I have around $11,000 in student loans and I’ve been exploring my repayment options. The SAVE plan indicates my monthly payment would be $0, with forgiveness after 25 years. I’ve found conflicting information about whether this is a good choice. Some sources suggest that after loan forgiveness, I’d have to pay taxes on all the interest accrued. Is this true? If so, is the SAVE plan still my best option? Currently, I only earn about $10,000 annually, and I’m quite confused by all of this. Any advice would be greatly appreciated.
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There is no rationale in my opinion. For background, I owe roughly $100,000 in student loans in addition to some school debt. I don’t intend to use PSLF because I’m going into anesthesiology. I’m now using the SAVE plan to get my payments as low as possible for as long as I can. I’ll use the money for other things, like trips, savings, etc., and once I do have to make payments, I’ll be aggressive about it regardless of the plan I’m in.
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The SAVE Plan might not be in line with your repayment objectives if you’re hoping to pay off your loans faster or if you simply want to make a set number of payments over time. You may not always receive a lower monthly payment amount with the SAVE Plan.
After graduating with around $11,000 in student loans and currently earning about $10,000 annually, I found myself in a similar situation exploring repayment options. The SAVE plan offered me a $0 monthly payment with forgiveness after 25 years. However, I discovered that any forgiven amount could be considered taxable income, which means paying taxes on the accrued interest. Despite this, the SAVE plan may still be a good option given my low income, as it provides immediate relief and manageable payments. It’s important to weigh the long-term tax implications and possibly consult a financial advisor to ensure it aligns with your financial goals.