Student Loan Update After Supreme Court - with Mike Foley

/

We’re back once more with Mike Foley, CFP, CSLP, to bring us another update on the student loan saga. Unfortunately that forgiveness isn’t going to happen, but there are a lot of other changes upcoming… including returning to payments! Mike lays it out for us:

What are the major updates?

  • Student loans are back on - interest returning in September, with payments likely resuming in October.

  • No Biden forgiveness.

    • But no impact to PSLF rules, either.

  • New PSLF rules are active.

  • No more interest capitalization when changing repayment plans or enrolling.

  • New “SAVE” plan.

    • Replacing the REPAYE

    • Lowers the monthly payment by changing the discretionary income calculation.

      • No unpaid interest!

      • Able to file taxes separately from spouse.

      • Weighted average calculatoion for undergraduate and graduate loans:

        • 5% for undergrad

        • 10% for graduate

    • Will start later this summer.

      • Those on REPAYE will automatically switch over to SAVE

      • Married borrowers can file separately — unsure if this will recalculate payment adversely for some married borrowers.

        • Some spouses with higher loan balances could see increase in payments.

  • PAYE and ICR programs going away.

    • Tough break for those going for long-term taxable forgiveness and have loans pre-2014.

    • Also tough for those with high incomes and just a few years away from PSLF.

  • New “On Ramp” program

    • No defaults until Sept. 2024 — interest will still accrue, though.

  • Losing out on REPAYE, and then switching to IBR or PAYE strategy:

    • Limited to just 5 years on REPAYE/SAVE to get interest subsidies before losing out on being able to switch to a plan that can be done in 20 years like the new IBR or PAYE.

    • Those who have loans pre-2014 — need to switch to PAYE or forever hold your peace!

What should we do before loans turn back on?

  • Update your contact info at student aid.gov and with your loan servicer.

  • Link your bank account to your new loan servicer — likely changed during COVID.

  • Check your payment amount due on your loan servicer website.

    • Don’t just automatically rectify your income — earliest you need to rectify if already enrolled in a program would be 6 months after payments resume — so you may be able to make payments still based on your 2019 income!

Any loopholes to look out for?

  • Are you unemployed during the summer between residency/fellowship and your job?

    • May be a good time to re-certify while you’re unemployed.

  • Are you looking to pay off your loans?

    • May want to consider reporting lower income for a few years while you can, to take advantage of interest subsidies through new SAVE program.

  • Did you work for a qualifying PSLF institution prior to med school while you had undergrad loans outstanding?

    • Potentially able to consolidate loans and get PSLF or IDR credits, if you complete before end of year.

Getting in touch:

More info:

Disclosure:

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.  Michael is a registered representative and investment advisor representative of Securian Financial Services. Securities and investment advisory services offered through Securian Financial Services, Inc. Member FINRA/SIPC. North Star Resource Group is independently owned and operated. 6720 N Scottsdale Rd Ste 290, Scottsdale, AZ 85253. Financial Professionals do not provide tax or legal advice and this should not be considered as such. Please consult a tax or legal professional for advice regarding your specific situation.

Updates in Student Loans, feat. Michael Foley

/

We’re back once again with Michael Foley to talk updates in the student loan sphere on today’s #WellnessWednesday. We thank again the partnership from SMFM Thrive to make these podcasts possible!

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.  Michael is a registered representative and investment advisor representative of Securian Financial Services. Securities and investment advisory services offered through Securian Financial Services, Inc. Member FINRA/SIPC. North Star Resource Group is independently owned and operated. 6720 N Scottsdale Rd Ste 290, Scottsdale, AZ 85253. “

Miss the PSLF Waiver? There may be another option after July 2023.

o   Must be employed at a qualifying employer at the time of your application for forgiveness though.

o   Can still get retroactive credit for periods of time with FFEL loans or while in certain period of forbearance/deferment.

o   Must consolidate prior to May 1st, 2023 though if there are FFEL loans involved.

New guidelines around PSLF qualifying month, starting July 2023

o   Things needed to get PSLF credit:

§  1. Working at a qualified employer,

§  2. making eligible payments,

§  3. for 120 months. These stay the same but the definitions of the first two have updates.

o   Eligible payment changes

§  Borrowers can now make retroactive payments to get credit for periods of time that they were in deferment or forbearance in the past and get them counted towards PSLF. Even periods of time where their payment would have been $0.

§  New consolidation rule: Weighted average of months.

·       Example: 1 loan 30k with 60 months combined with another loan with 30k with 0 months. New month count for consolidated loan will be 30 payments.

o   Changes to Qualifying employment

§  Flat 30hrs per week at a qualifying employer.

§  Allow qualifying employers to certify employment for a contractor if that individual is providing services that by State law cannot be filled or provided by an employee of that organization. Doctors at nonprofit hospitals in California and Texas.

Biden Forgiveness Update

Stuck in court after being struck down by a federal judge in Texas. Will likely be seen by the Federal Supreme Court which could take some time! Supreme Court will start the first oral hearings in February 2023. 

Forbearance period extension pushed out contingent on the court case:

·       Recertification dates extended

o   If falls 6mo after the loans turn back on, it will be pushed out by 1 year.  

·       Consult your CPA – a tax filing extension might be favorable on the student loan side of things if your 2021 income was lower than 2022.

Other meaningful updates in the Federal Student Loan space

Actions/Considerations:

1.     Don’t rule out the PSLF program even if you are a contractor with a hospital in CA or TX

2.     Consider consolidating any outstanding FFEL Loans prior to May 2023.

o   But be careful in consolidating all your loans (new weighted average rule).

3.     Don’t recertify income prematurely (given recertification extension)

o   Also, think before you file your taxes in the new year. Be sure to consult the CPA AND the student loan counselor if you made more in 2022 than in 2021. Potential for savings when payments do turn back on.

4.     Hold on changing repayment plans until after July 2023 if there is a lot of unpaid interest.

5.     Keep an eye on this court case- BUT remember that this is entirely separate from the PSLF program. Many are getting these confused.

6.     Be VERY careful with refinancing loans right now given the changes in the Federal space. Once you jump ship, you can never go back.

 

Additional Resources:

Bio: https://www.northstarfinancial.com/advisors/michael-foley/

https://www.ed.gov/news/press-releases/education-department-announces-permanent-improvements-public-service-loan-forgiveness-program-and-one-time-payment-count-adjustment-bring-borrowers-closer-forgiveness

https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/futureofpslffactsheetfin.pdf?utm_content=&utm_medium=email&utm_name=&utm_source=govdelivery&utm_term=

Contact:

FoleyTeam@NorthStarFinancial.com

Like to schedule a review of your student loans?

  1. Please complete this BRIEF QUESTIONNAIRE (takes about 5 minutes).

  2. Please also send a copy of your Federal Student Loan data file from www.studentaid.gov (instructions at the top of the questionnaire). Email: FoleyTeam@northstarfinancial.com

  3. Scheduling link will be emailed following your completing the questionnaire.

 

 

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

/

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.

Budgeting, feat. Mike Foley

/

We’re back with another special Wednesday episode this week, again brought to you in part by the SMFM Thrive Initiative! SMFM Thrive is a wellness program for MFMs - but we hope that this week’s podcast will be helpful even to those outside of MFM land!

Michael Foley rejoins us today to talk budgeting!

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. 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.

How to build a budget

  • Spreadsheet or app to identify normal and regular expenses and regular income to identify surplus income.

    • What comes in?

    • What goes out?

    • What is left over?

Research for budgeting hacks

  • Brain scan study https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2656877/

    • Same cognitive energy to save for our future self as it does to give money to someone else.

  • Make the decision once and then automate, automate, automate.

  • Setting up hurdles

    • We tend to see better results when there is a separation between your everyday checking account and your emergency reserve.

    • Look at a separate high yield online savings account at a separate bank

      • Takes 1-2 business days to transfer

      • Enough time to feel a bit guilty but it is there if you need it.

  • Positive psychology research

    • Identify those things that actually bring you happiness and fulfillment

    • Some may cost less than you think.

      • Get the most bang for your buck from a fulfillment standpoint.

  • PERMA exercise

    • Positive Emotion, Engagement, Relationships, Meaning, Accomplishment.

    • These are your real goals... not a dollar amount in your bank account!

Triaging your surplus income in residency vs in practice.

  • Establish the basics- like checking basic vitals – if a patient tells you that they want to start to train for a marathon, but they have high blood pressure, knee issues, and they have no training plan. Can you go out there and start running? Absolutely. But you might want to address some other issues first.

    • Emergency reserve

    • Cash ready for upcoming expenses

    • Insurances- DI, Life, Umbrella

    • Debt repayment plan

    • Then preventative care- like starting to work out, eat healthy, etc.

    • Retirement savings

    • Medium term savings- nonretirement

    • Once maxed out all other retirement options, then look towards other tax advantaged accounts as a business owner or through 7702 max funded life insurance contracts.

  • How to know if you can afford something?

    • Are you on track for your short and long term goals and have savings automated, then you can spend the rest and not feel guilty about it?

Common mistakes

  • Only focusing on your student loans: I’m going to continue living like a resident and pay off all of my loans”

  • Building up fixed expenses right out of training before working with an advisor to help you identify some of your longer-term goals.

  • Raising fixed expenses can limit your surplus income very quickly

  • Not able to hit goals? Make more money or spend less money. Going backwards in lifestyle expenses is rough.

Need some budgeting help?

Financial Wellness with Michael Foley, CFP, CSLP

/

We have a special Wednesday episode this week, brought to you in part by the SMFM Thrive Initiative! SMFM Thrive is a wellness program for MFMs - but we hope that this week’s podcast will be helpful even to those outside of MFM land!

Our guest is Michael Foley. 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. 

DISCLOSURE: Michael is a registered representative and investment advisor representative of Securian Financial Services. Securities and investment advisory services offered through Securian Financial Services, Inc. Member FINRA/SIPC. North Star Resource Group is independently owned and operated. 6720 N Scottsdale Rd Ste 290, Scottsdale, AZ 85253

Check out some additional resources from Michael:

My Bio: https://www.northstarfinancial.com/advisors/michael-foley/

CSLP Blog: https://cslainstitute.org/blog/

Student Aid Updates: https://studentaid.gov/h/announcements-events

Medical Economics articles: https://www.medicaleconomics.com/authors/michael-foley-cfp-cslp?page=3

And to schedule an initial consultation with Michael click here.