Money Rehab with Nicole Lapin - What to Do Before Your Student Loan Payment Jumps to $900

Episode Date: August 12, 2026

If you've been parked in SAVE plan limbo for the last two years, the waiting is over, and the letter that starts your 90-day clock is either already in your inbox or on its way. Today, Nicole breaks down what happened to SAVE, why doing nothing could send your payment from $0 to $900 overnight, and exactly what to do before that clock runs out. Nicole walks through RAP, the new Repayment Assistance Plan replacing SAVE, how it calculates your payment off your income, and the upside most people miss: your balance can't grow even if your payment doesn't cover the interest. She also covers why studentaid.gov is about to get slammed, whether you should let the government pull your income data from the IRS, and how to avoid accidentally landing in a plan that doesn't count toward forgiveness. Then, Nicole flags two things you don't want to miss: a quadrupled autopay discount worth locking in before September 30th, and a little-known Secure 2.0 rule that lets your employer match your student loan payments straight into your 401(k). If you're already in default, she also breaks down what's coming this fall as wage garnishment turns back on, and the two ways out. Finally, today's tip you can take straight to the bank: a tax-filing move married borrowers should run the numbers on before their next RAP payment is calculated. Start investing investing at SoFi.com/MNN  Check out Nicole's financial literacy course ⁠The Money School⁠  Find a Financial Advisor or Financial Coach from Nicole's company ⁠Private Wealth Collective⁠  Watch video clips from the pod on ⁠Money Rehab's Instagram⁠ and ⁠Nicole Lapin's Instagram⁠  Here's what Nicole covers today:  00:00 Are You Ready for Some Money Rehab?  00:16 SAVE Is Officially Dead  01:29 What Happens If You Do Nothing  02:12 Check Your Real Balance (Interest Never Stopped)  02:37 Meet RAP: The New Repayment Assistance Plan  03:24 Get Ahead of the Studentaid.gov Stampede  04:40 The 401(k) Match You Didn't Know You Had  05:21 If You're in Default: What's Coming This Fall  06:35 Tip You Can Take Straight to the Bank This podcast is for informational purposes only and does not constitute financial, investment, or legal advice. Always do your own research and consult a licensed financial advisor or tax professional before making any financial decisions.

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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. 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. Okay, 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. 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 $0 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 tipping 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-crum. crazy circus. Rap went live and student a.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 into 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 everyone. everything up and auto recertifies 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. Wrap counts. IBR counts. So I would pick one of those. Then get on auto pay. It is basically free money. The department just quadrupled the auto pay 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 auto pay, log in and confirm it applied. 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 2.0 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 social. 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. The 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 times 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 student a.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. Wrap 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-numbering 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 checkbox. Oh, no.