Student Loan "Perks" & Unique Repayment Strategies
OK, time to take a deeper dive into FEDERAL Student Loans (2 Types)---then hit Repayment Options & some Unique Ideas that are not the mainstream.
Most of you will like this---a few will say OMG, this is Amazing!
Then there's the others - The Outspoken and Loud Minority.
Just let me prove my case. These things are within Guidelines! (kinda-sorta)
​​
The Setup:
You are now able to play a similar game the Rich Guys have been playing for years. Not exactly the same of course, but the concept is similar. YOU KNOW the very wealthy use the Government's programs/codes (and sometimes its money) to their advantage. They have tax loopholes; bankruptcy options (for their companies); they can borrow money with their company "shares" as collateral -- thus no income tax on that money; or even get total bailouts...get the picture?
​
Anyway, after hitting the basic info you need to know for Student Loans & Payback, we'll then cover some of those "Strategies or Loopholes" available to you (with a few even improved by the recent 2025 OBBB changes). Now---for most "upstanding citizens" some of this may feel like a "gray area"---but remember, you UPSTANDING CITIZENS are often the Middle Class which rarely gets a break. Perhaps it's time to "play the game" like the BIG BOYS.
NOTE: This stuff is not designed for the trust fund babies, or those w/ huge 529's---but it can be!
Perhaps they'll be able to see a very good "Arbitrage" opportunity given
THE GREAT RATES & REPAYMENT options below! Hmmmmmmmm
For now, we shall transition to the somewhat CRAZY STUFF. Let's start with the Basic Student Loans---then move on to Repayment where the MAGIC CAN HAPPEN!
​​
​​
FEDERAL STUDENT LOANS
Do you really know how good you have it?
​​
​
There are 2 "Basic" Federal Student Loans...
​
1. Direct Unsubsidized Loans
2. Direct Subsidized Loans
*Both are issued "Directly" TO THE STUDENT. No co-signer or credit needed. MORE ON THAT TO COME.
​
With Unsubsidized Loans, they're essentially available to everyone and offer great rates. Additionally, the cool part is that you can borrow all throughout College---but defer payments until you graduate & get into that Great New Career (or leave school). With these loans, interest will accrue as it would with a normal loan---but it's just tacked on to the balance.
​
Now, Subsidized Loans are pretty much the same thing, but with these the Government covers the interest while you're in School. These are typically provided for Lower to Middle Income students---and they are just a portion of the total loans available. See the chart on the left.
​
Note: Overall, the total amounts available annually will be the same regardless of "Sub" or "Unsub".
​
​​
Next, Student Loan Rates are reset annually in May, then active for loans disbursed on or after July 1 through June 30. THEY ARE FIXED. In fact, they are almost in line with Home Mortgage rates for
A+ borrowers with Big Down Payments, & really low Debt-to-Income ratios. The best of the best applicants essentially.
Let's just say 98% of Students ain't this...
​
​​
​​
*For 2025-2026 these rates are 6.39%
& could include tax deductions for the borrower (once payback begins).
​
The rates are based on the 10-year treasury yield + an add-on.
The formula for 2025-2026 was: 4.342% + 2.05% = 6.39%.
For comparison, the Parent PLUS Loan is 8.94% (still good, but a big difference).
​
​​​​
***Students qualify for these automatically with no credit, no job.
And eligibility isn't based on the parents' income!
​​​
***They are UNSECURED which essentially makes them equivalent to a "Personal Loan". Today, in the real world--- those might be 12-20%+, with MUCH SHORTER repayment terms & HUGE payments. Federal Student Loans don't have those problems.
​
​
​
As it stands now, these are the TOTAL ANNUAL Federal Student Loans
(Subsidized & Unsubsidized) a Student can get:
*Presently set to be unchanged by the OBBB, with the exception of capping Aggregate Limits (the total overall amount)​
​
​
1. A Dependent Student can get $5500 Year 1, $6500 Year 2, $7500 Years 3 & 4
​
2. An Independent Student can get $9500 Year 1, $10,500 Year 2, then $12,500 for the last 2 years
​
3. A Dependent Student whose Parents have Horrible Credit & get denied a Parent PLUS Loan
(the next-step loan option after using the above), now get the same amount as the Independent Student.
WHAAAAAAAAT? Yeah, that's fair.
*PS: Parent PLUS Loans were covered under FA BASICS, but there is a short recap near the bottom of this page.
​​
4. Now here's one most people don't know. You can attempt to get a "Professional Judgement" & Your Dependent Kid can also get bumped to the Independent Student Loan Amounts (see #2). Wait, What?
Yup, we cover that IN DEPTH in our 5 Random Cost Strategies, the last part of "Cost Cutting Tricks".
​
​
​
So, What Does All of the Above Boil Down To?
The FAFSA related Federal Student Loans are an unbelievable deal,
& are DEFINITELY "Financial Aid". Now you know how they work, and how you might qualify for even more (before getting into the more expensive stuff).
​
​​
​
​
*Now, One Quick Side-Bar Before We Move On
Some of the programs/options we're presenting include regulation changes "made" by the July 4, 2025 OBBB Act. Thus, if any specific programs
were not mentioned, we left them unchanged. Here's the catch---apparently this stuff was kinda "generally approved" meaning the specific details are not finalized (or factual) just yet.
Now the REAL FUNNY PART...
Almost all of your sources online---YouTube "Experts", numerous articles from Big-Time websites, and even some A.I. apps present these as FINAL CHANGES (even as of a few days go). The truth here after digging SUPER-DEEP before our official launch, is that the FEDERAL REGISTER released a NPRM (Notice of Proposed Rulemaking) on Jan. 30, 2026 w/ a 30-day Public Comments window on their 200+ page proposal. Yup, we read it--ALL. So, is this stuff Official? Nope---not at time of writing. But if you hurry, you can punk-out a Few Experts. Just kidding---Don't do that (wink wink).
Anyway, apparently this thing may have to go through several more steps, proposals, or departments before finalization---which will likely tack on
3-6+ months. Regardless, we will update this info when the rules are finalized---but they're likely to be fairly close to what's been "Proposed".
​
***For today---just note: Any Regs set to be changed by the OBBB are reflected on our site as "the new standard" but are fairly easy to differentiate.
​
​
​
​​
Anyway, with that covered, let's get back to the good stuff...
​​​
​​​
​
​
*NEXT: Repayment---Another Chance to "Play The Game"
(Like Those Rich Guys)
​
​
​
​
​
​
​
Starting off, let's put this in perspective. When I ran Admissions Teams---the Terms, Rates, Payments, & Overall Costs OF LOANS were typically not the questions we got most often (regarding money). The MAJORITY of our students asked this:
​
​
“What if I don’t get a job?”
(mainly meaning in the field of study)
​
That is a great question! But perhaps not the most positive of thoughts on Day 1 or 2 in the process. However, after discussing our Career Services Departments---we would simply touch on 3 BASIC SAFETY NETS, associated with Federal Student Loans & pulled each up on a computer for them to review directly from the Dept of Education:
​
1. We showed them Income-Based Repayment (IBR) options that base your payment on YOUR INCOME not the Total Loan Amount (if needed). If your income is fairly low, you might get a payment as low as ZERO (adjusted annually). (Just FYI the minimum on new loans 2026+ is now $10)
​
2. Student Loan Debt for Undergrads is forgiven after 20 years of payments (Yeah, that changed recently to 30---but there are other ways)
3. If you work for any level of Government (including Military), or most Non-Profits (including Healthcare), this Student Loan Debt is Forgiven after
10 years of payments under PSLF - "Public Service Loan Forgiveness". (YUP, that's still there Gang)
​
*And YES, if you paid 120 months of $10 payments it would still be wiped clean---each payment counts. Told you these were unbelievable options...
​
​​​
​​
​
​
​​So that gives you a taste----but there's more!
1. If you don't make a bunch, you don't pay a bunch. You could borrow $39,000---but have a $10 payment monthly (which should be about $288 NORMALLY on the "Standard Payment" 20-Year Term). That $10 payment is good for 12 MONTHS, then it's recalculated each year.
2. These loans can be forgiven (or paid off) in a number of ways: 10 years Public Service, 30 years for Everyone, Disability, the SLRP Military Plan----and, you never know what the next Administration will do. The last one tried to forgive $10,000-$20,000 of student loans, and got a very Student/Borrower friendly policy known as "SAVE" into action. Here's where you can find details ON THE PLANS PRIOR TO 2026: IDR - Income-Driven Repayment Plans (IBR, ICR, SAVE, PAYE etc,,) ***As of 2026, many people in "repayment" can still qualify for previous IDR options- (i.e. Income Driven Repayment)​***
​
​
​
​So, Let's Drive This Home with a Semi-Wild Real-World Scenario:
We recently encountered a College Prospect who wanted to go to a 60k per year Private University, but her goal after that was to be a Stay-at-Home Mom. Guess what---WITH THIS NEW PLAN (yes, the 2025 OBBB), she can file "Married Filing Separately" on her taxes showing ZERO income---and just have a $10 payment forever (on her Federal Student Loans). This is, of course, providing her situation & the rules don't change too much. ​
​
​
(We told you some of this stuff was crazy)
​Just note: We have no expertise in any Tax related junk---make sure you consult a Tax Advisor.
​​
​
​​
​
​
​
​Now, What Can You Do with These Options?​
Let's Explore the Plans:
​
First off, the shocker is that MOST OF AMERICA doesn't know this stuff exists (and is available to everyone).
Next, I'd bet 90%+ of people haven't taken advantage of any of these opportunities available. Again---many of you are the stereotypical
"Upstanding Citizens" not looking for short-cuts or angles. I get it. But just take a short trip with us.
​​​​
Beginning in 2026 (based on the OBBB), new borrowers will choose between 2 Student Loan Repayment Plans after they leave School.
​
1. The "Tiered Standard" Repayment Plan (or)
​
2. The Repayment Assistance Plan "RAP"
​
*Below are some charts we can go off of for those plans. Forgive us if they shift slightly before implementation.
Odds are they end up pretty accurate.​​​​​​​​​​​​​​​​
RAP vs. Standard Repayment Plan
So, although the two concepts ARE VERY SIMPLE, The Actual Student Loan Repayment PROCESS can be a little more complicated if you're not ready.
​
You're going to end up with loans from several different time periods, under different TERMS. If you do nothing at graduation, you will get a 6-month grace period, then payments begin but not just for one loan or account.
Nope---it seems you have to do a "Direct Consolidation Loan" to get these to appear as "One Loan". Your rate will just be a weighted average of the rates you were given. THE KEY HERE---at least for those just getting started in School---is when you graduate you might want to do the following: (JUST OUR OPINION)
​​
​
1. Immediately Do That Consolidation Paperwork to get them all into one qualified loan (still eligible for all the benefits listed above)
​
2. Next, after that is completed---go ahead and Get that RAP Application submitted (verifying income and other pertinent info). Once that is finalized, they'll let you know the lowest payment that you qualify for.
​
*Now remember---you get a 6-month grace period before you "ENTER REPAYMENT", however:
If you do "what we would do" (opinion), you're gonna lose that grace period. So why might you want to do this?
****So, you get your "one loan" & you can get the lowest payment available for you FOR YEAR 1.
​​
NOW THIS IS KEY: for this section (above and below),
We're talking about STEREOTYPICAL Recent Grads that did not have a good job last or this year. Why?
Well, if you haven't STARTED a new job yet, they're going to use last year's Tax Info (Adjusted Gross Income - AGI)
OR---your current income situation FOR YOUR PAYMENT CALCULATION.
****Let's say you made $20,000 (mostly part-time), and you still have that job. Looking at the above charts, it appears you might have a payment of around $17. LOCKED IN FOR 12 months. And the Loan Balance will still go down! SWEET DEAL RIGHT? (more on that "go down" thing next)
​
So now with that covered, let's start ABOVE--on the left--with the Standard Plan---as it's pretty simple. Just take your student loan balance and run it on the term listed (with ​your weighted average interest rate).
​
​We mentioned earlier the case of $39,000 in loans w/ a standard amortized payment around $288. Now enter an income of $30,000. Using the "RAP" (Repayment Assistance Plan) Chart you'd be paying $50 a month total (or just $10 w/ a Dependent!!!). Oh yeah, forgot to mention that. We were generously given a nice $50 reduction in payment per dependent (after your calculation).
​
Bottom Line: It's a much simpler calculation & can be a great help for those making less than $40-$60k (depending on if you have any kids running around).
​
​​​
​
​
*Lastly, we covered Parent PLUS Loans​ (for Undergrads) in the FA Basics section. But here are some
details regarding both receiving them & paying them back, just in case you're interested.
Just remember, these are on the Parents.
They're a good deal at just 8.94% (2025-2026) & include a $20k annual maximum.
You do get some safeguards that you don't get with regular Private Student Loans or Personal Loans, but they're not quite as generous as the Direct Student Loans. We won't get into all the specifics but here are a few quick tidbits. Generally, interest accrues as normal, and there are special rules FOR YOU regarding in-school deferment, repayment terms, situational life changes, forbearance, & loan forgiveness. Just keep in mind (Parents)---if you're willing to sign for these, they are still much better than most mainstream alternatives.
​
​
​
​
​​
*NOW FOR THE ADDED BONUS!
It may be small, but it's certainly a great gesture (& can be used Strategically).
​
​
*There are 2 SUBSIDIES you don't hear much about in the Press (they're part of the OBBB).
1. If you are only paying $10 a month (or any "RAP calculated" payment not covering interest) on Direct Student Loans, your balance will never go up---Interest is WAIVED thanks to Uncle Sam.
​
2. If your payment does not reduce Principal, the Government is going to ensure $50 goes toward it EVERY MONTH---so $600 a year. Not a ton, but definitely PRETTY SWEET!​
Ex. For those not good at math (like me); even if you have a $150 payment calculated on RAP, it won't cover the interest on a $39,000 balance on a 20-year term.
​
​
SO, BAM!
*The Gov't "waives" the extra interest, AND you get a free $50 knocked off Principal!
Told ya, you'd be pretty surprised! ​​​​​​​
*Disclaimer: The above example of a $150 payment (on 39k of Student Loans borrowed) was based on a person
making a tad under 50k w/o any kids (or about 60k with a couple kids----but seriously, don't rush that!!!).​
​​
​
****ONE LAST LITTLE "SIDE BAR" (kinda related): People have gotten used to "Forbearance" or "Forbearance w/ no Interest Accumulation". Well, you'll still be able to get a 9-month forbearance (under "RAP") if you become unemployed, your income changes, or significant life changes occur, but you'll get no credit toward loan payments OR THE $50 SUBSIDY. So, in the case of a big change (like unemployment) it might play out better to do a RAP amendment for a $10 minimum payment. Just sayin'
​
​
​
​​
​
​​​​
​​
​​​
​​SO BOTTOM LINE: Who Knows What's Coming Next??
A portion of these loans could be forgiven outright if a new plan comes along with new Administrations---or they could just lower the # of years for "Standard Forgiveness". You may get a job with the Government (Local, State, or Federal), work at a Non-Profit, or join the Military--all getting the 10-Year Public Service Forgiveness.
**DON'T FORGET---A ton of Healthcare Jobs are Non-Profit (as are most Public K-12 & Colleges/Universities).
Definitely Lots of Opportunities for a little "Strategery"!
​
*HOPEFULLY NOW YOU HAVE THE FULL PICTURE TO MAKE THE BEST & MOST STRATEGIC DECISION FOR YOUR SITUATION, &
GAME-PLAN FOR THE FUTURE!!
​
(Welcome to the "Big Boy" Game)
​​​
​