Great question.

Yes, it is possible to exploit the loophole to sign up for SAVE. It’s a risky process with a firm deadline, but the reward is potentially huge.

Michael – thank you for your thoughtful and informative reply. I looked at the NPR article you linked as well (again thanks). Additionally, I have attended one of the Massachusetts AG’s Student Loan Unit Assistance presentations. At the end of the day, it’s clear that those of us in situations where reliance is loophole-driven, are in a much more risky position which could result in higher costs and no loan forgiveness available on the 25th year of repayment. The latter outcome being the result of loophole elimination via administrative and/or political forces. As such, I am going to stay with my 2005 Parent Plus consolidated Navient-loan and perhaps increase my monthly principal payments.

Thanks again – very much – for your time and attention!

To break down this scenario, I think it is helpful to look at the two key items that might help you get where you want to go.

First, we have the one-time IDR count adjustment. As part of this program, you can consolidate loans and keep your progress from before consolidation (in the past this would have restarted the progress).

That new consolidated loan, if it includeds Parent PLUS loans would not be eligible for SAVE. However, it would be eligible for the ICR plan. Parent PLUS loans are not eligible for the SAVE plan.

The one possible workaround to get Parent PLUS loans eligible for SAVE called the “double-consolidation loophole”. It’s not a subject I’ve covered on this site as it is technically a loophole in the federal record keeping, but the Department of Education has recently acknowledged the situation and seems to be temporarily blessing it. NPR did a great article explianing the loophole and how to utilize it.

Hopefully this will give you a bit of clarity on your situation.

I’ve got a couple thoughts for you Nick. First, there isn’t a deadline to sign up for SAVE. You can wait to enroll. The downside is that you would lose out on potential progress toward forgiveness.

Also, you can use this calculator to estimate SAVE payments now and when the 5% rule is implemented.

Thank you for your response annd possibly some great news. Are we able to switch from standard repayment to SAVE after we find out the idr count or is it something we should do immediately? Reason I ask is because when we use the payment calculator for idr plans it doubles our current payment. From what I can gather it appears to reflect 10% discretionary income still instead of 5% even though all loans are undergrad. Is the discrepancy on the percentage due to SAVE phase ll not being implemented until July or am I missing something?

If the monthly payment on SAVE is the same as the standard repayment, switching to SAVE probably is the better choice because you will get progress toward forgiveness.

Given that her balance is higher than what was originally borrowed, forgiveness could be a huge win. SAVE would also prevent future balance growth.

As long as she doesn’t have FFEL loans, the one-time adjustment should happen automatically. That said, the benefit only matters if you finish the progress toward forgiveness.

Finally, I’d encourage you to keep an eye on the forgiveness options currently in development. With a balance higher than what was originally borrowed, your wife could be in line to benefit from that.

The tax bomb is definitely an issue for borrowers to watch out for, but it won’t start until 2026 at the earliest.

I’m hopeful that there won’t be a tax bill when that time finally comes, but there is at least one good way to prepare just in case.