Student Loans: The Saga Continues! An Update with Michael Foley.

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Two major updates

$10k or $20k forgiveness (Pell grant recipients)

  • Qualify if you make less than 125k single or 250k married

  • Likely what they already have on file for you- automatic or app coming in October

  • Is it going to be taxed?

    • Not federally but maybe in some states- check with your CPA

  • Is it going to be challenged legally?

    • Likely

    • Will take a long time to reach the Supreme Court

    • Also hard to sue without being able to show harm.

Forbearance extension through end of the year

  • No interest accrual or payments due

  • Also means the deadline for REFUNDs has been extended

  • Likely further extensions on Recertification dates.

Opportunities that have presented themselves with these extensions

Income reporting

  • Typically, must report income every 12 months – different during COVID

  • Paystubs or Most recently completed tax return

    • Presented opportunity to get on track for reporting your income from two years ago.

    • Some may be able to keep their incomes from 2019 for another year or more!

      • Huge for those seeking PSLF

      • Even helpful for folks paying down loans aggressively – REPAYE example- bulk payments.

      • Don’t forget about filing your taxes separately from your spouse and community property rules

PSLF Program and Waiver Action Items

  • Make sure all your loans qualify

  • Employer Certification form submitted to Mohela

  • Call current loan servicer and let them know you want to enroll in PSLF and move to Mohela

    • Don’t write this off even if you have a high income and not a lot left.

  • Income contingent repayment could be helpful for you

    • Lesser of 20% of income OR 12yr repayment times factor based off income (max 200%)

  • If you are unsure if you could qualify or not, request the refund of payments now

    • Worst case scenario, you pay that money right back towards your loans

    • Still no interest until January.

Proposals announced:

  • New repayment plan with a 5% discretionary income payment

    • Only for undergrad loans

  • Raising discretionary income amount to 225% instead of 150%\

  • No accrual of unpaid interest

Major takeaways

  • If you have Federal loans, everyone should be reassessing their gameplan. Lots of new strategies at play.

  • Don’t leave any money on the table.

  • Get your ducks in a row for PSLF even if there is a glimmer of possibility that you go for it.

  • Seek professional counsel on this by advisors trained on the Federal loan system. Let them help guide you through this.

    • This is not a simple system.

    • Lots of content going around that are either politically charged or financially charged that are offering tainted advice for borrowers – Beware!

Michael is a comprehensive financial advisor who runs his practice out of Scottsdale, Arizona, under North Star Resource Group. Michael was trained at Duke University and holds his Certified Financial Planner designation alongside his Certified Student Loan Professional designation. Although Michael serves a diverse group of clients with their financial and student loan needs, with two physician parents, Michael has found a specialty in working with those in the healthcare space. 

North Star Resource Group is independently owned and operated. 6720 N Scottsdale Rd Ste 290, Scottsdale, AZ 85253.

Separate from the financial plan and his role as financial planner, Michael may recommend the purchase of specific investment or insurance products or accounts. These product recommendations are not part of the financial plan and you are under no obligation to follow them. Financial Professionals do not provide specific tax/legal advice and this information should not be considered as such. You should always consult your tax/legal advisor regarding your own specific tax/legal situation.

To schedule an initial consultation with Michael click here.