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?
Please complete this BRIEF QUESTIONNAIRE (takes about 5 minutes).
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
Scheduling link will be emailed following your completing the questionnaire.
