A Lifeline that Could Eliminate Your Crippling Student Loan Debt – PSLF

BY: - 17 Apr '17 | Money

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In October 2017 tens of thousands of Americans will see the remaining balance of their student loans completely erased. These people are among the first enrollees in the Public Service Loan Forgiveness (PSLF) Program.

The Good

Created in 2007, the Public Service Loan Forgiveness Program is designed to help people who choose to work in public service jobs deal with their crushing student loan debts.

The idea is relatively straightforward. People working in public service jobs pay a percentage of their income toward their Federal Direct Loans in 120 consecutive payments, spread out over ten years. Typically they are required to make a payment equal to one tenth of their discretionary income. After 120 payments, the rest of their student loan debt is forgiven. As an additional bonus, because the portion of the student loan that is forgiven is not considered income, it is not taxable.

The US Department of Education defines public service employment as: work within a government organization at the local, state, or federal level; work at a not-for-profit organization that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, or work at certain not-for-profit organizations that provide “qualifying public services”.

While loans that are received under the William D. Ford Federal Direct Loan Program, qualify for the PSLF program, other federal student loans may also qualify if they are consolidated into a Direct Consolidation Loan.

The PSLF program is a lucrative lifeline for people with crippling debt loads who decide to work in public service jobs. As a result, nearly 550,000 people have signed up for the program including civil servants, teachers, policemen, firefighters, and even doctors and lawyers who work for federal or non-profit entities.

The Bad

Unfortunately, relatively few people have taken advantage of the PSLF program. While less than a million people are enrolled in the program, the Government Accountability Office estimates that 25% of the workforce is employed in a job that would qualify for the PSLF program.

A report by the Jobs With Justice Education Fund suggests that just 1% of potentially eligible borrowers are enrolled in the program. The cause may be limited promotion of the program by the Department of Education as well as a complicated enrollment process. Worst yet, the report indicates that many loan service companies fail to even inform borrowers of their potential eligibility for the program.

You may qualify for this program and not even know it. To find out if you qualify for the PSLF program, visit the US Department of Education website.

The Ugly

Unfortunately, some people who believed they were working in public service jobs, and thus eligible for the PSLF program, were told years later that they were not actually eligible. These people had relied on approval letters from the program’s administrator, FedLoan, that their jobs had qualified them for the program.

One such person was lawyer Jamie Rudert. He was deemed eligible for the PSLF program because he worked for the Vietnam Veterans of America. After three years of working with the organization, however, the Department of Education declared that his work did not in fact qualify as public service, even though he was originally informed otherwise.

As reported by the New York Times:

“In a legal filing submitted last week, the Education Department suggested that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent by the administrator, FedLoan Servicing, are not binding and can be rescinded at any time, the agency said.”

In essence, the Education Department is claiming that you can not trust the word of the loan servicing company hired by the government to service federal student loans. This in essence has left hundreds of thousands of borrowers in limbo. Could their eligibility in the program also be retroactively revoked?

Just as concerning, some conservative lawmakers could push to eliminate the PSLF program altogether, although current program enrollees would likely be grandfathered with their benefits. One outlet has even called the PSLF program a “time bomb,” suggesting that the Trump administration kill the expensive budget item.

What Should You Do?

The PSLF program still remains one of the best ways to wipe out burdensome student loan debt. After ten years of working in a public service job and making payments based on your income, your debt should be eliminated. But as we’ve seen, the Education Department has reversed the approval of some applicants who were first deemed eligible for the program. Despite this fact, if you are currently already in a government or non-profit job, I would strongly suggest that you look into determining whether or not you qualify for the program.

If you do qualify it may be in your best interest to go ahead and apply for the PSLF program, but keep a close eye on whether or not the courts hold the Education Department and its program administrator, FedLoan, to initial program approval letters.

The tougher decision is for students who are not currently employed, but contemplating whether or not to go into careers in the government or public service based solely on their desire to take advantage of the PSLF program. There are no guarantees that Congress will not eliminate the program or that the Education Department will be allowed to continue to retroactively rescind a person’s acceptance into the program.

About the author

Alonzo Peters wrote 292 articles on this blog.

Alonzo Peters is founder of MochaMoney.com, a personal finance website dedicated to helping Black America achieve financial independence.

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Financial Intimacy – What is It and Why Black Couples Need It So Much?

BY: - 20 Apr '17 | Money

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Of the many intimacies that we attend to and invest our energy into throughout the course of a relationship, financial intimacy usually is not at the top of the list…despite its impact on the day-to-day functioning and operations of a household.  In order to have a healthy, trusting, and holistic marriage, though, we must pay close attention to how we are working on deepening financial intimacy.

I define financial intimacy as enjoying the benefits of full disclosure and communication around all things related to finances with a life partner.

And as African-Americans, whose collective experience in this country has been marked by the systematic destruction of family structure and the elimination of opportunities for socio-economic mobility, it is even more imperative and pressing that we engender financial intimacy of our relationships. The fate of our collective economic and familial structures depends on it.

The Heart of Financial Intimacy

While every couple will have their singular way of fostering financial intimacy, financial intimacy looks and moves with a particular rhythm. You will know financial intimacy when you see and hear the following:

Use of data to ground money talks

Instead of making generalizations and broad statements about the state of a couple’s finances, financial intimacy dictates that each partner speaks in specifics about a particular financial focus. Instead of saying, “We are spending too much money,” a couple demonstrating financial intimacy will say, “Over the past three months, we have spent $200 more than we budgeted on entertainment and electricity.”

Focus on solutions

When couples experience financial intimacy, they leave the “blame game” out of the communication. Rather than say, “we did not meet our investment goals for this month,” couples with a healthy level of financial intimacy may offer solutions to the problem such as enlisting the support of a financial advisor, increasing the number of times they work overtime, or opting for a “cash only” system in order to address money gaps.

Candor around emotions

Partners that benefit from financial intimacy feel free to express the range of emotions that accompanies financial realities. In addition to communicating happiness, optimism, and hope with respect to their financial dreams, couples with a strong foundation in financial intimacy do not shy away from expressing doubt, angst, disappointment, and frustration when it comes to money matters. They just do it respectfully.
Click Here to Download a FREE Copy of the BMWK Generational Wealth Pledge for Black Families!

The Benefits of Financial Intimacy

Establishing financial intimacy will do more than just improve the state of your money; it will permeate all facets of your marriage. Here are but a few of the benefits of having a marriage that forges financial intimacy.

Decrease in Financial Friction

Once you have established financial intimacy, fighting about spending, budgeting, and roles/responsibilities is less likely to happen since fighting around money is usually a symptom of financial disconnect, miscommunication, and muddled understanding.

Shared Goals

When you establish financial intimacy, you and your partner co-construct a financial vision for the family. With a shared financial vision, you and your spouse are on the same page with respect to the long term and short-term goals for the family’s financial future. With shared financial goals, you create financial alignment, increasing the likelihood that each financial decision will be evaluated in its ability to help you reach your financial destination.

Peace of Mind

You don’t have to worry about screening calls, opening bulky envelopes. You also won’t have to cross your fingers when you use your credit card or debit card hoping that it will go through. Financial intimacy eliminates surprises and fear.

Legacy of Financial Responsibility

Lamar Tyler, co-creator and CEO of Black and Married with Kids always tells us, his staff writers, “You never know who is watching [brands, organizations, and companies] so always be on your A game.” If you have children, whether you notice it or not, they are internalizing your messages about money, relationships, and how both are to be handled in a relationship. Even if you do not have children, you are part of a larger community with young couples looking for positive financial models to emulate.

The more financial intimacy you have, the more likely that you will be debt free and achieve greater financial freedom more quickly. Period. When couples support their shared financial goals, they make better decisions about how to invest their money, how to save their money, and how to grow their money.

BMWK – Has establishing financial intimacy been a goal for your marriage?

About the author

Kara Stevens wrote 142 articles on this blog.

Kara is a motivational speaker, life coach, and founder of the personal finance and lifestyle blog The Frugal Feminista .

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