On Course - Student Debt Relief Plan

On Course | September 27, 2022 | Volume 22, #8     Welcome. We at Compass Planning continue to appreciate your support. Thank you.   For those of you who have college debt or have family members who do, this month we're highlighting key info for the newly passed student debt relief plan and providing links for more detailed information.   The Biden-Harris Administration expects that over 40 million borrowers are eligible for its student debt relief plan and nearly 20 million borrowers could see their entire remaining balance discharged. Nearly 90 percent of relief dollars will go to those earning less than $75,000 per year – with no relief going to any individual or household in the top 5 percent of incomes in the United States.   If you missed our series on retirement, you can still access the issues. For Retirement, Part 1 - Retirement Savings, click here. For Retirement, Part 2 - Social Security, click here. For Retirement, Part 3 - The Retirement Paycheck, click here.   If you would like assistance with student loan debt forgiveness, we are here to help you stay On Course!   Jennifer Lane, CFP   Student Debt Relief Plan   The program is a three-part plan to help working and middle-class federal student loan borrowers transition back to regular payment as pandemic-related support expires.   Three parts Part 1: The student loan payment pause is extended through December 31, 2022, with payments resuming in January 2023. This pause extends automatically. Part 2: Provide targeted debt relief to low- and middle-income families. The U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households. Part 2: In addition, borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is because of time-limited changes that waive certain eligibility criteria in the PSLF program. These temporary changes expire on October 31, 2022. For more information on eligibility and requirements, go to PSLF.gov. Part 3: Make the student loan program more manageable for current and future borrowers. The administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.   Eligibility Your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households). If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation. If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation. Your relief is capped at the amount of your outstanding debt.   The process Nearly 8 million borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education. If the U.S. Department of Education doesn't have your income data, the administration will launch a simple application which will be available by early October. (See below.) Once borrowers complete the application, they can expect relief within 4-6 weeks. Everyone is eligible to file the application, but there are 8 million people for whom the government has data and who will get the relief automatically. Borrowers should apply before November 15th in order to receive relief before the payment pause expires on December 31, 2022. The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022.   To be notified when the process has officially opened, sign up for "Federal Student Loan Borrower Updates" at the Department of Education subscription page. Applicants will have until Dec. 31, 2023 to apply.   Get your kids involved as early as you can in college financial planning by including them in a monthly discussion about your money and theirs. You don't need to share your whole financial picture with them -- focus on their accounts and the accounts you own that are earmarked for their college costs.   Get more tips in Jennifer's book Buy Now   Jennifer and Sarah were both named 2022 Boston Five Star Wealth Managers.   Helpful Websites     Department of Education subscription page   One-Time Student Debt Relief   Public Service Loan Forgiveness   Student Debt Relief Plan   The White House Fact Sheet                   Jennifer In The Media   Below are links to Jennifer's frequent contributions to financial planning articles.   NBC Boston turned to Jennifer for advice and tips on what to do if you win big in the lottery. Click here to watch or read the segment. Jennifer contributed to a WBUR Radio Boston segment, How to Look Before You Leap into the "Great Resignation." Click here to listen. NBC10 consumer investigative reporter Leslie Gaydos interviewed Jennifer for savings tips. For a great video, How to Save $1,000 in 5 Months, click here. For the written article, click here. Jennifer contributed to a timely article, How to seek forbearance on your mortgage, for The Boston Globe. Read article. If you’re interested in dividend funds, Jennifer contributed to The New York Times article, Dividend Funds Can Add Income, and Risk, to Your Portfolio. Read article. Jennifer contributed to a BankRate article, Should I combine my mortgage and student loans? Read article. Need help with your 401(k) during the pandemic? Jennifer contributed to a Boston Globe article, Five tips for managing a 401(k) during the pandemic's turbulence. Read article. Jennifer contributed to the Bottom Line Inc article Prepare your Finances for a Possible Recession. Read article. Jennifer contributed to The Wall Street Journal article If Saving During a Pandemic Is Hard, Here's How to Stay Motivated. Read article. The New York Times featured Jennifer in an article titled, Balanced Funds Don't Inspire Fear or Greed. That's Why They Are So Useful. Read article. With a contrarian view, Jennifer contributed to an article, People are enraged by the idea that you should have twice your salary saved by the time you're 35! published recently by Business Insider. Read article. Moving in together? Check this article from Business Insider, Five questions you and your partner should answer before taking the biggest step in your relationship. Read article. Insider asked Jennifer to contribute to an article on old fashioned ways to manage your money, Six money-saving tips your grandma used that are way more effective than any budgeting app. Read article. Jennifer contributed to an article on Business Insider, This is the best way to do your taxes online - according to experts. Read article. CNN Money's Money Moves featured Jennifer in an article on how to strike the right balance between retiring early and saving enough. Read article. Jennifer contributed to a CNN Money article When is the Right Time to See a Financial Advisor? Read article.   Compass Planning News   Compass Planning is a sponsor of YW Boston's 2022 two-part Elevating Lives Series. Compass Planning continues to meet with clients as well as those interested in learning more about the firm via phone and web-based video conferencing. Email [email protected] to learn more. Compass Planning has become a supporter of The Center for Financial Planning at the sustainer level. The CFP Board created the center to achieve a more diverse and sustainable financial planning profession so that every American has access to competent and ethical financial planning advice. AdvisoryHQ named Compass Planning as one of the ten best Boston financial advisors. (Disclosures)   Compass Planning Associates helps families, individuals, and small-business clients achieve financial security, knowledge, and control over their money. Our fee-only, client-centered approach provides education and guidance for achieving financial goals and dreams.   This newsletter and any linked references are for informational purposes only and are not to be construed as tax, legal, or investment advice. Compass Planning has gathered the information from sources it believes are reliable, but your individual situation can vary, and you should consult with your investment, accounting, and/or tax professional before taking any action. ©2022   Compass Planning Associates, Inc     Contact Us  ‌  ‌  ‌   PO Box 917 Westwood, MA 02090 617-523-4666 [email protected]