Student Loan Repayment Spouse Income – Special Edition Webinar with Jeff Levine End of Year and 2024 Tax Planning November 21st at 3:00 PM ET

Executive Summary The CARES Act student loan repayment and interest freeze set to expire in September 2021 Deciding whether to revise a student loan repayment plan Case Study 1 – Al and Jasmine: Mixed Income Married How can the timing of taxpayer’s income verification affect a positive change? Strategies for Families with Children (and Other Dependents) Case Study 2 – Gavin and Gavin: PSLF Borrowers Assessing Recertification and Tax Filing Status Student Loan Planning Comprehensive Student Loans With the possibility of remission? Student loan planning with a payment freeze

Student Loan Repayment Spouse Income

Student Loan Repayment Spouse Income

Beginning March 20, 2020, most federal student loan borrowers were granted a grace period from making student loan payments, with interest rates set at 0% and no payments required. The policy began as an executive order, then was incorporated into the CARES Act, and has been expanded repeatedly by both the Trump administration and the Biden administration. However, the payment and interest freeze is set to expire on September 30, 2021, and millions of borrowers will once again be required to make monthly student loan payments.

Paye: Pay As You Earn Student Loan Repayment

Resuming student loan payments will be a significant change in the finances of many borrowers. This not only affects cash flow, but can also affect their preferred tax filing status, where they choose to keep their retirement savings, etc. started, so the best strategy to pursue after the payment freeze ends has changed very well. And with so many debtors starting payments at once, it’s important to have a plan in place and implement it before the September 30 deadline.

Borrowers on Income Driven Repayment (IDR) plans have many planning options to consider. Both the timing of their income certification and their 2021 tax filing status can be strategically adjusted to minimize student loan payments. Especially since the popular strategy of married filing separately to reduce payments may no longer be attractive to families with young children, due to the American Rescue Plan’s 2021 changes to the child tax and dependent care credits. (Which are reduced or eliminated entirely for couples. Who file separately, and who have become fully refundable).

(their loan balance in anticipation of future public service loan forgiveness or IDR forgiveness) may now be able to pay their debts down to $0, while others may have had career changes that led them to such forgiveness programs. become eligible to which they did not have access before. Borrowers shouldn’t assume that the student loan plans they had before the pandemic still apply, and counselors can play a key role in helping them think through the moving parts. And how best to manage the trade-offs involved.

Even massive student loan cancellations of some amounts have turned from a ‘pipe dream’ to realistic odds of getting by in the coming months. While it’s not certain, and many policy details are still unresolved, it’s on the minds of many borrowers who don’t want to rush into paying off a loan only to find out that it’s only a few months away. Waiting for will be forgiven. . For some borrowers, this may mean taking at least a small bet on forgiveness, choosing to pay some interest now in hopes of forgiveness, even if they owe the same amount today. Have cash to pay for. Other borrowers may decide to pay off their debts with the money they saved during the pandemic, just to eliminate the debt (and its future interest and payment obligations).

Student Loan Interest Deduction, Explained

Ultimately, though, the bottom line is that with millions of student loan borrowers due to ‘suddenly’ start paying off in October, lenders are likely to be flooded with service requests soon. That means people who are considering possible changes to their student loan strategies, from changing their tax filing status to speeding up (or not) verifying their income, should now There is a need to review your plans, including considering if those plans can be adjusted. At least some level of student loan forgiveness does, in fact, happen!

Ryan Frailich is CFP, founder of Deliberate Finance, a fee-only financial planning practice that specializes in working with couples in their 30s, as well as teachers and nonprofit workers. Before becoming a planner, Ryan was a teacher himself and then worked to grow a charter school organization as Director of Talent and Human Resources. Given their age and professions, student loans are a priority for most of her clients, so she strives to find the right ways to inform clients about their student loan options. I have spent many hours. You can find him on Twitter, email him at [email protected] , or basically any festival in New Orleans that serves delicious food and drinks.

*** Editor’s Note: At the time of writing, the student loan repayment freeze expired on September 30, 2021. On August 8, 2021, the Department of Education extended the student loan repayment freeze to January 31, 2022. Borrowers will have to repay in February 2022. Notably, the Department of Education is calling it the “ultimate extension” of the student loan repayment freeze. The timelines in the case studies below may not be accurate due to this extension.

Student Loan Repayment Spouse Income

While the coronavirus pandemic has imposed financial hardship on millions of Americans, the impact has been felt by these people on very different levels.

Federal Student Loan Repayment Plans: Income Based, Traditional & Extended Repayments On Student Loans

Affected Fortunately for some federal student loan borrowers, their financial situations were relatively unaffected by the pandemic. In fact, some borrowers were left with Avon.

Financial circumstances led to student loan repayment freezes, stimulus money received, and reductions in discretionary spending (such as limited social gatherings and travel, as well as work-from-home situations, resulting in less discretionary spending).

Americans also managed to pay off $83 billion in credit card debt during 2020, and household net worth reached an all-time high by the end of 2020. For some borrowers who were previously on the path to debt forgiveness, these favorable conditions may now reduce their student loan debt to $0 as it removes that debt from their balance sheet. will end sooner than can be amortized through an Income Driven Repayment (IDR) plan over 20 or 25 years, potentially leaving them with less than the outstanding cost. on their plan for the full payment period.

Of course, many other borrowers were not so lucky and may have lost substantial income due to the pandemic, leaving them in a worse financial position than before. This can make it difficult to resume payments or require a complete change in strategy.

Now That President Biden’s Student Loan Cancellation Program Has Been Canceled, Here’s What’s Next

On the other hand, some borrowers may have changed jobs, gotten married (or divorced) or moved across state lines during the 18 months the payments are frozen. Given loan forgiveness options, such as those offered through programs such as Public Service Loan Forgiveness (PSLF), which may be tied to a borrower’s employment, a person may now qualify for loan forgiveness. is something that may not have happened before (or vice versa). Accordingly, individuals who have benefited from and relied on the relief provided by the CARES Act should prepare for a return to ‘normal’ as temporary relief arrangements are phased out.

Traditionally, student loan borrowers in the United States have been required to make monthly payments for the life of their loans, often lasting at least ten years, if not longer. In an effort to provide some relief from the impact of COVID on these borrowers, especially given that many are recent college graduates who have just started their careers and are not yet earning a steady income, An executive order was issued by the Trump administration on March 13, 2020, temporarily suspending student loan payments that many student loan borrowers typically have to make.

While the initial executive order left unanswered questions, the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed on March 25, 2020 clarified several key details:

Student Loan Repayment Spouse Income

The Trump administration later extended the payment suspension first to December 31, 2020, and then to January 2021. And when President Biden was inaugurated in January 2021, one of his first actions was to issue a new executive order, which continued all previous suspensions. Provisions up to 30 September 2021.

How Marriage Affects Your Student Loans

When this article was first drafted, further extension of the payment and interest freeze was out of the question, but given the economic recovery, it was highly unlikely. But on July 8, 2021, Fedloan, a nonprofit loan servicer hired by the Department of Education to service the loans of 8.5 million borrowers, announced that it would end its contract after the current term expires in December 2021. Will not extend or accept. Which means the Department of Education needs to find new servicers willing to take on those millions of borrowers, transfer loans to new servicers, and ensure accurate data transfer (which has been a big problem in the past). Critically, Fedloan is the only servicer that currently administers the Public Service Loan Forgiveness Program, therefore


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