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Saving For College – I Am Starting Late, What do I do?

I understand the guilt of not saving for college. For many, paying for college is the status symbol of a good parent. I do not think it is, but many people feel this way. If you feel guilty because you have not saved for college, don't. If you are worried about what to do since you are starting late, here are some tips. And I am keeping the best one for last.1. Start a 529A 529 Plan may not be right for everyone, but it is a good starting point. It offers a tax advantage option to save for college. Even with less time for the money to grow, putting aside a little now will help. With the cost of college, every penny you can have ready to use will be beneficial.2. Have "The Talk"It's not comfortable, but asking the grandparents what their intentions are is very important to have a solid college funding plan. You do not have to ask, "How much are you going to give," but you should ask, "Do you have any plans?"You can frame this conversation around being prepared for financial aid requests. Help from grandparents can be beneficial, but if given through the wrong [...]

June 27, 2019|Categories: College|

529 Plans – What If We Do Not Use the Money?

The 529 Plan is a great way to save for college. They offer stock market like returns, state tax deductions, tax deferral, and if used for qualifying educational expenses can even be tax-free. With these significant advantages, the one nagging question everyone asks is the say. What if we do not need the money for college?Luckily, there are a few solutions. Non-Qualified WithdrawsWhat if my child doesn't go to college? This would be the worst case scenario. You've put aside money for the last 18 years, and little Jimmy decides to join the circus. If you take the money out of the 529, you will pay taxes on the gains and a 10% penalty. It's not that large of a penalty.For example, if you put $10,000 into the 529, and not it is worth $25,000, and you take the full $25,000 because Jimmy needs to buy a harness to practice his trapeze act. Since you had a profit of $15,000, you would pay tax based on your income tax rate. You would also have a penalty of $1,500.This is not much different than just investing in a taxable brokerage account.Penalty-Free WithdrawsSome withdraw are taxable but do not have the additional [...]

June 20, 2019|Categories: College|

Why Your Loan Servicer May Not be the Best Place to Find Help

Recently Michael Lewis, author of the Wolf of Wall Street, had a podcast episode speaking of the student loan crisis. One of the significant points he brings is that your loan servicer is not giving you the best advice. In my experience, Michael Lewis is correct. I have personally spoken with many borrowers who reached out to their loan service and received advice that cost them thousands of dollars. Some have even lost out on forgiveness. So, why does this happen?The 7 Minute RuleMichael Lewis specifically spoke of Navient having a 7-minute rule. Navient measures their customer service representatives by their ability to finish calls within 7 minutes. They do not judge employes by how well they solve the customer's problem, but by how fast they get off the phone. Sadly, often, the best solution is for borrowers to use one of the income-driven repayment options. These options are also some of the most lengthy conversations to talk through. When I create a student loan plan, it can take 3 hours of work, not a 7-minute phone call.Call Center Jobs SuckI have experience in call centers, and they are not great jobs. They are a modern factory — finely tuned [...]

June 10, 2019|Categories: Student Loans|

Student Loan Forgiveness is Going Nowhere

The political season is starting to heat up. Without getting into many of the heated topics that will no doubt be a part of the debate, I want you to know the one you do not have to worry about. Public Service Loan Forgiveness is going nowhere. The last four years have carried a lot of talk about the current administration wanting to eliminate PSLF, but while it has been a talking point in the media, there is nothing to fear. Let's talk about why. Please note, this is not an endorsement of any candidate or party. 1. $ 350 Million Recently a Republican congress and the Trump administration passed legislation to grant $350,000,000 to cover some of the loopholes in the for the first round of forgiveness applications. They did change the program, but they did put aside a large chunk of money to help people that would have qualified had they been on the correct payment plans. This $350 million is a great sign to the livelihood of the PSLS program. With all the talk about this administration and the Republicans wanting to remove the program, the fact that they dumped more money into it is a positive [...]

June 3, 2019|Categories: Student Loans|

47% of PSLF Certifications Were Approved in March

The headlines were wrong, but fear equals clicks. Toward the end of 2018, all the headlines spoke about "The Evil Government Lied!" and "No Forgiveness of You!". Ok, I made those up, but they are not that far off. Most headlines said, "The government had denied 99% of student loan forgiveness requests." With every lousy headline, there is some truth. The sad truth is that the PSLF program is complicated, your loan servicer is no help, and most people are making critical mistakes. Now, in mid-2019, a ray of hope is shinning. The Department of Education has released March numbers showing that a 52.5% approval rate. There were 2,181,000 applications filed in March and 1,148,911 approved. In an attempt to be 100% transparent, these were not final requests, but employment certification forms submitted. In other words, it wasn't final approval, but a sort of mid-course check-in being approved. Deeper Into The NumbersTaking a more in-depth look at the number, we can see why some were denied. The Department of Education denied 60% of applications due to missing information. Reasons for this denial could be a simple as a missed signature or a portion of the form not filled out completely. [...]

May 27, 2019|Categories: Student Loans|

The 5 Steps of Qualifying for Public Service Loan Forgiveness

Public Service Loan Forgiveness (PSFL) was in the news a lot over the last six months. Mostly negative and utterly sensational. The stories revolved around the Department of Education, denying, 98% of forgiveness applications. The news stories imply the program is broke, and people will never receive forgiveness. While the program can be improved, the earlier mentioned denials were not the Department of Education (DOE) trying to force people to pay. Borrower mistakes caused these denials. Public Service Loan Forgiveness revolves around making 120 qualifying payments. The applicants that the DOE denied had made mistakes over their loan term. The following will guide you through the qualifications needed to make sure each monthly payment qualifies. Loan TypeNot all loans qualify for Public Service Loan Forgiveness. You should already know that private loans, loans funded by private companies, do not qualify. PSFL will only forgive your federal loans; but not all federal loans. Only Direct federal loans. If you have FFEL, Graduate Plus or Parent Plus loans you may have to consolidate those loans into a Direct Consolidation Loan to qualify. Payment PlanLike loans, not all payment plans qualify for PSFL. Only the ten-year standard payment and income-driven repayment plans qualify. [...]

May 20, 2019|Categories: Student Loans|

Why The 98% Decline Rate of Student Loan Forgiveness ​Happened, and Why it Does Not Matter

Not going to lie, 98% is a lot of people for the Department of Education to decline for student loan forgiveness. It makes for great headlines and a lot of outrage. It's also a lie. It is true that 98% of people were denied, but the real surprise is that 2% were approved. The whole store needs to be known, and it is nothing overly complicated. The biggest problem is, the media is scaring people away from seeking forgiveness.Why did this happen?The simple answer, the program was designed by our government, and they have shown a consistent inability to do anything right. The more detailed explanation? The plan was put in place before the tools needed were available. In 2007, Congress created the Public Service Loan Forgivenss program. At that time, people were receiving FFEL loans. These loans do not qualify. It wasn't until 2010 that borrowers began using the correct loans. Picture this. You graduate in 2018 and dive right into teaching or a nursing job at a hospital. You hear rumors of a forgiveness plan and know you have federal loans. Not only do you have federal loans, but you also work for a qualifying employer. This is [...]

May 13, 2019|Categories: Student Loans|

Defaulting On Your Student Loans is (almost) Always Your Fault

Last week a news article was written about a single mom having a wage garnishment for her student loan payments. While this is no doubt a difficult situation, she should not have gotten to this point. While it might sound uncaring, if you are in default on your student loans, it is your fault because you should have used the flexible payment options available to you.Avoid ForbearanceThe first step toward defaulting on your loans is allowing your loans to go into forbearance. Forbearance is a temporary waiver in your payments. It is designed to get you past a short term financial setback without going into default. Forbearance is not just a “Get out of payments free” card. It will show on your credit report and lower your credit score. When you fall behind you can request a forbearance, but your lender may not always approve the request. If they do not accept the request, the next step would be a default. Delinquent and DefaultIf you are one day past due on your loans, you are delinquent. Default begins when you are 270 (for FFEL, but may vary by loan type) days behind; almost nine months. 
There are significant ramification to [...]

May 6, 2019|Categories: Student Loans|

Please, Please, Please Do Not Refinance Your Student Loans

I’m never one to hold back on my opinion, and student loan refinance companies are one of those areas I have a strong belief. These companies selling student loan refinance should be required to pay back the tens of thousands of dollars in damage they are doing. It wasn’t long ago I heard a story of a teacher that refinanced her loans. She sat down with a friend of mine to get some guidance and was devastated to find out she missed out on forgiveness because she was told refinancing was a good idea. This lender got a new client. The loan officer, presumably, got a commission. The teacher lost thousands of dollars. NOT JUST ADVICE FOR FORGIVENESSThis advice is not just for people trying to get forgiveness of their student loans. This advice to avoid student loan refinancing is for anyone that has federal student loans. While student loans are terrible, they do have some safety nets. Taking advantage of these safety nets when needed can be critical to avoiding a financial nightmare. They are similar to have an emergency fund, and insurance policy put aside to care for this one debt.PRIORITIZING YOUR FINANCESHaving these safety nets in place [...]

April 29, 2019|Categories: Student Loans|

4 Solutions to Your Student Loan Problems

Student loans are our generations biggest financial danger.  On average student loans put us in a $35,000 financial hole on the day we graduate.   Worst than that, most of us do not know what to do about them.  There are four options you have.  They range from paying off your loan immediately, to having your loan forgiven. ForgivenessForgiveness should always be your first consideration.  With other strategies, you are trying to minimize the interest you spend, but with forgiveness, you reduce not only the interest but also the principle your repay.  There are multiple forgiveness paths you can take.  If you are a teacher, you have a program designed specifically for you, Teacher Loan Forgivenss.  If you do not qualify for that, there are more options.  If you work for a non-profit or have a government job, including teacher, you have access to Public Service Loan Forgiveness.  Don’t let your income lead you to believe you do not qualify.  There are some moves you can make to increase your forgiveness.Lastly, for the rest of us, there are still forgiveness options.  They are not ideal, and often mean you are making less money than is desirable, but they are there.Remember, you [...]

March 27, 2019|Categories: Student Loans|
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