Patching the student loan system is just the latest chapter in our long, sorry history of making things hard. In doing so, we confuse the very people we’re trying to help: the young, the old, the sick, the people without much time because they’re working hard to make ends meet.
In some ways, this is a feature of federalism. The U.S. government helps pay for or subsidize unemployment insurance, Medicaid and 529 college savings plans. States, however, have rights. And so the size of your unemployment check depends on where you live, your state can refuse federal Medicaid funds that could help you have more health care and there are dozens of 529 college savings plans with different tax breaks — or none at all.
We also like markets and plenty of choice. Politicians, policy wonks and product managers spend decades creating or navigating laws and regulations, and marketplaces emerge accordingly.
Many will benefit. President Biden’s executive order means the federal student loan balances of millions of people could fall by as much as $20,000. Here are answers to some common questions about how it will work:
Who qualifies for loan cancellation? Individuals who are single and earn $125,000 or less will qualify for the $10,000 in debt cancellation. If you’re married and file your taxes jointly or are a head of household, you qualify if your income is $250,000 or below. If you received a Pell Grant and meet these income requirements, you could qualify for an extra $10,000 in debt cancellation.
What’s the first thing I need to do if I qualify? Check with your loan servicer to make sure that your postal address, your email address and your mobile phone number are listed accurately, so you can receive guidance. Follow those instructions. If you don’t know who your servicer is, consult the Department of Education’s “Who is my loan servicer?” web page for instructions.
How do I prove that I qualify? If you’re already enrolled in some kind of income-driven repayment plan and have submitted your most recent tax return to certify that income, you should not need to do anything else. Still, keep an eye out for guidance from your servicer. For everyone else, the Education Department is expected to set up an application process by the end of the year.
When will payments for the outstanding balance restart? President Biden extended a Trump-era pause on payments, which are now not due until at least January. You should receive a billing notice at least three weeks before your first payment is due, but you can contact your loan servicer before then for specifics on what you owe and when payment is due.
But then we get a result like the one we have in retirement savings. Have yourself a 401(k) or a 403(b) or a 457 depending on where you work, or all three over your next three jobs. You can invest money in a T.D.F. or possibly a REIT but probably not an E.T.F., and don’t forget to check for the E.S.G. options. Or maybe you’d like one of the many flavors of I.R.A.s, like an S.E.P. or (you really can’t make this stuff up) a S.I.M.P.L.E. one.
Then, it’s time to sign up for Medicare. Tempted by an “Advantage Plan,” where a company promises to help you comprehend and utilize selections from your menu of government benefits? You may be able to choose among H.M.O., P.P.O., P.F.F.S., S.N.P., H.M.O.-P.O.S. and M.S.A. plans. The Centers for Medicare Medicaid Services website has an acronym glossary with 4,420 entries, because personal finance is its own language. You learn as you go, or not at all.
Article source: https://www.nytimes.com/2022/09/03/your-money/student-loans-personal-finance.html
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