Public Service Loan Forgiveness ... Do You Qualify?

Do you work for the CDC? VA? Emory? A non-profit?

Do you still have federal student loan debt?

Have you previously tried getting your loans forgiven through the PSLF program and failed?

Good news!!

In October 2021, exciting (and temporary) changes were made to the U.S. Department of Education’s Public Service Student Loan Forgiveness Program, significantly increasing the number of federal student loans that qualify for forgiveness. There are some technical requirements that must be met: a particular type of loan, making a set number of payments (120), 10 years of work service and working at a qualifying institution. 

What is the Public Service Loan Forgiveness Program?

According to the Department of Education website, “The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.”

What qualifications are needed for the federal student loan forgiveness program?

1. Your loans must be federal student loans … NOT private. ** You can determine if the loan is a federal loan if it begins with “Direct.” 

2. You have to make 120 qualifying monthly payments

3. Work for a qualifying employer (a nonprofit or government institution) 

4. Work full-time ( at least 30 hours a week)

5. 10 years of work service with a qualifying employer

Check out this PSFL tool on the federal student aid website to help determine if you qualify.

What changes have been made to the PSLF?

Good news - if you did not qualify for PSLF before, you may qualify now! This program began in 2007, and although the ‘qualifying employment’ requirement has not changed, the program now allows all federal student loan payments to be counted toward the PSLF program. Previous disqualifying factors, such as an ineligible loan type or repayment plan, will no longer automatically make you ineligible. 

Several clients have said, “I consolidated my loans years ago, so I don’t think I am eligible for forgiveness.” Even if you consolidated your loans when you began making your initial loan payments, these loans may still be eligible for forgiveness if they are federal student loans.

When should I get started?

This is a temporary expansion, so you will need to have your paperwork and applications submitted by October 31, 2022. The sooner you get started the better.

How to get started?

Creating an account at www.studentaid.gov is definitely your best first step. The account will be established within 3-5 days. Once you gain access to your account, your loans will be listed and you will be able to determine the number of payments made. In addition, there will be an eligible employer database that you can search. 

How can we help?

This program has been changed significantly, and we understand there are a lot of qualifications and grey areas. Where you may not have qualified under the previous PSLF program, the temporary expansion could accept your application and see ALL of your debt wiped out! This is where we can help. If you are unsure of the process and/or if you qualify, we can work with you to identify next steps and walk you through the process. 

Here’s what you’ll need: 

1. Student loan documents - the latest statement or access to your federal student aid profile

2. Your latest income tax return

3. Name of your employer

4. Work service history

We can go through this information and process together. If you don’t qualify, we can identify why you don’t qualify and how you can go about qualifying in the future. We can help you consolidate your loans (if needed). And finally we can help you complete the application process.

If you have been putting this off, don’t worry, we are here to help. Set up a Zoom meeting (or consultation) here:

Why Everyone is Talking About Their Extra COVID Cash

Even though we are doordashing dinner, our grocery bills are exploding and we’re buying new bikes… our checking accounts are unusually flush with cash and credit card bills are low.

We’ve been forced to save during COVID-19

On average we’re spending 25-30% less due to the coronavirus.

Businesses are closed and we are staying home. Spring and summer plans were cancelled and refunds are rolling in from flights, hotel reservations and summer camps.

What Should You Do With Your extra COVID Cash?

Be intentional with that money, fund your future happiness.

If you are wondering what you should be doing with this new found stash of cash (cache of cash?), I have some suggestions:

1. Let it ride

Most people don’t have 3 month's worth of family expenses set aside in an emergency fund. If you do now, congratulations. Now more than ever, the argument for having a sizable chunk in cash is becoming abundantly clear. Set this money aside for the unexpected.

2. Upgrade Your live/work space

If you have been considering updating your furniture, splashing some new paint on the walls, or turning an extra bedroom into a study … now is the time to do it. You will likely be spending more time working from home in the future. And your kids are going to be schooling at home in the coming years (including your college kids). It all adds up to many more hours a day in your house. You might as well take the time to make it as comfortable as possible. Talk to a local designer or use an online tool. We’ve been using Havenly.

3. Upgrade your yard

Just as important as your inside living space, is your outside living space. Now is the time to invest in beautifying your yard. There are added benefits as well, as gardening is a wonderful outlet for any extra time you may have. And it is also helpful work for finding mental head space/peace.

4. Get Your Credit Cards in Control

If you have let your credit cards get a bit out of control, now is the time to pay them down, and assess what you really need to be spending. Part of that is getting control of those recurring needling $8-$100 expenses that get lost on your credit card bill. Now they are suddenly super visible. Start canceling subscriptions. Get your credit cards completely under control.

5. Fund your 529s

Invest in your kid’s education. You can put $15k into each of your children’s 529s. I typically suggest aiming to have two year’s worth of in-state tuition set aside when the kids graduate from high school.

6. Fund your IRAS

Setting aside money for your long term financial planning, is always important, and should be done a set cadence. Now could be a brilliant time to fund your 2020 Roth IRA (as well as your 2019 if not yet done). And if you have been hearing about backdoor Roth’s, it is time to implement one. A good read on a back door Roth can be found at the White Coat Investor.

7. Fund your brokerage account

Adding money to your mid/long-term savings can also be done through a standard brokerage account. You will end up paying capital gains taxes, sure, but the market is the best way to earn money, when your time horizon is greater than 5 years. After depositing your money in the account, I suggest dollar cost averaging in over the course of the next several months. Pick a day of the month (I like to use the first of the month), and make your purchases, regardless of the daily results of the SP500. You need some sort of forcing function to make you follow through, in the face of an ever changing market. Not sure what to invest in? Get in touch with me to talk about what to buy.

8. Financially Support Equality + Social justice

Now is the perfect time to put your money to good use, fighting for social justice, right here in the USA. Put your money where your mouth is!

Be intentional with your money, and it can help bring you joy

This time of quarantines has been an instructive time. Use it as a level set to gauge what you really need to be spending. Your extra money, needs to find an intentional place in your life. Make it work towards your ultimate happiness. Don’t let it go to waste!

What You Need To Know About Crafting An Agile Financial Plan

Agile financial planning is the most effective method I’ve seen to help people successfully reach their financial goals.

“Plans are useless. But planning is INDISPENSABLE.”

-Eisenhower

What is Agile financial planning?

Agile financial planning is crafting and iterating a financial plan over time, through an ongoing partnership with clients, so it specifically suits the client’s short/med/longterm goals.

How is Agile financial planning different than the traditional financial planning process?

In a traditional financial planning engagement, a client needs to gather all of their personal financial documents such as bank accounts, brokerage accounts, 401ks, insurance for car and home, etc. Then, they have a brief meeting with a financial advisor, who will create a financial plan based on the data from the financial statements provided. The advisor and clients meet again, where the financial advisor hands off the financial plan for the clients to implement. It’s much akin to your physical therapist giving you a list of exercises to do at home, that you never do. Or a dietician giving you a strict diet plan that doesn’t allow you to eat any carbs, even though your little guilty pleasure is pasta.

What’s the benefit of Agile financial planning?

Your financial statements only captures a snapshot in time and tells the stats of your story. You, your family and your goals are all unique to you and should be reflected in your financial plan. Most people aren’t comfortable pouring out their hopes and dreams to a financial planner in a consultation meeting. As a result “personalized” financial plans often turn out to be just based on numbers and stats and the client doesn’t implement it or stick to it.

In addition, life changes: Children are born, careers change, houses are bought, tuition comes into play, debt becomes an issue, relatives need help, inheritances come your way, retirement comes on to the horizon, etc. If you don’t have an agile financial process in place, your financial plan, no matter how good it was when it first was purchased, quickly becomes out of date and out of alignment with your life for today and the future.

Reaching your financial goals requires three key pieces:

1. Having a plan that will actually work for you.

2. Implementing the plan.

3. Having a plan that adjusts with your family’s circumstances.

A sneak peak Into How I Implement Agile Financial Planning

The first step in my agile financial planning process is to start by building the family Profit and Loss (P+L).

To do this we need income statements and spending account statements: savings, checking, credit cards. I ask clients to send me their statements as they track them down, rather than having to dig around for a massive amount of documentation.

Once I have enough information, I review the family’s cash flow and share my observations. If I am way off… they let me know. If I am close … they let me know. For example, often clients tell me, “Oh, actually much of my spending is on this other credit card and I haven’t given you that statement yet.” Through this process, we start to build an understanding of how we best communicate, a common language and a shared awareness of the family’s financial habits. Based on this collaborative and iterative process, we organically begin to develop a plan for how to handle the P+L in the future, that actually works for the client.

Do you have a partner that you can work with, who will craft and iterate your financial plan over time, through life’s ups and downs, so it specifically suits you? Everyone needs that type of partner.