Season 2 Episode 4: The Government Might Pay Off Your Student Loans. Act now!

Written By Caitlin Meredith

You, yes,You!, might qualify for student loan forgiveness but you have to apply NOW! Spread the word!

This week Sara and I pepper student-loan specialist Danika Waddell with questions about two different student loan programs: the Biden $10,000 debt relief program, which you’ve probably heard of, AND the Public Student Loan Forgiveness program, which you might not have heard about.

The Public Student Loan Forgiveness waiver is a temporary rule change for a program that lets people who have worked in public service (in government, certain non-profits, school districts, public health, etc.) for ten years to apply for loan forgiveness.

***This is DIFFERENT than the $10,000 Biden student debt relief plan.***

Do you have student loans? Have you ever worked as a teacher at a public school? Have you worked as a social worker? Have you ever worked in an under-served health care setting?

It doesn’t matter that you haven’t worked in a qualifying institution for ten years yet, you can still apply and have all of your additional years and payments start counting for future forgiveness.

If there’s any chance you might qualify, please investigate and APPLY NOW! The temporary waiver expires on October 31st, 2022.

We also discuss the latest information about the Biden $10,000 program, and where to keep up-to-date.

Here are the resources we talk about in the episode for learning more:

Many thanks to Danika Waddell, founder and president of Xena Financial Planning who answered all our student loan forgiveness questions with patience and humor, and provided this great list of resources.

So get going and get applying! Remember, you don’t need all of your forms and information right now, the most important thing is that you submit an application by October 31st, 2022.

Ask us your dumb investing and finance questions for Season 2 on our Ask Us page!

This episode was edited by Kelly West. Music by Bad Bad Hats and Devmo.

Transcript for Season 2, Episode 4: The Government Might Pay Off Your Student Loans. Act now!

Music intro by Bad Bad Hats

Caitlin Welcome to Women on the Verge of a Financial Breakthrough where we are figuring out finance, one dumb question at a time. I'm the dummy. Caitlin Meredith. I'm a mediator and coach based in the Bay Area.

Sara And I'm Sara Glakas. I'm an investor advisor and founder of Black Barn Financial, a registered investment advisor here in Austin, Texas, and also the founder of the Austin Women's Investing Group, which can be found on Meetup.

Caitlin We keep saying we're not doing our actual second season yet, but then sneaking in episodes. And this is another one of those because there's something everybody needs to know about right now that's super important. And even though Sara I think of as knowing everything about everything and the financial world, there are a few areas that she's not the expert. So we invited one. So we're going to have our guest introduce herself, who is the student loan expert, among many other things. So why don't you say who you are and then what your deal is?

Danika What my deal is? Yeah, sure, I could do that. Thanks for having me. Caitlin and Sara. My name is Danika Waddell and I am the founder, lead planner of Xena Financial Planning. So I'm based in Seattle, have clients scattered around the country. But I do have, as part of my practice, a focus on student loan planning because it's pretty complicated, as we'll probably touch on today.

Caitlin But also your specialize in women in tech, right? I mean, we're probably not going to be able to talk about that, but I just think that's fascinating because something they have to know about that's particular to their industry is stock options like the benefits you get when you start working for a startup are different than other kind of benefits.

Danika Yeah, that's true. There are some certain unique benefits that are very common in the tech world. And so I do focus on women in the tech industry and helping them kind of navigate all of those particular things that they have access to and in their roles. Yeah.

Caitlin So a lot of different things. But today here this is all coming about because in July I got an email that said like, you may or may not qualify to get all of your student loans forgiven.

Caitlin And I was like, Wait, what?

Caitlin I have a lot of student loans. And I like there was just enough information in the email for me to think, this doesn't sound like a scam, but it's not actually enough information for me to know if they just had to send it out to 60 million people or they chose me on purpose. So it's because of this program called the Public Service Loan Forgiveness Program. Can you say what that is? And oh, and that there was a deadline. I had to do something by October 31st. So this whole podcast episode is because of that deadline, October 31st. Okay, your turn.

Danika Awesome. Yeah. No, that's a great lead in public service. Loan forgiveness is a relatively new program. It was introduced by, I think it was Barack Obama a little bit over a decade ago. And how it worked initially was that you had to work in an industry that was considered, well, public service, right. So it was things like teachers and nurses and, you know, federal employees. But you had to work for a specific type of company. But they had these roles and it was like you had to be in a certain type of loan program, you had to have a certain type of loans. But if you did those things after ten years of making payments, whatever else was outstanding would be forgiven. So that's very, very high level what the program was at at the outset. What has happened is now that it's been around for more than ten years, people have started to get to the point of submitting their applications and saying, okay, I hit my ten years, you know, where's my forgiveness? And I think in the first year, it was something like 2% of those applications were approved. It was really, really low because the requirements were very narrow and a lot of people were, say, enrolled in the wrong type of program or their payments didn't count because they didn't get them certified in time. It was just kind of a huge mess.

Caitlin And these weren't rich people. They were like teachers, public school teachers who had been like really working hard and paying off, thinking they were going to qualify and then also couldn't get good information. I just know all of this. Anecdotally, I have to say I have no expertize.

Caitlin I just like read the news around this being like, that sucks.

Danika It really did. It was really unfortunate because so many people thought that they were on track and then would find out, oh, they had the wrong type of loans or they didn't get the right certification. So what came out earlier this year, which you're referencing, Caitlin, is that they issued a one time waiver which is expiring at the end of October that would allow people to qualify that may otherwise not have qualified. And so you still have to work for, you know, one of these public services. Industries or companies. You can't just be, you know, a doctor making $500,000 a year. Like, those people aren't going to qualify. But if you were going to qualify anyway and maybe you're on the wrong type of plan or you made the wrong type of payment, or, you know, you made a partial payment but not a full payment. All of that stuff is going to be given is going to fall under this temporary waiver. And so that's huge. So I agree. It's really it's very time sensitive. So it's really important to get the word out as much as possible.

Caitlin So many things are in my head. One all of my student loans are from before for more than ten years ago, and yet they still think I qualify. And that was another loop de loop for me. I was like, Wait, this program didn't even exist then, and yet I might qualify. Do I have that right?

Danika They have expanded it a lot, and it doesn't necessarily matter when you got the loans, you did have to have them before June of this year. So if you know, if you took out a loan yesterday, you're not eligible. But if you have older loans, there's a very, very good chance that you will qualify. But I do know that they have to be public. You cannot have private loans are not eligible. So they have to be public. They have to be direct. And that will be in. If you have anything with your student loan documents on it saying what type of loan you have, it will say direct in the name of the loan. If if that's, in fact, what you have. So it has to fit those criteria. It can't be a parent plus loan. So there are definitely are a lot of you know, there's just a lot of restrictions. But they have expanded it a lot. So depending on I don't know exactly, again, what type of loans you have, but there's a good chance that even though they're 20 years old, you might still qualify.

Caitlin Right. And I guess that speaks to my larger surprise, which is I just assumed I wouldn't qualify because of when I had my loans and I did. So don't make any assumptions about this program. You do. I mean, you might not make it, but don't just assume you won't, because in fact, I do qualify it like I called the place and they told me I do. So one is the timing of when you got your loans out that is really opened up. Like it might not be for everybody. Of course, you still have to look, but don't just assume you won't qualify. The other, as you said, is the type of loan which who remembers? Like I signed those documents on a sweaty New Orleans afternoon and was like, I will sign anything.

Caitlin You want me to sign to get out of this office as soon as possible. There was no.

Caitlin Really in-depth analysis and comparison about different financial.

Caitlin Institutions than what they're offering. I was like, money, money, money. You sign, sign, sign.

Caitlin So I had no idea. But the other thing is where you can where you can have worked, because I talked to this woman who's been an educator for 15 years, and she's like, no, I don't think I qualify because it's like governmental institutions. So she thought it meant like for your state government or the federal government, not a school district. And am I right?

Caitlin I mean, I hope I am because I really, like, went overboard to be like, no, you can qualify, so please tell me I was right.

Danika I don't want to say all educators are eligible, but a lot are. And I mean to double check, you just want to go to, you know, student aid dot gov and just look at the eligibility and you will be able to determine like, you know, if you're in the right type of industry and there are, you know, if you work for like a medical institution that is nonprofit, you might qualify even though, you know, if you worked at a private hospital, you're not going to qualify, but a nonprofit hospital might.

Caitlin So it really.

Danika Varies. And so I would definitely recommend just checking the website, but you had a great point. Caitlin. Don't assume that you don't.

Caitlin Qualify that like you go for it no matter what. Because also everything I've worked in public service that qualifies up to this point, even if it's only six years or whatever will, I'll get credit for it. So going forward I can add to that credit.

Danika Absolutely. So it's still worth doing? Actually, that's a great point. So let's say you're not working in public service right now, but you have six years of credit. You definitely want to get that credit because you might get another four years before you've paid all those loans off and you might still qualify for the forgiveness at some point in the future. So you should still take advantage of the fact that you've made payments that do qualify, even if you don't get any forgiveness today. Right. You still can just sort of bank that six years or whatever you have and keep it in case you go back to public service in the future when you still have those loans.

Caitlin Okay, Sara, you I see you scribbling. Yes.

Sara My question is, is that public service forgiveness program different from the $10,000 loan forgiveness plan and how so?

Danika Yeah, it's totally different. Yeah, great point. So the thing that most people have been talking about, and I love the focus on the public service loan forgiveness just because that's really time sensitive. People only have another month, you know, as of today, another few weeks or something to get that waiver. But the the loan forgiveness that. Was announced by the Biden administration this summer is totally different. This has nothing to do with where you work. And it it's even more broad because it applies to, say, parent plus loans, which the public service loan forgiveness does not. So the way that it's working is it's based off your income. So if you make too much money, you will not be eligible. But if you make less than 125 as a single person or to 50 as a couple, you are eligible for $10,000 of loan forgiveness and $20,000 if you received Pell Grants when you were when you were a student, works for undergrad. It works for grad school. It's really, really broad and there's no time limit on that. Right. So, again, you had to have have had the loans by June of this year. So it's not going to work for people that are taking out loans today. But anybody that had a loan as of June 30th is eligible to receive this credit. And in theory, some of the loans it might happen automatically, but with loan services, you never want to assume anything. So you definitely will need to keep really close track of what's happening. You know, document everything, take screenshots, all of those things. Because it seems like from what they're saying this for some people, it will happen automatically. They'll just, you know, if you have less than 10,000, you'll just get a letter saying, great, your loans are gone. If you have 20,000, they might send you one saying now your balance is 10,000, but I would not count on that. And even if you do see that, I would still document everything.

Caitlin How would they do that? That sounds like magic. Not like literally how are they paying for it? But like how do they go into Caitlin Meredith's student loan account, figure out that she qualifies and pay her I mean, the money?

Danika I believe from what I understand, it would only work if you're on an income driven plan because they're getting your tax returns so they know exactly what your income is so they can see, okay, you're around this type of plan. This is this is your loan balance. This is your income. They're only using 2020 or 2021. It can't be any other year. So it can't be. This is.

Caitlin Dealer's choice. Who who decides? Those are very different years for a lot of us.

Danika I think if you have qualifying income in one year, you will be eligible. So it doesn't matter if you made $300,000 in 2021, but the year before you made 10,000, you're going to be eligible.

Caitlin Okay.

Danika So but they have access to your your adjusted gross income because you're on an income driven plan. So in theory, again, this is what they're saying. Yeah, some people it might be automatic. I would not assume that. And I would keep track of absolutely everything that you possibly can.

Sara Right. I mean, Danika, so based on what you're seeing out there, I think the question that I'm getting from everyone at this point is like, if I'm not one of those people where it is automatically happens, when is the application or paperwork? Going to be is going to be finalized. When is it going to be available? How quickly could this end up turning around?

Danika I would not expect anything to be quick in this case. There's so many people that have loans, there's the servicers are really, really behind. I would say it's it's going to be slow. And again, they're saying that they might have more specifics in terms of like here's a form to fill out that sort of thing in October. I wouldn't hold my breath on that date, but I'd say within the next month or two, we should have a pretty good idea of what to do if it's not automatic. You know, here's where you apply. This is how you do it. These are the steps that you go through. And again, keep copies of everything and document everything.

Sara And so what about kids who are in school right now? I have a niece and two nephews who are in college, and we are all very interested to know how would that work? Do they qualify on their own income? Do they qualify on their parent's income? Who fills out the forms? How do you think that's going to work?

Danika Really good question. I was reading something about this earlier today and they said that if a current college student has loans that were taken out before June, they are eligible. But there is going to be a look at income, and it's not the same as if you're a dependent on your parent's tax returns. There's going to be another criteria that they use to determine whether or not you're a dependent. But if you were a dependent on your parents, you know, if you meet that criteria, basically they will look at your parent's income. So for some, I think it's going to we don't know exactly what that's going to look like yet. So for the students, they might be eligible, but if their parents made more than, you know, 250, they might not qualify. So that one, I'm not 100% sure how that one will play out.

Caitlin Then he got where people supposed to get in. Other than reading the headlines like is there a website or something that you're using that they'll definitely give all the information on about this when it comes out?

Danika Probably the two best ones are the Education Department, which is EDD, dot, gov, debido, adobe ready.gov and then student day student aid dot gov. So you can kind of go on and, you know, find out information about what loans you have. You know, you can find out who your loan servicer is. Things like that are going to end press releases. Those things are coming out in those two places. That's where I would monitor.

Caitlin Okay. Well, I love that you just said to find out what your loans are, because a lot of us have been on deferment now for over a year. So like, we're not used to logging into our accounts. And we might even forget because my loans have been sold so many times, like if you told me to tell you exactly who has them right now, I'd be like, Is it great? Like still? Or was that the first one? So going to student aid dot gov, making an account if you don't already have one and logging in. They have kept track of that because they're interested in how much money you owe. And so it'll also say who your servicer who's holding those loans. And so then you can also get in touch with them directly. But that for me was the starting point, like who has my loans and how much do I owe again?

Caitlin Sometimes I like to live as if I don't owe all that money, and so I take a little vacation from that knowledge.

Caitlin So I called Great Lakes and I was like, Hey, I have these two different loans from two different masters programs and one has like an incredible interest rate. 2.4 I don't want anything to touch that. I don't want to consolidate because the other one has 6.8. Which one will they wipe out? And she said it automatically will wipe out what the 10,000 will be taken from the higher interest rate loan.

Caitlin And I was like.

Caitlin That's amazing, okay? Because I was really worried that, you know, I'd get this great gift.

Caitlin And they would do it.

Caitlin From the bigger account. But with a lower interest rate. She seemed to think that they would go for the higher interest rate loans, which I thought was very nice.

Danika That is amazing. And yet I would still check. Yes, they might they might make a mistake. And you might be able to go back to them and say, you know, like when the first forbearance started at the beginning of COVID, a lot of people's payments stopped automatically and other people didn't. But if you call I mean, you can call now and still you're eligible to get that money back. So if you made payments after March of 2020 and then they were eligible for this forbearance, which not all are, because if you again, if you have private loans or something, you don't qualify. But if your loans were eligible for the forbearance, you can call now and still get money back from payments that you made, say in like March and April before the servicers kind of figured all that stuff out and stopped the automatic withdrawals.

Caitlin I'm so glad you brought that up, because I decided that I was going to still pay my loans even though they were in deferment, like it felt like. I don't know if it was a moral principle or like I got to keep in the habit or like, won't I feel proud of myself when, you know, I didn't take the break from it, that I didn't do it forever? It lasted only six months, but I can call them and be like, I want that money back because now that money actually might still be mine if it all gets forgiven.

Danika Right. Especially if you're going to be eligible for forgiveness and or public student loan forgiveness. You could get a refund and still get your loans wiped out. And why wouldn't you do that? So yeah, that's absolutely available to people.

Caitlin And there's no way we could have known that going into I mean, especially March 2020, we know nothing, you know.

Caitlin We'll be going.

Caitlin Back to normal in three weeks was sort of the running. So there's no way we could have known what was going to happen with those money, the money or the loans. But now, in retrospect, we can claim our money back and either keep it or put it to the loans. But there's no real benefit to having overpaid or early paid because they weren't they're not collecting interest for that time either, right?

Danika Right. Yeah.

Caitlin Okay, Sara, I saw Sara scribbling again.

Sara You can you can see into my soul. Yeah. One of the things I was hoping to Nicole, you could clarify is what programs deal with undergrad loans versus grad school loans?

Danika Good question. And it's you know, I'm honestly I'm not even going to try and quote it on the on the podcast because there's, I believe, something like six different income driven plans. And I don't even want to tell you which ones are most of them are available for both. But the part of the thing that just came out with this new bill that, you know, that Biden issued is they're actually introducing another one. And so I don't even know all the details of that one yet. But what's really cool about the new one is that it's going to lower people's payments, potentially lower people's payments even more. So it is a incredibly complex landscape. And so off the top of my head, I really I honestly don't even know because I always have to look them up because there's so many. Yeah. Same. So I'm very, I'm very comfortable with them. But it's still, it's, there's unique rules for each plan. And, you know, some of them it's certain years, some of them it's, you know, they look at an individual's income sometimes they look at the couple's income. I mean, every single plan is different. And it's really it's it's it's hard to keep track even for somebody that does this every day. Right.

Caitlin How do they decide? They say if you're an individual, you're income for this $10,000 BIDEN One, there's two parts to this. One is your it depends on your income. So as a single person, 125,000, your as head of household, 250,000. Well, I'm a solo parent, so I'm head of household. So does that mean it's 250 for me?

Danika Yep, it's 250 for you.

Caitlin It makes me very good news.

Danika Yeah.

Caitlin Okay. So head of household means because.

Caitlin There's a lot of people, there's grandparent, there's a lot of people that file as head of household that may or may not be and a couple but that have dependents and have their own loans or their kids loans or whatever. Okay. So that's crucial to know. The second part is the first 10,000 seems to be like you already described. It's for everybody. Everybody who has a public subsidized loan, direct loan, whatever, even the parent pleasant's the second 10,000 that might be available. My understanding is for people that received specifically Pell Grants for their education. Is that correct?

Danika That's correct. So you had to receive. Pell Grants. When you're an undergraduate student, that's the criteria. And from what I understand, you could have gotten one Pell Grant in four years, and that means you're then eligible to get that extra extra $10,000 forgiven.

Caitlin And it was described to me at one point how to find out if you got it. Because if you're like me and this all happened 20 years ago, who remembers? But on the student aid website, there is a feature, a tab where you can see grants. And so you can actually see the history if you are ever given a grant or not and what kind it was. So don't freak out if you're filing system does not accommodate 20 years of student loan paperwork. Somebody knows. The government knows and your servicer would know. So you can still f.

Ind that out. I mean, either way, you would think with a Pell Grant the government was keeping track. So you'll automatically. One would hope you would automatically get it. But I get your point already.

Caitlin Don't just assume it. Follow up on it. And don't believe it until you really see the balance change. And it stays that way.

Danika You're learning.

Caitlin Okay, I'm learning. See?

Caitlin I'll forget it tomorrow, but I got it today. All right. Sara, what was your question?

Sara Those were really the main ones, because I think here I thought that we were going to start with the the easy headlines of the $10,000 when you just started launching into the the public service loan forgiveness program with the deadline just in my mind, I went back through all of the people that I know who might qualify. All the teachers, all the nurses, all of the social workers. And if there's this waiver to make this whole process a little bit easier to qualify for the loan forgiveness, that is really, really powerful. And that is something that I want to send to everyone in my network and make sure that everybody knows so that those people can start gathering this information as soon as possible. And see see what I.

Caitlin Am with you on this. Evangelical, obviously, Danika, as to but because I'm someone who got the email in July and didn't read it till I was like throwing things out of my inbox and was like, wait, what is this? Because I'm so used to getting these updates, especially during the pandemic, like forbearance extended again, again. So you might not have even read the email. They sent me literally one email in July for something that has a deadline to do a little bit of work at the end of October. And I haven't heard about it since. I actually I found a Facebook group, the Public Service Loan Forgiveness Program Helper, and it's like there's tens of thousands of people and at the moderators are amazing. They have like how to tutorials and stuff like that. So I highly recommend asking to join that group if you're on Facebook because you know it's crowdsourcing people to share their stories and you know, teachers, everybody. But like you, Sara, I feel like everyone I meet in the world, I'm like, Oh my God, I think you qualify. Like, Wait, you said you were a teacher for two years. You can do it now. Like, I am getting so pumped up. Like when I find out somebody doesn't have a retirement account, I'm like, Oh my God, you can do it. It's you, but this is time sensitive. It seems almost cruel that they're, like, dangling this thing and that it's going to expire. And even the wording of the email is like, But supplies won't last forever. Like, get in while you can. We've added some nice features, but they're due to expire, which seems super unfair. But yes, time is of the essence because even getting your application without all the information on it before October 31st still qualifies you. You still get your foot in the door as long as they get something. Did I am I spreading the correct word? And that, Danika.

Danika You're absolutely right. You just have to have started the process by October 31st. So it doesn't mean that like everything has to be approved and accepted and finalized and all those things, you definitely want to take the steps that are listed on the website and start that process, that get the application in as much as you can before October 31st, because that at this point is a hard deadline. I don't know if there's a chance they might extend it. I wish they would, because, like you said, it hasn't been very widely publicized. People are talking a lot about loan forgiveness, the $10,000 and the $20,000. Of course, we've heard a lot about that. I haven't heard as much about the waiver.

Caitlin I know I haven't either. And Danika mentioned that. What something that's so frustrating about this waiver in particular is that very few of the people that work at institutions that are managing parts of it understand it. There's a lot of misinformation going out about it. Why I think that's kind of funny is my mantra on this podcast is always like, just pick up the phone and call. Call Vanguard. They'll tell you everything. They're amazing. This is an exception to that where you call in. If they tell you something that isn't what you're expecting or is a negative, then you call back and try to get another person. Or call another institution like what I have found and heard through this Facebook group is so many people are getting wrong information and it's always in the negative direction. It's never like, yes, you qualify and woops you don't. It's always like, Oh no, then you can't do it. And really it seems like an opportunity to not take no for an if you have even a twinge of a possibility, do the application because you can make up for it later for finding out. It's not like you get in trouble, you're not taking any money yet. So when in doubt, just do the application because it's overwhelming. I, as someone who co-hosts a podcast about building your financial future, have put this off a long time because it's overwhelming. The steps like this is for my employment in 2004 that I am trying to like find an H.R. department, see if they remember me. Are my files in storage somewhere? You know, like it is daunting to put aside the amount of time that you think you'll have to put aside to make all these phone calls to hunt people down and h.r. Departments under the best of circumstances when you're a current employee don't always have an amazing reputation. But when you were a former employee from like before, they were like even in high school in some cases and you're like, no, I swear, I worked there. It was 2004. They're like, Whatever, lady, it is very easy to get discouraged. And since we're so used to having financial or student loans, it's just like, Oh, forget it, I'll just live with them forever. So persistence and not worrying about all of the steps to check off all at once. But the application part, that little box where you can say it was my employer would not or was unavailable to verify my employment is key in this.

Danika I'm so glad you knew about that because I haven't gotten to that point with any of my clients. So I'm thrilled that you have seen that that box is available. But you're right, you should. Absolutely. If there's a glimmer of hope that you might be eligible, do the application. Things can get worked out later. And you're right, there is unfortunately, a lot of people who work for the loan servicers, you know, and all of those all these different agencies, you know, we'll have some resources, I know, to share that don't have the right information. So it is really discouraging if you call and they're like, yeah, you're not eligible and there's a very good chance that those people are wrong. So don't just give up, you know, you kind of have to be a little bit persistent for sure.

Caitlin It is definitely the feedback that I've observed in the Facebook group that there are things like applications, the certifications getting rejected because it was an electronically generated signature on the part of the H.R. department. You know how like PDFs allow you to like choose which signature is your style? That apparently is a no go and so it will get rejected. And then you have to go back to that the wonderful h.r. Department that finally emailed you the freaking form after four months of and being like, Hi, sorry, can you hand sign this and whatever. So there are going to be the road to this forgiveness does seem like for most people will be, as Sara said about the iBons website, not the best process anyone has ever designed. There will be plenty of opportunities for frustration. And yet, like the number of people getting tens of thousands of dollars forgiven is like significant. Like it is actually happening. So it pays.

Danika It's life changing. Yeah, sure. For for many people, it's life changing. So it's definitely worth a couple hours of your time.

Caitlin Yes. And maybe spreading that out over time because dealing with each new sort of pitfall that comes up. We, as Danika referenced, we she gave us all these resources and websites like explainers. And we're going to put those on our show notes and on our website, Women on the Verge dot com just so everybody can. But there really is a time is of the essence here feature of this and to like spread the word to everyone you've ever met that has a student loan and that might even have qualified for a year because who knows, their next job could be also qualify and they'll already have that time banked in and be accepted in the program. You said you were hoping they extend it. Why wouldn't they make it permanent? Like why? Why have a deadline at all? Is that too big of a question for this forum?

Danika I think it might be. I don't know why. I really think that there is a lot of room for for something like, you know, just a general opening of that process and making it a whole lot easier. I would love to see them extend it or make it permanent. I don't have a ton of confidence in that at this point, but it's possible that they could extend it. I mean, there's no reason why they can't. But I don't think they're getting a whole lot of pressure about this one in particular. I mean, I think the student loan forgiveness more generally, that was there's been a lot of pressure to to forgive some amount of loans. And I think 10,000 was kind of like the minimum that they felt they can even do. But I don't think there's been a lot of pressure on the public service. Well.

Caitlin It's easy if nobody knows about it. Nobody is around to give pressure. But the other part of it that I remember being totally freaked out about is that it says something like, you must have made 120 verified payments towards your like. And I'm like, I'm supposed to count? Like, I'm going to like, that was before I had a Google calendar. Like, how would I literally count? And that was three services servicers ago that I started to paying. And then when I called Great Lakes because I picked up the phone and called the lady at Great Lakes who has my student loans now. And she's like, Oh, no, they figure that all out for you. Don't worry. No, no, no. You'd like they they'll know that you don't have to. And I think if I was going to be I know people have had to fight for their number. And so if you do have a paper trail, if you do have it documented, that could really serve you. But even if you don't, you have to rely on whatever servicers records there are, but they do exist. And so at least hopefully you'll get the bulk of your payments, even if you don't have independent records to verify they caught every single one of them. But, you know, you look at this list of things to qualify it and each one you're like. Oh, God, I have no idea. I have. It's really demoralizing process just to be like another thing I don't know, another thing I don't know and that seems impossible to find out.

Danika Yeah, I guess the last thing I would say about that is that there are people that focus on this, that, you know, that help, right? There are websites, there's actually a website and the resources that I shared, free student loans, free student loan advice that work like there are places that you can go to get help with this and it definitely is onerous and discouraging. And like all of those things for sure, I don't want to discount that, but there are resources out there. Some of them are free, some of them are you know, some people will do like a 500,000, $500 student loan analysis, you know, those sorts of things. So I would look for programs or, you know, people like like me, I don't actually do one time student loan analysis, but there are many people that do like go take advantage of those because people will help you navigate it.

Caitlin That is such a good idea. And what is there sort of like what's yours? I know you have like you're certified in this. Like what? What would we Google if we wanted to find somebody that could do that for us?

Danika Yeah, the designation that I have is called Certified Student Loan Professional. And if you go there is a website, I believe it's CSLA institute dot com, but you don't have to remember the website, but you would just Google like CSLP and then there's a search tool. Okay. And look for people in your area. But I really like the ones that will do this kind of like one time analysis of your situation. Like for instance, if you're looking at getting into an income driven plan and there's half a dozen of them, and you're like, Well, I don't know which one makes the most sense for me. They'll run an analysis and kind of say like, Oh, this is the one for you and this is why, and they can give you all the numbers. So that can be a really valuable service. I'm not positive how many of those people would help you do public service loan forgiveness, but I'm pretty sure many of them would help you navigate that process, too.

Caitlin Is amazing. Knowing that there's a professional out there that could help you with that process is very comforting.

Danika I don't think very many 18 year olds are thinking this through or 22 year olds or whatever.

Caitlin Even I mean, in some cases a 29 year old, I mean, 35, whatever. Let's not go too personal here.

Danika Totally fair. There's two other things I wanted to mention before we finish up about, you know, all this, all the latest developments in student loan repayment and all of that. One is that payments are starting back up again in January. So we've been in a forbearance for two and a half years. But supposedly I'm not going to hold my breath on this one either, to be honest, because I don't think they're going to be ready. The servicers, I don't think, are going to be ready, but they're saying payments are going to start back up in January. If it's not January, it'll be very soon. So people need to get prepared for the fact that they will be paying. So this would be a good time, even if you don't qualify for any kind of forgiveness, to remember where your loans are and what's that parent amount going to be? How am I going to set up my direct debit so that you're you're just ready to go? Because I do think it's going to be a little bit of a mess. When it starts again, just a lot of kind of confusion. So that's one thing. The other thing is, and I think I alluded to it already, but there is a new income driven plan which could be an opportunity for you if you're already in one or if you're not, you could really lower your payments quite a bit there, really reducing. It's like a best there's a formula as a percentage of your income, but it's they're lowering the percentage. So it means you could reduce your payments by quite a lot. So just be aware that there's a new income driven plan and that might be a really good option for a lot of people.

Caitlin Okay. I'm told in October that I can apply for the $10,000 forgiveness, but as you're saying, it's all going to take a really long time. And what if I haven't? Like my first January payment is due on a loan on one of my loans. That's the one I think that will be wiped out by the $10,000. Do I make a payment on that? I mean, I would or I wouldn't like is there any how on earth could they pay that $10,000 to everybody before January when our first payments are due? Again, there's no way you could know that, right?

Danika I don't. But I think there will be a lot more guidance coming out from the administration in the next couple of months where they might say, you know, if it gets to be December 15th and they have only processed 10% of the forgiveness, you know, of the people that are eligible, they might say something like, all right, if you've got a payment coming up, go ahead and, you know, go ahead and make it as normal and we'll we'll end up refunding yours. You know, I would wait for guidance from the administration on that because I it's kind of too soon to say. And I hope that they have most of it worked out by January. But. It's a it's a lot. There's a it's a big administrative lift.

Caitlin Okay. That makes sense. The second one that occurred to me we were talking is taxes like. What implication does is this a gift? Is it like we'll be paying taxes on this money we're getting?

Danika That is a very, very good point. There will not be a federal tax, but some states might call that taxable income. So if you live in particularly some of the red states are likely to say, well, this is taxable income at the state level. So you might end up paying, you know, 5% state income tax if you live in whatever. I don't know the states yet. I believe a couple have already said that they're planning to consider it taxable income. It will not be taxable at the federal level.

Caitlin But in theory, if you got a 100 through the $10,000 waiver that's through federal, you might have to pay 5% on that in your income taxes, which would probably be less than you would be paying on monthly payments for the year on that. So might be recoverable, but if you get a 100 hundred and $50,000 recovered or forgiven in student loans and then all of a sudden you're paying 5% on that, that might be.

Danika A byword for public service loan forgiveness. The states don't tax that one. So I'm just talking. Oh, okay. The 10,000 and the 20,000 that is very likely to be taxed by some states. But public service, loan forgiveness, I don't think that's going to be taxed anywhere.

Caitlin Okay. Oh, that's a really good differentiation between the two. And then, of course, the money that we're not putting in student loans we can put towards retirement. Yes. Right. Other stuff. Go, Caitlin.

Caitlin It was my idea. I just had it. What do you guys think?

Sara Wrapping it all up in a bow. Love it.

Caitlin There's so much more to talk about. Student loans. And also, I feel like women and tech Sara like that negotiate, navigating stock options and all of that stuff. Also, as a divorce coach in the Bay Area, a lot of women, if they're not employed by a startup, their spouses are in, if they're getting divorced, that's an asset that a lot of decisions have to be made about. And that's really dependent on dates like what the date of separation is because of the valuation of the option, all that stuff. So I think that's actually fascinating for us to do on another episode. But for now we're going to put, as I keep saying, we're going to put all of the resources in the show notes and on our website, Women on the Verge dot com and also Danika's website, Xena Financial Planning and look at her bio and all the things she specializes in. And I think that's it. And obviously we have the one thing a woman on the Verge can do today to build her financial future, which is just, if nothing else, go on the student, a backup website to see what your loans are and then just download the application. I think it's six pages, but you only fill out the first four or something and if you don't have the information, just put you don't have the information and just put the bookmark in the program so that you can qualify and figure out the rest of it later. Thank you so much for coming and explaining.

Sara Oh, my gosh, Dan, thank you so much. I can't wait to have you back on any time.

Danika It was fun. Thanks, ladies.

Music transition by Bad Bad Hats

Caitlin Hey, before we go, thank you so much to Kelly West, who co-produced and edited this episode.

Music transition by Bad Bad Hats

Caitlin If your partner is making you ask for money, giving you an allowance are not letting you know about family income. This could be economic abuse.

Sara Learn more at thehotline.org, or call one 800 799 safe.

Music outro by Devmo

Devmo I know the first thing you notice is that I'm covered in gold, the flick of the wrist it could turn a hot bitch cold, to get what you want in life girl you gotta be bold. Now Imma die rich, and I know...

Caitlin This podcast contains general information that is not suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this podcast will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.

Caitlin Meredith
Previous

Season 2, Episode 5: Individual Stocks Mess With Your Mind
Next

Season 2, Episode 3: Making Money Lemonade Out of Bear Market Lemons