With the current Pandemic Forbearance, many financial advisors think there's not urgency to address student loans for their high-balance clients. But here are several factors you might consider before deciding to do nothing.

1. Losing Months Towards Forgiveness
‍Be sure your client is in an Income-Driven Repayment Plan. If your client hasn't enrolled yet, then they are not earning credits (months) towards forgiveness that they could be. By waiting to enroll, they’re throwing away these free months that could be counting towards their taxable event of canceled debt after the 20 to 25 year term. This is especially impactful for someone who wouldn’t immediately qualify for a $0 payment. Regardless of what your client’s estimated payments will be after payments resume, they will qualify for $0 monthly payments and 0% interest until the freeze on payments lifts.

‍2. It’s Your Fiduciary Responsibility to Ensure Clients Prepare Now
‍When borrowers reach forgiveness at the end of their repayment program, the federal government views the canceled balance as taxable earned-income. Waiting to make a savings strategy for this tax event is costing your clients money. As you’re well aware, the sooner they begin building wealth in a portfolio or savings option, the less expensive the policy or investment will be for them.
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Do your clients know the exact tax implication they’ll be seeing down the road? Have you prepared them with specific numbers for their situation? If they don’t know what kind of tax implication to expect with an investment or savings plan in place, they’re not prepared.
As their financial advisor and fiduciary, it’s best to advise them on this significant expense, and ensure they are preparing now.

When your clients strategize with us on their loans, they will receive a report detailing their expected tax implication, presenting an immediate need for them to work with you on implementing a savings strategy.

3. Time-Sensitive Need to Consolidate Older Loans
Borrowers with Commercially held Federal Family Education Loans (FFEL) loans under the Department of Education, HEAL Loans or Perkins loans must consolidate their loans into a Direct Consolidation Loan to receive a one-time account adjustment to qualify for massive credits (months) towards forgiveness that may not have been eligible previously. Federal Student Loan borrowers must act by the end of 2023, in order to receive the one time account adjustment to have additional months qualify toward the 20-25 Year Income-Driven Repayment plan or Public Service Loan forgiveness. You can learn more about that here.

4. Catching Potential Refunds Before It’s Too Late
‍The Department of Education considers most payments made since March 2020 to be “overpayments”. Borrowers who made payments during the covid deferment will most likely want to seek a refund, and must submit their request before the freeze on payments lifts.
If requests on payments made after March 2020 are not made by the time the Pandemic Forbearance is lifted, then no refunds will be granted when payments resume. Federal Student Loan repayments are supposed to resume.
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Borrowers will not receive refunds on payments made since the Pandemic Forbearance after payments resume 60 days after the Supreme Court Decision on Biden’s Proposal of up to $20k in loan forgiveness or if no decision is made by June 30th, 2023, 60 days from then - Essentially, September 2023.

5. Beat the Rush to Avoid Costly Errors and Delays
‍There are 43 million federal student loan borrowers in America and they are almost all experiencing this payment pause by the Department of Education. Loan servicers will be overwhelmed with applications when everyone is submitting their recertification paperwork once the freeze on student loan payments lifts. The next 60 days is the optimal time to beat the rush and reap the benefits of fast processing speeds, lower error rates, unnecessary delays, and possible application rejections. In a recent audit, loan servicers were found to have a 61% error rate negatively impacting borrowers.
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6. Get on our Schedule Now and Waive the Planning Call Fee
‍Student Loan Tutor is a small, but mighty firm, and no one else does what we do for high-balance Federal Student Loan borrowers. Our tutor’s schedules will be booked out for weeks or months once payments resume.

As an added bonus for new financial partners, we’re waiving the $150 Planning Call Deposit Fee for your first client referral until the Pandemic Forbearance lifts. If you have spoken with a client or prospect recently who you think might benefit from our strategic services, there’s no better time to get started than now.

Here’s the link to book their FREE evaluation call.