How Dentists Should Prepare For The End Of The SAVE Plan

On this episode of The Dentist Money Show, Jake and Taylor break down what’s changing with federal student loans, what the end of the SAVE plan means for dentists, and the options borrowers have moving forward. They discuss the new RAP plan, changes to income-driven repayment plans, loan recertification requirements, and when refinancing may make sense. Tune in to learn how to navigate the changing student loan landscape, understand what’s coming next, and how to prepare.

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Podcast Transcript

Jake: Welcome everybody to the dentist money show. My name is Jake. I’m here with Taylor today You got the student loan dream team on the podcast Taylor. What’s up? How you doing?

Taylor: you know, Jake and I, everything that consumes our life right now is the NBA and the Utah Jazz draft pick. So we spent 15 minutes pre-recording talking about it. And that’s the only thing that’s on my mind. So.

Jake: Yeah, we’re not exactly sure when this podcast will come out. Probably a few weeks from when we’re recording it. I do think it’s important, Taylor, to say when we’re recording this podcast as we get into some of the student loan stuff, more information or things may come out. We’re recording this on May 19th, just for the record here. We are very interested in our beloved Utah Jazz and the NBA currently. If you’re listening to this podcast, maybe this comes out after the draft. ⁓ The Jazz had the number two pick in the draft. If you’re following the situation at all, there’s an awesome BYU player that’s here in Utah that people want the jazz to draft.

Taylor: No, no, no, no. Don’t even put that out there, Jake.

Jake: It’s a big decision. Okay. This is important to Taylor and I. This will impact our happiness over the next 10 years as we spend a decade watching the jazz. Big deal for us here. Almost like this is in relation to Trump’s new student loan plans coming out. This is more important. Yeah. Maybe more impactful. The jazz is draft pick here.

Taylor: You more impactful for Jake and I being good advisors because we’re happy going into work.

Jake: We’re going to be grumpy. You’ll hate us. Yeah, if we if this doesn’t work out for our jazz anyway. So yes, we are recording this on May 19th. Again, this may come out a little bit later. What we wanted to do today was hit on as many angles of this student loan situation as we can. We are up. We are coming up on this July 1st, kind of deadline when a lot of these plans and things are changing. So we wanted to talk about that briefly. Taylor, any general thoughts about student loans that we need to get out? off the bat here.

Taylor: Yeah, what I would say here is we have gotten ourselves into some bad habits when it comes to student loans over the last six years. Not for anyone, not through any fault of anyone listening or us here on the pod, but just artificially, again, I doubt this is shocker to anybody. But since 2019, basically since 2020, I have clients since 2019 that haven’t made payments, but 2020 is when the COVID forbearance happened.

Jake: Yes.

Taylor: Right. And for a good four or five years, no one was forced to make a payment and there was the whole save plan that was here and, you know, people are still on kind of waiting. It’s been an administrative forbearance. But I think if we back up and we just look at things from like a 3000 foot view and we say, hey, you know, let’s ignore all the details and just talk student loans in general. What student loans were before? COVID, they’re going to be after COVID as well. Now, what do I mean by that? Income-driven repayment plans are still going to be around. They still exist. And the purpose behind an income-driven repayment plan is still the same. Income-driven repayment plans are there to help low-income individuals. That’s the whole reason for an income-driven repayment plan. If you have a low income, then you get a low payment, right? If you have a high income, then you have a high payment, right? And the thing that I think a lot of people are confusing with these income-driven repayment plans is that they associate, for good reason, right? If you graduated in 2018 or 2019 and then COVID happened, you you’ve going on almost a decade of never having to make a payment, right? And you being on an income-driven repayment plan the whole time,

Jake: It’s wild.

Taylor: It’s really easy to see why some people think these income-driven repayment plans just mean no payment, but that has never been the case. And if it weren’t for COVID, the save plan that people are clinging to right now wouldn’t be an option and wouldn’t be something that most of the people on save would still be on, right?

Jake: Yeah, I agree. like that you’re taking this. I like starting here this general point of view. You covered the income driven repayment plans, which is great. The other two options just like again backing up broad level here, right? Once you graduate dental school, you’re starting to work. You do have the option to get into one of these income driven repayment plans, which we’ll keep talking about throughout this podcast. You don’t have to go into an income driven repayment plan. Once you graduate, you have that six month. What’s the official term for the six months? It’s not like your forbearance or you have your essentially your grace period or for a period where you do not have to make payments. You don’t default on your loans. If you do not elect for anything after you graduate, you will be defaulted into just a standard repayment plan. It’s usually over 10 years. Like if you don’t even touch or elect for anything under student loans, 10 year plan, pay it back like a typical loan based on the interest rate of the different tranches of your loans over 10 years. And you can switch that if you want. You know, you can actually

Taylor: It’s just a deferral period that you can be in.

Jake: Do extended payments out to 20 and gradual payments, all of that fun stuff. But that’s one option. Another option is you can privately refinance, right, too, if you want to take your loans away from the government, get them into a private lender. These are like Laurel Road, SoFi, I Mojila will actually earn us there. Some of these providers will do that for you where you just refinance. Usually you want to do this because you can get a better rate on your loans.

Taylor: earnest.

Jake: You can go from maybe like a six and a half, seven percent average interest rate to maybe down to a five or if we get better rates of four or three. like depending there, then you get just a consistent payment moving forward. So those are two other options you can do outside of income generally payment. The reason they don’t make a lot of sense for most dentists at the beginning of their career is if you’re graduating with three, four hundred or even five hundred thousand dollars worth of debt, that standard payment or even a refinance payment over 10, 15 or 20 years. could be like three to $5,000 a month, which for a lot of new grads who are working as an associate or trying to buy a practice or purchase a house or something like that, it’s like there’s other financial goals that take priority and it’s like, let’s just like lower, like the reason for income driven repayments is let’s lower this payment in the short term, give us some flexibility to plan for some other things in our life. And then as income grows, then you get into a more stable point in your career, then you can maybe like refinancing and paying back your loans. Did I miss anything there, Terrence? That were kind of like the three main options, refinancing, standard payment, and then IDR, which we’ll spend most of the time today talking about the nuances and complexities of the IDR system.

Taylor: Yeah. Those are the three main options that most people take, right? Like you mentioned briefly, there is the graduated repayment, which is like a modified lower payment that gets bigger over time and you get the extended fixed plan that you can basically do. I wouldn’t call it a refinance. You’re still on the federal system, but you just make it a fixed amount longer than the standard 10-year. So that’s an option as well, but for the most part, you see the standard, the income driven and then a refinance, right?

Jake: Yep. Okay. Yep. So let’s get into Taylor. Some of these, that’s kind of like the general, you know, direction you can take as you graduate school there. ⁓ let’s dive into some of the kind of recent things that have been happening with student loans. Some of the things to be aware of here. ⁓ so maybe we start with the safe plan. I think is it’s like, when we talk about income driven repayment plans, there are a lot of different types of plans under like this income driven rebelled umbrella, right, which is kind of hard to think about. In the past, there’s been like, then they call them different things. And I always find the names funny. Like they I feel like they try to make them complicated, and they can maybe make them easier. There’s been like IBR, which is called income based repayment is a plan, which is again, easily confused with income driven repayment. But IBR is like its own plan that’s split into old IBR and new IBR, which we can talk about, I’m sure we will get to at some point.

Taylor: Yeah. Well, and that’s the thing is it was originally just IBR and then it was old IBR was the original and then it was new IBR, kind of like the original Star Wars changing to a new hope. You it was just IBR, but then there was old IBR, then new IBR, then there was pay, then there was repay, then there was ICR, then we have save, now we have rap. You know, I think there’s probably someone whose full time job is just to make acronyms.

Jake: That’s the perfect analogy, yeah. Mm-hmm. Yep. Yes. That’s what always like to think about. Like who’s making the names of these plans? They’re like WRAP plan, ⁓ the SAVE plan, which sounds more appealing for people to get into. Yeah, so you highlighted all the different plans, all these different types of income, gender, and repayment plans. We may touch on a few of them. I wanted to start with the SAVE plan because I think that’s most pertinent currently. So the SAVE plan, S-A-V-E, was Biden, the Biden administration’s plan that they implemented. I can’t even remember what year couple of years ago, maybe during COVID is time. Yeah. This is the safe plan was the most beneficial IDR plan that’s ever been put in place, right for borrowers. So under the safe plan, they had a really favorable calculation for calculating your payment. ⁓ You can stay on this plan here. It had a 25 year forgiveness window, which we can talk about like after 25 years, if you had not paid back your loans, you would get forgiveness at that point.

Taylor: It was during COVID. It was during the COVID for Barrett’s.

Jake: And then the real kicker with the save plan is whatever your payment was, the difference between your payment, whatever interest you owed each month, the save plan would cancel your interest every month. So no interest was ballooning.

Taylor: And this was honestly the most important and the thing that saved most of our clients, tens of thousands to hundreds of thousands of dollars over the COVID forbearance. Again, all income-driven repayment plans have some similarities, right? Which is that your payment is derived based on your income. So again, if you have low income, you have low payment, high income, high payment. So for a lot of recent grads who start out with a zero income, right? Your payment will be next to nothing, right? Getting started. But you’re still going to accrue interest. That does not change regardless of the income driven repayment plan that you’re on, right? But traditionally, the first income driven repayment, if your payment was really low, but you owed $1,500 of interest every month, that unpaid interest was accruing, right?

Jake: Which that’s the trade off, right? That was the trade off you’re making like an exchange for a lower payment. I’m just accepting that some interest is going to accrue all my loans until I’m ready to pay them back.

Taylor: And that was IBR, that was pay, right? And then the repay, which literally was just revised pay as you earn. So they changed it, they didn’t do new and old IBR, they just called it repay instead of new, right? ⁓ Don’t ask me why. But anyways, the change on that was they’re saying, okay, instead of all the interest accruing, we’ll make half the interest accrue and half will be forgiven, right? So the natural next step,

Jake: and said, yeah, yeah, repay.

Taylor: was the save plan, which said, hey, if you have any unpaid interest instead of that accruing, this is gonna get canceled or waived, right? So again, if you graduated in 2019 or 2020 and your income coming out of school was zero, then your payment was zero and.

Jake: no interest is accruing, your balance is not ballooning.

Taylor: Exactly. So you have literally thousands of dollars every month of unpaid interest that was being canceled or forgiven, which is why I it was so beneficial for recent grads and made even more beneficial when they didn’t make you recertify your income.

Jake: Yeah, let’s talk about this. I think the recertification is a huge component here. So with income driven repayment plans, they base your payment off of your income. So what they do is naturally people’s incomes will change. So they ask you to recertify or resubmit your income, like verification of income every single year. Right. So it’s like I got on this plan in July. It’s like next July, they’re going to ask me to resubmit my income to adjust my payment every single year. This is funny, Taylor. I have talked about recertification with a lot of new grad dentists over the past couple of years and many do not know what it is. They did not understand that you had to like resubmit income because they’ve never had to do it. This is one of the big things with COVID.

Taylor: Well, that’s the thing that’s the biggest reason why the safe plan has been so beneficial and people have held on to it is they technically have never had to recertify, right? They’ve gotten letters for the last six years saying you’re going to need to recertify. And then when the time comes, they say, never mind, we’re pushing this back. We’re pushing this back. We’re pushing it back. Right. And that’s been the biggest thing that people have been like, well, they’ve never made me do it. Why now? Right. What’s going to change?

Jake: Yeah, they keep pushing your date back.

Taylor: Right.

Jake: So that’s the biggest, that’s where I think where we’ve gotten to the situation is that people have been enrolled in the save plan for the past even five or six years, seven years even. There’s a chance that you’re like, you recertify, like you submitted your income right out of school. It was zero, your payments have been zero. No money has grown or accrued on these loans until now and you haven’t, you just like really haven’t had to worry about it. Now, again, still continuing with the save plan, cause a lot of I think over the past five years too, most people I know have switched to the SAVE plan over the past five years. Most people have been on SAVE ⁓ who graduate.

Taylor: Everybody that had a low income, right? You know, had people who had graduated five, 10 years before COVID, were already making a high income. It didn’t make sense for them to switch to save because again, the only benefit of save is if your payment is below your interest owed, right? If your payment is above your interest owed, there’s no reason to be unsafe, right?

Jake: Yes. Yes. And so with that, but this is the thing with save interest did so with the whole save plan. There was a court injunction. When was this Taylor when they had the first court injunction June of 2024. This is when they said, okay, we’re going to keep the save plan in effect, but that interest cancellation that you were getting, we are stopping that like that’s not lawful or something there. So if you’ve been on the save plan, they haven’t asked you to recertify your income or to change plans.

Taylor: June 2024.

Jake: but you have been accruing interest on your loans since 2024, June or July 2024.

Taylor: Well, so June is when the court case came, right? But you technically didn’t start accruing interest until August of 2025, right? There’s a million and one million of one things that have happened along the way, right? But if you if you think about it, it really was the Biden administration came in, implemented save. And then once the Trump administration came in, they said, hey, that plan that they implemented was illegal, right? They shouldn’t have been able to do that.

Jake: Okay. Okay, that’s the number, August the 25th. Okay. Okay.

Taylor: and we’re going to put this in an administrative forbearance. So that happened June of 2024, right? And then the one big beautiful bill was passed and part of the one big beautiful bill in July of 2025, they said, hey, this forbearance that the people on safe have been in, it’s still going to be in forbearance, but we are canceling the interest forgiveness, right? So since August of 2025, interest has been accruing.

Jake: There you go.

Taylor: Right, which was the key feature of save any unpaid interest was being waived. It was being forgiven. And that has not been the case since August of 2025.

Jake: Yeah, so you can still be on the plan, but it’s that trade off again now of your are accruing interest. You can keep your zero dollar payment. You’re not going to default, but that’s the trade off they are accepting now. Also with that is you are not right since this time you’re not getting credit these months of zero dollar payments. You’re not getting credit towards your if you are someone who may be looking for long term government forgiveness, you’re not getting credit towards your 200. You know your 20 years your 25 year, you know, forgiveness window payments to make.

Taylor: Yeah, which I think I could be mistaken here, but I think that stopped in June of 2024 with the

Jake: Yeah, that was more with the forbearance. Yeah, where you haven’t been getting payments credit for these payments for a while on save, which is fine. Again, if you’re a dentist out there like, I’m just figuring out my career. I have other expenses or things I’m saving for maybe being on save makes a lot of sense just to keep your payments low when you’re willing to have that trade off of the interest accrual. That has been a fine plan all the way up until about now, which we’ll talk about is, again, we’re getting more details every single month about how things are going to play out. But as of now, what they’ve told us is, the safe plan like we’ve kind of been killing it off for the past two years and is officially going away. Probably sometime this year, Taylor.

Taylor: Yeah, so the background again was June 2024 was like, hey, this court case is blocking all of the safe features. We’re going to wait and see, right? We’re trying to get rid of it. And then with the one big beautiful bill in that bill, they basically said all previous income driven repayment plans are going to be grandfathered out by July 1st of 2028. But the SAVE plan was always July 1st of 2028 or sooner, right? And they basically included language in there of like, hey, one way or another, it’s gone July 1st of 2028 like all the other plans, but we’re still working on getting this gone sooner, right? And the big update that happened recently, right, just within the last, what, month or two, right, was this update was that we now know it’s going to be sooner, right? That question has been answered and they have said you are going to start receiving a notification from your servicer starting July 1st of 2026. that’s from when we’re recording this about a month and a half out. Right? And then the notification is going to say you have 90 days to leave the save plan and go somewhere else. Otherwise you will be auto enrolled in that standard repayment plan.

Jake: Is that what it is I was wondering about that if they were to switch them to rap or something, but they’re just going to if you don’t elect anything, they’ll flip you to standard. OK.

Taylor: That we. Yeah, and we should say and note that the standard repayment plan is changing a little bit, right? But, you know, the big change with the standard is previously the standard repayment was just a flat 10 years. Now what they’re doing is based on the balance, it can go further than 10 years, right? But it’s still, yeah, for most dentists, it’ll be more than a 10 year standard, but…

Jake: I wanted to get to that too. Yeah. We can kind of get to all the new things here which it will for most of our clients.

Taylor: It’s still a standard loan in the sense of whatever the term is, it’s based on your interest rate term straight payments all the way through.

Jake: Essentially if you have more than a hundred thousand dollars of loans that actually extends out to 25 years is what the new standard plan is going to be Which I think is helpful right where it’s like lowering your payment early on over 25 years again helping you get settled in your career But yeah, that’s what the new standard plan is going to be. So yes as of July 1st is kind of this Inflection point where the big beautiful bill that Trump, you know came out last year like all of this student loan changes are taking place or should be taking place on July 1st or after the driver’s is actually like when the Trump kid account is going to be available to on July 1st, that’s a different podcast ⁓ but A short one. They’re not great. We don’t need I do like don’t do that. I take your free thousand I guess but Trump accounts are not awesome So yes, July 1st is his inflection date so starting like the save plan to kind of recap all of our save there

Taylor: A short one, a short one.

Jake: Is it is going away for those of you who have been the safe plan you are going to get kicked off to another plan Again like this fall for pretty certain like you’re going to have to change 90 days from July 1st is end of September right? Is when that would be? So like this time that you’ve enjoyed being on the safe plan without any payments or things like that Like that’s coming to an end for you. You are gonna have to make a decision on what you want to do from here Which leads us into some of these other type plans that you can get into, which I think we should talk about. Let’s start with the WRAP plan, Taylor. So this is Trump’s new plan, ⁓ WRAP, that he came out with the big beautiful bail. It’s going into effect on July 1st. This is supposed to function similarly to the SAVE plan, where it is a 25-year- it is not. Instead, it’s a 30-year forgiveness window. SAVE was 25, so they stretched that out the longest forgiveness window of any plan, any income.

Taylor: 30.

Jake: Draft and Repayment Plan. There is supposed to be that interest cancellation. Like as far as we know, they have said on WRAP, like I think in the initial Big Beautiful Bill, that there’s supposed to be interest cancellation like the SAVE Plan with WRAP, which I don’t know if that’s confirmed. I think we’re still waiting like confirmation on that, but it’s supposed to be there.

Taylor: I mean, that’s, that’s, that’s, those are the features that have been improved through the one big beautiful bill. So it’s still a thing, right?

Jake: There you go. So you get that interest cancellation. The calculation though for your payment, like determining your payment based on your income is less favorable ⁓ by quite a bit over like the save plan and things there. so this is kind of like your new, the RAT plan is like the new save plan. I guess you could like your new income driven repayment plan. Technically for all borrowers after like if you took out student loans after July 1st of this year, the RAT plan is your only option. That’s the only income driven repayment plan available to you ⁓ as of now. Anything else on the WRAP plan that we need to talk about?

Taylor: No, what I would say is functionally the WRAP plan is basically the SAVE plan, which again, everyone equates the SAVE plan with zero payments, but the SAVE plan never was zero payments, right? Zero payments was the COVID forbearance. The SAVE plan, if it were ever actually implemented, the biggest feature of the SAVE plan was any unpaid interest was being forgiven, which is what’s happening with the WRAP plan, right?

Jake: Yeah.

Taylor: The biggest differences are, as you mentioned, instead of 25 years of payments and then forgiveness, it’s now 30 years of payments and forgiveness.

Jake: which changes the math for people who are like, wanna go for long-term forgiveness, that extra five years, mean, 30 years of payments on loans, like that changes the calculation of does it make sense to get government forgiveness with taxes and things there. I really…

Taylor: some mortgage. It changes it, but honestly, I always told my clients and I know you have told them as well, Jake, but I’ve said forgiveness is the worst case scenario, right? And most of the time people are like, what do you mean? Forgiveness sounds amazing. I want that. But if you think about it, it’s like, again, income driven repayment plans. If you have low income, you have low payment, right? And

Jake: Yes.

Taylor: That means for us to have made it to 25 years of making payments and never have paid off our student loans, we have to have had a low enough income that entire 25 years. So what’s better? Having a low income for 25 years and achieving forgiveness or having a really high income for 25 years and being forced to pay off your student loans?

Jake: 25 years. Yeah, that’s the goal. The whole reason you got into student debt in the first place is hopefully to create skills to create a high income for yourself, right? That’s the whole point.

Taylor: So I personally don’t want any of my clients to achieve loan forgiveness, right? That’s my goal for them. Now again, life circumstances, changes, things happen, and that’s why this is actually still a really great thing that exists. An income driven repayment plan is really, really helpful for low income individuals and families. And it will continue to do so because the same and most important key feature of save is being maintained which is any of the unpaid interest is being canceled or forgiven, your loans are not ballooning, they’re not starting at 300,000 and turning into 1.5 million over 30 years, right? It’s just staying at whatever balance you originally took out, which is a really, really helpful feature, but again, it’s only going to be beneficial for the low-income households.

Jake: Essentially, if you get anywhere close that we talked about, it’s like that one to one debt to income ratio, right? It’s kind of the line in the sand, something you can do in your head where if you have $300,000 worth of student loans, your gross income is hovering around $300,000. Usually at that point, these income-driven repayment funds, like your payment is going to increase to be high enough that over the course of 25 to 30 years, your payments are high enough that you’re going to end up just paying off your loans anyway before you get to any sort of long-term forgiveness. So then at that point we can talk about refinancing, being more efficient with it, getting a better interest rate, and paying them back there.

Taylor: But this, again, this is everyone’s different, every situation is unique. So as always, it depends. But for the most part, if we were to map out what our preferences when it comes to tackling your student loans, it hasn’t really changed prior to COVID. And now where we are today, right? Our hope with income driven repayment plans is that a young dentist brand new at a school can get on an income driven repayment plan like a wrap, get a lower payment have some interest subsidy until their income catches up and they get better at their craft and make more money and are more successful in their careers. And then the hope is they get to a place where an income driven repayment plan no longer makes sense and they either refinance to a better interest rate or go on a standard 20, 25 year repayment schedule.

Jake: Yeah, and knock them out. Okay, so that’s the RAP plan that is available for you. Like as you’re switching from save after July 1st, you can get on Trump’s new WRAP plan is an option. The really only other income driven repayment option is what’s called IBR or income based repayment. So I think we need to talk about this. So along with the WRAP plan being instituted with the big beautiful bill, the Trump administration also said we are getting rid of all these other plants. So that’s why we’re getting rid of the save, we’re getting rid of pay, we’re getting rid of repay. All these plans will phase out in 2028. July 1st, 2028 was kind of the date that has been given. So if you’ve already been on pay or these plans, you can stay on them and recertify and keep staying on these plans until 2028. But you are getting kicked off at that point. IBR is the big one. Like at the end of the other one that’s staying around long term. So for all the existing borrowers, like if you have had student loans, if you’ve either been on pay or IBR and things, you can get on IBR before 2028. So it is going to go, it’s like for people after 2028, you cannot get on the IBR plan. But if you’re an existing borrower, you can get on IBR and kind of stay with that plan as long as you get on before 2028 here.

Taylor: Yeah. And why this would matter is the IBR plan, depending on the plan you’re on, there’s a chance that you might be able to achieve forgiveness if you’re still on an income driven repayment plan and you had student loans from that long ago. Let’s say your first student loan you took out in 2014, and then you graduated in 2018 and you made a couple of years of payments, then you were on save. And why I say 2014 is if you were 20th July, if you took out your loan July 1st of 2014 or later, right, you are on the new IBR plan, not the old IBR plan. And that’s a key distinction because the new IBR plan is just better than the old IBR in every single plan.

Jake: crazy distinction. Yep. Which is funny. Do you find this funny, Taylor, that they are like the new IBR plan for borrowers after July 1st, 2014 is more like is more favorable. They’re like helping out newer borrowers and not older borrowers. They’re kind of hurting older borrowers with old IBR. That’s weird. Yeah.

Taylor: Yeah, usually you get like grandfathered with a better plan on the old stuff, not penalized. But yeah, it’s a weird thing. So I have a couple of clients that like took their first loan out right before that deadline. And it just kind of screwed them over.

Jake: So that. This is for any loans. If you take an undergrad, whatever loans, if you had any type of loans before July 1st, 2014, you are kicked into, you can get on IBR, but it’s what’s called old IBR. So the distinctions between the two, new and old IBR. New IBR has a 20 year forgiveness window. So it’s the shortest window of any of the plans. So it really is like new IBR is the best. If there’s a chance you might get government forgiveness based on your income compared to your loans, new IBR is generally the plan to be. There is no income cancellation, mean, interest calculation cancellation, sorry, can’t talk. So if your payment is lower than what you own interest, some interest will accrue on your loans. And then the calculation was at 10%, I’m pretty sure discretionary income is where it stands for new IBR. And so old IBR is less favorable. It is a 15 % of discretionary income for the payments. your calculated payment every year will be higher. And it’s a 25 year forgiveness window instead of 20.

Taylor: Yeah, yeah, 10%.

Jake: So you extend five more years of payment if you wanna go for forgiveness.

Taylor: Yeah. you have basically your payment is 50 % more on old IBR and you have to make five extra years of payments to achieve forgiveness.

Jake: which really hurts your math on that long-term forgiveness option, old versus new. ⁓

Taylor: Right. So there’s a contingent of people out there that took their first loan in 2014, graduated 2018, and then got student loan forgiveness credit all throughout COVID, from 2018 to 2024. So that’s, what is that? Don’t make me do my last six years of payments. So they’re only 14 years out from forgiveness if they switch to the IBR plan. Now,

Jake: This year, 18, yeah, six years, yeah.

Taylor: You know, you’re going to have to run some calculations and do some math and figure out is that even a possibility? Because again, the hope is that your income’s gone up and you’re making more money. And there’s a decent chance that even with 14 more years to go, your payments going to be so high, you pay them off anyways, and you’re better off doing the refinance. So it’s it’s a very like small subset. You have to have taken out your loans in the right window and you have to have your income in the right window where it makes sense to actually be on this plan. But there is a group of people that potentially this could make sense for.

Jake: Yep. So those are really your options on the like moving forward. Those are really your options for income driven new payments. You can get on the rat plan Trump’s new plan or if you’ve had existing loans, you can move to an IBR plan new world if you’re still looking for kind of that relief payment wise. Now, again, this is I want to bring this up again, Taylor, in the sense that most of these people like in this scenario, a lot of dentists we’ve talked to have just not had to recertify their income in like five to six years. And this is what they’re underestimating. Like it doesn’t matter what if you had been at a zero dollar payment or a $500 payment, you know, in early 2020, it’s likely your income has gone up and it doesn’t matter what income driven you plan to get on rap or no IBR. It’s likely your payment might jump out to a couple thousand dollars a month just because your income has gone up and they’re going to ask you to recertify.

Taylor: Well, and that’s the key point is when you change plans, you have to recertify then, right? So you can’t just be like, well, I haven’t made a payment, save isn’t, because I’ve had a couple of people actually say that to me. They’re like, well, my save plan says I don’t have to recertify till 2027. And I’m like, that’s fine, but you’re kicked off of save before 2027, right? And when you’re kicked off of save, you have to recertify if you go to a new plan. You can’t just keep your recertification the same.

Jake: We maybe should have clarified that, yes. Yep, you’re getting kicked off.

Taylor: when you switch plans. When you switch, you have to recertify right then.

Jake: There you go. Another quick note too with Trump’s WRAP plan is the payments on that plan do not qualify for forgiveness on any other plan. So if you had the idea of like, I’m get on the WRAP plan for a couple of years and then before 2028, I’ll maybe switched to new IBR, you get forgiveness there. Those payments that you had on WRAP do not qualify for your forgiveness. So you didn’t get credit for those over those couple of years for your forgiveness if you stayed on.

Taylor: Yeah. Credit will still be applied from past income driven repayments. Like if you’re coming from a different plan and you’re switching to RAP, those will count. But the WRAP plan payments don’t count to IBR. And you’re also not allowed to switch to be on RAP and then go to IBR. So once you’re on IBR, that is, sorry, once you’re on WRAP, right? I’m getting my yes. Once you’re on RAP,

Jake: Getting your acronyms mixed up, yeah.

Taylor: You’re either on that as your income driven repayment plan moving forward or you’re switching to a standard or doing a private refinance. In the past, you could switch back and forth between different income driven repayment plans. That’s not an option to wrap.

Jake: Did we hit on everything? Kind of new, rap, save, IBR? I think we got it all. Right? Kind of what’s upcoming.

Taylor: Yeah, what I would say here is, say what you want. Student loans have been nothing but complicated and confusing for better part of 15 years now, right? And it’s just gotten more and more complicated. Things are gonna get a whole lot more simple after these new changes, right? Once all these other plans are gone and it’s just this or this. It’s gonna be a lot more simple to calculate your student loans and what you wanna do, right? So for better or worse, a lot of the complexity that has been a pain over the last however many years, yeah, the plan, and the plan if you compare it, like income driven repayment plans, the reason for them, again, is to help low income individuals afford payments.

Jake: I think it’s for better. I like the simplicity.

Taylor: And that’s still gonna be the case, right? This WRAP plan, although it’s worse than the SAVE plan, you could argue it’s still better than the old IBR, than the new IBR, than the ICR, than the PAY, than the REPAY plans, right? Because one of the biggest kickers is that interest cancellation, and that still exists. So despite it getting a little bit worse than SAVE, It’s still a really great plan, right? For what it was created for, which is income or low income households, right?

Jake: which I don’t know if we need to caveat this for dentists listening to this. It’s not you. Sorry. I don’t think we can like dentists are a lot of things, but they are not low income typically low income households. So that is one thing I think it’s important to wrap our brains around before 2019, 2020 dentists graduated and actually just paid back their student loans. I know it’s a crazy thing to think about, but that’s what happened. Like for most of

Taylor: I think we do. I think we do need a caveat.

Jake: Dental school history, we have gotten out of that for half a decade plus. But paying back your student loans is a bad thing. Most people will have to do it. Taylor, think we need to address there are people listening to this who are saying it like thinking to themselves. Okay, like I get it what you guys explained to me for like the next couple of years, what’s going to happen with the Trump administration? What about in 2028 when Trump’s not president anymore and we get a new administration in there is all of this just going to change again? What do you What do you say to that question?

Taylor: My answer is probably, but when it changes, it’s not changing for you. Right. And that’s, that’s the whole thing is like one way or another, even if you’re holding on to pay or you’re holding on to ICR or you’re holding on to these other plans, they’re gone July 1st of 2028. And the new administration doesn’t get elected till November of 2028 really doesn’t have anything that they can do till 2029 at the earliest. So all of these old plans will be gone. They’re just, they’re going to be gone. Right? So you can stay on the federal system and kind of wait and see and play it out. Right. But even save again, even say, which was the most beneficial plan we’ve ever had. Wouldn’t make sense if they reinstituted it for most people. Right. Because the only reason why it did make sense is because of that lack of recertification of income. Right. If this is the funny thing about all of this, like if you really look at it rap and save are very similar. They’re very, very similar plans. There’s a couple, you know, you got to make an extra five years of payments. The payment calculation is less favorable, but at its core, it’s basically the same plan, right? But most people aren’t going to be on wrap because their income has gone up, right? And so even if there’s a new plan that comes out in 2029 and a new administration comes in and comes up with a whole new set of rules, it’s just so, so unlikely that it’s going to be for you, right?

Jake: Yeah, you can you can keep playing the game if you want to. I have several people that I work with who are like, I just want to wait and play it out and I’m fine accruing interest and I don’t want to recertify before I have to or switch before I have to and that’s fine. And they want to see what’s going to happen. They don’t want to refinance because they want to see what’s going to happen with the new administration. Like that is up to you. You can do what you want with your student loans. I would just say this, anecdotally speaking, the people that I work with who are happiest with their student loan situation actually refinance like five years ago at three and a half percent and are just paying back their loans and feel great about it. Two and a half. There is something psychologically about I am locking in my payment. I’m paying this over 10, 15 or years or however it is. I’m not accruing interest. I am making progress towards paying this down. I don’t have to worry about the government hoopla. I don’t have to like just have all these unknowns.

Taylor: Two and a half. I have a client at two and a half.

Jake: Those people get I’m telling like every single one of those people refinance or loans have not regretted it. The people that have worked with because they just like the consistency of doing that. There is always a risk of I’m going to play this government student loan game and before you know it five years past and 10 years past and 15 years past your balance is the same and you haven’t made any progress and you haven’t gotten forgiveness yet. If there’s still people out there who think. They’re like, maybe like the government would wipe out all of my loans at some point, something you know some hard he’s going to come in and do that. Again, we would say if that ever does happen, it likely will not be for you dentists. Unfortunately, it be for

Taylor: and they’re likely going to have income limits around it, right?

Jake: Yes, which you’re going to be above. And they tried like all in forgiveness in the past and it has gone shut down pretty hard by a big contingent of the country and politicians who think that’s unlawful. That was just for 10 grand of forgiveness. Yeah.

Taylor: And that was just for $10,000. Not $350,000, which is the average dental school loan coming out of school these days.

Jake: Yeah, it’s up to you. Like you can keep playing the game. It’s weird again, as we’ve we’ve dedicated a whole podcast to this, the ins and outs, the different income, dividend, payment plans, like there will probably be changes and weird things that happen in the future. Hopefully this was educational for people listening to this again. We used a lot of acronyms and lingo and different words there. Hopefully they’re able to follow. Did we miss anything, Taylor? What’s what’s what do we need to touch on?

Taylor: No, the only thing I would close with is just to reiterate the takeaways, which is if you are on the save plan right now, right? Starting July 1st, you’re going to get a notification from your service servicer that you have to change plans within 90 days. So that puts you basically end of September, right? So from the time that you’re listening to this to the end of September, you kind of get got to get your ducks in a row, right? Now the hope is you have taken this save plan forbearance, the lack of making a student loan payment, and you done planning in your own life to save more money, increase your ability to pay off more, have extra money go into your brokerage account, have an inflated savings rate, right?

Jake: Use it to your advantage, yeah.

Taylor: And that would be best case scenario, right? Because one way or another, whether that be the standard, whether that be a refinance or whether that be wrap, you’re gonna have a payment come September, right?

Jake: Yeah, once again, very normal, just not normal the past five years.

Taylor: And that is a significant change to go from nothing to, in some instances, as much as $5,000 a month or more, right? That is a big, big change, right? So you’ve got, what, three, four months here to get your ducks in a row and figure out how you’re gonna carve out your student loan payment out of your cash flow. And I hope that that’s coming from, you’ve been doing increased savings and you you’ll have to lower that brokerage draft. But, you know, that’s that’s best case scenario. For some listeners, they’re going to have to have a rude awakening and a reality check and really dive into their spending and figure out how am going to Right. And that’s a tougher conversation to have. Right. ⁓ So what I would say here again, If you’re listening to this and you’re confused or you’re like, you know, what should I do? And you just want to like talk to someone. That’s what we’re here for. Right. We have very, you know, we would love just go to dentistadvisors.com We get a big book free consultation button right there on the website. You can’t miss it. So please reach out, put in the comments that you want to talk student loans. I think we have a specific dentist advisors, student loan consultation link. If that’s what you want to do but please reach out, we would love to help. We’ve been through this, I mean, dozens of times with our own clients recently, right? And so if you’re a client and you’re listening and you wanna do this, please reach out, but if you’re not a client and you want to go through this, we would love to help.

Jake: Nicely said, the other thing I would add to that is like what you mentioned is student loan planning involves knowing a comprehensive kind of understanding of your whole situation to write student loans plays into everything your other debt payments, your savings rate, your spending, what career stage you’re at. Are you opening up a practice here shortly? Are you buying a new building? Are you having kids? know, whatever maybe. Are you buying a home?

Taylor: Are you buying a home? I’ve had several clients that are trying to figure out buying a home in the next couple of months and it’s actually beneficial for them if they buy the home and then do the refinance of their student loans because right now they’re getting a more favorable interest rate or better debt to income ratio with their current student loans. So to your point, Jake, it affects more than just student loans.

Jake: And this is an ongoing thing too. So like as part of our planning, this, like you should have discussions about your student loans probably yearly, right? If they’re not, it’s on a refinance table because things are changing every year. Your income’s changing, goals are changing. Things are moving around in your life. Your payment will change if you’re on an income driven repayment plan. So this is a, it’s usually not like a one time. Let’s figure it all out, set it and forget it. ⁓ Involves a lot of different factors in your financial situation. It involves planning, like ongoing planning for this. So yes, Taylor said, we’d love to talk to you. If you want to reach out, we’re not scary. We’ll try and make you feel as good as you can about your student loan situation. Not the end of the world. If you have to make some payments against student loans, I don’t know, Taylor, if you agree with this, I still think student loans are a great investment to get into dentistry We would talk with people with hundreds of thousands of dollars in student loans, but it has allowed them to create hundreds of thousands of dollars of income and create meaningful wealth for them and their families.

Taylor: if not millions.

Jake: Not millions, so I still think it is worthwhile. Like don’t be sad like crap, I have to make a student loan payment. It’s OK. It’s why you took out the loans in the first place. You knew you were going to pay him back at some point. It has helped you get into this awesome career. Just I would try and be like, let’s be a little more upbeat about a student loans. If that’s the thing, I don’t know.

Taylor: And if there’s any silver lining here, like, you kind of already won the lottery, right? Like, just the sheer fact of when you graduated dental school, and you had five years of not having to make a payment and having no interest accrue, where when you have three to 500,000 student loans, your interest is accruing anywhere from 1500 to 3000 bucks a month that you didn’t have to make payments on for five years.

Jake: You got five, yeah. Yeah, I agree. Okay. Well, I think we can wrap this up. I think we went okay on time. Final thoughts at all, Taylor.

Taylor: So I just wanted to go on record that I want Darren Peterson. So we’ll see what happens.

Jake: I want Darren Peterson as well. This could backfire on us, but that’s I want for the jazz. If you listen to this point, let’s be rooting for that there. Okay, thank you all for listening. We will stop rambling here. We will see you next week in the following weeks on the podcast. Talk to you later. Bye.

Keywords: student loans for dentists, SAVE plan, income-driven repayment (IDR), RAP plan, student loan refinancing, student loan recertification, dental school debt, student loan strategy

Student Loans