2025 Kentucky Student Loan Forgiveness & Repayment Plan Updates

The year 2025 brings a significant shift for Kentucky student loan borrowers, thanks to federal reforms and new state initiatives. This comprehensive guide covers the latest updates on federal forgiveness programs, examines the redesigned SAVE Plan, reviews the latest repayment options, and outlines Kentucky-specific resources available to help you manage and potentially erase your student debt.

Major Federal Changes for 2025

• Expanded SAVE Plan: Lower monthly payments and new interest subsidy rules improve affordability.
• Public Service Loan Forgiveness (PSLF) Overhaul: Streamlined certification process and expanded eligible employment sectors.
• One-Time Account Adjustment: Retroactively credits time in repayment for borrowers in income-driven plans, helping more Kentuckians qualify for forgiveness sooner.
• Fresh Start Initiative: Defaulted borrowers regain access to relief programs and new repayment plans.

Understanding the SAVE Plan (2025)

The Saving on a Valuable Education (SAVE) Plan replaces REPAYE and is now the most affordable income-driven repayment (IDR) option for Kentuckians in 2025. Key features include:

• Payments capped at 5% of discretionary income for undergraduate loans (down from 10%), and 10% for graduate loans.
• No excess interest accrual: If your monthly payment doesn’t cover all interest, the government pays the rest—your balance won’t grow due to unpaid interest.
• Accelerated Forgiveness: Undergraduates with original balances under $12,000 can get forgiveness after just 10 years, with each additional $1,000 adding 1 year (capped at 20-25 years).

Application Steps for SAVE Plan

1. Visit studentaid.gov/idr/ and log in with your FSA ID.
2. Select the SAVE Plan from the repayment options list.
3. Submit income and family size information; update annually.
4. Monitor your loan servicer communications for confirmation and next steps.

Kentucky Student Success Story: SAVE Plan

Kentucky Nurse: Bethany from Lexington had ,500 in federal student loans. After enrolling in the SAVE Plan in 2024, her payment fell from $426 to $163/month, and she’s on track for full forgiveness in 17 years, with $33,200 projected to be erased (based on current rules).

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.

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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).

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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.

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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

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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.

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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.

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⚡ Key Flexible Funding Options

 

GHC Funding everages financing types that prioritize asset value and cash flow over lengthy financial history checks:

• Bridge Loans: These are short-term loans used to "bridge the gap" between an immediate need for capital and securing permanent financing (like a traditional loan or sale). They are known for fast closing and are often asset-collateralized, making them ideal for time-sensitive real estate acquisitions or value-add projects.

• DSCR Loans (Debt Service Coverage Ratio): Primarily for real estate investors, these loans are underwritten based on the property's rental income vs. debt obligation ($\text{DSCR} = \text{Net Operating Income} / \text{Total Debt Service}$), not the borrower's personal income or tax returns. This offers flexibility for those with complex finances.

• SBA Loans: The Small Business Administration (SBA) guarantees loans offered by partner lenders. While providing excellent terms (long repayment, lower rates), the application process is typically slower than private/bridge funding, often making them less suitable for immediate needs. SBA eligibility heavily relies on the DSCR metric for repayment assessment.

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🌐 Learn More

 

For details on GHC Funding's specific products and to start an application, please visit their homepage:

Link to GHC Funding Homepage

 

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.

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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.

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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.

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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.

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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.

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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.

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2025 Public Service Loan Forgiveness (PSLF) Updates

PSLF remains the premier federal program for Kentuckians in nonprofit, K-12 education, government, or qualifying public service jobs. Recent changes make PSLF more accessible:

• Employment Sectors Expanded: More state and local government roles now included.
• New Recertification Portal: Enhanced PSLF Help Tool vastly simplifies the employer certification and application process.
• One-Time Account Adjustment: Many payments previously ineligible now count toward PSLF, even periods in deferment or on non-qualifying plans.

PSLF Application Guide for Kentucky

1. Confirm employment with a qualifying Kentucky organization using the PSLF Help Tool.
2. Submit annual Employment Certification Forms (ECFs) via the portal.
3. Make 120 qualifying monthly payments under a federal IDR plan.
4. Apply for forgiveness after 10 years’ service and 120 payments.

Success Story: Kentucky Teacher Achieves PSLF

Public School Teacher: Chris in Louisville taught for 10 years in Jefferson County Public Schools and diligently submitted ECFs each year. With an original loan balance of $92,340, Chris made 120 payments under IBR and had $73,800 forgiven under PSLF in April 2025.

Income-Driven Repayment (IDR) Plans: 2025 Options

✅ 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.

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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.

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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.

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Besides the SAVE Plan, other IDR plans are still available in 2025, including PAYE, Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). All IDR plans:

• Set payments based on income and family size.
• Offer loan forgiveness after 20-25 years of qualifying payments.
• Are accessible through the federal IDR application portal.

✅ 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!

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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

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Note: The Department of Education recommends most borrowers choose the SAVE Plan for lowest monthly costs.

Teacher Loan Forgiveness (TLF): Special Opportunities in Kentucky

Kentucky continues to face teacher shortages, qualifying many educators for both federal and state support:

• Federal TLF: Teachers serving in low-income Kentucky schools for five consecutive years may be eligible for forgiveness of up to $17,500 in Direct or Stafford loans.
• Kentucky State Loan Forgiveness: The KHEAA Best in Class Loan Forgiveness Program offers up to $3,000/year for qualifying Kentucky teachers in critical shortage areas.

How to Apply for TLF in Kentucky

1. Verify your school is listed as a low-income school at the Teacher Cancellation Low-Income Directory.
2. Teach full-time for five consecutive academic years.
3. Complete the Federal TLF Application and submit to your loan servicer.
4. For state aid, apply directly with KHEAA.

Kentucky-Specific Forgiveness & Assistance Programs

The Commonwealth offers several student aid and forgiveness programs:

• Kentucky State Loan Repayment Program (KSLRP): Up to $40,000 for health professionals in underserved counties (details).
• KHEAA Advantage Grant: Offers targeted assistance to borrowers with financial need (learn more).

One-Time Account Adjustment: Maximizing Retroactive Forgiveness

As of July 2025, account adjustments will automatically review and count previously ineligible payments, for both PSLF and IDR. Check your loan servicer portal or Federal Student Aid for updated totals.

Common Borrower Questions for Kentucky (2025)

• Am I eligible for forgiveness if I consolidated my loans? Most consolidations remain eligible—check your current payment count via your servicer or studentaid.gov.
• Do Parent PLUS borrowers qualify? Parent PLUS loans can qualify for ICR and certain adjustments, but not all IDR plans or PSLF options—review your eligibility.
• What if I previously defaulted? The Fresh Start program reinstates federal aid eligibility and PSLF/IDR opportunities for defaulted borrowers.

Step-by-Step: Your 2025 Loan Forgiveness Action Plan

1. Access or create your studentaid.gov account.
2. Download your Aid Summary for a full picture of your federal loans.
3. Review your current repayment plan—switch to SAVE for lowest payments if eligible.
4. Explore PSLF and recertify employment if applicable.
5. Apply for Kentucky-specific programs linked above if you work in education or healthcare.
6. Submit all required documents, and track status via your loan servicer and studentaid.gov.

Additional Resources for Kentucky Borrowers (2025)

• Federal Student Aid: Loan Repayment & Forgiveness
• Kentucky Higher Education Assistance Authority (KHEAA)
• KY State Loan Repayment Program (KSLRP)
• PSLF Help Tool
• Consumer Financial Protection Bureau: Student Loans

Conclusion: Navigating Student Debt in Kentucky for 2025

With new federal relief, a more borrower-friendly SAVE Plan, expanded PSLF, and robust state programs, Kentucky borrowers in 2025 have more pathways to affordable repayment and meaningful forgiveness than ever before. Stay proactive, leverage Kentucky resources, and revisit your options each year to guarantee maximum relief on your student debt journey.

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