Student Loans - The Administration Has an ED Problem

EDIT: I accidentally uploaded the wrong audio the first time, so if you notice that it's a repeat episode please let me know and I'll reach out to the platform so that all files are updated. 

April 16, 2026: One of the most frustrating and anxiety riddled facts about student loans is the repayment terms. And now the game has changed… again. Today, I take another check-up on the student loan terms and updates from the US Department of Education. With SAVE officially out of the picture, and a July 1 deadline looming, decisions must be made by borrowers. Court rulings and beautiful bills aside, you’ll want to listen whether you’re in repayment, or planning to take out a student loan. 

Sources:

https://studentaid.gov/announcements-events/idr-court-actions

https://www.congress.gov/crs-product/IF13075

https://www.nerdwallet.com/student-loans/learn/what-is-the-new-repayment-assistance-plan-rap-for-student-loans

https://www.cnbc.com/2026/03/10/save-plan-for-student-loan-borrowers-is-over-federal-appeals-court-.html

https://www.forbes.com/sites/adamminsky/2026/02/27/student-loans-in-save-plan-thrust-into-new-uncertainty-after-major-court-ruling/

AFT v Dept of Ed: https://clearinghouse.net/case/46244/

https://www.studentloanplanner.com/repayment-assistance-plan-rap-calculator/

https://thecollegeinvestor.com/58820/repayment-assistance-plan-rap-student-loan-calculator/

 Questions or Comments? Info@ThinkingAheadPodcast.com 

#StudentLoans  #LoanRepayment

Transcript

**OPENING AUDIO – MOHELA PHONE CALL MENU

Hello and welcome to the Thinking Ahead podcast. My name is Rinaldo Stephens and I'm your host on this journey to find out more and discover the truth about careers, college and finance. 
 
 

That clip you heard at the beginning was a phone call with MOHELA, the largest student loan servicer in the nation. Lately, they’ve been getting a lot of calls because of the recent decision by the upper and lower courts about the ongoing litigation between the Department of Education and the states that sponsored the lawsuit. 
 
 The current administration has an ED problem. Or spelled out, a problem with the Department of Education. What? What else do you think ED could mean?

After all the ED got asked by the DOJ LCCs to axe the SAVE and force SLBs to choose an IDR  or SRP before the RAP implemented by the BBB goes into effect …

As you can see, Congress loves Acronyms. 

All this to say, that it’s time for another student loans update episode, 

A little disclaimer before we move on, a little reminder. I AM NOT A FINANCIAL ADVISOR. Any information or advice I provide is for informational purposes only. As with all financial advice, do your own research and seek advice from a professional. Don’t be a dum dum.

First let’s get this out of the way.

S.A.V.E  and REPAYE are officially dead. As of March 10, 2026, a US Court ordered the Department of Education to eliminate the SAVE and REPAYE Income Driven Repayment plans, and to move all enrollees from those plans into other plans. 

Thanks to the lawsuits, however, there has been confusion among ongoing litigation. Many borrowers, myself included, were put in a non-optional forbearance, meaning even if you made payments during this time, they did not count towards your on-time  payments for loan discharge. On top of that, as of last August interest started accruing on these accounts, even though many accounts are still in an administrative forbearance.
 That means, while you don’t have to pay, you’d still be accruing interest. And the new account doesn’t show you how much interest is accruing, it only gives you a total of amount due.  So you either make payments that don’t count towards your discharge months, or you don’t pay and gather interest. Either way, the department benefits directly from this. 

Even worse, borrowers who have qualified for student loan forgiveness since April 2025 WEREN’T GRANTED said forgiveness because, as the Administration claims, they couldn’t recode the system to differentiate between which forgiveness claims were under the S.A.V.E. litigation, and which were not. By not forgiving/discharging loans that were eligible and delaying the SAVE litigation, the TRUMP-MCMAHON LED DOE forced the number of forbearance and delayed borrowers to go over 10  million. When they’ve been giving news conferences this past year, they don’t like to claim that they are part of the problem, but here we are. And, SIDE NOTE, they did play politics by not outing their fellow Republicans that would not drop the suits and allow the program to end on the 2028 date that THEY wrote in THEIR Big Beautiful Bill… and you can’t see me but I’m using airquotes….  But I digress. 

The confusion seemed to end on February 28th of this year, when a lower court decided to dismiss the case because the suing party (led by Republican state legislators) and the administration (Trump-McMahon DOE) were in agreement. Not to mention the law had passed stating that SAVE would end anyway in 2028. 

HOWEVER… an appeal made to the U.S. Court of Appeals for the 8th Circuit reversed that decision, and “forced” the Department of Education to end SAVE this year.

And it’s possibly not over. That was the main lawsuit but there are countless lawsuits ongoing and being formed against the Department of Education. It’s probably one of the main reasons why they’re trying so hard to close it. 

In short, the drama over SAVE and REPAYE is over for now. If you have a loan that was switched over to one of these plans and were stuck in administrative forbearance, you should be contacted by your loan servicer before JULY 1st to discuss your options. 

What are your options? I’m glad you asked listener!

BEFORE July 1st, your options are the current standard and Income Driven repayment plans. Let’s dive briefly into each one. 

FIXED REPAYMENT PLANS: Standard (10 years); Graduated (10 Years*); Extended (25 years)

INCOME DRIVEN REPAYMENT PLANS: Income-based Repayment Plan; Income-Contingent Repayment Plan (ICR); Pay As You Earn Repayment Plan (PAYE)

First up is the classic go to, The vanilla with no sprinkles, Standard plan (10 years); this plan doesn’t really need explanation, but when you first graduate, the standard idea is that you’ll have 10 years to pay back whatever you borrowed during school. If you’re lucky enough to have a good paying job right off the bat when you graduate, then this is the plan for you. 

Tangible Example: If you borrowed $40,000 of Direct Subsidized Loans at 6.4%, your monthly payments would be about $454/ month for the entire 10 years. 

Next we have the Graduated Repayment Plan (10 Years*); And no, this is not a plan for graduate students. What a graduated plan does is set a repayment term of 10 years, but it spreads the payments out so that you’ll pay less in the beginning, but then every 1 or two years, you end up paying more and more, so that by the end of the 10 years, your payments are more than double what they were in the beginning. 

Tangible Example: If you borrowed that same $40,000 at 6.4%, your monthly payments would be about $260/ month for the first year but almost $780 for the last year of your payments, with about $4,000 extra to be paid in interest.

 This may sound harsh, but the truth is you don’t end up paying as much interest as some of the other plans on this list. This would be the choice for a person that is perhaps spending their first few years after graduation getting military service or internships out of the way, and then they work up to a better paying job. 

Last of the fixed repayment plans Extended (25 years): The extended plan takes the benefit of having small monthly predictable payments, but stretches them out over a 25 year period. 

The tangible example has an enticing monthly payment of $267, but over 25 years, would end up paying a total of $80,202, meaning you pay $40,000 of interest on top of the $40,000 principal you borrowed. 

There is also an EXTENDED GRADUATED FIXED REPAYMENT Plan,… a mouthful that follows a similar timeline, but like the 10 year graduated plan, adjusts slowly over time, with more interest accruing in the beginning. 

Truthfully, I feel that these plans are a stop gap for when you first leave college and want lower payments until you find a better paying job, or for when you lose a job or large amount of income. If you find yourself choosing this plan because of income limitations, then you’d better off choosing one of these Income Driven Repayment plans. Or IDR.

As stated by their name, Income Driven plans are based on your reported income. They aim to first be affordable, and then to pay off the amounts. These plans, used in conjunction with Public Service Loan Forgiveness, are a good way to erase student loan debt, while not falling behind in reaching life’s milestones. It’s a lot easier to get a down-payment on anything, if you have $7500 + interest extra in your own bank account. To be eligible for any IDR plan, you do have to show proof of income either through taxes or W2 submissions, if you don’t have at least 2 years of taxes filed. 

For the purpose of this exercise, and because the system on studentaid.org does it’s own background math, I’ve put the income salary at $35,000/yr with a 3% increase each year. We’re still going to use the Direct Subsidized Loan of $40,000, borrowed at 6.4%. 

Under the Income-Contingent Repayment Plan (ICR) , Your monthly payments are generally limited to 20% of your discretionary income [For the ICR, Discretionary Income = Your Taxable Income - HHS federal poverty guidelines]. And the repayment term is 25 years. Your monthly payments drop to a measly $286 and readjust according to your yearly household. If your income actually increased by that 3 percent each year, the last few months of payment would be $313. Unfortunately, without principal forgiveness, you would end up paying $71,636 over the life of the loan. Y

In the Income-based Repayment Plan, Your monthly payments are limited to 10% of your discretionary income [for IBR and PAYE, Discretionary Income = Your Taxable Income – (150% × HHS federal poverty guideline)]. With a loan term of 25 years, this means your loan payments would start out at $96! If you had no adjustment to your family size, and you stuck with that 3% raise per year, at the end of 25 years your payments would only climb to $212. Of course, for you mathematicians out there, you probably noticed that this doesn’t even cover the original loan, much less the interest. 
 Well, that’s because any outstanding balance at the end of the 25 years is DISCHARGED. FORGIVEN. ANNULLED. In this case it would be a whopping, $51, 593 that you would no longer have to pay back. 

At first glance, this seems like a no-brainer, but the IBR comes with a double edged sword. 

First,and this is important: If you leave the IBR Plan or no longer qualify to make payments based on your income, any unpaid interest will capitalize (be added to your loan principal balance), increasing the total amount due on your loan. This means, if you get married or get that job glow-up late in the life of the loan, you’ll be booted off the plan AND your interest payments will increase. 

Secondly, and this applies to all discharged loans in the IDR, a law passed as part of the Big Beautiful Bill counts all loans discharged or forgiven outside of the Federal Aid specialty programs, PSLF and Teacher Grant, count as INCOME  for the year that they are forgiven. $50,000 in forgiven loans is nice, but that tax bill on $50,000 worth of income? Unkind at best.

The moral with this repayment plan is to HAVE a repayment and job plan, act early, and act quickly. 

And last of the Income Driven plans is the Pay As You Earn Repayment Plan (PAYE)Also known as PAYE. This 20-year plan also limits payments to the 10% of your discretionary income, and has some of the same expectations as the Income Based Plan.… yearly certifications of income and family size, updated payments accordingly… however, it does not have the STING of the IBR plan if you find yourself ineligible after a raise. You will be moved to the standard plan if your situation changes, but it doesn’t appear to roll your interest into the principal when that happens. A blessing if I ever heard one. 

Of the income based repayment plans, this one is probably the best and most forgiving… literally, as in the example of $35000/yr income with a 3% raise over time with no family changes… you would have $55,654 forgiven at the end of  20 years or 240 months of repayment. 

Some final notes on the plans that are available today: 

I’ve been using years as a basis for how long these loans take to repay, but that is all based on timely MONTHLY payments. So ,the 10 years is 120 payments in a row, with no deferments, forbearances or missed payments. 

It stands, by common sense, that if you miss payments, or don’t pay due to forbearance or deferment, that the time outlined in these plans will go further, and the amounts different because interest. And don’t try to call the department of Education or your lender and try to argue otherwise. The fine print is pretty clear on that one. 

If you do have some trouble actually getting your loans forgiven on time, Tate Law, the self proclaimed #1 Student Loan Lawyer, recommends getting in touch with your loan managers first, and then your state’s Ombudsman so they can contact the appropriate parties and apply pressure to get that done. 

As a final note, remember, all forgiven loans in 2026 forward will count as INCOME. I’ll of course updates if anything changes. 

I’ll be honest… this episode is getting longer than I planned. So I’m going to break this down into a two parter. 

In the next episode, Dr Dre might make an appearance… but more importantly I’m going to talk about the plans that are going to replace the current set of plans on July 1, 2026. If you are unsure on whether or not to wait it out until those plans roll around? Don’t. You only have roughly 2 and a half months to get the paperwork in, and at the rate the ED is going, they won’t be UP to par… and may even have a flacid response…..

If you  want to stay up to date on what’s happening with student loans, be sure to subscribe to the podcast through RSS, spotify, Youtube, or your favorite podcasting platform. 

Until next time, stay smart on your finances, and keep thinking ahead!