housing loans

College Funding Changes In The Pandemic Relief Bill

There are several student financial aid provisions in the pandemic relief package that was included in the Consolidated Appropriations Act of 2021 that passed the House and Senate on Monday, December 21, 2020.

Student Loan Relief

Student loan borrowers are disappointed that the legislation did not include an extension to the student loan payment pause and interest waiver, nor did it provide any student loan forgiveness.

The payment pause and interest waiver is set to expire on January 31, 2021. President-elect Joe Biden will be able to extend it further after he takes office on January 20, 2021. Several possible extension dates have been floated, including April 1, April 30 and September 30, but Joe Biden has not yet said anything specific about the extension, just that it is needed.

Nevertheless, there are some changes in the legislation that affect student loan borrowers. In particular, the tax-free status of employer-paid student loan repayment assistance programs (LRAPs), which was set to expired on December 31, 2020, has been extended for five years through the end of 2025. Such LRAPs will be exempt from income and FICA taxes for both the employee and the employer.

PROMOTED DP World BrandVoice | Paid Program Track And Trace Technology Is The Disruption Automotive Logistics Needs UNICEF USA BrandVoice | Paid Program Young Changemakers Are Shaping A Better World Grads of Life BrandVoice | Paid Program How Reimagining Employment Practices Can Advance Racial Justice

SULA, a complicated set of limits on subsidized Federal Direct Stafford loans, has been repealed. SULA mostly affected students who transferred from a 4-year college to a 2-year college.

In addition, there have been a few changes concerning the U.S. Department of Education’s Next Generation Processing and Servicing Environment (NextGen) for federal student loans.

New student loan borrower accounts must be allocated to loan servicers based on their past performance and servicing capacity.
Borrower accounts must be reallocated from servicers for “recurring non-compliance with FSA guidelines, contractual requirements, and applicable laws, including for failure to sufficiently inform borrowers of available repayment options.” Applicable laws include consumer protection laws.
NextGen must allow for multiple student loan servicers that contract directly with the U.S. Department of Education.
NextGen must incentivize more support to borrowers at risk of delinquency or default.
Borrowers must be allowed to choose their loan servicer when they consolidate their federal loans.
The U.S. Department of Education must improve transparency through expanded publication of aggregate data concerning student loan servicer performance.

MORE FOR YOUTrump May Not Sign Stimulus Bill Without $2,000 Stimulus Checks; Here’s What Could Happen Next Biden May Support Only $10,000 In Student Loan Forgiveness Biden Says He Is “Unlikely” To Cancel $50,000 In Student Loan Debt By Executive Order

Changes in College Tuition Tax Breaks

The legislation changes the income phaseouts for the Lifetime Learning Tax Credit (LLTC) to be the same as the income phaseouts for the American Opportunity Tax Credit (AOTC), starting with tax years that begin after December 31, 2020.

The Lifetime Learning Tax Credit will start phasing out at $80,000 for single filers and $160,000 for taxpayers who file as married filing jointly. The tax credit is fully phased out at $90,000 (single) and $180,000 (married filing jointly). Married taxpayers who file separate returns are not eligible.

For comparison, the 2020 income phaseouts for the LLTC were $59,000 to $68,000 (single) and $118,000 to $136,000 (married filing jointly).

The new income phaseouts will not be adjusted for inflation.

In addition, the legislation repeals the Tuition and Fees Deduction, effective with tax years that begin in 2021. This is a permanent repeal, so the Tuition and Fees Deduction will not be resurrected by the next tax extenders bill.

New Funding for Higher Education Emergency Relief Fund

The $81.88 billion for the Education Stabilization Fund includes

$54.3 billion for the Elementary and Secondary School Emergency Relief Fund
$22.7 billion for the Higher Education Emergency Relief Fund (HEERF)
$4.05 billion for the Governor’s Emergency Education Relief Fund, of which $2.75 billion has been earmarked for Emergency Assistance to Non-Public Schools

The Higher Education Emergency Relief Fund previously received $16 billion as part of the CARES Act.

The allocation formula for the HEERF funding is more complicated than the one in the CARES Act, but the allowable uses are similar. Public and private non-profit colleges are required to use at least half of the money for financial aid grants to students. Private for-profit colleges are required to use all of the money for financial aid grants to students. Colleges must provide at least the same amount of emergency financial aid grants to students as they did under the CARES Act provisions, even if their total allocation is lower.

The emergency financial aid grants to students can be used for any element of the student’s cost of attendance or for emergency costs related to the pandemic, such as “tuition, food, housing, health care (including mental health care), or child care.”

The grants must be prioritized to students with exception financial need, such as Pell Grant recipients.

The emergency financial aid grants to students are tax-free.

Most College Students Remain Ineligible for Stimulus Checks

Most college students will remain ineligible for the recovery rebate checks, also known as the stimulus checks.

The legislation includes the same restriction that limits the $600 per qualifying child to children age 16 and younger. Only 0.1% of undergraduate students are age 16 or younger.

College students who are under age 24 are also ineligible, because they can be claimed as a dependent on someone else’s federal income tax return. The remain ineligible even if they are not claimed on someone else’s tax return.

A college student might qualify if they are married and file a joint return with their spouse or if they provide more than half of their own support. About 15% of undergraduate students are married. College students who are 24 years old or older may also qualify. More than 40% of undergraduate students are 24 years old or older.

Invest $500 to get $2500 in a week completely legit

College students can still claim the $1,200 stimulus checks from the CARES Act in addition to the new $600 stimulus checks, if they are eligible.

Increase in the Maximum Pell Grant

The maximum Federal Pell Grant has been increased to $6,495 for the 2021-2022 academic year.

Eligibility criteria will be pegged to a multiple of the poverty line starting with the 2023-2024 academic year. Students will be eligible for the maximum Pell Grant if they and their parents/spouse, as applicable, are not required to file a federal income tax return or if their adjusted gross income (AGI) is less than 175% to 225% of the poverty line. The higher threshold is reserved for households involving a single parent.

FAFSA Simplification

The legislation simplifies the Free Application for Federal Student Aid (FAFSA) starting with the 2023-2024 academic year. The new FAFSA reduces the number of questions on the form by two-thirds, from 108 questions to about three dozen questions. Follow me on Twitter. Check out my website or some of my other work here.

Mark Kantrowitz

I am Publisher of PrivateStudentLoans.guru, a free web site about borrowing to pay for college. I am an expert on student financial aid, the FAFSA, scholarships, 529 plans, education tax benefits and student loans. I have been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. I am the author of five bestselling books about paying for college and have seven patents. I serve on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and am a member of the board of trustees of the Center for Excellence in Education. I have previously served as publisher of Savingforcollege.com, Cappex, Edvisors, Fastweb and FinAid. I have two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU)

University of California Television (UCTV)

How to pay for college is a pressing question for all applicants from the class of 2020. COVID-19 has caused financial uncertainty and many are having to rethink their plans. Jodi Okun, an expert in financial aid, joins Steven Mercer to talk about how the pandemic is impacting financial aid awards, what to do if your family’s financial situation has changed, and how to plan for the future in uncertain times. [Show ID: 35963] More from: STEAM Channel (https://www.uctv.tv/steam) UCTV is the broadcast and online media platform of the University of California, featuring programming from its ten campuses, three national labs and affiliated research institutions. UCTV explores a broad spectrum of subjects for a general audience, including science, health and medicine, public affairs, humanities, arts and music, business, education, and agriculture. Launched in January 2000, UCTV embraces the core missions of the University of California — teaching, research, and public service – by providing quality, in-depth television far beyond the campus borders to inquisitive viewers around the world. (https://www.uctv.tv)

U.S. Households’ Net Worth Hits Record $123.5 Trillion As Stocks Boom, But Debt Is Also Surging

While unemployment has remained stubbornly above pre-pandemic levels, record highs in the stock market have pushed the net worth of all households in the U.S. to a new high, despite the fast growth in household debt.

The net worth of households in the United States climbed to $123.5 trillion in the third quarter, up 8% from a year ago, the Federal Reserve said in a report Wednesday.

The Fed, which calculates net worths by subtracting overall debt held from the sum of assets like savings and equities, attributed the gains to the surging value of stocks, which jumped $2.8 trillion in the third quarter, as well as real estate, which increased in net value by $400 billion.

PROMOTEDJapan BRANDVOICE | Paid ProgramJapan Is Innovating Mobility As A Service And Creating A $61 Billion MarketTableau BRANDVOICE | Paid ProgramRevisiting Our 2020 Data Trends Predictions. How The Pandemic Changed Our Outlook For The YearSquare BRANDVOICE | Paid Program6 Tips for Omnichannel Marketing Success

Meanwhile, household debt, which includes mortgages, credit card debt and personal loans, jumped at an annual rate of 5.6% in the third quarter, reaching $16.4 trillion; that’s the fastest growth this decade, beating out a 3.9% increase in 2017.

Business debt fell 0.9% to $17.5 trillion in the third quarter, while federal government debt jumped 9.1% to $26 trillion.

CRUCIAL QUOTE

“We’ve seen home prices rise, market prices for tradable instruments rise and savings increase… but those gains skew to upper income people,” KPMG Chief Economist Constance Hunter told the Wall Street Journal. “It’s a vicious cycle,” she added of the pandemic’s disparate impact on lower-income Americans. “Not only are lower-income households more impacted, they also are less likely to have the resources to draw upon to support their families.”

KEY BACKGROUND

The S&P 500 jumped 8% in the third quarter, while the tech-heavy Nasdaq Composite soared nearly 12%, and both have reached record highs in the fourth quarter–as has the Dow Jones Industrial Average. But far from everyone benefits from those gains. According to a Gallup poll in March and April, just 22% of Americans making less than $40,000 annually said they owned any stocks, compared to 84% of people making at least $100,000 per year.

TANGENT

There were 10.9 million unemployed people in the country last month, when the U.S. economy added a much lower-than-expected 245,000 jobs, according to data released by the Bureau of Labor Statistics last week. The number of unemployed people in the U.S. remains more than three times higher than it was before the pandemic, during which 22 million Americans have been forced into unemployment.

Turn %500$ investment into 2500$ in one week completely legitimate

He Got $221,000 Of Student Loan Forgiveness, But Then This Happened

Getty

This veteran thought he got $221,000 of student loan forgiveness, but then this happened. Here’s what you need to know.

Student Loans: Bankruptcy

A Navy veteran was granted $221,000 of of student loan forgiveness, which is also known as student loan discharge. U.S. bankruptcy judge in New York, Cecilia G. Morris, ruled that Kevin J. Rosenberg will not have to repay his student loan debt because it will impose an undue financial hardship.

However, in a relatively rare move in bankruptcy cases, his student loan servicer, Education Credit Management Corporation (ECMC), is now appealing the ruling.

“Instead of pursuing those opportunities available to him, and paying back his taxpayer-backed federal student loans, Plaintiff, for the past 10 years, has held various positions in the outdoor adventure industry, including starting up and running his own tour guide business,” ECMC wrote in filings.

ECMC claims that Rosenberg, who has a law degree from Cordozo Law School at Yeshiva University, could have earned more income working as an attorney. Rosenberg borrowed $116,500 of student loans between 1993 and 2004. He filed for Chapter 7 bankruptcy in 2018 and asked the court last June to discharge his student loan debt, which had grown to $221,400, including interest. At the time of filing, Rosenberg’s annual salary was $37,600, and after living and debt expenses, his monthly net loss was $1,500.

Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met.

The Brunner Test: Financial Hardship

Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.

In plain English, the Brunner standard says:

the borrower has extenuating circumstances creating a hardship;
those circumstances are likely to continue for a term of the loan; and
the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments – such as try to find a workable payment plan.)

“Inability to pay one’s debts by itself cannot be sufficient to establish an undue hardship; otherwise all bankruptcy litigants would have an undue hardship,” ECMC argued.

What Else Can You Do If You’re Struggling To Make Student Loan Payments?

Here are some potential action steps:

1. Income-Driven Repayment: For federal student loans, consider an income-driven repayment plan such as IBR, PAYE or REPAYE. Your payment is based on your discretionary income, family size and other factors, and you can receive federal student loan forgiveness on the remaining balance after 20 or 25 years of payments. However, you will owe income taxes on the amount of student loans forgiven.

2. Pay Off Other Debt: Pay off credit card debt first. Credit card debt typically has a higher interest rate than student loans. You may qualify for a personal loan at a lower interest rate, which can be used to pay off credit card debt, save you money in interest costs and potentially improve your credit score.

3. Contact your lender: If you’re facing financial struggle, don’t keep it a secret from your lender. Contact your lender to discuss alternative payment options.

4. Refinance student loans: Student loan refinancing rates are incredibly cheap right now and start at 1.99%. Student loan refinancing is the fastest way to pay off student loan debt. To qualify, you’ll need a credit score of at least 650 and enough monthly income for living expenses and debt repayment. If you meet those requirements, you may be a good candidate for student loan refinancing. If you don’t, you can also apply with a cosigner to help you get approved and get a lower interest rate.

This student loan refinancing calculator shows how much you can save with student loan refinancing.

Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

Zack Friedman

Zack Friedman is the bestselling author of the blockbuster book, The Lemonade Life: How To Fuel Success, Create Happiness, and Conquer Anything. Apple named The Lemonade Life one of “Fall’s Biggest Audiobooks” and a “Must-Listen.” Zack is the Founder & CEO of Make Lemonade, a leading online personal finance company that empowers you to live a better financial life. He is an in-demand speaker and has inspired millions through his powerful insights. Previously, he was chief financial officer of an international energy company, a hedge fund investor, and worked at Blackstone, Morgan Stanley, and the White House. Zack holds degrees from Harvard, Wharton, Columbia, and Johns Hopkins.

Source: He Got $221,000 Of Student Loan Forgiveness, But Then This Happened

How to Determine Exactly How Much Money You Need to Push Your Business to the Next Level

Too often, entrepreneurs–especially inexperienced ones–take the “luxury” approach to funding, incorporating every bell and whistle into their expansion plan by trying to accomplish all goals at one time. That’s nice, but it’s usually not reality and often forces businesses to be cash strapped because of high debt repayments.

That’s why I suggest entrepreneurs take a three-pronged approach to their expansion planning. This exercise helps businesspeople ruthlessly prioritize their needs and determine what is a must and what is frivolous.

A, then B, then C

Let’s say an entrepreneur believes he or she needs $1 million to make their expansion plans a reality.

Now, write up a plan for that amount. What are you going to do with that million? What are the specific investments you will make? What will your cash flow look like afterward? What does your business, in general, look like?

Now do the same exercise with $500,000. Ask yourself the same questions, as well as anything else that’s pertinent. Can you primarily accomplish the same goals with half the cash?

Finally, do the exercise one more time, this time with a loan of only $250,000. What are the answers to the questions now? Might it be possible to do what you want to do with only a quarter of the original loan?

And the answer is…

No set answer will be correct.

Perhaps your initial inclination that you need $1 million was correct. And there’s a good chance that $250,000 simply won’t get the job done.

But there is a decent probability that the middle option might be feasible, especially if it makes you realize that some of the more frivolous “wish list” things you’d like to do are best set aside for now. Remember, you don’t have to accomplish everything at once, and a scaled-down plan might allow you to better focus on more important things, preventing you from overextending yourself.

Of course, don’t get too stuck on exact numbers. Maybe this exercise will have you realize your plan can go ahead effectively for $790,000. Or $615,000. Or $485,000. Or any other number.

The purpose is to gain some clarity and sharpen your focus–not to mention to allow you to decide what makes you most comfortable and enables you to sleep at night. Don’t underestimate the value of that.

Also, keep in mind the time factor. The larger the loan you seek, the longer it likely will take to receive approval from a lender. The saying “time is money” always rings true, especially in this scenario. You might miss opportunities waiting for lender approval.

Remember, business tends to be more of a marathon than a sprint. You need to pace yourself in all aspects, including financing, to better your odds of finishing the race. Hopefully, this exercise helps you accomplish that.

By Ami KassarCEO, MultiFunding.com @amikassar

Source: How to Determine Exactly How Much Money You Need to Push Your Business to the Next Level

TED

15.6M subscribers

Trust: How do you earn it? Banks use credit scores to determine if you’re trustworthy, but there are about 2.5 billion people around the world who don’t have one to begin with — and who can’t get a loan to start a business, buy a home or otherwise improve their lives. Hear how TED Fellow Shivani Siroya is unlocking untapped purchasing power in the developing world with InVenture, a start-up that uses mobile data to create a financial identity. “With something as simple as a credit score,” says Siroya, “we’re giving people the power to build their own futures.” TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes (or less). Look for talks on Technology, Entertainment and Design — plus science, business, global issues, the arts and much more. Find closed captions and translated subtitles in many languages at http://www.ted.com/translate Follow TED news on Twitter: http://www.twitter.com/tednews Like TED on Facebook: https://www.facebook.com/TED Subscribe to our channel: http://www.youtube.com/user/TEDtalksD…

What Not To Do When Buying A Home

The home-buying process can be a long one. Once you have an accepted offer, you’ll likely be excitedly counting down the days until you can move in and start your life as a homeowner. You might be preapproved for a mortgage, but you might not end up qualifying for the loan if you make mistakes during the loan approval process.

Below are a list of pointers I give my buyer clients to make sure they protect their home purchase during the process:

Don’t open any new credit cards. When you apply for a credit card, the credit card company will run an inquiry on your credit, which can wind up lowering your credit score. Check in with your mortgage lender before opening any new credit cards, or hold off until your mortgage is finalized and you have the keys to your new home.

Don’t take out any new loans or buy a car. Having a good credit score is key to qualifying for a mortgage. Taking out a new loan means taking on more debt, and reducing your debt-to-income ratio could put the mortgage loan in jeopardy.

Do not cosign for anyone else. You might not be the primary person on the loan, but cosigning makes you financially obligated to cover the payments if the primary ends up defaulting. Even if they always keep their loan in good standing, the loan will show on your credit report until it is paid off in full.

If you are a cosigner on any loans (like a car payment), expect to have to reach out to the primary person on the loan since your lender will likely need a year’s worth of bank statements from them to prove they have made all of their own payments.

Don’t change jobs. Banks are wary of issuing a loan to someone with an unstable employment history. Lenders look at employment history, and a change can mean that you won’t be seen as having the stability to make regular payments in the future. Most lenders like to see at least two years with the same employer. A sudden switch can also set back the loan process if you have to wait a month for your first pay stub, an item the lender will need to review.

Don’t consolidate debt. Debt consolidation brings all of your debt under one monthly bill and often can reduce your interest rate. Your mortgage preapproval was based on the state of your debts and credit score at the time you applied for the loan, and any changes could disrupt the loan approval.

Don’t miss any loan payments. The lender is going to run a credit check before finalizing the loan, and any late or missed payments can have a negative effect on your credit score. It is imperative to stay current on all credit card payments, auto payments and any other bills.

Don’t buy furniture. I know buying furniture is one of the more fun ways of setting up your new home, but hold off until you have the keys. Using your credit card means taking on additional new debts, which could put your loan at risk. Wait until after the official close to start shopping.

If a big purchase or job change is truly unavoidable, it is best to discuss it with your mortgage lender upfront. Since any of the above-mentioned items on the list can result in loan denial, I believe it’s best to hold off. Once you are officially a proud homeowner, you can move ahead with all of your plans.

Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?

Beatrice de Jong

Beatrice is the Consumer Trends Expert for Opendoor. Read Beatrice de Jong’s full executive profile here.

Source: What Not To Do When Buying A Home

Shine Insurance

9.88K subscribers

This video is essential for every first time home buyer and it’s a great refresher even if you’ve purchased a home before. From searching for a home to understanding the mortgage closing process this video will help you navigate the process like a boss! Want more? Our New Home Buyers Guide Workbook & Course will walk you through all 9 steps of the home buying process. Get them at https://www.newhomebuyersguide.net Here’s an overview of everything in the video: Intro – 0:01 What You’ll Learn 0:29 Fun Fact – 1:03 I’ve ABSOLUTELY been right where you are STEP 1 Apply for a Mortgage – 1:32 Get preapproved before you go house shopping STEP 2 -Make An Offer – 4:29 Price & Contingencies – Offer, Counter, Accept STEP 3 – Escrow Period – 7:07 Period between Accepted Offer and Closing – Secure A Mortgage – 8:08 – Home Inspection – 8:51 – Address Contingencies – 10:07 – Get Insurance – 10:38 – Closing – 12:32 Closing Costs – 13:27 Monthly Mortgage Payment – 15:45 – Principle – 16:30 – Interest – 17:00 – Escrow Account Contributions – 17:41 Rookie Mistake – 21:17 Outro – 22:28

Tag: housing loans

College Funding Changes In The Pandemic Relief Bill

Student Loan Relief

Changes in College Tuition Tax Breaks

New Funding for Higher Education Emergency Relief Fund

Most College Students Remain Ineligible for Stimulus Checks

Increase in the Maximum Pell Grant

FAFSA Simplification

Like this:

U.S. Households’ Net Worth Hits Record $123.5 Trillion As Stocks Boom, But Debt Is Also Surging

CRUCIAL QUOTE

KEY BACKGROUND

TANGENT

FURTHER READING

Like this:

He Got $221,000 Of Student Loan Forgiveness, But Then This Happened

Like this:

How to Determine Exactly How Much Money You Need to Push Your Business to the Next Level

A, then B, then C

And the answer is…

Category

Like this:

What Not To Do When Buying A Home

Category

Like this:

Student Loan Relief

Changes in College Tuition Tax Breaks

New Funding for Higher Education Emergency Relief Fund

Most College Students Remain Ineligible for Stimulus Checks

Increase in the Maximum Pell Grant

FAFSA Simplification

Share this:

Like this:

CRUCIAL QUOTE

KEY BACKGROUND

TANGENT

FURTHER READING

Share this:

Like this:

Share this:

Like this:

A, then B, then C

And the answer is…

Category

Share this:

Like this:

Category

Share this:

Like this: