If you have federal student loans, now is a good time to review your strategy, not just your balance. Recent legislation has significantly changed the federal student loan repayment system.

Recent changes to federal student loan repayment are shifting the landscape once again. According to the U.S. Department of Education¹, the Saving on a Valuable Education (SAVE) Plan is being phased out, and borrowers currently enrolled in the program will transition to a new repayment framework.

While the headlines have focused on legal and political back-and-forth, our focus is on what actually matters to your household and your budget sheet. How does this impact your cash flow, your interest costs, and your long-term wealth goals?

Why your Repayment Plan Matters

It’s easy to view student loan payments as an unchangeable monthly expense, but treating them dynamically can free up capital for other financial priorities like home buying, retirement savings, or building your wealth.

The plan you choose determines

• Your monthly payment.
• How much interest you’ll pay over time.
• Whether you qualify for certain forgiveness programs.
• How quickly you’ll become debt-free.

According to the Federal Student Aid², income-driven repayment plans are designed to tie monthly payments to a borrower’s income and family size, helping make repayment more management.

However, those plans aren’t automatically the best choice for everyone. Borrowers with higher incomes, for example, may pay less interest over the life of the loan under a different repayment strategy.

What Borrowers Should Do

According to the U.S. Department of Education¹, borrowers currently enrolled in the SAVE Plan should expect communication from their loan servicer explaining next steps and available repayment options.

In the meantime, consider taking a few proactive steps:

• Log into StudentAid.gov to confirm your loan information is accurate.
• Watch for notices from your loan servicer.
• Review the repayment plans available to you before making a selection.
• If your income has changed, be prepared to provide updated information if requested

Taking a few minutes to review your loans now can help prevent surprises later.

What About Student Loan Forgiveness?

One common misconception is that changes to the SAVE Plan mean student loan forgiveness has disappeared. That’s not the case.

According to the Federal Student Aid³, the Public Service Loan Forgiveness (PSLF) Program remains fully active for borrowers who meet the program’s employment and repayment requirements. Other federal repayment options may also continue to provide forgiveness opportunities depending on a borrower’s individual circumstances.

Because eligibility requirements vary, it’s important to review the details of any program before assuming you qualify.

Student loan policies will likely continue to evolve, but proactive planning never goes out of style.

Rather than waiting until a payment changes or a deadline arrives, use this transition as an opportunity to review your repayment strategy. The right repayment plan can improve cash flow today while supporting larger financial goals like buying a home, saving for retirement, or building long-term wealth.

If you have any questions about how your student loan fits into your overall financial plan, a Verde advisor can help you evaluate your options.

Sources:

¹ U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in the Unlawful SAVE Plan.

² Federal Student Aid. Income-Driven Repayment (IDR) Plans.

³ Federal Student Aid. Public Service Loan Forgiveness (PSLF).

Disclosures:

The information provided is for educational purposes only and does not constitute personalized investment, legal, or tax advice. Verde Capital Management (“Verde”) is a registered investment adviser. Please consult your financial advisor, loan servicer, or qualified tax professional regarding your individual circumstances.