Hi everyone, I just wanted to share an update on my student loan situation in case it answers any questions any of you have out there about timeline to switch plans and also share something I figured out in case it might help someone.
Obviously, I was in the save forbearance. And they are about to approve the court agreement and force us to transition to other plans. I was waiting and seeing, but now that they’re saying, it’s going to happen soon and be a tight turnaround.
I started thinking about what they used to determine our income. Since I was in a rough spot in 2024, my 2024 income is much lower than my 2025 income will be on this year’s tax return. I realized that if I apply to switch to IBR now my payment would be little to nothing for a year before I’m forced to recertify. And that if my recertification date is January every year, I am maximizing the time that my lower income is used to calculate my payment before the next tax return comes out in a month or two.
So I applied for IBR and my payment is zero dollars until next January when I will recertify and it will go up significantly. My application was processed immediately by federal student aid on Friday, January 2 and I had confirmation from my loan servicer this morning on January 6 so it only took them four days to process and my due date is 21 days from today on January 23. I was reading all over the Internet that application processes were backlogged, but they are not so I wanted to let you all know that.
Additionally, I put a lot of thought into IBR versus RAP and I am going to stay with IBR because the payment is capped at what your standard student loan payment would be and in the long run that will keep my payment lower than RAP.
However, I plan to pay off my student loans in half the time, about five years is my goal so I truly doesn’t matter which plan I’m at, but if I lose a job or have an emergency, a lower payment gives me more wiggle room in my budget and if I have a financial emergency, I’d rather be on the IBR then the standard.
One word of caution I found online is that switching from the IBR to any other plan will trigger your interest to be capitalized into your new principal balance and I hope that’s not what they’re planning to do if anyone transitions from IBR to RAP this summer.
Posted by Hustle_bb_woo
5 Comments
Thank you for the info!
You got lucky with the IBR processing time for sure. A lot of borrowers have been getting processed quickly but unfortunately a lot have still been waiting for months. It seems to be based on luck and differs between servicers.
Unfortunately capitalizing interest when switching off of IBR is required by law so there wouldn’t be any avoiding that if a borrower is in that position.
If you are going to be paying aggressively then you would hopefully not have much accrued interest to capitalize anyway if you wound up wanting to use RAP in the future. The interest subsidy and the $10 minimum payment if you experience low/no income could be useful in the future if you experience a hardship for an extended length of time and don’t want the interest accrual to get crazy while you can’t pay more than the minimum at the the time. But that is just a “what-if” scenario for the future.
“it’s going to happen soon and be a tight turnaround.” I have yet to see any authoritative source regarding this. All I’ve seen is speculation and scaremongering, when in fact the Dep’t of Education has said they are going to engage in a rulemaking for SAVE borrowers that will likely not result in a final rule until July 1, 2027, and the OBBB says borrowers in an IDR forbearance will be moved to RAP on July 1, 2028 unless they voluntarily choose to move plans earlier.
Just as a data point for others: I applied to switch from SAVE to PAYE around 12/9 with manual recertification. MOHELA sent me their typical delayed processing message stating that it will take up to 90 business days (which would be mid-April) for them to review my application.
I think I am in the same boat as you. My previous year AGI was around $90,000. My 2025 is going to be around 210,000 (got married and made more money filing jointly). Do t think I’ll qualify for forgiveness on and income based plan so thinking of switching to IBR soon off of save. I have $4800 in interest accrued. Would it make sense to pay that off before i switch so it’s not added to the principal or does it really matter?
This was my exact thought process! A did my application 12/29/25, used my income from 2024, was approved on 1/1/26. I re-certify in 12 months and I hope my buyback will be approved by then. I have 134 eligible payments but only 104 are qualifying… this entire process is annoying but atleast I won’t have to worry about the next 12 months lol.