CLIENT KNOWLEDGE BASE

Student Loan Forgiveness: Strategy Guide

The GO CPA Team has reviewed the current Federal guidelines surrounding the 2022 Student Loan Forgiveness Program.  This strategy guide will help you be prepared to APPLY for forgiveness and ensure you get the maximum benefit!

Quick Refresher? Watch our first video on Loa...
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    A refresher of the qualifications...

    1. You hold Federal Student Loans, whether undergraduate or graduate with a balance remaining
    2. Your 2020 or 2021 Adjusted Gross Income is less than $125k SINGLE or $250k MARRIED.
      1. The clarification here is EITHER YEAR will count!  If you are over in 2021, that is not a problem if you were under in 2020!
        1. Be careful to review your filing status if you were recently married!  Choose the year that is more beneficial as a couple. 
    3. PARENTS - holding Parent Plus loans
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    Step 1: Get Prepared to Apply!

    As of 9/20/2022, there is a lack of guidance on applying for student loan forgiveness. The Dept of Education says $8M will receive "automatic forgiveness" but it is still a good idea to apply

    1. SIGN UP here to receive an immediate notification when the portal opens
    2. Ensure you have your various student loan servicer log ins NOW. You will need these when applying
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    Strategy 1: CHECK your Loan Types ASAP

    Remember, student loan forgiveness only applies to Direct Federal Student loans.  If you have private student loans, those DO NOT qualify since the Fed Gov't cannot force a private lender to forgive your loans.

    1. If you have private student loans, immediately contact your loan provider to discuss a refinance into a Direct Federal Consolidation Loan
      1. You should only consider a refi and consolidation back to a Federal Direct Loan IF you will qualify.  Please note, it may or may not be possible to only consolidate up to the forgiveness cap
    2. If you have a "Federal Family Education Loan" you will also need to use this consolidation strategy!
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    Strategy 2: Review Payment History

    If you have been paying your student loans since the payment moratorium in March 2020 and have a balance remaining UNDER $10,000, pay special attention! 

    1. Go to your Loan Servicer (say Mohela) and review your payment history from March 2020 - present
    2. Contact your servicer to request a refund UP TO and only UP TO the Cap of $10k
      1. Please note - if you have several loan servicers, be careful as the cap is $10k in total.  Do not request $10k refunds from several loans servicers! 
    3. The refund will come back to you and your outstanding balance will increase. 
      1. As soon as this is done, apply!
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    Review State Tax Considerations

    Good news!  You are EXEMPT from state taxes unless you reside in the following states:

    1. Arkansas
    2. Indiana
    3. Minnesota
    4. Mississippi
    5. North Carolina
    6. Wisconsin
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    Apply!

    As soon as the application is released, it is a good idea to apply for a few reasons.

    1. The Dept of Edu is going to be 1000% overwhelmed by this.  Remember what happened to the IRS in 2020?
    2. Apply before 11/15 to get forgiveness before the Federal Payment moratorium ends on 12/31/2021
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    Reinvest those savings wisely...

    We strongly believe you should take that monthly payment and immediately invest it!  If you are already used to paying a fixed amount per month:
    • Put into a simple investing account
    • Direct to a high yield savings to save up for a real estate purchase
If you still have a question, we’re here to help. Contact us