repayment and they're like, just going forbearance right to the waivers where the department of ed's trying to fix this now to, you know, if you don't make payments, we're just going to put you in an income driven payment plan where your payment might be zero anyways, and you just didn't know it. Yeah. Oh, it just makes so much sense. I know. Crazy, right? All of this just logically makes sense now. Um, it's no, I think, and I've, I've said this, I think for years, I felt like we were going in a better direction and I feel like that is already unfolding. We've seen it unfolding with the different waivers coming out. With this proposed new repayment option. Um, things are moving in a good direction. And so I think some of the problems that people have had with servicers in the past, while they're probably not going to disappear, like there's still going to be maybe hiccups and, and issues with maybe implementing this here coming up. But, um, I think there's a lot more kind of stop gaps on like preventing the worst from happening, like default. And, um, you know, I, I just think there's a lot of really positive things that we could be grateful for here coming up and a lot of opportunities to save more money. So, so many opportunities. Yeah. Mm-hmm. Um, let's see anything else we want to touch on so far with this proposed plan? I think those are some of the big ticket items. I think maybe the last thing I was going to mention kind of going along the lines of what I just said is there might still be hiccups with this here in the future. Um, Travis and one of our previous episodes, um, made, made it very clear that, and it, it is, um, public knowledge now that department of ed is not getting more money, uh, not, not more funding for this upcoming year. So that could have been a big problem if there were a lot of big changes about to happen. So 2021, 2022, we saw a ton of changes that these servicers had to go through and I'm not taking their, their defense. I'm not, you know, pro servicers or anything. I don't feel bad for these guys, but they had to deal with the PSLF waiver. Now the IDR waiver, um, payments continuously getting pushed and postponed. So they've, they've had a lot of work, like really a lot of work and they did not get an increase in their funding this upcoming year. Um, so that was a little worrisome at first to us because we were thinking, oh my gosh, they're talking about this brand new income driven plan. How are they going to implement it and turn everybody's payments on and, you know, you know, just get people back into repayment into a normal world here coming up in 2023 with maybe payments resuming. Um, but I think they kind of, and they said this and the proposal, they said that they were going to make things, they were kind of, kind of scratch this new income driven plan and just revamp the existing repay plan to make things more simple. And I think that's what they're doing. Maybe just for simplification in general, because that's what a lot of things, a lot of people had been calling for. Um, but also budget wise, maybe it's a good thing to simplify on their end. Um, cause this, this is not a brand new plan. It's just revamping an existing plan. And, uh, the implementation could be pretty simple because it's narrowing down the options that people have to pick from when it comes to repayment. Um, and it's automating certain things. So I think that's, that's going to create. And not less work for the servicers, but I don't think it's going to create, create as much work as maybe a new plan could have created in the future. Definitely. So hopefully their lives get a little bit easier because Lord knows that we need simplicity for the servicers. Yeah, we need simplicity. So there's timely, uh, customer service support that you can get. Um, that, you know, you don't run into multiple problems with them calculating your payment. Um, so I'm, I'm hopeful that this will help, uh, reduce some of those issues in the future. Um, but we just, we'll have less reason to get mad at them going forward. Maybe that might be a pipe dream. I don't know. They're still not going to be your planner. So just know that as you know, the servicers role is just to answer basic factual questions that they read from a script and put you on the plan that you asked them to put you on. Yeah. Um, call them with specific questions, not for advice. Yeah, exactly. If you want to plan, that's where we come in. We're the nerds that'll get it done for you. So, well, cool. Well, I think you did a great job kind of touching on the, uh, revamp of repay. We will have more content on this to come as we know how this is going to be implemented and if any of these proposed changes will, um, you know, be adjusted in any way, but, uh, any closing thoughts, Connor, I think it's an awesome change, I think it makes things a little bit simpler, but at the same time, man, it, it, it does make some things even more complicated. Right. And there's, you know, you, you would think with income driven plans going away and, and, you know, just having a couple options to choose from that. You know, this is really simple, but it's not right. You, you have so many different considerations of married filing, separate switching plans, you know, when to switch plans and you know, how to save as much money as possible. And, you know, with the dollars, when they're bigger than your savings can be humongous with this. So it's overall, it's a great thing, but there's a lot of planning to do around it for sure. Yep. Yeah, you're exactly right. And so some timing, some dates to just keep in mind is, um, there's a 30 day period where folks can submit comments. There's a public comment period right now for this proposed, um, new revamped repay plan, so it's, it's not implemented yet. There's nothing you can do to opt into this right now. Um, but if it is approved, we think it's possible that they could phase out the availability of pay as you earn as early as this summer. So if you're someone who, um, let's say borrowed before 2014 and forgiveness is something that you are entertaining, maybe you're already on pay as you earn, or you're about to graduate and you're trying to figure out if you need to apply for pay as you earn, um, then we, you know, let's get a consultation on the books before the summer. So we can make some decisions on if we should lock in eligibility for pay as you earn, or if the new revamped repay plan is going to make more sense. Um, one other date to be aware of is, uh, the date for consolidations. If you're someone who has those FFEL loans, the family federal education loans, um, the deadline to consolidate, as far as we know right now for the IDR waiver, which we talk about in other podcast episodes is May 1st. So I think folks, you know, over the spring months coming up into the summer, we're going to be doing a lot of conversations around these two things, the IDR waiver and this new proposed plan, because time is going to be of the essence when it comes to them removing the availability of being able to consolidate for the IDR waiver, uh, without the repercussions. And then, um, being able to opt in to pay as you earn, if that plan might ultimately be better for you than the new revamped plan. So, uh, definitely check us out studentloanplanner.com, uh, check, check us out for a consultation. If you need some help with your specific situation, um, email us at help at studentloanplanner.com. Uh, subscribe to our newsletter and, uh, thanks for listening today. Thanks guys. Thanks Megan.