Should you sign up for the ‘SAVE Plan’ for student loans

Graduates can already sign up for Biden’s new ‘Saving on A Valuable Education’ plan which offers payments as low as zero dollars based on your income.

After 20 to 25 years of payment, even if your payments are low, your loans will be forgiven. There’s a catch for Mississippi residents, however. Mississippi is one of 13 states without a tax exemption for student loan forgiveness. Meaning the money you had forgiven counts as income, and if you pay very little to nothing on your loan, you will be taxed for the full amount left.

This could lead to you owing the state money you don’t have. So, to help you make an educated decision, News 25 spoke with student services at Mississippi Gulf Coast Community College. Their advice is so much can change in 20 years you might as well take advantage of SAVE if you can’t afford a higher payment. Dr. Phillip Bonfanti said, “What we’re talking about is 20 years. A number of things can happen with a student in 20 years. In 20 years, Mississippi could join the 37 states, first of all, and say ‘We’re going to exempt any amount of a loan forgiveness.’ The student themselves will presumably be making more money. There are enough unknowns to me that I think the loan repayment plan based on income is probably the right way to go first of all, because it does allow you the promise of loan forgiveness. And remember, the taxes on whatever amount you were forgiven, are going to be lower.”

Dr. Bonfanti says if you’re nervous about owing money in the future, pay what you can to help lower that number that will be forgiven. He also suggests reaching out to your school to have them help you navigate paying for your schooling.