College, Debt, Podcast, Student Loans, Students
August 28, 2022
Listen to Podcast Episode:
On this episode, Suze goes into more detail about the Federal Student Debt Relief Program, and what you should prepare for.
Suze: August 28, 2022. Welcome to another edition of Suze School. Now. I know, I know
Suze: I'm really not here. Because you know on August 26th, I had my gallbladder taken out. But I just wanted to do a very short Suze School on the student loan forgiveness, because it's caused so much confusion. I've gotten so many questions from all of you, and even though on the Women & Money app, if you look at my post, you would see everything that you need to know.
Suze: But just in case you don't have the Women & Money app, you're not using it for some reason, I don't understand why you're not, you should just be going to Apple Apps or Google Play and download it. But again, not my problem, right? But some of you are writing, and you're just so confused about this. So I just want to give you a few things that you need to know.
Suze: First, I want to make a statement.
Suze: There are so many of you as well who are so upset about this. You feel like you did what was right, you paid off your student loan, you suffered, you did and on and on and on and boy I get that. I get that.
Suze: And then there are many of you who are thrilled that this is happening.
Suze: Because you haven't paid your student loan forever. It's been there, it's been growing and
Suze: it's great that some money, or maybe all of your money
Suze: has been absolutely forgiven in terms of the loan.
Suze: however you feel about it,
Suze: it's not my job here to take sides. It's not my job to say this should have happened, that should have happened. It's my job to simply educate you. Now, I have my own feelings about it.
Suze: But I'm not gonna get let my own feelings get in the way of educating you, and telling you what you need to know.
Suze: Also, I just have to say, don't be so sure that everything that I'm about to tell you is going to stay and be in play. And that is because there are many politicians actually on both sides that do not like what just happened.
Suze: And if any of those politicians decide to sue or object to it in whatever way they can, it can stall this entire process for quite a while. So just know that is a good possibility that that could happen.
Suze: And what will make the decision, well politics. Will the republicans be seen in a certain way that they don't want to be seen if they object to this? What will happen if some of the democrats, it's a mess. Let me just say that.
Suze: But nothing is sealed yet. This is not definitely going to happen, until time passes and we see that no politician has objected to it. However. The only thing that is not in question is that the payment pause will be extended one last time, this is it everybody. To December 31, 2022.
Suze: But with that in mind,
Suze: let's just assume that it stays like it is, so then what are the things that you need to know?
Suze: Obviously you already know that it has to be a federal student loan. It cannot be a private student loan. It can be for anybody who has a federal student loan, who is an undergraduate,
Suze: a graduate, and parent plus loans. So many parents are writing me and go, but Suze, does this apply to parent plus loans? And the answer to that question is, it absolutely does.
Suze: Again, the income limitations, and I believe it will be based on adjusted gross income,
Suze: whether it's for a federal student loan or a Pell grant, which will forgive up to $20,000, again, it's up to $10,000 for a federal student loan, and why do I say up to, because of all you still owe on the Pell grant or a federal student loan is, let's just say $5,000, that's all the forgiveness you are going to get.
Suze: So don't think you get more than what you currently owe.
Suze: Again, you only qualify for the forgiveness of the student loans, if your adjusted gross income is under $125,000, if you are single.
Suze: Under $250,000, if you are married filing jointly.
Suze: So now that we know that, here are other questions that many of you have.
Suze: What happens if I'm a current student?
Suze: Can I get this student loan relief? Yes, but you have to be careful here. Because students, if you are claimed as a dependent on your parents taxes, then guess what?
Suze: It will be based... the income will be based on your parents’ income, and not yours. So just be careful about that. What if you're currently taking out loans now? Do they qualify? That's what you want to know,
Suze: only loans taken out before July 1, 2022 will be the ones that qualify for this. This is what has upset many of you. Suze, I've paid off my loan. Does that mean I missed out on this $10,000?
Suze: Well, it depends. So listen to me closely. If you made any federal student loan payments between March 13th, 2020 to August 31st, 2022, you are eligible for a Department of Education refund. Now, what does that mean? That means because you were responsible,
Suze: and you were paying that student loan during the moratorium, you can apply for a refund with the Department of Education. So what do you need to get that refund? First, you have to get everything in order.
Suze: You need to know all the details of the payments, you have to show that you have then payments, and once you have all that in order, then you are to reach out to your service loan provider, and tell them you want a loan refund.
Suze: Now they're gonna need proof of payment. And all of you need to remember once again, this is only for payments that you made from March 13th, 2020 till August 31, 2022. And again, up to the max of that $10,000. Okay everybody? Next thing you want to know, will these loans be tax free?
Suze: Yes, they're gonna be tax free on the federal level.
Suze: On the state level that just might be something different. Because not all states conform tax wise to what the feds want. So there's certain states like Alabama, Arkansas, Mississippi, New Jersey, that you best check with.
Suze: There could be more states, so just ask your CPA if this comes to be, through I owe income tax on the state level. Alright.
Suze: how's this gonna work? How do I know I'm going to get this relief? So if the U. S. Department of Education has your income data, and many of you have your income data with the Department of Education, then you will receive the relief automatically, you don't have to do anything. However. What happens
Suze: if the Department of Education doesn't have your income data, or if you don't know if the Department of Education has your income data? Don't worry, because the administration is going to launch a simple application in the coming weeks for you to fill out. Now for those of you who want to be notified by the Department of Education when this application process is open,
Suze: then sign up with the Department of Education on their subscription page. Just that simple. You know, part of this is also for those of you who are on income-based repayment programs.
Suze: Now they want to refigure how much you actually owe every month. And if this passes, if this really does come to be, it's going to help you a lot, because rather than 10% of your discretionary income having to go to the student loan, only 5% will go to it.
Suze: And if you make those payments on time every month, then your balance of your student loan will stay the same, rather than growing. And hopefully they're going to reduce it and forgive it in 10 years rather than 20. If you have any other questions you can always write in to firstname.lastname@example.org. But this was a very brief Suze School just to bring you up to date
Suze: as to what's happening with the student loan relief. Now, you know, you also know that there's only one thing that matters when it comes to your money, and that's I want every single one of you
Suze: to be safe, strong, smart and secure. See you soon. Bye bye.
To learn more about how you can help yourself and others, please visit: https:myalliant.com/good.
Take advantage of the Ultimate Opportunity Savings Account with Alliant Credit Union at: https://bit.ly/3vEUTZW
Get Suze’s special offers for podcast listeners at suzeorman.com/offer
Join Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on her podcast!
To ask Suze a question, download by following one of these links:
CLICK HERE FOR APPLE: https://apple.co/2KcAHbH
CLICK HERE FOR GOOGLE PLAY: https://bit.ly/3curfMI
Answer Yes or No to the follow statements.
I pay all my credit card bills in full each month.
I have an eight-month emergency savings fund separate from my checking or other bank accounts.
The car I am driving was paid for with cash, or a loan that was no more than three years, and I sure didn’t lease!
I am contributing at least 10% of my gross salary to a retirement plan at work, or I am saving at least that much in an IRA and/or regular taxable account.
I have a long-term asset allocation plan for my retirement investments, and once a year I check to see if I need to do any rebalancing to stay on target with my allocation goals.
I have term life insurance to provide protection to those who are dependent on my income.
I have a will, a trust, an advance directive (living will), and have appointed someone to be my health care proxy.
I have checked all the beneficiaries of every investment account and insurance policy within the past year.
So how did you do?
If you answered yes to every item, congratulations. If you are working on improving on a few items, I say congratulations as well.
As long as you are comitted to truly creating financial security, I applaud you. If that means you are paying down your credit card balances, or are building up your emergency fun with automated payments, that’s more than fine. You are on your way!
But if you found yourself saying No to any of those questions, and you’re not working on moving to Yes, then I want you to stand in your truth. No matter how good you feel, you have some work to do before you can honestly know what you are on solid financial ground.
Saving, Investing, Home Ownership, Retirement
Credit & Debt, Saving, Investing, Retirement