What to Do Before Your Student Loan Payment Jumps to $900

**Nicole Lapin** (0:00)
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I'm Nicole Lapin, the only financial expert you don't need a dictionary to understand.
It's time for some Money Rehab.
Open your student loan account. I know, I know, I'll wait. If you have been living in safe plan limbo for the last two years, we are out of purgatory because the letter is coming. Maybe it's actually already in your inbox, and it starts a clock that if you ignore it, could take your payment from $0 to $900 overnight. Here's everything that we know that's going on. SAVE, the Biden era plan that gave millions of people tiny or $0 payments, is dead. So RIP, rest in peace. A federal appeals court got rid of it back in March, and the one big beautiful bill act mixed it again for good measure. About 7 million people were parked in save forbearance. That waiting is now over. Starting July 1st, servicers began mailing 90-day notices, going out in tranches all the way into next year. So if you haven't gotten yours, I'm sorry. It doesn't mean that it missed you. It is coming. Once it actually lands, you've got 90 days to pick a new plan. And if you don't pick a plan, your servicer picks a plan for you and drops you into the standard plan that does not care about your income. It takes your balance, splits it over a fixed term, and then sends you a bill. In other words, it is not going to pick the best plan for you. This is maybe the best example of a problem that keeps coming up again and again in personal finance land. Doing nothing feels safe in the moment, but it is often the single most expensive move you can make in the long run. More than half of the people on Save had a zero dollar payment. Get auto enrolled in a standard plan on an $80,000 balance, and all of a sudden, you are staring down about $900 a month. One last doom and gloom point, I promise, and then I'm moving on to tell you what you can do about it. While your loans were paused, they were not frozen. Interest had been quietly piling up since August of 2025 So the balance you remember then, it grew. Log back in and take a look at the real number before you decide anything. Okay, enough doom. Let's talk about options because here's a new one. It's called RAP, the Repayment Assistance Plan. And if you take out any new federal loan going forward, it's basically the only income driven option you've got. Your payment is a slice of your adjusted gross income. 1% if you are barely earning up to 10% once you clear 100 grand, minus 50 bucks for every dependent, I should say. Honestly, RAP is a mixed bag. The bad news is no more zero dollar payments. And forgiveness now takes a full 30 years. But here is the upside. If your payment does not cover the interest that month, the government eats the difference. Your balance does not grow. And if you're not chipping away at least $50 off your principal, they kick in the rest. So you're always moving forward. For a lot of people, that is the first time that the math has been on their side. One big warning, the rollout has been a cuckoo crazy circus. RAP went live and studentaid.gov basically fell over. So picture this fall when everybody panics and goes into the same website all at once. My biggest piece of advice here is get ahead of the stampede today if you can. To do that, log in to studentaid.gov and run your numbers through the loan simulator. It's going to show you what RAP, IBR, and standard each cost. While you're there, you'll also want to decide if you want to give the department consent to pull your income from the IRS. It does speed everything up and auto re-certifies you, so your payment doesn't reset by surprise. But if you're not into sharing data, I obviously get that too. It is totally your call. And if you're going for loan forgiveness, do not get dumped into the new tiered standard plan. Payments there don't count toward forgiveness. RAP counts, IBR counts, so I would pick one of those. Then get on AutoPay. It is basically free money. The department just quadrupled the AutoPay discount from a quarter percent to a full percentage point. On a $30,000 balance, that's a few hundred bucks. You have to enroll by September 30th to lock it in through 2028 If you're already on AutoPay, log in and confirm and apply. One thing to look out for, if three payments bounce, unfortunately, the discount is gone for good. Here's something from the fine print that I read so that you don't have to. If your job offers a 401k match, and if you've been skipping it because all of your dollars go to loans, stop. There's a new rule in the Secure 2 Act that lets your employer treat your student loan payments like 401k contributions and matches them into your retirement. Yes, this is a real thing, and it's really important to pay attention to. You pay your loans like you already do, and your company drops free money into your 401k anyway. So if you thought you had to choose between paying down your debt and building your retirement, you definitely don't. Email HR if you have an HR department, and ask if they offer student loan matches. If they do, enroll ASAP. Otherwise, you're leaving thousands of dollars a year on the table. If you are already in default, though, this is an important thing to remember. Elections were frozen for years, but the government is turning wage garnishment back on this fall, timed right at these save deadlines. More than 7 million borrowers are in default. Garnishment means they can take up to 15% of your paycheck automatically. No court, no judge, and grab your tax refund on top of that. If that's you, please don't wait. I know you have a lot going on, and this is probably really stressful, but this really is one of those time is of the essence things. If you're in default, you have two exits. Rehabilitation, which actually wipes your default off your credit report, or two, consolidation, which is faster but does leave a financial scar. Rehab is the smarter long game, and I'm not just saying that because this is Money Rehab, but heads up, the chaos has scammers out in full force. Nobody legit charges a fee to unlock forgiveness. Every real option is free at studentaid.gov. If somebody wants your credit card to save you, hang up. For today's tip, you can take straight to the bank. If you're married and you're the one carrying student debt, look hard at filing your taxes married filing separately. RAP calculates your payment off your adjusted gross income, and if you file separately, only your income counts. Your spouse's salary vanishes from the equation. For a high earner married to someone with little or no student debt, that can quietly slash your monthly payment. Here's the catch, though. Filing separately can cost you certain tax breaks, so it is not a no-brainer. It's a run your numbers kind of thing. Put your loan savings next to the tax savings you would give up and see which number is bigger. Most people never even think to look. But the ones who do sometimes find thousands of dollars hiding right there in a single track box.