The S&P 500 finished the week down just over two percent as technology stocks fell. With the high concentration of technology stocks in the index, moves in this sector have an outsize impact. It’s a reminder that, while tech is booming, you need a more diversified portfolio to ease industry-specific risk.
Another risk is for anyone with a student loan, as there are several important changes coming up for federal student loan borrowers beginning July 1st.
First, the SAVE plan is officially ending. If you are currently enrolled in SAVE, your loan servicer should notify you of your specific deadline of at least 90 days to choose a new, eligible repayment plan. If you miss that deadline, you may be automatically enrolled in the standard or new tiered standard repayment plan.
Second, there is a temporary auto-pay benefit, no matter what repayment plan you have elected. If you are in active repayment and enroll in auto-pay by September 30th, you may be eligible for a 1% interest rate reduction through June 30, 2028. If you are already enrolled in auto-pay, that reduction should be applied automatically.
Finally, borrowers taking out new federal student loans will have a much simpler, but more limited, set of repayment options: the new Tiered Standard plan and the Repayment Assistance Plan, or RAP.
The Tiered Standard plan has a fixed monthly payment, with repayment terms of 10, 15, 20, or 25 years, depending on the loan balance. RAP will be the Income-Drive Repayment plan that counts towards PSLF, or Public Service Loan Forgiveness. Under RAP, payments are calculated based on 1% - 10% of adjusted gross income, with a $50 monthly reduction for each dependent. The percentage increases for every $10,000 of AGI you reported, up to 10%. For example, if you reported $30,000 of AGI, you would pay 3% towards your student loans. After 30 years of qualifying payments, any remaining balance may be forgiven.
Student loan repayment is becoming simpler in some ways, but the right choice still depends on your income, loan balance, job, and long-term goals.
Your action item this week: log in to your student loan account, confirm your current repayment plan, and review your options before any deadline sneaks up on you. And if you’re unsure, talk with a financial professional before making a change.
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