Real Answers for Life’s Money Challenges
I recently completed a life goal and finally finished my bachelors degree.
I am happy to say that I now have the degree and a great job in my field.
Like most students, I left with a pile of student loan debt.
I researched and ended up applying for one of the federal alternative payment plans.
Aside from my guilt for exploiting this loophole, is there anything wrong with my plan?
Am I missing some pitfall that is going to really break me later?
Thanks for the help.
Lucky Loophole
Lucky,
Congratulations on your degree!
But oh, student loan guilt.
Itll take the shine off your new diploma in an instant.
The feeling that you should be doing more.
It usually ends in the fetal position on the couch.
But youre doing it right, even if yourincome-based repayment(IBR) amount seems trivial.
Interest rates for federal student loans are lower than for other consumer debt, such as credit cards.
Long-term student loans are gross, but theyre just a third wheel in your relationship with your money.
Everyones got a third wheel.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Instead of focusing on the total balance, take it month by month and focus on whats duenow.
Dont feel bad about the loophole seriously.
Take the way out.
Now, for a few words of caution about that way out.
If you had income-contingent repayment before IBR came into play, your situation may be different.
Always get proof, especially when you think theres a loophole in play.
As for your income, remember thatincome-basedrepayment.
Youre smart to also be thinking about the tax obligation for the forgiven loan balance.
Minsky suggests working with a tax adviser or accountant if you havent done so already.
They would have a better handle on potential tax consequences of loan forgiveness, he said in an email.
Changes to federal law could impact your situation, too, Minsky warned.
The inbox is open.
Send your worries to[email protected], and Ill see what I can do to help.
Disclaimer: Chosen questions and featured answers will appear in The Penny Hoarders Dear Penny column.
I wont be able to answer every single letter (I can only throw in so fast!).
We reserve the right to edit and publish your questions.
Dont worry your identity will remain anonymous.
I do, however, promise to give you honest advice based on my own insights and real-life experiences.
Lisa Rowan is a senior writer at The Penny Hoarder.
When you log into your bank account, how do your savings look?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
