Student Loan Forgiveness & Repayment Plans: Complete 2025 Guide for Kentucky Borrowers

2025 is a major milestone year for federal student loan borrowers in Kentucky. Significant changes to forgiveness programs, repayment options, and new state-level resources mean big opportunities for Kentuckians to manage, reduce, or even erase their student debt. This comprehensive guide will walk you through every major forgiveness program, the latest SAVE plan updates, new federal policies, and Kentucky-specific help available to students and graduates.

Key 2025 Student Loan Policy Changes for Kentucky Borrowers

• SAVE Plan fully phased in: Lower monthly payments, faster forgiveness for many.
• Public Service Loan Forgiveness (PSLF): Enhanced application process and documentation rules.
• New annual income recalculation & family size rules.
• Kentucky state programs: Expanded Teacher, Healthcare, and Rural Service Loan Repayment.

SAVE Plan Explained (2025): Reducing Payments and Accelerating Forgiveness

The Saving on a Valuable Education (SAVE) Plan is the most popular income-driven repayment (IDR) option as of 2025. The plan, fully implemented this year, offers the lowest payments ever on federal loans—sometimes as little as $0 per month—and quicker paths to forgiveness for thousands of Kentuckians.

How the SAVE Plan Works in 2025

• Monthly payment capped at 5% of discretionary income for undergraduate loans (was 10% previously).
• Married borrowers: Payments based on your own income if you file taxes separately.
• Loan forgiveness:
  • Undergraduate-only borrowers: Remaining balance forgiven after 20 years.
  • Any graduate loans: Forgiven after 25 years.
  • BALANCE under $12,000: Forgiveness after just 10 years of payments (as of July 2024, impacting new and existing enrollees in 2025!).
• Unpaid interest no longer accrues: Interest not covered by your payment is erased monthly.

Eligibility

• Direct Loans (Subsidized, Unsubsidized, Grad PLUS, Consolidated Direct Loans)
• FFEL loans must be consolidated into a Direct Loan
• Parent PLUS borrowers cannot enroll but may access Income-Contingent Repayment (ICR)

How to Apply for SAVE

1. Go to StudentAid.gov/idr
2. Log in with your FSA ID
3. Complete the Income-Driven Repayment Plan Request
4. Select “SAVE” (or allow the servicer to pick the lowest payment for you)
5. Link to IRS Data Retrieval for fastest processing

2025 Scenario: Kentucky Borrower Success Story

Jasmine from Louisville: Owes ,000 in federal direct loans, single, earns ,000/year.

Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!

Test Your Expertise: The Complexities of the 1031 Exchange

As a sophisticated real estate investor, you understand that the 1031 Exchange is a cornerstone strategy for tax deferral and wealth accumulation. But beyond the basics, the intricacies of the 1031 Exchange rules can pose significant challenges. This quiz is designed to test your in-depth knowledge and highlight critical nuances that separate casual investors from true experts in 1031 Exchange transactions.

Instructions: Choose the best answer for each question.

Start Quiz

Page 1 of 5

Question 1: Understanding "Like-Kind" in a 1031 Exchange

Which of the following scenarios most likely qualifies as a like-kind property exchange under IRS Section 1031, allowing for 1031 Exchange tax deferral?

a) An investor exchanges a portfolio of publicly traded REIT stocks for a commercial retail building. b) An investor exchanges their primary residence, used for personal living for 15 years, for a duplex intended for rental income. c) An investor exchanges raw land held for appreciation in Texas for a stabilized apartment complex in Florida, both held for investment. d) An investor exchanges a classic car collection (personal property) for a single-family rental home (real property).

Page 2 of 5

Question 2: Navigating the 45-Day Identification Period for a 1031 Exchange

An investor sells a multi-family property on June 15th for a 1031 Exchange. According to the strict timelines, by what date must they identify their replacement properties to comply with the 1031 Exchange requirements?

a) July 30th of the same year, as the 45-day period includes weekends and holidays. b) August 29th of the same year, allowing for an extra 45 days if needed. c) December 12th of the same year, aligning with the 180-day completion period. d) January 1st of the following year, if they plan to file for an extension.

Page 3 of 5

Question 3: The Role of a Qualified Intermediary (QI) in a 1031 Exchange

Why is the engagement of a Qualified Intermediary (QI) absolutely critical for the validity of a 1031 Exchange?

a) The QI provides investment advice and helps the investor choose the best replacement property for their 1031 Exchange strategy. b) The QI acts as a liaison with the IRS, directly negotiating tax liabilities related to the 1031 Exchange process. c) The QI holds the proceeds from the relinquished property's sale, preventing the investor from having "constructive receipt" of funds, which would invalidate the 1031 Exchange. d) The QI provides legal and tax advice to ensure the 1031 Exchange is perfectly compliant

Page 4 of 5

Question 4: Understanding "Boot" and its Impact on a 1031 Exchange

An investor sells a commercial building with $500,000 in equity for a 1031 Exchange. They purchase a replacement property for $450,000, effectively reducing their debt by $50,000. What is the tax implication of this scenario within the 1031 Exchange framework?

a) The entire 1031 Exchange is disqualified because the investor "traded down" in value. b) The $50,000 in reduced debt is considered "boot" and will be immediately taxable as partial gain in this 1031 Exchange. c) There are no immediate tax implications, as the primary goal of the 1031 Exchange is only about the "like-kind" nature of the properties. d) The investor can defer the $50,000 as long as they pay off other personal debts with the funds, still qualifying for a full 1031 Exchange.

Page 5 of 5

Question 5: Advanced 1031 Exchange Strategies & Flexibility

An investor aims to sell a highly appreciated single-tenant retail property and replace it with multiple smaller, diversified multi-family units to spread risk. Which of the following 1031 Exchange identification rules best allows for this diversification strategy, maintaining eligibility for a 1031 Exchange?

a) The "Three Property Rule," where the investor can identify up to three properties of any value, regardless of the relinquished property's value, for their 1031 Exchange. b) The "200% Rule," allowing identification of any number of properties, provided their aggregate fair market value does not exceed 200% of the relinquished property's value for the 1031 Exchange. c) The "95% Rule," which states that if more than three properties are identified, the investor must acquire at least 95% of the aggregate value of all identified properties to qualify for the 1031 Exchange. d) All of the above are valid identification rules within a 1031 Exchange, offering flexibility for various investment strategies.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

Start Quiz

Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

Page 2 of 5

How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

Page 3 of 5

What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

Page 5 of 5

Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

• 2025 SAVE Plan payment: $57/month (down from $163/month under former REPAYE plan)
• Projected forgiven balance in 10 years: $11,400 (after 120 payments)
• “This reduction in payment let me start saving for a home while chipping away at debt!”

Public Service Loan Forgiveness (PSLF): 2025 Updates in Kentucky

The PSLF program forgives remaining federal Direct Loan balances for full-time public employees after 120 qualifying payments (typically 10 years). The 2025 rules focus on expanded digital employment certification, real-time status tracking, and simplified eligibility checks. Kentucky’s large education, healthcare, and state/local workforce means thousands are eligible.

2025 Policy & Application Enhancements

• Online PSLF Help Tool now provides digital employment certifications.
• PSLF Dashboard: Track payments, employment history, and status online in real time.
• Expanded eligible employers: Includes all Kentucky state/university systems, most nonprofit hospitals, and government agencies.

Step-by-Step: PSLF Application Process in 2025

1. Enroll in a qualifying IDR plan (SAVE, PAYE, IBR, or ICR)
2. Consolidate FFEL/Perkins to Direct Loans if required
3. Submit the PSLF Form each year or when changing jobs
4. Your employer completes digital certification
5. Track qualifying payments via the PSLF Dashboard
6. Apply for forgiveness after 120 qualifying payments (can be non-consecutive)

Success Story: Kentucky PSLF

Mark, Public School Teacher in Lexington: $112,000 in Direct Loans, 12 years in Kentucky schools, annual salary $52,000.

• Made 120 qualifying payments under IDR
• Received full loan forgiveness in May 2025: $71,100 erased
• “It was a huge relief, and the new dashboard helped verify every payment instantly.”

Other Income-Driven Repayment (IDR) Options in 2025

✅ Small Business Resources 

• SBA – Small Business Administration
  https://www.sba.gov

• SCORE Mentors (Free Mentoring & Workshops)
  https://www.score.org
• Small Business Development Centers (SBDC)
  https://americassbdc.org

Are You an SBA Real Estate Loan Expert?

Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.

Start Quiz

Page 1 of 5

For an existing commercial property, what is the minimum owner-occupancy percentage required for an SBA 7(a) real estate loan, and does this specific scenario qualify?

A manufacturing company plans to acquire a 30,000 sq ft industrial real estate facility using an SBA 7(a) Loan. The company initially needs 18,000 sq ft for its operations and intends to lease out the remaining 12,000 sq ft.

A) 60%; Yes, it qualifies. B) 51%; Yes, it qualifies. C) 75%; No, it does not qualify. D) 60%; No, it does not qualify, as they are leasing out a portion.

Page 2 of 5

Which of the following sets most accurately represents additional cost categories that can typically be financed within an SBA 504 Loan for a commercial real estate project?

Hint: Beyond the straightforward purchase of a commercial real estate property, an SBA 504 Loan is highly effective for comprehensive projects.

A) Business inventory, working capital, and employee salaries. B) Building renovations, long-term machinery essential to operations within the property, and soft costs like architectural fees. C) Advertising expenses, short-term equipment leases, and utility deposits. D) Personal real estate investments, vehicles for personal use, and stock market investments.

Page 3 of 5

Between an SBA 7(a) Loan and an SBA 504 Loan, which program generally offers the lowest typical borrower down payment for a commercial real estate acquisition, and what is that common minimum percentage for established businesses?

A highly profitable professional services firm in a competitive market wants to purchase its office real estate with minimal upfront capital. The firm's owners prioritize cash flow and liquidity.

A) SBA 7(a) Loan; 15% B) SBA 504 Loan; 10% C) SBA 7(a) Loan; 5% D) SBA 504 Loan; 20%

Page 4 of 5

For new construction, what is the initial minimum owner-occupancy percentage required, and what is the maximum timeframe to meet the full owner-occupancy threshold, for an SBA Real Estate Loan?

A fast-growing tech startup plans to construct a new 50,000 sq ft headquarters using an SBA Loan. They will immediately occupy 35,000 sq ft and have a definitive plan to occupy the remaining 15,000 sq ft within two years as their team expands.

A) Initial 51%, full 80% within 5 years. B) Initial 60%, full 80% within 3 years. C) Initial 75%, full 100% within 1 year. D) Initial 51%, full 100% within 2 years.

Page 5 of 5

What is this crucial requirement, and what fundamental principle does it underscore for the lender?

When securing an SBA Loan for a commercial real estate purchase, principal owners with a 20% or greater ownership stake are almost universally required to provide a specific type of assurance beyond the collateral of the real estate itself.

A) A fixed-rate interest payment commitment, demonstrating long-term stability. B) A first-lien position on all personal assets, ensuring full recovery. C) A personal guarantee, signifying the owners' personal commitment to loan repayment. D) A business plan with projected revenue growth of at least 15% annually, showing future viability.

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

While the SAVE plan is the default recommendation, other IDRs remain open through 2025 for legacy borrowers:

• Income-Based Repayment (IBR): 10%-15% of discretionary income, 20-25 year forgiveness
• Pay As You Earn (PAYE): 10% of discretionary income, 20 year forgiveness (closed to new borrowers in 2025)
• Income-Contingent Repayment (ICR): 20% of discretionary income, 25 year forgiveness (used for Parent PLUS loans via consolidation)

Choosing the Right IDR Plan

• Use the Loan Simulator Tool to compare SAVE, IBR, PAYE, and ICR.
• Re-calculate your income and family size annually (required every 12 months)
• If you lose income in 2025, recertify immediately for lower payments

Kentucky Teacher & Healthcare Loan Forgiveness in 2025

✅ Real Estate Investor Resources

• AirDNA (Short-Term Rental Data)
  https://www.airdna.co

• Rentometer (Rent Comps)
  https://www.rentometer.com
• Zillow Research & Data
  https://www.zillow.com/research

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

Start Quiz

Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

Ready to send

Please provide your contact information to proceed.

Email Address *

First Name *

Consent *

Yes, I agree with the privacy policy and terms and conditions.

Submit

Kentucky continues to offer robust state-level forgiveness programs for teachers and healthcare workers, especially in shortage areas:

• Kentucky Teacher Loan Forgiveness Program (KTLFP): Up to $5,000/year for five years ($25,000 max) for educators serving in high-need districts. Learn more & apply
• Kentucky State Loan Repayment Program (KSLRP): Up to $40,000 in federal + state relief for physicians, nurses, dentists, and therapists serving in rural/underserved Kentucky communities. Apply here

Student Loan Forgiveness: Step-by-Step for Kentucky Residents (2025)

1. Review your loans and servicer assignment (check eligibility for SAVE or PSLF at StudentAid.gov)
2. Compare repayment options using the Loan Simulator
3. Select and enroll in the best IDR plan (SAVE recommended for most)
4. If a public employee, submit PSLF certification annually
5. Check eligibility for Kentucky-specific forgiveness programs (esp. teachers, health professionals, rural service)
6. Track payments and documentation through your servicer and FSA portal
7. Apply for forgiveness when eligibility is met—keep digital and PDF copies of all forms

Common Borrower Concerns Addressed in 2025

• “Will forgiven student loans be taxed in Kentucky in 2025?”
  No, Kentucky does not tax federal loan forgiveness including PSLF, SAVE, and state programs. Federal student loan forgiveness remains tax-free nationwide through at least 2025 under current IRS rules.
• “How do I confirm employment eligibility for PSLF?”
  Use the PSLF Help Tool and employer search (submit EIN if not listed).
• “What if I consolidate or miss a payment?”
  Consolidation resets PSLF count but can help access SAVE. Missed payments do not require back pay, but non-qualifying months don’t count toward forgiveness.
• “Can I get both state and federal forgiveness?”
  Yes! Many Kentucky public servants combine state repayment incentives with PSLF or SAVE.

Useful 2025 Resources for Kentucky Borrowers

• Free federal counseling: studentaid.gov
• Kentucky Higher Education Assistance Authority: kheaa.com
• State loan repayment and teaching incentives: education.ky.gov | chfs.ky.gov – Loan Repayment
• Public Service Loan Forgiveness Help Tool: studentaid.gov/pslf/
• Student Loan Ombudsman (KY): kheaa.com/complaint

Conclusion

2025 is a breakthrough year for Kentucky student loan borrowers. Whether you’re a teacher, nurse, public servant, or in the private sector, the SAVE Plan, PSLF, and robust state-specific programs offer real relief and achievable paths to debt freedom. Stay current, keep documentation, and seek free guidance from trusted resources—your fresh financial start is closer than ever.

Get a No Obligation Quote Today.

GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

Contact GHC Funding Today. Main: 833-572-4327 Email: sales@ghcfunding.com

See Full Bio

DSCR LOAN SBA LOAN BRIDGE LOAN