March 6, 2025 • 24 mins
Questions? Thoughts? Send a Text to The Optometry Money Podcast!
The student loan landscape is shifting again! In this episode, Evon breaks down the latest updates on the SAVE Plan, the recent court rulings, and what these changes mean for optometrists navigating their student loan repayment.
With major legal challenges in play, borrowers on SAVE are currently in interest-free forbearance, but the future of the program remains uncertain. Evon unpacks the key takeaways from the recent 8th Circuit Court of Appeals decision, discusses potential next steps, and shares what optometrists should consider when making student loan repayment decisions.
What You’ll Learn:
✅ Background on the SAVE Plan & Legal Challenges – Why the courts put SAVE on hold and what’s next
✅ What This Means for Optometrists – How the latest rulings impact those on SAVE, PAYE, and IBR plans
✅ Should You Switch Plans? – Factors to consider before making a move
✅ Tax Strategies for Student Loan Borrowers – Filing tips to optimize student loan repayment
✅ Preparing for Uncertainty – Practical steps to protect your financial future
Key Takeaways:
💡 The SAVE Plan is currently blocked, and applications for income-driven repayment plans & loan consolidation are unavailable.
💡 Borrowers on SAVE forbearance are not accruing interest, but these months do not count toward forgiveness.
💡 Income-Based Repayment (IBR) is still available and could be an alternative for some borrowers.
💡 If you’re going for Public Service Loan Forgiveness (PSLF), the recent rulings do not impact the program directly, but timing your repayment strategy is critical.
💡 Tax planning is essential – Your tax filing status (Married Filing Separately vs. Jointly) and timing of recertification can significantly affect student loan payments.
Actionable Steps for Optometrists:
🔹 If you’re on SAVE forbearance – Consider whether staying put or switching to IBR/PAYE (when applications reopen) makes sense for your situation.
🔹 If you’re nearing forgiveness (20-25 years) – Switching to IBR sooner may be necessary to receive forgiveness.
🔹 If you’re married – Review tax filing strategies to exclude spousal income from payment calculations.
🔹 If your income has increased significantly – Be aware that switching to IBR/PAYE could trigger higher payments.
🔹 If you’re pursuing PSLF – Understand the buyback provision and how it affects your repayment plan.
Resources & Next Steps:
📩 Get More Updates! Stay informed with our Eyes on the Money Newsletter for the latest financial strategies tailored for optometrists. Subscribe here.
📅 Need Student Loan Help? Book a free intro call with Evon to discuss your student loan strategy and overall financial plan. Schedule a call here.
📢 Enjoyed this episode? Leave a review and share it with a fellow OD who needs to hear this!
The Optometry Money Podcast is dedicated to helping optometrists make better decisions around their money, careers, and practices. The show is hosted by Evon Mendrin, CFP®, CSLP®, owner of Optometry Wealth Advisors, a financial planning firm just for optometrists nationwide.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Evon (00:04):
Hey everybody.
Welcome back to the OptometryMoney Podcast, where we're
helping ODs all over the countrymake better and better decisions
around their money, theircareers, and their practices.
I am your host, Evon Mendrin,Certified Financial Planner and
owner of Optometry WealthAdvisors an independent
financial planning firm just foroptometrists nationwide.
(00:25):
And thank you so much forlistening today.
Really appreciate your time andyour attention today.
And we're gonna dive all intostudent loans.
there has finally been some newsaround what is going on with the
SAVE plan.
Uh, so we're gonna talk aboutrecent updates to the SAVE plan.
We're gonna talk about what inthe world that means for you
for, for optometrists out there.
This month March is, is usuallya month where I'm diving into
(00:48):
for my own client's.
debt and debt planning and debtdecisions where, I'm reviewing
their debt rates, which is theamount of their income that's
going towards debt payments.
We're reviewing whether we needto make adjustments to different
debts in their lives and a bigpart of that's student loans, of
course.
So this month I'm gonna behaving a few episodes just on
conversations around debt and,starting with the big thing on
(01:10):
everyone's mind, which is whatin the world is going on with
student loans these days?
And it's been several monthssince we've heard news on the
SAVE court cases, to go downmemory lane a little bit.
SAVE was initially rolled out, Ithink in 2023.
in part, so much of it was putinto place.
The remaining features of itwere due to go into effect in
(01:32):
July, 2024, and then mid-year2024.
So after it's been around awhile, the SAVE plan,
specifically the new parts ofthe plan that were soon to be
implemented, were challenged incourt and there were two court
cases, one out of Kansas, Ibelieve, one out of Missouri.
And eventually there was a oneline injunction out of the
(01:54):
Missouri case that put a halt onthe SAVE plan.
And from there, borrowers onSAVE were placed into an
interest free forbearance thatdidn't count towards
forgiveness.
So if you were on SAVE, if youapplied for SAVE you eventually
found your way into thisforbearance, and this is where
(02:14):
we're currently at right now.
And that injunction wasappealed.
And now all these months later,after hearing essentially
nothing, we saw an update onFebruary 18th, the eighth
circuit, US Court of Appealsbasically confirmed the
injunction of the lower courtand in its own thinking,
actually expanded it to blockthe implementation of the entire
(02:37):
SAVE plan.
And.
This particular court actuallytook its opinions further, kind
of going out on a limb on itsown, wondering whether
forgiveness was legal for any ofthe income-driven repayment
plans that are based on the ICRstatute.
So that's ICR, Pay As You Earnand SAVE and also the prior
(02:59):
REPAYE.
Pay As You Earn, SAVE, andREPAYE those were all created
based on executive action.
Based on the authority, orseemingly based on the authority
that the ICR law w gave thepresident or, or gave the
Department of Education.
so this court claimed, in theirown opinion, claimed that the
law doesn't explicitly stateforgiveness as a feature of the
(03:22):
ICR repayment plan.
Only that there should be anincome, driven repayment plan,
no longer than 25 years.
And so that was the big news onthe 18th.
We finally got some update from,from this court process here.
Basically just confirming theinjunction that was set before.
the other big news is that theoptions for, or the applications
(03:45):
for applying for a newincome-driven payment plan and
consolidation have been grayedout on the Federal Student Aid
website, you can't click into itto continue with that process.
so there's no ability to switchplans or to consolidate right
now as of this recording.
And so there's likely some bigadjustments happening on the
processes there behind thescenes.
(04:06):
maybe as a result of that courtruling, maybe they're applying
to remove the opportunity or theoption to apply for the SAVE
plan.
Apply for Pay As You Earn.
I'm not sure, this is somethingI'm expecting to get worked out
over the next few weeks.
but that's, that's currentlywhere we're at right now.
And so what does this all meanfor optometrists?
How, you know, what does thismean for you as a student loan
(04:26):
borrower?
well, ultimately nothing reallyhas changed.
It's essentially just confirmingthe injunction set by the lower
court.
however, this appeals court sentthe case back to the lower court
and said, Hey.
Let's get a ruling already.
And so what this should meanhopefully is that we're, we're
expecting a final ruling on the,on the destiny of SAVE on the
(04:50):
fate of SAVE from that lowercourt.
So hopefully, we'll, we'll hearsomething soon that gives us a
little bit more, I.
more concrete direction and I'dexpect the online and paper
applications to be availableagain soon, over the next few
weeks.
And, and so what do I think willhappen as a result of this?
Well, if I can put myspeculation hat on, right.
(05:11):
Ultimately, I have no clue.
I'm in the same boat as everyoneelse, still trying to watch and
see what can be done.
But, if, if I'm going tospeculate.
hearing the opinions of thosewho know and follow the legal
process and the legislativeprocess better than I do, I do
feel it's more likely than notthat SAVE doesn't survive the
(05:31):
process here, at least not inits current form.
so I, I think we should preparefor that if we're on SAVE.
If we're relying on SAVE reallyheavily in terms of student loan
outcomes.
I think we should prepare forthe, the possibility that it
doesn't exist at the end ofthis.
Now, I do think it's verypossible that REPAYE, Revised
Pay As You Earn, can come backessentially.
(05:52):
I, I think it's possible thatthey just reset the landscape
that it was before covid.
I think that's certainlypossible.
do I think the sort of.
Student loan apocalypse happensthat this higher eighth Circuit
court had in mind where theysort of reject all forgiveness
opportunities, for student loanrepayment plans that are based
(06:15):
on ICR.
I don't think so.
I think that's an extremeopinion that's not really
grounded on the precedent overthe last 30 years.
The IBR plan is in statutes, sowe know that forgiveness is
explicitly mentioned as itrelates to the IBR plan.
So we, we know it's clear thatthere's congressional intent for
forgiveness, and there hasn'tbeen any clear picture offered
(06:38):
of what specifically wouldhappen at the end of 25 years.
If there's still a loan balanceand there's no forgiveness
opportunity, does the borrowerdefaults?
Is there a balloon payment?
What does that look like?
So nothing's really been offeredthere.
And, and while it's possible, Idon't think it's likely that
this worst case scenario happenswhere Pay As You Earn is no
(06:59):
longer an option forforgiveness.
And Revised Pay As You Earn, isalso not an option or ICR.
And so what should we do then?
We, we have this information, wehave this update ultimately.
Nothing really changes thatmuch.
We're still waiting for thislower court to give us a final
ruling, something we can takeand do something with more
concretely, what should you dohere?
(07:21):
Well, let's start with what weknow.
What are some of the facts thatwe know here?
We know that forgiveness is notpossible at this current moment.
If you are on SAVE or Pay As YouEarn, or ICR.
If you reach it right now,meaning you're about to hit 20
or really 25 years, you can'treceive forgiveness even though
your payments are counting.
(07:42):
You can't receive actualforgiveness on those plans, but
we also know that IBR incomebased repayment is explicitly in
statute, it's in law, it'savailable, and you can receive
forgiveness while on IBR, wealso know that payments on Pay
As You Earn and past priorpayments on Revised Pay As You
(08:04):
Earn and SAVE do still count asqualifying payments toward
forgiveness.
So those payments still count.
You're still accruing that, oryou did accrue that.
We also know that PSLF isn'treally at stake here.
If you're going for PSLF, it'sambiguous whether you can
receive PSLF cancellation whileon Pay As You Earn or SAVE or
(08:26):
ICR.
But I've heard from others doingloan consults that so far
they've seen that borrowers havecontinued to get PSLF processed
while on those repayment plans.
Now that can change, butultimately that's what we are.
And then PSLF itself as aforgiveness program, as a
forgiveness option isn't atstake here.
It's not at risk here.
(08:47):
so what should you do,particularly if you're on SAVE
forbearance?
What actions should we thinkabout taking?
There's no one right answer foreverybody.
Ultimately, it's up to thespecific situation you find
yourself in the details of yourown student loans, and what
makes the most sense for you andyour family.
But let's talk about some ofthese different factors here.
So, number one, if you'replanning to pay your loans down
(09:08):
to zero and you're, you'replanning to pay them all back,
well, you're just enjoying theinterest-free forbearance.
You're putting money away into ahigh yield savings account and
you're building up big, a biglump sum for some big payment
down the road.
So you're just enjoying the ridehere, right?
And then as soon as thatinterest fee forbearance ends,
then you're starting to make adecision whether to stay on
(09:28):
save, if it exists, whether torefinance, whether to do
something else.
So, you're just staying put fornow.
If you're going for forgiveness,it gets more interesting.
the big question I come acrossis, should you say, should you
stay?
On the SAVE forbearance orshould you switch to another
plan?
Mostly IBR or PAYE Pay As YouEarn?
(09:48):
well, at this exact moment,there's literally nothing we can
do with the applicationsunavailable.
there's no action we can reallytake, but let's assume they are.
Let's plan for when they dobecome available again.
Knowing there's no one rightanswer, here are some factors to
think about.
I think the big sort ofoverarching question is you'd
(10:09):
wanna think through how high isyour risk tolerance?
And what I mean by that is thathow much do you prefer the
certainty of being on anotherplan like IBR and Pay As You
Earn, continuing the loanpayments again and get an
accrediting months towardsforgiveness versus the
uncertainty of the SAVEforbearance.
(10:29):
Even if it is interest free andjust sort of pausing your loans,
and even if it does end up inyour favor, what are you more
inclined to be comfortable with?
What's gonna allow you to sleepat night?
Is it that certainty, or are youcomfortable with that sort of
uncertainty with the SAVEforbearance?
If you're going for PSLF, maybeyou're at the VA or at your at
(10:51):
Kaiser Permanente or somethinglike that, you have more options
because of the buyback option.
so that's something you canconsider.
Even if you stay on SAVE you'regetting that interest free
forbearance and you have thatpotential, the buyback option
down the road.
I do want to keep in mind thoughthat we're assuming the buyback
option is going to continuebeing available indefinitely,
(11:12):
and there's some uncertaintythere.
Potentially.
It was created through executiveaction.
So it is possible that thecurrent administration adjust
that buyback provision.
But PSLF borrowers have a littlebit more flexibility here.
Here are some factors to thinkthrough, especially if you're
going through 20 or 25 yeartaxable forgiveness.
If you're going to be eligibleforgiveness very, very soon in
(11:34):
the immediate near future,you're gonna need to switch to
IBR to get it.
Now.
You might be able to stick onPay As You Earn, for example.
But eventually, in order toactually get that forgiveness,
you're gonna have to hop ontoIBR and and through the end of
2025, even that 20 or 25 yearforgiveness is tax free.
We don't know if Congress isgoing to extend that, but that's
(11:56):
the current law right now.
If you switch plans, what youwanna know is that, is it going
to lead to a huge jump in yourpayment amount?
Many of you may not had torecertify your income since
COVID years.
It might have been years andyears since you've had to reshow
your income and recalculate yourpayments for the next 12 months.
And if you switch plans, forexample, from save to IBR, it's
(12:19):
going to re-trigger thatrecertification.
So based on your new income andyour new family size, or more
recent family size.
Is that going to lead to a muchhigher payment?
if you're on PSLF, for example,that buyback amount based on
your old income.
Maybe the cheaper routes.
You may want to stay on thatSAVE forbearance a little bit
(12:40):
longer until you are forced torecertify until you're sort of
forced to make a decision.
So what's that gonna do to yourpayment if you are able to
switch to IBR, Pay As You Earn,and, and get a pretty similar
payment amount, meaning you'rein, you're not gonna have this
huge jump in income.
It might be the better option totry to aim for IBR sooner rather
(13:00):
than later.
What are the plans are youeligible for?
That's the other thing you wannalook at.
If you took out your firstfederal loans after July of
2014, you're eligible for thenew version of IBR.
And this is nearly identical toPay As You Earn with a 20 year
forgiveness timeline.
And it's probably the mostdesirable option here because
(13:21):
again, IBR is sort of quoteunquote safer.
It's, it's in statute, it's notsomething that the, any
presidential administration cansimply adjust.
So that newer version of IBR isdefinitely something you wanna
look at.
if you already had loans beforethat point, before July of 2014,
then you're eligible for the oldversion of IBR, which has a less
(13:43):
favorable payment calculation.
If you took your first federalloans out after October, 2007
and also took out another loanafter October, 2011, then you're
eligible for Pay As You Earn.
So even if you're not eligiblefor the new IBR, you still do
have Pay As You Earn.
If you took out loans before2007, you're really only limited
(14:07):
to old IBR.
And so you're sort of comparingwhat SAVE would have been with
the old version of IBR, and sothat that does make that
decision, that math even alittle bit more difficult for
those older borrowers.
So what other plans are youactually eligible for?
That's something you wanna lookat.
Are there any cashflow goals orreasons to continue using the
(14:28):
SAVE forbearance?
So for example, maybe you'recoming up on forgiveness and you
need more time to build updollars.
To prepare for that futurepotential tax bomb when those
loans are forgiven.
That's something you might wannakeep in mind.
Maybe you have an immediate goalof buying a house.
You need down payments orbuilding up an emergency fund,
or preparing for practicepurchase or something like that.
(14:50):
Maybe there's an immediate goalthat you need to set aside
dollars for.
Well, if that's the case, thenthat SAVE forbearance is going
to allow you to do that, so.
So you wanna think through anyshort term immediate cash flow
goals that you might want totake advantage of.
and then what's the potentialoutcome for SAVE?
Is is something you wanna thinkabout.
Now, that's hard to know, right?
But we do wanna think about whatpotential outcomes would be for
(15:11):
SAVE and whether that's going tobe more favorable for you.
So for example, something I I'veseen is that maybe you're a
single borrower and your onlyother option would be the old
IBR plan.
It's possible that if RevisedPay As You Earn comes back,
that's still gonna be the morefavorable option for you.
So rather than switching to IBRand then down the road switching
(15:33):
to Revised Pay You Earn again,you might just wanna stick it
out on the SAVE forbearance and,and see what happens.
On the other hand, if you aremarried and both spouses are
working and you're trying tofile taxes separately for
student loan, purposes.
Then maybe Revised Pay As YouEarn wouldn't help you anyways,
because that doesn't allow youto file taxes separately and
exclude your spouse's incomefrom the calculation.
And so you do wanna thinkthrough, okay, if SAVE were to
(15:55):
be replaced by Revised Pay AsYou Earn, or if SAVE were to
stick around, what would thatoutcome be for me?
What would make sense?
But as we kind of wrap all thatup, you do wanna just think
about your, your risk tolerance.
How comfortable are you with theSAVE uncertainty on forbearance,
rather than going towards thequote unquote certainty with
hopping onto another plan withIBR, knowing you're getting
(16:19):
those payments started andknowing you're getting that
clock ticking again towardsforgiveness.
Ultimately if you have a longtime until you're going to hit
forgiveness, especially taxableforgiveness here, if you have
10, 18, 15 years or so until youget to that taxable forgiveness,
20 or 25 years.
You are probably looking atmaking that switch to IBR if
(16:41):
possible, or, or Pay As YouEarn.
That's gonna be the long-termoutcome.
It, it's just really abouttiming.
When do you wanna make thatdecision?
And think about those otherfactors I talked about earlier.
if you're sticking withforbearance, don't let these
months of forbearance go towaste.
Keep putting that same monthlypayment amount into savings so
that you can keep that habitgoing of making the payments.
(17:03):
You can build up dollars towardsthe buyback if you have PSLF as
an option or just build up forthe future potential tax bomb
when loans are forgiven.
So don't let these months ofzero payments and zero interest
go to waste.
Keep that, keep that habitgoing.
And then a couple things I wantyou to keep in mind.
Number one, keep in mind thatIBR and pays you Earn.
(17:23):
Or going to require a partialfinancial hardship, meaning that
your payment on IBR or pay whenyou're trying to get into it.
So for example, if you'reswitching from SAVE and trying
to apply to get on IBR or Pay AsYou Earn your payments for IBR
or Pay As You Earn would have tobe lower than your payment would
be in a 10 year standardrepayment plan with your current
(17:47):
loan balance and interest rate.
So you can take a look and say,okay, what would my IBR payment
be?
What would my Pay As You Earnpayment be?
And what would my 10 yearstandard repayment plan be?
And would I have that partialfinancial hardship because if
you don't, if your payments aretoo high, you wouldn't be
eligible for those plans.
So if your income has justincreased substantially to a
(18:08):
point where your payments wouldbe too high, or if you're
anticipating that being thecase, when it comes time to
switch out of SAVE later on, youmay wanna make that switch
sooner rather than later.
Especially if you can use theprior year's tax return with
more favorable income, or youwant to be careful about where
you shift deductions, thingslike that.
So you want to keep that partialfinancial hardship in mind for
(18:32):
IBR and for Pay As You Earn.
The last thing I wanna bring upis tax filing, and we're at that
time of year where we'restarting to fill out personal
tax returns.
Now we're getting those filed.
some of you overachievers, maybeeven got your returns filed
already.
But if you're usingincome-driven plans towards
forgiveness, I want you to bemindful of how and when you file
your taxes.
(18:52):
For example, if you're marriedand your spouse is working, you
want to have projected out, youwant to be aware of whether you
should or shouldn't be filingyour taxes, married, filing
separately instead of married,filing jointly.
In order to exclude yourspouse's income from that loan
calculation, I.
If you should have filed taxesseparately, but already filed
(19:14):
taxes jointly, and you'relistening to this before the
April tax filing deadline, talkto your tax preparer about
filing a superseding tax return.
Essentially, it's sending in anew tax return with the words
superseding return at the topwith a letter explaining the
reasoning.
And if it's done correctly, andbefore the tax filing deadline,
(19:35):
including up to October'sextended filing deadline, if you
filed an extension, if you dothat correctly before the
deadline, it's possible toreplace a married filing joint
return with a married filingseparately.
Cause once that deadline passes,whether it's the April deadline
or if you file an extension, theOctober deadline, you can't
amend a joint return back to aseparate return.
(19:59):
You can only amend a separatereturn back to a joint.
And so knowing how you should befiling your taxes if you're
married and if both spouses areworking can be critical to
making the math more favorablefor student loan planning,
especially if you live in acommunity property state,
becomes even more important.
the second thing is that timingis important as well.
For example, if you have anincome recertification date
(20:22):
coming up over the next severalmonths, especially if you're on
Pay As You Earn and your priortax return has a much more
favorable income amount tha n2024, you may want to file an
extension for 2024 tax return,so that you can reuse the prior
year's tax return to recertifyyour income and recalculate your
payments for the next 12 months.
(20:43):
Because it's literally, thatwould literally be your most
recently filed tax return.
And once that recertificationprocess is done, once your new
payments are calculated, thenyou can go ahead and file that
next return.
It's all about, remember, it'sall about the most recently
filed tax return.
So that timing conversation isimportant.
(21:04):
And I'd even consider it ifyou're on the SAVE forbearance,
because currentlyrecertification, if you're on
SAVE those recertification dateshave been pushed into 2026.
However, it's very possiblethat's, that's rescinded, that's
changed by the currentadministration and brought into
2025 into this current year.
So I even might consider.
(21:25):
filing an extension just to giveyourself more flexibility, more
breathing room, more options onwhich year to use.
If your 2024 income's gonna bemuch higher than 2023.
So keep an eye on tax filing,keep an eye on what's going on
here with the SAVE court cases,and keep an eye on our content.
So whether the, it's throughthis podcast or our weekly
(21:46):
newsletter.
Keep an eye on what's going onso that you can make informed
decision.
You can talk to your ownAdvisors about this and, and
make adjustments as thoseadjustments come up.
And if you wanna talk to someonewho works exclusively with
optometrists to help you planaround these super important
topics and so much more, pleasereach out.
I would love to have a nopressure intro call with you
(22:08):
just to talk about what's onyour mind financially and to
share how we help optometristsnavigate those same things all
over the country.
You can also subscribe to ourweekly Eyes on the Money
Newsletter where I write allabout student loans, practice
and personal cash flow taxes,investing in so much more, all
through a link to that in theshow notes.
With all that, really appreciateyour time.
Hopefully this update washelpful.
(22:30):
We'll catch you on the nextepisode.
In the meantime, take care.
Hey everybody.
Welcome back to the OptometryMoney Podcast, where we're
helping ODs all over the countrymake better and better decisions
around their money, theircareers, and their practices.
I am your host, Evon Mendrin,Certified Financial Planner and
owner of Optometry WealthAdvisors an independent
financial planning firm just foroptometrists nationwide.
(00:25):
And thank you so much forlistening today.
Really appreciate your time andyour attention today.
And we're gonna dive all intostudent loans.
there has finally been some newsaround what is going on with the
SAVE plan.
Uh, so we're gonna talk aboutrecent updates to the SAVE plan.
We're gonna talk about what inthe world that means for you
for, for optometrists out there.
This month March is, is usuallya month where I'm diving into
(00:48):
for my own client's.
debt and debt planning and debtdecisions where, I'm reviewing
their debt rates, which is theamount of their income that's
going towards debt payments.
We're reviewing whether we needto make adjustments to different
debts in their lives and a bigpart of that's student loans, of
course.
So this month I'm gonna behaving a few episodes just on
conversations around debt and,starting with the big thing on
(01:10):
everyone's mind, which is whatin the world is going on with
student loans these days?
And it's been several monthssince we've heard news on the
SAVE court cases, to go downmemory lane a little bit.
SAVE was initially rolled out, Ithink in 2023.
in part, so much of it was putinto place.
The remaining features of itwere due to go into effect in
(01:32):
July, 2024, and then mid-year2024.
So after it's been around awhile, the SAVE plan,
specifically the new parts ofthe plan that were soon to be
implemented, were challenged incourt and there were two court
cases, one out of Kansas, Ibelieve, one out of Missouri.
And eventually there was a oneline injunction out of the
(01:54):
Missouri case that put a halt onthe SAVE plan.
And from there, borrowers onSAVE were placed into an
interest free forbearance thatdidn't count towards
forgiveness.
So if you were on SAVE, if youapplied for SAVE you eventually
found your way into thisforbearance, and this is where
(02:14):
we're currently at right now.
And that injunction wasappealed.
And now all these months later,after hearing essentially
nothing, we saw an update onFebruary 18th, the eighth
circuit, US Court of Appealsbasically confirmed the
injunction of the lower courtand in its own thinking,
actually expanded it to blockthe implementation of the entire
(02:37):
SAVE plan.
And.
This particular court actuallytook its opinions further, kind
of going out on a limb on itsown, wondering whether
forgiveness was legal for any ofthe income-driven repayment
plans that are based on the ICRstatute.
So that's ICR, Pay As You Earnand SAVE and also the prior
(02:59):
REPAYE.
Pay As You Earn, SAVE, andREPAYE those were all created
based on executive action.
Based on the authority, orseemingly based on the authority
that the ICR law w gave thepresident or, or gave the
Department of Education.
so this court claimed, in theirown opinion, claimed that the
law doesn't explicitly stateforgiveness as a feature of the
(03:22):
ICR repayment plan.
Only that there should be anincome, driven repayment plan,
no longer than 25 years.
And so that was the big news onthe 18th.
We finally got some update from,from this court process here.
Basically just confirming theinjunction that was set before.
the other big news is that theoptions for, or the applications
(03:45):
for applying for a newincome-driven payment plan and
consolidation have been grayedout on the Federal Student Aid
website, you can't click into itto continue with that process.
so there's no ability to switchplans or to consolidate right
now as of this recording.
And so there's likely some bigadjustments happening on the
processes there behind thescenes.
(04:06):
maybe as a result of that courtruling, maybe they're applying
to remove the opportunity or theoption to apply for the SAVE
plan.
Apply for Pay As You Earn.
I'm not sure, this is somethingI'm expecting to get worked out
over the next few weeks.
but that's, that's currentlywhere we're at right now.
And so what does this all meanfor optometrists?
How, you know, what does thismean for you as a student loan
(04:26):
borrower?
well, ultimately nothing reallyhas changed.
It's essentially just confirmingthe injunction set by the lower
court.
however, this appeals court sentthe case back to the lower court
and said, Hey.
Let's get a ruling already.
And so what this should meanhopefully is that we're, we're
expecting a final ruling on the,on the destiny of SAVE on the
(04:50):
fate of SAVE from that lowercourt.
So hopefully, we'll, we'll hearsomething soon that gives us a
little bit more, I.
more concrete direction and I'dexpect the online and paper
applications to be availableagain soon, over the next few
weeks.
And, and so what do I think willhappen as a result of this?
Well, if I can put myspeculation hat on, right.
(05:11):
Ultimately, I have no clue.
I'm in the same boat as everyoneelse, still trying to watch and
see what can be done.
But, if, if I'm going tospeculate.
hearing the opinions of thosewho know and follow the legal
process and the legislativeprocess better than I do, I do
feel it's more likely than notthat SAVE doesn't survive the
(05:31):
process here, at least not inits current form.
so I, I think we should preparefor that if we're on SAVE.
If we're relying on SAVE reallyheavily in terms of student loan
outcomes.
I think we should prepare forthe, the possibility that it
doesn't exist at the end ofthis.
Now, I do think it's verypossible that REPAYE, Revised
Pay As You Earn, can come backessentially.
(05:52):
I, I think it's possible thatthey just reset the landscape
that it was before covid.
I think that's certainlypossible.
do I think the sort of.
Student loan apocalypse happensthat this higher eighth Circuit
court had in mind where theysort of reject all forgiveness
opportunities, for student loanrepayment plans that are based
(06:15):
on ICR.
I don't think so.
I think that's an extremeopinion that's not really
grounded on the precedent overthe last 30 years.
The IBR plan is in statutes, sowe know that forgiveness is
explicitly mentioned as itrelates to the IBR plan.
So we, we know it's clear thatthere's congressional intent for
forgiveness, and there hasn'tbeen any clear picture offered
(06:38):
of what specifically wouldhappen at the end of 25 years.
If there's still a loan balanceand there's no forgiveness
opportunity, does the borrowerdefaults?
Is there a balloon payment?
What does that look like?
So nothing's really been offeredthere.
And, and while it's possible, Idon't think it's likely that
this worst case scenario happenswhere Pay As You Earn is no
(06:59):
longer an option forforgiveness.
And Revised Pay As You Earn, isalso not an option or ICR.
And so what should we do then?
We, we have this information, wehave this update ultimately.
Nothing really changes thatmuch.
We're still waiting for thislower court to give us a final
ruling, something we can takeand do something with more
concretely, what should you dohere?
(07:21):
Well, let's start with what weknow.
What are some of the facts thatwe know here?
We know that forgiveness is notpossible at this current moment.
If you are on SAVE or Pay As YouEarn, or ICR.
If you reach it right now,meaning you're about to hit 20
or really 25 years, you can'treceive forgiveness even though
your payments are counting.
(07:42):
You can't receive actualforgiveness on those plans, but
we also know that IBR incomebased repayment is explicitly in
statute, it's in law, it'savailable, and you can receive
forgiveness while on IBR, wealso know that payments on Pay
As You Earn and past priorpayments on Revised Pay As You
(08:04):
Earn and SAVE do still count asqualifying payments toward
forgiveness.
So those payments still count.
You're still accruing that, oryou did accrue that.
We also know that PSLF isn'treally at stake here.
If you're going for PSLF, it'sambiguous whether you can
receive PSLF cancellation whileon Pay As You Earn or SAVE or
(08:26):
ICR.
But I've heard from others doingloan consults that so far
they've seen that borrowers havecontinued to get PSLF processed
while on those repayment plans.
Now that can change, butultimately that's what we are.
And then PSLF itself as aforgiveness program, as a
forgiveness option isn't atstake here.
It's not at risk here.
(08:47):
so what should you do,particularly if you're on SAVE
forbearance?
What actions should we thinkabout taking?
There's no one right answer foreverybody.
Ultimately, it's up to thespecific situation you find
yourself in the details of yourown student loans, and what
makes the most sense for you andyour family.
But let's talk about some ofthese different factors here.
So, number one, if you'replanning to pay your loans down
(09:08):
to zero and you're, you'replanning to pay them all back,
well, you're just enjoying theinterest-free forbearance.
You're putting money away into ahigh yield savings account and
you're building up big, a biglump sum for some big payment
down the road.
So you're just enjoying the ridehere, right?
And then as soon as thatinterest fee forbearance ends,
then you're starting to make adecision whether to stay on
(09:28):
save, if it exists, whether torefinance, whether to do
something else.
So, you're just staying put fornow.
If you're going for forgiveness,it gets more interesting.
the big question I come acrossis, should you say, should you
stay?
On the SAVE forbearance orshould you switch to another
plan?
Mostly IBR or PAYE Pay As YouEarn?
(09:48):
well, at this exact moment,there's literally nothing we can
do with the applicationsunavailable.
there's no action we can reallytake, but let's assume they are.
Let's plan for when they dobecome available again.
Knowing there's no one rightanswer, here are some factors to
think about.
I think the big sort ofoverarching question is you'd
(10:09):
wanna think through how high isyour risk tolerance?
And what I mean by that is thathow much do you prefer the
certainty of being on anotherplan like IBR and Pay As You
Earn, continuing the loanpayments again and get an
accrediting months towardsforgiveness versus the
uncertainty of the SAVEforbearance.
(10:29):
Even if it is interest free andjust sort of pausing your loans,
and even if it does end up inyour favor, what are you more
inclined to be comfortable with?
What's gonna allow you to sleepat night?
Is it that certainty, or are youcomfortable with that sort of
uncertainty with the SAVEforbearance?
If you're going for PSLF, maybeyou're at the VA or at your at
(10:51):
Kaiser Permanente or somethinglike that, you have more options
because of the buyback option.
so that's something you canconsider.
Even if you stay on SAVE you'regetting that interest free
forbearance and you have thatpotential, the buyback option
down the road.
I do want to keep in mind thoughthat we're assuming the buyback
option is going to continuebeing available indefinitely,
(11:12):
and there's some uncertaintythere.
Potentially.
It was created through executiveaction.
So it is possible that thecurrent administration adjust
that buyback provision.
But PSLF borrowers have a littlebit more flexibility here.
Here are some factors to thinkthrough, especially if you're
going through 20 or 25 yeartaxable forgiveness.
If you're going to be eligibleforgiveness very, very soon in
(11:34):
the immediate near future,you're gonna need to switch to
IBR to get it.
Now.
You might be able to stick onPay As You Earn, for example.
But eventually, in order toactually get that forgiveness,
you're gonna have to hop ontoIBR and and through the end of
2025, even that 20 or 25 yearforgiveness is tax free.
We don't know if Congress isgoing to extend that, but that's
(11:56):
the current law right now.
If you switch plans, what youwanna know is that, is it going
to lead to a huge jump in yourpayment amount?
Many of you may not had torecertify your income since
COVID years.
It might have been years andyears since you've had to reshow
your income and recalculate yourpayments for the next 12 months.
And if you switch plans, forexample, from save to IBR, it's
(12:19):
going to re-trigger thatrecertification.
So based on your new income andyour new family size, or more
recent family size.
Is that going to lead to a muchhigher payment?
if you're on PSLF, for example,that buyback amount based on
your old income.
Maybe the cheaper routes.
You may want to stay on thatSAVE forbearance a little bit
(12:40):
longer until you are forced torecertify until you're sort of
forced to make a decision.
So what's that gonna do to yourpayment if you are able to
switch to IBR, Pay As You Earn,and, and get a pretty similar
payment amount, meaning you'rein, you're not gonna have this
huge jump in income.
It might be the better option totry to aim for IBR sooner rather
(13:00):
than later.
What are the plans are youeligible for?
That's the other thing you wannalook at.
If you took out your firstfederal loans after July of
2014, you're eligible for thenew version of IBR.
And this is nearly identical toPay As You Earn with a 20 year
forgiveness timeline.
And it's probably the mostdesirable option here because
(13:21):
again, IBR is sort of quoteunquote safer.
It's, it's in statute, it's notsomething that the, any
presidential administration cansimply adjust.
So that newer version of IBR isdefinitely something you wanna
look at.
if you already had loans beforethat point, before July of 2014,
then you're eligible for the oldversion of IBR, which has a less
(13:43):
favorable payment calculation.
If you took your first federalloans out after October, 2007
and also took out another loanafter October, 2011, then you're
eligible for Pay As You Earn.
So even if you're not eligiblefor the new IBR, you still do
have Pay As You Earn.
If you took out loans before2007, you're really only limited
(14:07):
to old IBR.
And so you're sort of comparingwhat SAVE would have been with
the old version of IBR, and sothat that does make that
decision, that math even alittle bit more difficult for
those older borrowers.
So what other plans are youactually eligible for?
That's something you wanna lookat.
Are there any cashflow goals orreasons to continue using the
(14:28):
SAVE forbearance?
So for example, maybe you'recoming up on forgiveness and you
need more time to build updollars.
To prepare for that futurepotential tax bomb when those
loans are forgiven.
That's something you might wannakeep in mind.
Maybe you have an immediate goalof buying a house.
You need down payments orbuilding up an emergency fund,
or preparing for practicepurchase or something like that.
(14:50):
Maybe there's an immediate goalthat you need to set aside
dollars for.
Well, if that's the case, thenthat SAVE forbearance is going
to allow you to do that, so.
So you wanna think through anyshort term immediate cash flow
goals that you might want totake advantage of.
and then what's the potentialoutcome for SAVE?
Is is something you wanna thinkabout.
Now, that's hard to know, right?
But we do wanna think about whatpotential outcomes would be for
(15:11):
SAVE and whether that's going tobe more favorable for you.
So for example, something I I'veseen is that maybe you're a
single borrower and your onlyother option would be the old
IBR plan.
It's possible that if RevisedPay As You Earn comes back,
that's still gonna be the morefavorable option for you.
So rather than switching to IBRand then down the road switching
(15:33):
to Revised Pay You Earn again,you might just wanna stick it
out on the SAVE forbearance and,and see what happens.
On the other hand, if you aremarried and both spouses are
working and you're trying tofile taxes separately for
student loan, purposes.
Then maybe Revised Pay As YouEarn wouldn't help you anyways,
because that doesn't allow youto file taxes separately and
exclude your spouse's incomefrom the calculation.
And so you do wanna thinkthrough, okay, if SAVE were to
(15:55):
be replaced by Revised Pay AsYou Earn, or if SAVE were to
stick around, what would thatoutcome be for me?
What would make sense?
But as we kind of wrap all thatup, you do wanna just think
about your, your risk tolerance.
How comfortable are you with theSAVE uncertainty on forbearance,
rather than going towards thequote unquote certainty with
hopping onto another plan withIBR, knowing you're getting
(16:19):
those payments started andknowing you're getting that
clock ticking again towardsforgiveness.
Ultimately if you have a longtime until you're going to hit
forgiveness, especially taxableforgiveness here, if you have
10, 18, 15 years or so until youget to that taxable forgiveness,
20 or 25 years.
You are probably looking atmaking that switch to IBR if
(16:41):
possible, or, or Pay As YouEarn.
That's gonna be the long-termoutcome.
It, it's just really abouttiming.
When do you wanna make thatdecision?
And think about those otherfactors I talked about earlier.
if you're sticking withforbearance, don't let these
months of forbearance go towaste.
Keep putting that same monthlypayment amount into savings so
that you can keep that habitgoing of making the payments.
(17:03):
You can build up dollars towardsthe buyback if you have PSLF as
an option or just build up forthe future potential tax bomb
when loans are forgiven.
So don't let these months ofzero payments and zero interest
go to waste.
Keep that, keep that habitgoing.
And then a couple things I wantyou to keep in mind.
Number one, keep in mind thatIBR and pays you Earn.
(17:23):
Or going to require a partialfinancial hardship, meaning that
your payment on IBR or pay whenyou're trying to get into it.
So for example, if you'reswitching from SAVE and trying
to apply to get on IBR or Pay AsYou Earn your payments for IBR
or Pay As You Earn would have tobe lower than your payment would
be in a 10 year standardrepayment plan with your current
(17:47):
loan balance and interest rate.
So you can take a look and say,okay, what would my IBR payment
be?
What would my Pay As You Earnpayment be?
And what would my 10 yearstandard repayment plan be?
And would I have that partialfinancial hardship because if
you don't, if your payments aretoo high, you wouldn't be
eligible for those plans.
So if your income has justincreased substantially to a
(18:08):
point where your payments wouldbe too high, or if you're
anticipating that being thecase, when it comes time to
switch out of SAVE later on, youmay wanna make that switch
sooner rather than later.
Especially if you can use theprior year's tax return with
more favorable income, or youwant to be careful about where
you shift deductions, thingslike that.
So you want to keep that partialfinancial hardship in mind for
(18:32):
IBR and for Pay As You Earn.
The last thing I wanna bring upis tax filing, and we're at that
time of year where we'restarting to fill out personal
tax returns.
Now we're getting those filed.
some of you overachievers, maybeeven got your returns filed
already.
But if you're usingincome-driven plans towards
forgiveness, I want you to bemindful of how and when you file
your taxes.
(18:52):
For example, if you're marriedand your spouse is working, you
want to have projected out, youwant to be aware of whether you
should or shouldn't be filingyour taxes, married, filing
separately instead of married,filing jointly.
In order to exclude yourspouse's income from that loan
calculation, I.
If you should have filed taxesseparately, but already filed
(19:14):
taxes jointly, and you'relistening to this before the
April tax filing deadline, talkto your tax preparer about
filing a superseding tax return.
Essentially, it's sending in anew tax return with the words
superseding return at the topwith a letter explaining the
reasoning.
And if it's done correctly, andbefore the tax filing deadline,
(19:35):
including up to October'sextended filing deadline, if you
filed an extension, if you dothat correctly before the
deadline, it's possible toreplace a married filing joint
return with a married filingseparately.
Cause once that deadline passes,whether it's the April deadline
or if you file an extension, theOctober deadline, you can't
amend a joint return back to aseparate return.
(19:59):
You can only amend a separatereturn back to a joint.
And so knowing how you should befiling your taxes if you're
married and if both spouses areworking can be critical to
making the math more favorablefor student loan planning,
especially if you live in acommunity property state,
becomes even more important.
the second thing is that timingis important as well.
For example, if you have anincome recertification date
(20:22):
coming up over the next severalmonths, especially if you're on
Pay As You Earn and your priortax return has a much more
favorable income amount tha n2024, you may want to file an
extension for 2024 tax return,so that you can reuse the prior
year's tax return to recertifyyour income and recalculate your
payments for the next 12 months.
(20:43):
Because it's literally, thatwould literally be your most
recently filed tax return.
And once that recertificationprocess is done, once your new
payments are calculated, thenyou can go ahead and file that
next return.
It's all about, remember, it'sall about the most recently
filed tax return.
So that timing conversation isimportant.
(21:04):
And I'd even consider it ifyou're on the SAVE forbearance,
because currentlyrecertification, if you're on
SAVE those recertification dateshave been pushed into 2026.
However, it's very possiblethat's, that's rescinded, that's
changed by the currentadministration and brought into
2025 into this current year.
So I even might consider.
(21:25):
filing an extension just to giveyourself more flexibility, more
breathing room, more options onwhich year to use.
If your 2024 income's gonna bemuch higher than 2023.
So keep an eye on tax filing,keep an eye on what's going on
here with the SAVE court cases,and keep an eye on our content.
So whether the, it's throughthis podcast or our weekly
(21:46):
newsletter.
Keep an eye on what's going onso that you can make informed
decision.
You can talk to your ownAdvisors about this and, and
make adjustments as thoseadjustments come up.
And if you wanna talk to someonewho works exclusively with
optometrists to help you planaround these super important
topics and so much more, pleasereach out.
I would love to have a nopressure intro call with you
(22:08):
just to talk about what's onyour mind financially and to
share how we help optometristsnavigate those same things all
over the country.
You can also subscribe to ourweekly Eyes on the Money
Newsletter where I write allabout student loans, practice
and personal cash flow taxes,investing in so much more, all
through a link to that in theshow notes.
With all that, really appreciateyour time.
Hopefully this update washelpful.
(22:30):
We'll catch you on the nextepisode.
In the meantime, take care.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Cardiac Cowboys
The heart was always off-limits to surgeons. Cutting into it spelled instant death for the patient. That is, until a ragtag group of doctors scattered across the Midwest and Texas decided to throw out the rule book. Working in makeshift laboratories and home garages, using medical devices made from scavenged machine parts and beer tubes, these men and women invented the field of open heart surgery. Odds are, someone you know is alive because of them. So why has history left them behind? Presented by Chris Pine, CARDIAC COWBOYS tells the gripping true story behind the birth of heart surgery, and the young, Greatest Generation doctors who made it happen. For years, they competed and feuded, racing to be the first, the best, and the most prolific. Some appeared on the cover of Time Magazine, operated on kings and advised presidents. Others ended up disgraced, penniless, and convicted of felonies. Together, they ignited a revolution in medicine, and changed the world.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.