Easing the Burden of Student Loans

Student loan debt was a topic of debate during the 2020 presidential election, and the Biden administration has since signaled a willingness to explore it further during his first term in office. In the meantime, there may be a light at the end of the debt tunnel courtesy of the federal Public Service Loan Forgiveness program (PSLF).

PSLF is aimed at helping college graduates who choose careers in public service (defined below). If a qualified borrower makes 10 years’ worth of timely payments on their loan, they are eligible to have the remainder of their loan balance wiped out.

The four steps below can help you or your loved ones navigate the maze-like qualification process.

1. Qualifying Employment: The first requirement for PSLF is to work in a public service position when you are making payments. This means a civil service, 501(c)(3) or a private non-profit employer that provides public services such as early childhood education or health care. Your employer will be able to tell you if they are a government or non-profit organization. (To learn more about jobs and employers that fit the bill, click here.)
2. Loan Eligibility: Not all student debt is eligible for forgiveness. To qualify, it must be a federal direct loan. This includes direct subsidized and unsubsidized loans, PLUS loans and direct consolidations. Private loans do not qualify. However, you can consolidate non-eligible federal student loans into a direct consolidation loan to make them eligible for PSLF. We recommend speaking with a financial adviser before making that move.
3. Repayment Plan: The next qualifier is making 120 loan payments after October 1, 2007 under what is called an Income-Driven Repayment (IDR) plan. The various IDR plans base your payments on factors like income, family size and debt size. Typically, the higher your income, the higher your monthly payment.
4. Timely Payments: Finally, your payments must be made on time and in full while you hold a qualifying job. It is important to note that these payments do not need to be made consecutively. If you leave one qualifying employer and return to another later, you can continue building toward that 120-payment hurdle.

Requirements for student loan forgiveness are subject to change over the next few years. In the meantime, the PSLF may be a useful option to help you lower your debt burden and meet other savings goals. If you have questions, please contact your wealth management team at any time—remember, we are The Planner You Can Talk To.

About Adviser Investments

Adviser is a full-service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trustsA legal document that functions as an instruction manual to how you want your money managed and spent in your later years as well as how your assets should be distributed after your death. Assets placed in a trust are generally safe from creditors and can be sold by the trustee in short order, avoiding the lengthy and costly probate process., institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFsA type of security which allows investors to indirectly invest in an underlying basket of financial instruments (these may include stocks, bonds, commodities or other types of instruments). Shares in an ETF are publicly traded on an exchange, and the price of an ETF’s shares will fluctuate throughout the trading day (traditional mutual funds trade only once a day). For example, one popular ETF tracks the companies in the S&P 500, so buying a share of the ETF gets an investor exposure to all 500 companies in the index., socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868.