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Explaining student loan forgiveness

by 24 February 2024 · Loans

FORGIVENESS? THE BIDEN ADMINISTRATION ANNOUNCED EARLIER THIS WEEK THAT $1.2 BILLION OF STUDENT LOAN DEBT WAS CANCELED HERE IN PENNSYLVANIA. THAT MEANS 5600 BORROWERS WILL HAVE THEIR DEBT ERASED. BUT THIS IS ONLY POSSIBLE IF YOU’RE ENROLLED IN THE SAVING ON A VALUABLE EDUCATION PLAN OR SAVE. SAVE IS THE NEWEST INCOME DRIVEN REPAYMENT PLAN THAT CALCULATES YOUR MONTHLY PAYMENT AMOUNT BASED ON YOUR INCOME AND FAMILY SIZE. THE SAVE PLAN REPLACED THE REVISED PAY AS YOU EARN PLAN. THOSE WHO ARE IN THE SAVE PROGRAM ARE THE ONES SEEING THEIR LOANS FORGIVEN. SO THE FIRST GROUP THAT’S GOING TO HAVE A MAJOR AMOUNT OF ATTENTION IS GOING TO BE THE FOLKS THAT BORROWED A VERY LOW AMOUNT. AND WHAT’S GOING TO HAPPEN IS LET’S SAY YOU BORROWED 12, BUT MAYBE IT GOT A LOT BIGGER OVER THE YEARS BECAUSE YOU DIDN’T OR COULDN’T MAKE PAYMENTS. WHAT THEY’RE LOOKING TO DO IS GET THOSE 12 AND UNDER FOR LOWER INCOME BORROWERS TO BE FORGIVEN. AFTER THAT, LARGE CHUNKS OF INTEREST ARE ALSO BEING FORGIVEN, EVEN IF THE LOAN AMOUNT ITSELF IS NOT COMPLETELY WIPED OUT, ACCORDING TO CHRIS PFANNSTIEL, A WEALTH MANAGEMENT ADVISOR. IF YOU ARE ON THE SAVE PLAN, LONG ENOUGH, THOSE LOANS WILL BE FORGIVEN ANYWAY. AFTER TEN YEARS. IF YOU WORK AT A NONPROFIT AND 20 OR 25 YEARS IF YOU WORK IN A FOR PROFIT COMPANY. SO IF YOU’VE DONE THE RIGHT THINGS AND YOU’RE DOTTING YOUR I’S AND CROSSING YOUR T’S, THEN THEY ABSOLUTELY SHOULD BE, PFANNSTIEL TELLS ME THE BEST WAYS TO STAY ON TRACK TO LOAN FORGIVENESS IS TO FIRST ENROLL IN THE SAVE PROGRAM, AND THEN CONTINUE TO FOLLOW WHAT HE CALLS PROTOCOLS, MAKE PAYMENTS WHEN DUE, SUBMIT RECORDS WHEN ASKED, AND MOST IMPORTANTLY, DO YOUR RESEARCH WITH YOUR LOAN PROVIDER. SOMETHING AS SIMPLE AS ENROLLING IN AUTOMATIC PAYMENTS CAN REDUCE YOUR INTEREST. BY 0.25%. THERE’S A LINK POSTED ON OUR WEBSITE AT WTAE DOT COM. THAT LINK WILL SHOW YOU ALL OF THE DIFFERENT REPAYMENT OPTIONS YOU HAVE FOR YOUR STUDEN

Explaining student loan forgiveness

Those enrolled in the SAVE program are seeing their loans forgiven

The Biden administration announced earlier this week that $1.2 billion of student loan debt was canceled.In Pennsylvania, that means 5,600 borrowers will have their debt erased. But this is only possible if you are enrolled in the Saving on a Valuable Education Plan, or SAVE.SAVE is the newest income-driven repayment plan that calculates your monthly payment amount based on your income and family size. The SAVE plan replaced the revised pay-as-you-earn plan. Those who are in the SAVE program are the ones seeing their loans forgiven.”So, the first group that’s going to have a major amount of attention is going to be the folks that borrow the very low amount, and what’s going to happen is, let’s say you borrow $12,000 and maybe it got a lot bigger over the years, because you didn’t or couldn’t make payments. What they are working to do is get those $12,000 and under for lower-income borrowers to be forgiven,” Chris Pfanstiel said. After that, large chunks of interest are also forgiven even if the loan amount itself is not completely wiped out.More information: Federal student loan repayment plans and the SAVE programAccording to Pfanstiel, a wealth management advisor, if you are on the SAVE plan long enough, those loans will be forgiven anyway — in 10 years if you work at a nonprofit, and 20 or 25 years if you work at a for-profit company.”If you’ve done the right things, and you’re dotting your i’s and crossing your t’s, then they absolutely should be,” Pfanstiel said.Pfanstiel says the best way to stay on track to loan forgiveness is to first enroll in the SAVE program and then continue to follow what he calls protocols. Make payments when due, submit records when asked, and, most importantly, do your research with your loan provider. Something as simple as enrolling in automatic payments can reduce your interest by 0.25%.

PITTSBURGH —

The Biden administration announced earlier this week that $1.2 billion of student loan debt was canceled.

In Pennsylvania, that means 5,600 borrowers will have their debt erased. But this is only possible if you are enrolled in the Saving on a Valuable Education Plan, or SAVE.

SAVE is the newest income-driven repayment plan that calculates your monthly payment amount based on your income and family size. The SAVE plan replaced the revised pay-as-you-earn plan. Those who are in the SAVE program are the ones seeing their loans forgiven.

“So, the first group that’s going to have a major amount of attention is going to be the folks that borrow the very low amount, and what’s going to happen is, let’s say you borrow $12,000 and maybe it got a lot bigger over the years, because you didn’t or couldn’t make payments. What they are working to do is get those $12,000 and under for lower-income borrowers to be forgiven,” Chris Pfanstiel said.

After that, large chunks of interest are also forgiven even if the loan amount itself is not completely wiped out.

More information: Federal student loan repayment plans and the SAVE program

According to Pfanstiel, a wealth management advisor, if you are on the SAVE plan long enough, those loans will be forgiven anyway — in 10 years if you work at a nonprofit, and 20 or 25 years if you work at a for-profit company.

“If you’ve done the right things, and you’re dotting your i’s and crossing your t’s, then they absolutely should be,” Pfanstiel said.

Pfanstiel says the best way to stay on track to loan forgiveness is to first enroll in the SAVE program and then continue to follow what he calls protocols. Make payments when due, submit records when asked, and, most importantly, do your research with your loan provider. Something as simple as enrolling in automatic payments can reduce your interest by 0.25%.

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