Consolidate Your Federal Student Loans
If you have Perkins Loans, FFELP Loans, HRSA Title VII Loans , or you borrowed student loans before July 1, 2010, you may need to consolidate these federal student loans into a Direct Consolidation Loan.; Only qualifying payments you make on a new Direct Consolidation loan can be counted towards the 120 payments for PSLF.; You can consolidate federal student loans through;StudentLoans.gov.
WARNING:; Consolidating your loans can reset the clock for PSLF qualification purposes.
Student Loan Repayment Assistance Programs For Teachers
The Teacher Forgiveness Program isnt your only option for student loan help. Many states also offer loan repayment assistance for teachers. Most of these programs require state licensure, as well as a commitment to working for two years in a qualifying area.
The Teach for Texas Program, for example, gives yearly assistance to teachers in designated shortage areas.
To find programs in your state, check out the full list of loan repayment assistance programs and filter the results by occupation.
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Katie OrmsbyDebt Consolidation Expert
Katie enjoys helping readers make sense of Debt Consolidation options. She’s previously written business and shopping features for The Seattle Times and Seattle Met magazine. She has a degree in journalism and political science from the University of Washington.
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Air Force College Loan Repayment Program
The main Air Force College Loan Repayment program is paused in 2018 . This program allowed you to get up to $10,000 in student loan debt paid off in 3 years.
However, the Air Force JAG student loan repayment program is still active. You can receive up to $65,000 in student loan forgiveness if you go into JAG in the Air Force.
You can learn more about this program here.
Keep Your Employee Headcount Up
Did you take out a PPP loan of more than $50,000? Then this ones for you.
The purpose of the Paycheck Protection Program is to keep employees on payroll . This is why keeping your employee headcount at the same level as when you applied is essential to getting your loan forgiven.;
Of course, keeping your employee headcount up is only part of the equation. You already know that using 60% of your loan for payroll costs is a must for forgiveness. But even if you spend 60% on payroll costs and 40% on non-payroll costs, you could lose part of your loan forgiveness if your workforce drops.;
When you applied for your PPP loan, you included all employees you employedfull-time and part-time workersin the calculation.;
But for loan forgiveness, the CARES Act looks at your average full-time equivalent employees during the covered period.;
You can use one of the following methods to calculate your FTE during the covered period:
The SBA will reduce PPP loan forgiveness based on your average FTE employee reduction. Heres the calculation to determine your PPP loan forgiveness reduction amount for FTEs:
**You can use one of two time periods:
I reduced employee levels what can I do?
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Ppp Loan Terms For Self
The PPP loan programs original rules made it difficult for self-employed workers to qualify for any meaningful size loan, and the payroll ratio requirements made it impossible to receive complete forgiveness on the loans. However, new changes to the program impact how self-employed worker loans are calculated and forgiveness criteria.
Forgiveness With Pay As You Earn
Pay As You Earn is similar to Income-Based Repayment, in that it isnt a typical forgiveness program. However, you could be eligible for forgiveness after a certain period of time.
The PAYE plan caps your monthly payment at 10% of your discretionary income. After borrowers make payments for 20 years, any remaining balance becomes eligible for forgiveness.
As with IBR, your forgiven balance might be treated as taxable income.
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Teacher Loan Forgiveness Program
Student loan forgiveness for teachers is neither generous nor easy to qualify for. Teachers can have up to $17,500 of their federal direct and Stafford student loans forgiven by teaching for five complete and consecutive academic years at a qualifying low-income school or educational service agency. Loans that were issued before October 1, 1998, are not eligible.
You must be classified as a highly qualified teacher, which means having at least a bachelor’s degree and having full state certification. Only science and math teachers at the secondary level, and special education teachers at the elementary or secondary level, are eligible for $17,500 in forgiveness. Forgiveness is capped at $5,000 for other teachers.
You can qualify for both teacher and public service loan forgiveness , but you can’t use the same years of service to be eligible for both programs. So you’d need 15 years of teaching service to qualify for both programs, along with meeting all the specific requirements to earn each type of forgiveness.
Ppp Amount Not Forgiven: Payback Required
Any part of your PPP loan that is not forgiven must be paid back, either immediately, in the case of non-permitted use, or in the form of a five-year loan at 1% interest. Loan payments on permitted use, including principal, interest, and fees are deferred until the SBA remits your forgiveness amount to you or, if you do not apply for forgiveness, for 10 months from the end of your loan-forgiveness-covered period.
An example of a permitted but not forgivable use would be utility costs that push your non-payroll expenses over 25% of the amount forgiven. Another example would be interest on non-mortgage debt in place on Feb. 15, 2020.
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How Debt Consolidation Works
If the number of payments youve got every month is becoming overwhelming, a debt consolidation loan may help lighten your load. Whether youre struggling with multiple, high-interest credit cards or private student loans thatve gotten out of hand, streamlining your finances can help you get ahead in the long run. When you consolidate your debt, you bundle all your financial stress into one monthly payment.
Often with lower interest rates than credit cards, debt consolidation loans let you take back control. Available through online lenders, banks, and credit unions, a debt consolidation loan can be a good option for getting out of debt and moving forward with your goals.
Ppp Forgiveness For Partnerships
As a general partner in a partnership, your eligible compensation is based on your partnership 2019 or 2020 net earnings.
The maximum partner compensation is capped at the 2019 or 2020 Schedule K-1 net earnings from self-employment. This amount must be reduced by claimed section 179 expense deduction, unreimbursed partnership expenses, and depletion from oil and gas properties. Once youâve taken these reductions into consideration, multiply the value by 0.9235. This is to remove what would be the employer portion of self-employment taxes.
Further reading:PPP Loans for Partnerships: What You Need to Know
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Navy Student Loan Repayment Program
The Navy Student Loan Repayment Program is one of several Navy enlistment education incentive programs designed to pay federally guaranteed student loans through three annual payments during a Sailor’s first three years of service.
You must sign up for this program when you enlist, and your recruiter must include this program in your recruiting paperwork.
You can learn more about this program here.
Dont Reduce An Employees Wages By More Than 25%
Did you take out a PPP loan of more than $50,000? Then this ones for you.
If you want full loan forgiveness, dont reduce an employees wages by more than 25% of what they received in the most recent full quarter.;
This rule applies to employees who earned:
Do not count employees who you did not employ at any point in 2019. These employees do not decrease your PPP loan under the salary reduction.;
Reducing an employees wages by more than 25% will result in a decreased PPP loan forgiveness amount equivalent to the amount you reduce their wages by.;
I cut wages what do I do?
Like with FTE levels, there is a Salary/Hourly Wage Reduction Safe Harbor that may prevent loan forgiveness reduction if you qualify.
To qualify for this safe harbor, you must restore the employees average salary or wages to what they were as of February 15, 2020 by December 31, 2020 or the last day of the Covered Period .;
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How Student Loan Forgiveness Works
Student debt has reached an all-time high in the U.S. According to a report by EducationData.org, student loan debt has reached $1.73 trillion, with over $1.56 trillion making up the Federal Loan Portfolio. It’s reported that as many as 43 million Americans owe an average of;nearly $40,000. In some cases, borrowers may be able to get their loans forgiven or canceled. Student loan forgiveness releases a borrower from their obligation to repay part or all of their federal student loan debt.
The prospect of seeing that debt evaporate may seem like a dream come true. In reality, though, not that many people end up being eligible. Requirements vary depending on the type of loan, but most offer forgiveness only for those employed in certain public service occupations. These include teachers, government service, military service, and AmeriCorps.
As noted above, there are a number of different loan programs that qualify for student loan forgiveness, including the:
- Direct Loan program
- Perkins Loan program
There are also repayment plans offered to student loan borrowers that include the forgiveness of some of their debt. There can be situations in which a loan is forgiven because the educational institution defrauded the student in some way. We discuss this more in detail below.
What If I Have Other Business Debts
Many businesses were paying off other debts before COVID came. This is natural, though, especially for startups. They needed the money to get their business off the ground.
Sadly, many of them cant pay these debts back. Instead of using the money to reopen, theyre giving it to lenders. What can you do, then?
You may perform the following debt reduction methods. They could lower your monthly payments or cut your remaining balance. Learn more about them below:
- Consolidation This combines all your debts into one and gives it a low interest rate. In turn, you wont have to pay as much every month.
- Settlement Some companies could talk to your lender about lowering your debt. However, theres a chance that theyll fail. This is why you should get a lawyer who deals with this issue. Theyll guide you through the whole process.
- Certain agencies like the NFCC can guide you through paying off corporate debts. They have advisors that may speak with you regarding your debt reduction plans. Many of them are nonprofits too.
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Federal Employee Student Loan Repayment Program
The Federal student loan repayment program permits agencies to repay Federally insured student loans as a recruitment or retention incentive for candidates or current employees of the agency.
This plan allows Federal agencies to make payments to the loan holder of up to a maximum of $10,000 for an employee in a calendar year and a total of not more than $60,000 for any one employee.
It’s important to note that an employee receiving this benefit must sign a service agreement to remain in the service of the paying agency for a period of at least 3 years.
An employee must reimburse the paying agency for all benefits received if he or she is separated voluntarily or separated involuntarily for misconduct, unacceptable performance, or a negative suitability determination under 5 CFR part 731. ;In addition, an employee must maintain an acceptable level of performance in order to continue to receive repayment benefits.
Furthermore, you must sign up for this program when you’re hired. You can’t go back to your HR department after you’re already employed and ask for it.
You can learn more about this program here.
Pay Reduction Beyond The 75% Threshold
Letâs say you have three employees that each made $3,000 per month before COVID-19. Your PPP loan amount was $22,500 . You had to lay them off in February 2020 due to COVID-19. You hired back all three of your employees, but at a reduced salary of $2,000 a month.
Over the 24 weeks of the PPP coverage period, you spend $36,000 on your employees . You claim the full $22,500 of your PPP loan for forgiveness.
When it comes to calculating your forgivable amount, your lender looks at each employeeâs individual compensation. The 75% minimum salary is $2,250 . Youâre paying each person $250 less each month. The $250 difference is scaled up to the 24-week period totalling $1,500. After multiplying this by three employees, $4,500 would be deducted from the forgivable amount. This results in a total of $18,000 forgiven .
A conversation with a bookkeeper can help make sense of your specific situation. This is where Bench comes in. Learn more about who we are and how we can help beyond monthly bookkeeping.
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Research State Loan Assistance Programs
Depending on your state and profession, you may be eligible for a state loan assistance program. Several states will give you money to repay a portion of your student loan debt in an effort to recruit and retain talented professionals.
For example, lawyers in Florida may qualify for the Florida Bar Associations Loan Repayment Program. Staff attorneys who work for government agencies, nonprofits and other public service organizations can receive up to $5,000 per year to repay their loans. Both federal and private student loans are eligible.
In Washington, healthcare professionals can receive up to $75,000 if they work for at least three years in designated health professional shortage areas within the state through its State Health program.
Check with your state department of education to see if similar programs are available where you live.
How Likely Is Student Loan Forgiveness
Not everyone can tap into student loan forgiveness programs. Furthermore, despite rumors regarding federal student loan forgiveness on a broad, sweeping scale its still up in the air. The Biden administration has asked the Department of Education to look into the legalities of offering more student loan reform.
However, fierce political arguments rage over programs such as PSLF and borrower defense to discharge.
Furthermore, not many individuals can even say theyve obtained income-driven repayment benefits because they are so new.
It is likely that Biden will continue to cancel more student loan debt, but that doesnt mean the administration will cancel everyones student loans. Biden also doesnt support cancellation of all student loans he publicly supports $10,000 of cancellation but also wants Capitol Hill to explore more options open to them. As of now, hell likely continue to operate under already-existing measures, such as the borrower defense to repayment rule.
However, its also important to note that student loans dont just get cancelled federal taxpayers will still have to pay to cancel student loans.
Ultimately, whether student loan experts believe that student loan reform will pass over the national stage, they tend to agree on one thing: You shouldnt set your repayment strategy solely based around whether you believe that student loan forgiveness is coming soon. Itll take a long time to arrive if it does and thats a big if.
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Targeted Eidl Advance: Qualifications
If you are in the first groupthose who applied for and received an EIDL Advance of up to $9,000you may qualify for a Targeted EIDL Advance if you:
- Are located in a low-income community, as defined in section 45D of the Internal Revenue Code; and
- Can demonstrate you suffered a more than 30% reduction in revenue;during an eight-week period beginning on March 2, 2020, or later. You will be asked to provide proof of the more-than-30% revenue reduction.
If you are in the second groupsomeone who applied for an EIDL Advance on or before Dec. 27, 2020, but did not receive oneyou must meet the qualifications above plus one more:
- You must have 300 or fewer employees.;
Any business that would normally be eligible for the EIDL program would potentially be eligible, including sole proprietors, independent contractors, and private, nonprofit organizations. Agricultural enterprises are not eligible.
All applicants may be asked to provide an;IRS Form 4506-T,;which gives the SBA permission to request your tax return information.
The SBA cautions against submitting a duplicate COVID-19 EIDL application. Only prior applicants will be considered for the Targeted EIDL Advance.
Bidens Student Loan Forgiveness Review: Should You Take Steps Now To Get Student Debt Cancelled Later
WASHINGTON, DC – APRIL 22: U.S. President Joe Biden delivers remarks during a virtual Leaders Summit … on Climate with 40 world leaders at the East Room of the White House April 22, 2021 in Washington, DC. President Biden pledged to cut greenhouse gas emissions by half by 2030.
As the Biden administration continues to evaluate options for enacting widespread student loan forgiveness, should you be doing anything now to maximize your potential future eligibility? Perhaps but some actions may carry significant and lasting consequences. Heres what to know.
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