As the fall elections near, a host of issues important to renters, homeowners, and the nation’s housing economy await attention. So far the focus has been on other national priorities, but a number of major problems confront the housing sector.
Important Housing Issues
The housing industry was a major contributing factor in the recession, and even now it remains essential to the health of our economy. Here are some of the most pressing needs:
Rising demand and inadequate inventories are driving up rents and home prices simultaneously, leaving consumers with few choices for affordable housing in the nation’s hottest housing markets.
Most homeowners still live in houses that are worth less than they were worth in 2006. Millions of homeowners are still recovering from the worst housing crash since the Great Depression, especially those who live the heartland where prices are rising slower than costs and in foreclosure-ravaged states like Florida and Nevada.
Crippling levels of student loan debt, the legacy of soaring college costs, have postponed or ended the homeownership dreams of millions of educated young adults.
Soaring land prices and restrictive zoning and siting laws are making it nearly impossible to build affordable high-density rental or condo housing in the core cities and inner suburbs.
Homeownership is lower than it has been in 50 years.
The housing sector should be an engine of economic growth, averaging at least 1.6 million units a year over the next decade but so far it has accounted for just 2.8 percent of annual GDP this decade, significantly less than the 4.3 percent share averaged in the 1980s and 1990s.
Taken over by the government in 2009, the huge companies that own half the nation’s mortgages, Freddie Mac and Fannie Mae, are still in limbo. In seven years, the Congress nor the White House have not been able to agree on what their roles should be. One result is the lack of a vibrant private label secondary mortgage market to provide much-needed credit for housing expansion.
Where We Stand Now
Some of these issues have lingered for years; some are new. All of them are taking their toll on the national standard of living.
Though the politicians who win elections may or may not be good for housing, there is new evidence that elections themselves are a good thing for home sales.
In an analysis of home sales dating back to 1990, the California Association of Realtors found that the sales growth is usually positive during an election year. In fact, C.A.R. found that growth in home sales at the end of an election year actually outperforms non-election years by 7.1 percentage points.
During the past five election cycles, sales in the final months of the year picked up, rising by 5.3 percent on average compared with -1.8 percent during non-election years. With the exception of December 2004, every single month of the final quarter saw robust growth in home sales during election years.
The pattern for California home prices is similar. C.A.R. also found little evidence of a negative effect on home prices during an election year. In fact, home price growth in California during the past five election cycles was slightly better than the long-run average of 5.6 percent.
Again, the effects were most pronounced during the final months of the year when demand—and therefore, upward pressure on prices—were boosted by roughly 5.6 percentage points following the elections.
The Verdict?
Too soon to tell. Candidates need to address housing issues before we can make guesses about the future. On the bright side, though, election season may give parts of the country a small boost.
Some parents want their children to follow in their footsteps, and even choose the same career. Others, however, want their kids to aim higher, and achieve more. This can be especially true for parents that were not able to go to college.
Being a first-generation college student is something to be proud of, but it can also be nerve-racking. There might be high expectations that come with being the first in the family to attend school that add to the normal stress of attending college. On top of that, there’s the fact that, if nobody else in the family has done it yet, there are no family members to give advice or provide guidance.
Fortunately, there are a number of things you can do to not only survive but thrive as a first-generation college student. Below are some strategies that can help you prepare for college and manage the pressure of being the first in your family to have this opportunity.
Challenges of Being a First-Generation Student
What exactly is a first-generation college student? Being a first-generation college student means the student’s parents either did not earn a college degree or did not go to college at all. Since their parents may not understand much of the college experience, these students are embarking on a somewhat unknown path, which can lead to challenges that other students don’t face.
Lacking this direct source of advice can affect the student’s ability to complete school. It may be more difficult for a first-generation student to adequately prepare for college, both financially and socially. College can be stressful, and without a support system that understands these experiences, the student may find it difficult to continue with school.
Some first-generation students may have other demographic characteristics, such as low economic status or being enrolled in a less-than-full-time course load, that also increase their risk of not finishing college. The usual stressors of college are enough to make it a challenging experience for anybody, but first-gen students may find these factors make it even more difficult.
Another factor that makes being a first-gen student difficult is not understanding the financial aid system. Students whose parents have gone to college may be more familiar with the process of applying for aid and looking for scholarships and grants. If first-generation students are already from a lower socioeconomic background, as well as being the first person in their family to go to college, the financial strain could be more difficult to manage than it is for others.
There are other reasons that first-gen students may have difficulty completing their four-year degrees: They may be less prepared for the rigorous academics at the college level, they could be working full-time jobs, or they could be attending college later in life, after having children.
First-generation college students can still be successful despite these additional difficulties. With the proper preparation and support, they can not only achieve their four-year degrees, but thrive in college. 💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.
Thriving in College
The saying “C’s get degrees!” describes students who get by in college by simply passing their classes, not looking to achieve anything other than that piece of paper at the end of it all. But if you’re a first-generation student looking to make the most of your college years, here are some tips to keep in mind.
Study Tips
If you want to crush your academics, instead of being crushed by them, you’ll need to develop proper study techniques. The lessons will be more difficult in college, and students have to depend more on their own self-discipline than they did in high school. If it’s been a while since you have been in school, implementing good techniques and habits can help you adjust to the work again.
Here are some study tips that may help first-generation students adapt to college-level learning:
• Pick a consistent study location, one that is comfortable and free of distractions. Once you’ve found the perfect spot, you might consider studying there consistently. • Write down deadlines and important dates in a planner — this may help prevent you from feeling overwhelmed and being caught by surprise when deadlines are approaching. • Schedule consistent study times instead of cramming the night before an exam. This has been proven to be a better method of remembering subjects for the long term. • Find a study group — this can make it easier to learn more difficult material. • Review notes each day. This repetition can help you remember them. • If you’re struggling with a certain class, ask professors for help during their office hours or seek out available tutoring services on campus.
Recommended: 5 Ways to Start Preparing For College
Building Relationships
The connections you make while in college can become invaluable after graduation. Getting to know professors and classmates can not only provide a source of social support during the stressful college years but may also provide opportunities for future networking.
Most professors will have regular office hours when they’re available to meet with students. These office hours can be used to talk about class material, get to know your professor better, or get their advice on your future. Usually, professors are happy to help students excel in class or discover the next steps in their journey.
Taking the time to get to know your classmates is also beneficial. When students make connections in class this helps give them support. Classmates can take notes for each other when someone needs to miss class, they can study together, and assist each other in the post-graduation job hunt.
Befriending classmates will not only provide academic support, but emotional support, too. Nobody understands what a college student is going through as well as another college student.
Avoiding Avoidance
Students who are juggling work, family, and school may feel overwhelmed by their college workload. Planning ahead and staying organized can help you stay successful in school despite these extra responsibilities.
Like all students, first-gen students might benefit from keeping a planner and scheduling study sessions ahead of time so they don’t fall into the trap of ineffective, last-minute cram sessions.
Staying ahead of schedule can also help in case other problems arise. Students who are parents might have child-related reasons for missing a class, but if they have assignments started ahead of time and are already on top of their study schedule, the absence will be less likely to negatively impact their grades. 💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.
Paying for College
College costs are an important piece of attending college, and it’s good to start planning as soon as possible. First-generation students may not have any immediate family members who have been through the process, possibly making information on how to pay for college more difficult to come by. There are a variety of ways students can finance college, including grants, loans, and scholarships.
The first step to financing your college education is filling out the FAFSA® (Free Application for Federal Student Aid). This application will determine your eligibility to receive federal aid for college, which includes scholarships, grants, work-study, and federal student loans. Federal grants usually don’t need to be repaid, but federal loans generally do.
Students must be able to demonstrate financial need to receive most federal aid, along with meeting other eligibility requirements .
If you aren’t eligible for federal aid, or if the federal aid you receive isn’t enough to cover all of your costs, you might also consider applying for private scholarships, which are available through a variety of sources, including schools, community organizations, and corporations. Eligibility varies for each one. Some scholarships are need-based, whereas some are merit-based. There are also scholarships available specifically for first-generation college students.
Another option available for financing college is private student loans. These are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.
Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal student loans
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
For the first time since 2016, the Free Application for Federal Student Aid (FAFSA) will not be ready on Oct. 1 for the following academic year. Instead, students have to wait until December to fill out and submit a redesigned application for financial aid — including federal student loans, grants and work-study — for the 2024–25 school year.
Nearly 72% of college families didn’t know that the 2023-24 FAFSA became available on Oct. 1, 2022, according to a 2023 study by private student loan lender Sallie Mae. If families aren’t ready to go when the new FAFSA is released this year, they could miss out on vital aid to help them cover college expenses.
“We’re dealing with a truncated financial aid season,” says MorraLee Keller, senior director of strategic programming at the National College Attainment Network (NCAN), a nonprofit organization supporting college affordability. Keller says all students should do what they can to be ready when the new simplified FAFSA is released.
Here are steps you can take now to make sure you’re ready to go when the new FAFSA is released in December.
Find your FSA ID
Your Federal Student Aid (FSA) ID is required to complete the FAFSA online, track the status of your application and make any changes and updates. It wasn’t required for the 2023-24 FAFSA, but it’s a must-have for the new one, according to NCAN.
If you’re an incoming first-year student, create your FSA ID by visiting studentaid.gov. If you’re a returning student but forgot your FSA ID, you can retrieve your username or password by selecting “forgot username” or “forgot password” from the login page.
Everyone who touches your FAFSA needs an FSA ID too. Parents and guardians who could access the form without an ID before will need to create one, says Keller — who advises all contributors to set up their FSA ID by this fall to avoid trouble accessing the application when it’s ready.
Track your school’s deadlines
States and schools can have financial aid deadlines much earlier than the FAFSA deadline. Missing an institution’s deadline could mean missing out on aid.
Incoming students can get their college list ready now and keep track of critical deadlines.
Many schools set priority deadlines in March before the relevant academic year, says Dana Kelly, vice president of professional development and institutional compliance for the National Association of Student Financial Aid Administrators. Kelly says this gives colleges a sense of their first-year class and provides incoming students an idea of how much institutional aid they can expect before the May 1 deposit date.
Returning students should double-check their school’s deadlines and renew the FAFSA before then.
Because so much aid is given out on a first-come, first-served basis, you want to get in line for that aid by filling out the FAFSA as early as possible, says Rick Castellano, vice president of corporate communications at Sallie Mae.
Estimate the amount of aid you’re eligible for
Given that colleges and universities will experience a delay in the FAFSA filing process, students should estimate how much federal aid they’re eligible to receive ahead of time using the Federal Student Aid Estimator, says Bradley Barnes, vice provost for enrollment management at the University of Alabama at Birmingham. An updated estimator is expected to be available by this fall.
The Education Department also released a 2024-25 Pell Grant lookup table. It can help you determine if you’re eligible for the need-based Pell Grant, which can give you up to $7,395 per year in aid that doesn’t need to be paid back. To use the table, you’ll need to know:
Your status — dependent or independent student.
Your family size.
Your and/or your parents’ adjusted gross income.
Your legal state of residence.
Contact your school’s financial aid office if you’re expecting less aid
The new FAFSA aims to make more aid available to more families. But this may not be the case for everyone. For example, families with multiple children in college could see significantly less aid. The federal government no longer factors the number of siblings attending college into the need-based calculation.
It’s crucial that families expecting less aid communicate with their financial aid offices, says Kelly. Schools are aware of the changes and understand that some returning students may be negatively impacted. According to Kelly, many schools are working to see what they can do at the institutional level to help.
But it all begins with the FAFSA. Every student can and should apply, whether seeking federal, state or college-level aid. Even if you plan to borrow, the FAFSA is your ticket to federal student loans — which often come with lower interest rates and more protections than private options.
Regardless of your income or what aid you believe you’ll be eligible for, completing the FAFSA is your best option for covering college costs.
The process of getting into college actually starts long before you fill out your first application. In fact, soon after you start high school, it can be a good idea to start laying the groundwork for college, from choosing the right classes to thinking about where you might like to go to figuring out how you’re going to cover the cost.
What follows is a simple five-step, pre-college plan that can help you find, get into, and pay for your dream school.
Preparing For College: A 5-Part Checklist
For many things in life, preparation is the key to success. And this is certainly true when it comes to getting into college. Here are five steps that can help you set yourself up for a successful college experience.
1. Research Your Dream School
One of the first parts of preparing for college is deciding which college or university is right for you. The good news is that there is a school out there for just about everyone. The bad news is that you have so many options that you might be overwhelmed with choices.
Some students know right away that they want to go to the same school their parents went to, while others may be limited to choosing between a few in-state campuses. Regardless of your position, there are some questions you can ask yourself to help narrow down your college search:
What Type of Career Do You Want to Pursue?
One of the first things you might consider is what you hope to do with your degree. If you already know that you want to be an urban planner, then you may want to focus your college search on schools with stellar urban planning programs. Think your dream is too niche?
Whether you want to study auctioneering or Egyptology, there’s likely a program for you. If, on the other hand, you aren’t sure what you want to major in, you may want to look at bigger schools with many different programs where you will be able to take a wide variety of classes. 💡 Quick Tip: When shopping for a private student loan lender, look for benefits that help lower your monthly payment.
Where Do You Want to be Located?
You may also want to consider what type of location you’re looking for in a college experience. Maybe you want to get as far away from home as possible, or maybe you would be more comfortable on a campus within driving distance of your family. Some students choose to live at home and attend a local college in order to save money on living costs. Once you narrow down a location, you can start searching for schools in that area.
Recommended: Should I Go to Community College?
How Many Schools Will You Apply To?
It’s not a bad idea to apply to multiple schools even if you have your heart set on just one. Your dreams and goals can change through the college application process, and a different school may be a better match when it comes time to make a final decision. Plus, the application process can be competitive, and applying to more schools may give you more chance of success in your application.
Recommended: College vs University: What’s the Difference?
2. Plan For the SAT and ACT
Once you know where you want to apply, it is time to get down to business and start preparing for college entrance exams. Some schools require the Scholastic Aptitude Test, known as the SAT, and some schools require American College Testing, known as the ACT. Many schools will accept either one.
The key to working towards a killer score on either test is preparation, preparation, preparation. Whether you’re taking an after-school prep class or studying by yourself, there are lots of resources available online to help you succeed. Both the SAT and the ACT offer free practice tests, and Khan Academy offers a free SAT practice program .
Taking practice tests can help you not only learn the material but can help you get comfortable with the format of the test. This can help you stay calm and confident when test day rolls around.
Recommended: Do Your SAT Scores Really Matter for College?
3. Get Involved In Extracurriculars
In between all that studying, you may want to consider taking some time to get to work in your community. One thing many colleges look for are multi-faceted students who are interested in more than just academics.
That means that getting involved in the community could potentially help you write a strong college application, and it may also help you decide what you want to do with your life. Sports obsessed? You might consider taking up a new sport to round out your classes or volunteering to coach a local youth team.
More into classic literature than shooting hoops? Many schools have programs where you can volunteer to tutor younger students, which can not only help sharpen your skills, but may look great on an application. Whatever you’re into, don’t be afraid to branch out and try something new — you might discover you have a passion for marine biology after organizing a beach clean up day with your classmates.
Recommended: College Planning Checklist for Parents
4. Consider Taking AP Courses
Many schools offer Advanced Placement or “AP” courses. Taking these classes may help you get one step ahead when it comes to college. AP courses allow you to tackle college-level material while you’re still in high school, and at the end of the class (if you pass the AP exam), you could be rewarded with college credits. Why try to rack up college credits in high school?
The more credits you earn from AP classes in high school, the more intro classes you may be able to skip in college. So if you take AP English in high school, you may qualify to skip out on the freshman level English class once you’re at school.
Depending on the school, that may mean that you have more opportunity to take specialized classes in your major, or it could even lead to the opportunity to graduate early.
5. Figure Out Your Finances
There’s no denying that college can be expensive. For the 2022-2023 academic year, the average tuition at a public college was $11,744 for state residents and $21,928 for out-of-state students. The average tuition and fees for a private college was $27,796. Keep in mind: These numbers don’t include the cost of housing, food, text books and supplies.
According to the Sallie Mae How America Pays for College 2023 , parent income and savings covered 50% of college costs. So, even if you’ll get some help from your family, you may need more funding to cover some of the cost of college. Fortunately, there are many ways to finance your education.
A good place to start is by filling out the Free Application for Federal Student Aid (FAFSA), which will let you know if you are eligible for financial aid, including grants, scholarships, work study, and federal student loans. If those do not cover your costs, you may also consider private student loans.
Private student loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.
Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal student loans. But if you are looking for supplemental funding for your education, private student loans are an option. 💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.
The Takeaway
The college application process can be overwhelming. Breaking it down into smaller steps and goals can make it feel a little bit easier. Consider researching schools, making a plan for standardized testing, expanding your involvement in extracurriculars, and taking AP level courses. Getting into college is half the equation, however — the other half is paying for it.
When federal financial aid, scholarships, grants, and savings aren’t enough -– student loans may be one option to consider to help fill in the gaps.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Located just southeast of Tacoma, Puyallup is a charming city known for its flower fields, farming history, and the iconic Washington State Fair. If you’re considering moving to Puyallup, then you may be wondering whether to rent versus buy a home in the area.
If you’re looking to buy a home in Puyallup, the current median sale price for a home is $523,500 as of July. On the other hand, if you’re considering renting an apartment in Puyallup, the average monthly rent for a two-bedroom apartment is $1,808. Depending on your budget and current mortgage rates, it may be that renting is less expensive than buying a home. However, it still may be the right decision for you to buy a home this year.
At the end of the day, making the decision between buying a house or renting an apartment in Puyallup depends on a variety of factors. In this Redfin guide, we will delve into the advantages and disadvantages of both renting and buying in Puyallup, so you’ll have the knowledge to make an informed choice. Let’s get started.
Advantages of buying a home in Puyallup
Investment opportunities
The first advantage of buying in this market is to consider it as an investment. If you do, you’ll likely make money. Appreciation is real, and even if the market slows down, appreciation grows. Equity can be used as a step towards a bigger house in the future, it can be used as cash when refinancing for medical costs, college costs, or just as a long-term retirement to subsidize your 401k.
Tax benefits
Homeownership has benefits, including potential tax benefits. In many instances, it can be a tax write-off, and may reduce your taxable income. Make sure to speak with a tax professional to understand the benefits you may qualify for.
Growth in the area
Puyallup is growing and expanding. What may feel like living in a smaller community now, may not be in a few years.
Disadvantages of buying a home in Puyallup
Low inventory and rising prices
A key disadvantage of currently buying a home in Puyallup, Washington, is the combination of few homes for sale and rising prices.Sellers aren’t selling, creating very low inventory in the market, and as a result, home prices are not decreasing. Many people are waiting for home prices to drop, but what we’re seeing is that prices are still rising.
Not finding your “dream home”
With a high demand for housing and a limited supply of available properties, buyers often find themselves having to settle for a home that may not meet all of their preferences or requirements. The intense competition in the market can lead to bidding wars, driving up prices and putting added pressure on buyers to make quick decisions.
Additionally, low inventory can make it challenging to find a home within a certain budget range or desired location. As a result, buyers may have to compromise on certain aspects, such as the size of the property, home features, or proximity to schools or other amenities, which can be a significant disadvantage when looking for a long-term investment in a home.
Determining if you are ready to buy a house in Puyallup
Depending on your current goals, there are a few additional factors that you may want to consider before deciding if now is the right time to buy a home.
1. Housing market conditions: One of the main factors to consider when buying a home in Puyallup is the housing market. Currently, the housing market in Puyallup is very competitive meaning that you’re likely to see bidding wars and multiple offers. As a result, it’s important to know how much you can afford in today’s market. To gain a better understanding, utilize a home affordability calculator.
2. Financial stability: Before you begin your homebuying journey, it’s important to have a good credit score and a stable income. Make sure you set aside funds to cover your down payment, closing costs, and other costs related to buying a home. It’s also a good plan to have an emergency fund set aside should you have any unforeseen expenses.
3.Long-term commitment: Buying a home is a significant investment compared to renting an apartment – especially when it comes to making a long-term commitment and financially. Therefore, if you’re not planning on living in Puyallup for more than a few years, it may make more sense to continue renting.
4. Personal goals: Finally, you’ll want to evaluate your priorities and figure out your personal goals before beginning the homebuying process. Do you want a home that’s close to amenities or in a more secluded location? Are you looking for a large kitchen or simply more space?
If you’re unsure whether you’re ready to buy, consider consulting with your real estate agent or financial advisor to fully understand your options.
Is it competitive to buy a home in Puyallup?
Yes, the housing market in Puyallup is very competitive. Multiple offers and bidding wars are common, and buyers are quick to write offers as they’ve spent time navigating the current market. Be ready and start working with an agent as soon as you can.
Advantages of renting a home in Puyallup
No maintenance costs
There’s no hassle if the stove stops working – your landlord has to pay for it. The roof is leaking and needs repairs, your landlord has to fix it, and that’s a large out-of-pocket expense you don’t have to consider.
Flexibility
Renting an apartment or house in Puyallup offers the advantage of flexibility. If you’re uncertain about your long-term plans or prefer the freedom to explore different neighborhoods, renting provides the flexibility to move more easily. Whether it’s for career opportunities, personal preferences, or simply a desire for change, renting allows you to adapt your living situation without the long-term commitment of homeownership.
Potential for lower monthly payments
Renting a home in Puyallup may allow you to have lower monthly payments. With the average rent for apartments in the area being around $1,800, it may be more affordable to rent compared to buying a home. To gain a better understanding of your circumstances and make an informed decision, you can utilize a mortgage calculator. You can get an idea of what your monthly mortgage payment may be, allowing you to better compare between renting vs buying a home.
Disadvantages of renting a home in Puyallup
Risk of rent increases
Besides losing out on appreciation and tax benefits, the main disadvantage to renting is that the rent price is out of your control and doesn’t last forever. Your landlord can raise the rent each year. Ask yourself, do you want to move every year because the landlord is raising rent or would you rather live in a home for 30 years with the same mortgage payment with no fear of it raising? As a homeowner, this stable income may help you save money for future events like trips, retirement, and more.
Lack of updates
Another disadvantage to renting is that your landlord may not keep the home updated with new and modern features. Homeownership gives you control to buy and install new features like a smart refrigerator, gas fireplace, new carpet, and eco-friendly flooring.
Renting vs buying in Puyallup: A real estate agent’s final thoughts
I believe that now is a great time to consider buying a home in Puyallup. With available homes that offer negotiation possibilities, you may not have to compete with multiple offers, making the process less competitive. At the end of the day, whether you rent or buy in Puyallup, the area is a wonderful place to call home. If you’re just starting to think about buying a home, make sure you’ve looked through your finances to understand what you can afford now and in the years to come.
Malik Lee, a Georgia-based certified financial planner and managing principal of Felton & Peel Wealth Management, thinks back to being accepted to Morehouse College in 1999 and facing around $20,000 per year in college costs.
While his friends’ parents took out loans to cover education costs, Lee’s grandmother — his legal guardian — declined.
Her response may seem harsh, but looking back with his perspective as a financial professional, Lee describes it as one of the best decisions she’s ever made.
Many of those parents who took out loans for their kid’s education struggled to repay them, Lee says. In some cases, the children are covering the loan payments because the parents can no longer afford them.
Lee imagines his grandmother, now 90 years old, still paying on a loan for his education when retirement should be her priority. Her saying “no” was an amazing decision, he says.
Parent PLUS loans can be harder to repay
Federal parent PLUS loans are available to parents of dependents attending college and are intended to fund education expenses not covered by other federal student aid.
But these loans differ from federal loans taken out by student borrowers in ways that make them harder to repay:
Higher interest rates. The interest rate on parent PLUS loans is 8.05%, compared with 5.5% for federal student loans.
No grace period. Federal student loan borrowers have a six-month grace period before they begin repayment. Repayment for parent PLUS loans begins after the loan is fully paid out.
Fewer repayment options. Parent PLUS loans don’t qualify for the government’s more generous income-driven repayment programs — like Revised Pay As You Earn, Pay As You Earn and Income-Based Repayment. Parents can apply for Income-Contingent Repayment after consolidating to a Direct Loan.
When you couple the tougher loan terms — compared with federal student loans — with the racial wage and wealth disparity that impacts Black families, you get a double-edged sword that limits the economic growth of some of the most vulnerable borrowers, according to a recent brief by the Education Trust, a higher education research and advocacy group based in Washington, D.C.
On average, Black workers earn 22% less than white workers, based on March 2023 weekly earnings data from the Bureau of Labor Statistics. And, regardless of income, Black households are less likely to own financial investments, according to a January 2023 report from the Treasury Department. Black families who do invest hold significantly less value in their assets, compared with white families, the same report concludes.
Black borrowers are dipping into their retirement plans to repay parent PLUS loans, says Brittani Williams, senior policy analyst in higher education for the Education Trust. And that’s undercutting their ability to save for their own futures.
If your child is heading off to college soon, there are ways to support them without falling into a debt trap.
Dive into the financial aid process
The more you can learn about financial aid and funding options, the less likely you’ll overextend yourself and be left with debt you can’t repay.
“Immerse yourself in the financial aid process as much as you’re immersing yourself in the college choice,” says Jackie Cummings Koski, an Ohio-based certified financial planner and financial educator. Koski says financial aid offices can often show you program-specific funding or other need-based dollars available to those who ask.
Making sure your child submits the Free Application for Federal Student Aid, or FAFSA, is a great starting point. But before you or your child accept any money, be sure to visit studentaid.gov to understand the type of federal aid awarded and the terms that come with it.
Set limits on how much you borrow
You can borrow up to the cost of attendance minus any federal aid your child receives. That could mean being asked to foot a pretty hefty bill, depending on what’s awarded to your child.
But you don’t have to borrow the full amount requested.
“Consider not paying for everything,” says Angela Ribuffo, an Alaska-based certified financial planner and president and financial advisor for Raion Financial Strategies. Parents can pay for one year — ideally year four, so they have at least three years to put away money, Ribuffo says. Giving yourself time to save can minimize how much you borrow, if you choose to borrow at all.
You can set limits on how much you borrow based on your income and other financial goals. Use a parent PLUS loan calculator to see how different loan amounts can impact your monthly payment given an 8.05% interest rate.
Always prioritize your retirement savings
As hard as it might be, try not to place funding your child’s education over saving for retirement.
“We’re not saying retirement is more important than your child’s future,” Lee says. “It’s that your retirement has no fail-safe.”
If you must choose between contributing to your child’s education or saving for retirement, Lee recommends being realistic about how the two scenarios can play out. There are more options for a child who cannot pay for college than there are for a retiree who is short on income, Lee says.
Committing to your retirement savings over paying for college could mean your child must find alternative ways to fund their education, and that is OK. Helping them research how to pay for college is still supporting your child on their journey and showing them that their future is important.
A Roth IRA might not be the flashiest way to spend your summer job money, but saving even a small portion of your paycheck could net you huge returns in the future.
The teen employment rate is expected to be 33.6% for summer 2023, based on Rice University’s recent jobs report
. Even more promising — the median wage for workers in the 16-24 age group was up 11.9% year over year in May, according to the Federal Reserve Bank of Atlanta.
As you make plans for that summer job money, here’s why you might consider adding a Roth IRA to the list.
Why open a Roth IRA?
Having a full-time job isn’t required in order to save for retirement. As long as you’re earning money, you can open a Roth IRA at any age.
And, particularly as a first-gen investor, it’s a great chance to start making your money work for you.
“The younger you are, the more time you have to save,” says Luis Rosa, a certified financial planner and founder of Build a Better Financial Future, a financial planning and investment advisory firm. “If you have the opportunity to start saving now, especially in a Roth IRA, and take advantage of not having to pay taxes on it at a future date, then it’s just a great combination.”
That benefit of a Roth IRA can also be its drawback: Because money is contributed after-tax, you don’t get any tax deductions now by saving for retirement. Instead, you get to take the money — and any gains — out tax-free after age 59½ as long as you’ve held the account for five years.
But those tax-free withdrawals are why Yanely Espinal, author of “Mind Your Money” and educational director at the nonprofit Next Gen Personal Finance, is a huge fan of the Roth IRA.
“I call it the G.O.A.T. (greatest of all time) when it comes to investment accounts,” Espinal says, referring to the Roth IRA. “And specifically for first-gen investors, you’re the first generation in your family to get access to the opportunity to build wealth.”
But what about 529 Plans?
If you’re working to save for college tuition and expenses, you might be considering a 529 savings plan instead of a retirement account. When it comes to a 529 plan versus a Roth IRA, which one wins out?
It depends on your situation and needs, and whether you’re planning to apply for financial aid. Money in a 529 savings plan, owned by either you or a parent, is counted as assets when applying for financial aid, but money in a retirement account isn’t.
“When you are a low-income or first-generation student, taking a … hit on your financial aid eligibility is a big deal,” Espinal says. “That could be your textbooks for your first semester or a laptop you need all four years.”
And although a Roth IRA is intended for retirement, it’s possible to access your money before age 59½ without paying a 10% penalty.
College costs fall under the category of “qualified distributions,” but there are catches to be aware of. You’ll owe taxes on any investment earnings withdrawn, and the withdrawals will count as income, which could reduce your financial aid eligibility in following years.
What to look out for in a Roth IRA
If you decide to open a Roth IRA, there are some things to consider, say Rosa and Espinal.
“The No. 1 thing you need to understand,” says Espinal, “is how much is it going to cost me to open an investment account? If it’s not free to open, automatic no.”
From there, both recommend a few more factors to think about:
Is there a minimum balance required to keep the account open?
Do the investments you want to buy have minimums, and how high are they?
Are there fees to keep the account active?
What are the fees, if any, for buying and selling investments?
Espinal also advises paying specific attention to the expense ratio, a term for the fees paid to cover a fund’s expenses, such as management and marketing.
“The expense ratio is an annual cost expressed as a percentage,” she says.
“You want it to be as close to zero as possible. Compare the costs and fees on a per-year basis across different platforms or firms, and go with the one that is going to allow you to keep the most of your money.”
Rosa also cautions young investors about transaction fees.
“If there are fees for trading,” he says, “you might actually churn your account, or trade to the point where the fees are more than any investment return you earned.”
How to invest your Roth IRA
After picking where to open your Roth IRA, the next step is deciding how to invest your money. Rosa is a fan of automating the process where possible.
Set it and forget it
“If you wait until the money hits your bank account to then decide to invest it, there is a chance that something’s going to come up,” Rosa says. “So if you can automate it to, say, on the 15th and 30th of every month, just make it as if it were a bill. A lot of us are already used to paying for video games and other subscriptions, and do the same for yourself and just automate your investment.”
Consider index funds
When it comes to picking what to invest in, Espinal prefers exchange-traded funds, also known as ETFs, and index funds, over individual stocks.
“This gives you automatic diversification,” she says.
Index funds and ETFs are baskets of assets, such as stocks or bonds, that seek to match the performance of a stock market index, such as the Dow Jones Industrial Average.
Rosa says he also recommends funds.
“Find a low-cost index fund that you don’t have to manage yourself and you don’t have to decide what stock to buy and sell,” he says.
Look into fractional shares
If you are interested in individual stocks, Rosa suggests exploring whether a brokerage offers fractional shares.
“You might be able to buy big company stocks without having to buy a whole share of them,” he says.
Digging further into what a brokerage offers is a good way to decide which one will offer you the most return for your money, and what’s feasible based on your circumstances.
The bottom line
For any new investor, and particularly when you’re first-generation, investing can seem complicated, especially if you don’t have anyone around you for guidance. But you can start small with a Roth IRA.
“You’re going to talk to an adult about money,” says Espinal. “That’s something most teenagers don’t do. And you’re learning to invest, even if it’s just starting with the basics, like buying an index fund for $200 inside your Roth IRA. It’s great for exposure.”
And even though retirement can seem like ages away, being strategic with your money now can pay off in the future. For young adults still on the fence about saving for retirement, Rosa’s opinion is: “If they can take some of that summer job money and put it in there, it’s best because they don’t feel the impact of it anytime soon,” he says. “But ultimately, their older self is going to thank them for having put their money in the world and be happy for that tax-free income.”
Protective Life Insurance Company has a great record or working with its clients and can offer some of the best term life insurance rates available.
If you have ever shopped for life insurance, then you are probably well aware that there are several important variables that you should keep in mind when determining how and where to purchase your coverage.
First, at the top of your list, should be knowing how much protection to obtain. This is because you will not want your loved ones or other survivors to fall short when it comes to proceeds. For example, if your beneficiary (or beneficiaries) will need a certain amount to pay for final expenses or other specific debts, then it will be important to purchase at least that amount of coverage.
But equally as important, though, will be ensuring that the life insurance company through which you purchase the protection is strong and stable from a financial standpoint. This is because you will want to know that the company will be there to make good on its promise if or when the time comes for the policy’s beneficiary to file a claim. One insurer that has been positive when it comes to paying out its policyholder claims for many years running is Protective Life Insurance Company.
The History of Protective Life Insurance Company
Protective Life Insurance Company has been in the business of offering life insurance coverage for nearly 110 years. In the year 1907, the company’s founder, Governor William Dorsey Jelks started the insurer, just as President Theodore Roosevelt started his 7th year as a United States President.
Just a short two years later, in 1909, Protective Life Insurance Company paid out its very first death benefit claim – and the company has been faithfully doing so ever since. By the year 1932, after just 25 years in the business, Protective had more than $65 million of insurance in force. And, by the time the company was in business for 50 years, it had nearly $1 billion.
Throughout the years, the company has grown and expanded. In part, it has done so by acquiring other insurers. For instance, in 1997, Protective acquired West Coast Life, which helped in solidifying the insurer’s national presence. And, in 2006, Protective acquired Chase Insurance Group.
By 2007, the insurance carrier’s 100th anniversary, it had more than $252 billion of insurance coverage in force. In 2015, the company became a wholly owned subsidiary of The Dai-ichi Life Insurance Company, Ltd. Protective Life Insurance Company was, and still is, headquartered in Birmingham, Alabama.
Protective Life Insurance Company Review
Protective Life Insurance Company is known for serving its customers first. Based on testimonials, the firm is known for being flexible, as well as for providing dedicated service. Also, it is also very involved in the communities in which it serves.
The company provides a learning center directly on its website. This can help consumers to learn more about life insurance and how much protection that they may need, based on their specific situation.@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-banner-1-0-asloadedmax-width:580px!important;max-height:400px!important
Protective also offers a claims center on its website, as well. Here, claims can be filed directly online. Forms can be downloaded and sent in, and questions may be asked of customer service representatives.
Reps may be contacted in a number of different ways, including via a toll-free telephone line (during business hours), email, and an email form. Business hours for reporting a life insurance claim are Monday through Thursday between 8:00 a.m. and 5:00 p.m. Central time, and Friday between 8:00 a.m. and 3:00 p.m.
Additional information is also provided within the Protective Life Insurance Company online claims filing center, such as details regarding what to do when a loved one dies, and life insurance FAQ.@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-large-leaderboard-2-0-asloadedmax-width:300px!important;max-height:250px!important
Financial Strength and Ratings
Protective Life Insurance Company is considered to be a very strong and stable company from a financial standpoint. It also is well respected for paying out its policyholder claims. In 2015 alone, Protective paid out over 20,000 life insurance claims in the amount of approximately $1.9 billion. The average processing time on a life insurance claim at Protective Life Insurance Company was 6.22 days. For this reason, the company has been given high marks from the insurer ratings agencies. These ratings include the following:
A+ from A.M. Best (Superior) This is the second highest out of a possible 15 total ratings.
AA- from Standard & Poor’s (Very Strong) This is the fourth highest out of a possible 21 total ratings.
A from Fitch (Strong) This is the sixth highest out of a possible 22 total ratings.
A2 from Moody’s (Good) This is the sixth highest out of a possible 21 total ratings.
Although Protective Life Insurance Company is not BBB (Better Business Bureau) accredited, the BBB has provided Protective with the grade of A+. This is on an overall grade scale of A+ to F.
Over the past three years, Protective Life Insurance Company has closed a total of 39 complaints through the BBB. Of these, ten were closed over the past year. Of the 39 complaints that were closed during the past three years, 18 had to do with problems with the company’s products and / or services, 10 were concerning billing and / or collection issues, 3 were with regard to advertising and / or sales issues, another 3 were having to do with guarantee / warranty issues, and five had to do with other issues.
Life Insurance Products Offered Through Protective
Protective Life Insurance Company offers a wide variety of different life insurance policies to choose from. This can help its customers to gear coverage more towards their individual protection needs.
Policy types offered through Protective include the following:
Term Life Insurance
Term life insurance can provide level death benefit protection for a set amount of time. This type of life insurance doesn’t offer cash value build up, so it is often more affordable than a comparable amount of permanent insurance such as whole life or universal life coverage. Therefore, it can be a good option for those who want a nice amount of coverage, but who may not have a lot to spend in premium.
Protective Life Insurance Company offers term life insurance plans that range from 10 to 30 years in level death benefit protection.
Universal Life (UL) Insurance
Universal life insurance is a form of permanent life insurance coverage. This means that it provides both death benefit protection, as well as cash value build up. The cash value will grow tax-deferred, meaning that there is no tax due on the gain unless or until the time that it is withdrawn by the policyholder. This can allow the funds to grow and compound exponentially over time.
A universal life insurance policy can be more flexible than some other types of permanent coverage like whole life insurance. This is because the policyholder can choose – within limits – how much of their premium dollars will go towards the death benefit, and how much will go towards the cash component of the UL policy.
@media(min-width:0px)#div-gpt-ad-goodfinancialcents_com-leader-1-0-asloadedmax-width:728px!important;max-height:90px!importantThe Protective Life Insurance Company’s Custom Choice UL policy is a very affordable way to protect one’s family’s financial security if the unexpected were to occur. It offers low premiums for life, as well as a death benefit that is non-taxable (from income tax) to beneficiaries.
The premium rates can start as low as $7.32 per month – and, provided that the premium is paid, the coverage will remain in force for the remainder of the life of the insured. Also, the premium will also remain level for an extended period.
Protective Life Insurance Company also offers a survivor universal life insurance product. This could be a good option for someone who is married or part of a couple and has estate planning needs, such as helping beneficiaries to pay estate taxes and / or helping a loved one with special needs.
These types of policies are also often referred to as second-to-die or joint life insurance coverage. They cover two individuals under just one single life insurance policy – and because of that, they are often less costly than purchasing two single policies. The death benefit that is paid out will be free of income tax to the beneficiary (or beneficiaries), and the proceeds may be used for whatever needs the survivor or survivors may have.
Variable Life Insurance
Variable life insurance is another type of permanent life insurance coverage. With variable UL, there is also a death benefit and a cash value component. However, with this type of insurance coverage, there is additional flexibility with the investments that can be chosen in the cash component. For example, equities may be chosen, which can allow for additional growth. They can, however, also pose more risk. Therefore, it is important to be aware of this before getting into any variable life insurance product.
Overall, a variable universal life insurance policy will essentially combine the “core” benefit of life insurance coverage via an income tax-free death benefit, along with a great deal of flexibility for the policyholder / investor in terms of cash value / investment build up over time. It is important to note that there may also be additional fees with variable universal life insurance because of the investments that are included in the policy.
Other Coverage Products Offered
Protective Life Insurance Company also offers a Protect My Child life insurance policy. While most people do not want to ever think about the passing of a child, the truth is that sometimes accidents or illnesses do occur. In this case, the cost of final expenses and / or uncovered medical expenses can be paid through a life insurance policy on a child.
The Protect My Child policy offers coverage of between $10,000 and $100,000. Because the policy is a permanent life insurance policy, it will also have cash value build up. Therefore, the plan will have tax-deferred savings that may be used for future college costs, the down payment on a house, a wedding, or any other need down the road.
When the child turns age 18, the amount of the life insurance coverage will automatically double – at no additional premium cost. When purchasing the Protect My Child life insurance plan, premium rates can start as low as $6.37 per month. And, because the policy is permanent, the rate is locked in never to increase. This means that the child can keep this same premium rate throughout the lifetime of the policy.
How to Find the Best Premium Quotes on Life Insurance Coverage
When seeking the very best premium quotes on life insurance coverage, whether it is through Protective Life Insurance Company, Banner Life Insurance, or any other insurer, it is typically best to do so via an agency or a company that works with more than just one life insurer. This is so that you will be able to compare and contrast all of the options that are available to you, as well as the cost of each. This is not only true when seeking the best life insurance coverage but for when shopping for other forms of coverage as well such as the best auto insurance companies and rates.
We know that buying life insurance can be somewhat confusing, There are lots of details to keep in mind – and you want to be sure that you are getting the very best deal from the best insurer for your needs. We can help you in sorting it all out so that your coverage will best meet the protection requirements that you have. We can do it all without you having to meet in person with a life insurance agent. Just simply go online or give us a call. So, contact us today – we’re here to help.
We financial planners and financial writers love to trot out hypothetical illustrations along the lines of “If you save 20% of your income starting at age 40, you’ll be able to retire by your late 60s, assuming an 8% rate of return” — a scenario I wrote about in March. While such projections are necessary for planning for the future, the truth is that they will most definitely be wrong once the future rolls around. There are just too many unknowable variables, such as future investment returns, inflation rates, and tax rates.
However, the unknowable unknowns aren’t just limited to economic variables, as readers often remind me after I write such an article. Here’s a tale a GRS reader told in the comments section after my March post:
In 1996 I had $78,000 in retirement funds and was 32 years old (hubby was 38). Then our home was flooded because a contractor doing a city project made a mistake. While struggling with being unable to live in the house, I was diagnosed with cancer and needed surgery ([we had] no insurance). Within a year I had cashed out the $78,000 to begin rebuilding the house and pay for surgery (we recouped a very small portion of the loss from the contractor). We sold the house and walked away with $11,000 to our name. That was in 1998.
We’ve tried to get back on track, but every time I save, something happens to eat it up: chronic illness, cost of experimental medication, hurricane and tornado damage to home over three years (part not covered by insurance), and more. Life lesson for us: Continue to save because it’s the responsible thing to do. Plan for the future, but be prepared for something to get in the way of those plans.
A sad story with an important lesson: Along your road to retirement, you may encounter speed bumps, fender-benders, road blocks, and perhaps outright tragedies. While many will be unpreventable, the financial fallout can be mitigated.
In this post, we discuss the most common causes of financial derailment, and what you can do to keep your plan on course. While many of the solutions are specific to each particular risk, there’s one line of defense that will protect your financial empire regardless of the method of assault, and that is a big, fat emergency fund. You’ve heard it before, but we’ll say it again: Have three to six months’ worth of living expenses in cash, ready to be deployed when the possible becomes the present.
Illnesses and Accidents Health problems are expensive and can impair a person’s ability to earn a paycheck. They can also force older Americans into retirement earlier than planned. Studies indicate that as many as 45% of current retirees quit work due to health problems or disability. The haleness and heartiness of a household’s breadwinner(s) aren’t the only factor; the health problems of other relatives, such as children or elderly relatives, can consume savings and impede a career.
Your defense As the sad tale of the above GRS reader shows, being diagnosed with a serious disease while lacking health insurance can lead to financial disaster. Being properly insured is an absolute necessity. However, no insurance policy covers all procedures and all costs. Reduce the burden of out-of-pocket expenses by participating in your employer’s flexible-spending plan, if offered, which allows you to set aside money for qualified health-care expenses. The money you contribute is not subject to income or payroll taxes.
The decision to acquire disability insurance, which replaces your paycheck in case you’re unable to work, is not as clear-cut. You already have some coverage through Social Security, though the definition of disability is very stringent. You may also have coverage through your employer. If you decide to purchase disability insurance for yourself, you’ll find that it can be expensive and complicated. However, the more your job requires that you be in good physical shape (e.g., traveling, meeting with clients, holding a scalpel, violin, or other tool), the more you should consider disability insurance. Many employers, professional associations, and other groups offer group disability policies, which can be less expensive and easier to qualify for.
Finally, one of the best ways to keep health-care costs down is to be healthy. As much as 70% of health-care costs are due to lifestyle choices — eating too much, moving too little, and putting things in our mouths that smoke, impair, or bear no resemblance to anything in nature.
Job Loss Once the boss stops sending a paycheck, either due to a layoff or company collapse, contributions to the 401(k) also stop. Depending on the person’s employment prospects, it may also be just a matter of time before debt piles up or the nest egg is cracked to cover living expenses. It’s a recipe for a delayed retirement.
But it’s not only the unemployed who find it harder to save for retirement. These days, income insecurity also takes the form of stagnant or reduced wages, while the costs of many goods and services keep rising. In many cases, the first item in the budget that gets sacrificed is contributions to the 401(k) or IRA.
Your defense Strengthening and expanding human capital is one of the most under-appreciated concepts in financial planning. To shore up your ability to turn your talents into dollars, develop multiple skills, stay on top of the trends in your company and its industry, and become crucial to your employer or, if you’re self-employed, your customers.
Loss of a Spouse Whether through death or divorce, the loss of a spouse can be emotionally and financially devastating. Most married household finances are built on two incomes, or one income and one spouse who does a lot of work that otherwise would cost money (e.g., raising kids). Then there’s the division of labor; it’s common for one spouse to handle all the bills or one to handle all the investing, with the other spouse being fairly ignorant of what’s going on. A death or divorce can leave a spouse on her or his own, often getting by on less income and having to assume all the financial housework.
Your defense If the death of a spouse would lead to significant financial hardship, then that spouse should have life insurance. Also, don’t be in the dark about important aspects of financial planning; each spouse has to at least know enough to step in during an emergency. One subscriber to my newsletter (a man who handles most of the financial duties in his household) annually updates a document he calls “A Letter From Your Dead Husband,” which explains the family finances to his wife in the case of his untimely demise.
As for divorce, it’s not very romantic to plan for your marriage’s dissolution. But if your matrimony is full of acrimony, begin by protecting yourself while still being fair to your spouse. If you’re engaged, a prenuptial agreement can be a delicate topic but a good idea, especially if there are kids from previous relationships.
Natural Disaster The tsunamis in Japan and tornadoes throughout America demonstrate that Mother Nature is a risk to everyone’s financial plan.
Your defense Have enough homeowners or renters insurance, with an insurer that has a record of honoring legitimate claims. Inventory all your possessions, with proof of ownership for big-ticket items, so you can substantiate your claims if necessary. Keep copies in several places, including in a fireproof safe or safety deposit box, along with other valuable items so that they’ll have some extra protection from the elements (as well as thieves).
Kids It costs $260,700 to raise a kid until age 17, according to the Department of Agriculture (because there’s little difference between a cow and a kid). And that doesn’t factor in college costs. Yes, children are their own form of natural disaster, at least when it comes to money. (Don’t get me started on the hair loss.)
Your defense Scientists are working on a cure. In the meantime, enjoy all the non-financial benefits of reproducing or adopting. Such as an excuse to play Candyland and Chutes & Ladder, again… and again… and again.
After years of speculation and debates, President Biden finally announced that he’d be fulfilling a campaign promise to cancel some student debt.
The plan could bring relief to over 43 million borrowers with an average $30,000 debt outstanding.
So, do you qualify for Biden’s student loan forgiveness plan? How much of your debt will be forgiven? How will it affect your monthly payments, and what relief is there for future borrowers?
Here’s everything you need to know about Biden’s student loan forgiveness plan!
What’s Ahead:
Biden’s student loan forgiveness plan
On Aug. 24, President Biden announced that the federal government would forgive $10,000 in student loan debt for qualified borrowers making under $125,000 as a single filer or $250,000 as a household.
If you received a Pell Grant, you could qualify for an extra $10,000 in forgiveness.
Biden also proposed a new income-driven repayment (IDR) plan that would lower payments on undergraduate loans from 10% or 15% of your monthly discretionary income to just 5%.
Overall, the Biden administration estimates the new plan will provide relief for up to 43 million borrowers. Here’s the full White House Fact Sheet.
December 2022 update
Now, if you were looking forward to having up to $20,000 of your student loans forgiven, you might feel deflated by some recent, grim-sounding headlines.
Headlines featuring words like “Lawsuit,” “Challenged,” and “Frozen.”
I was actually speaking to a group of college students about financial wellness right as the program was blocked. I was explaining how the program was in legal jeopardy, and that anyone interested should apply ASAP when a student politely raised his hand and said:
“Uh… the site is down right now.”
TL;DR: What happened?
The program is facing two high-profile lawsuits: one from six Republican-led states, and one from a pair of borrowers who didn’t qualify for full relief. As a result, student loan relief can’t proceed until both suits play out in court sometime next year.
In other words, it’s in limbo and nobody has received relief yet.
Who’s trying to block student loan forgiveness, and why?
Well, as you might recall, not everyone was happy to hear about Biden’s program. Some called it a Band-Aid on a bigger problem, and others said it was straight up unlawful.
But most of the students I spoke with didn’t care too much for the overarching politics. I’ll just take my $10k, thanks. They were among the 26 million who applied for relief before the site went down, 16 million of which had already been approved by the Biden administration.
Unfortunately, before the $400 billion relief train could arrive at the station, a federal judge based in Texas yanked on the brakes. U.S. District Judge Mark Pittman struck the program down on Nov. 10, barring its implementation and forcing an indefinite hold on new applications.
Judge Pittman was acting on behalf of a lawsuit filed by conservative interest group the Job Creators Network Foundation, which itself wrote up the suit based on complaints filed by two borrowers. One didn’t qualify for relief because her loans were privately held, and the other complained he was only eligible for $10,000 because he wasn’t a Pell Grant recipient.
The lawsuit alleges that the program unlawfully skipped right over the step where citizens provide feedback on proposed federal programs — a rule made sacred by the Administrative Procedure Act.
“This ruling protects the rule of law which requires all Americans to have their voices heard by their federal government,” said Elaine Parker, president of Job Creators Network Foundation.
“The program is thus an unconstitutional exercise of Congress’s legislative power and must be vacated,” wrote Judge Pittman.
So that’s big lawsuit/roadblock no. 1.
Big lawsuit/roadblock no. 2 comes from six whole states. GOP-led Arkansas, Iowa, Kansas, Missouri, Nebraska, and South Carolina collectively filed a lawsuit challenging Biden’s authority to cancel student debt. Technically their complaint preceded Judge Pittman’s, but wasn’t granted a preliminary injunction (read: taken super seriously) until Nov. 14.
Though both lawsuits have the same throughline — that this is an overreach of executive power — the Republican-led states also add that this high amount of debt relief could negatively impact tax revenue.
This echoes several earlier lawsuits that were eventually thrown out. One came from a Wisconsin taxpayers group alleging that this would dip too far into the U.S. Treasury. Another came from Arizona Attorney General Mark Brnovich, who asserted that the plan would hurt recruitment of public sector employees by erasing incentives provided by Public Service Loan Forgiveness.
In short, a lotta folks are trying to block Biden’s student loan forgiveness program. And while most lawsuits have fizzled out in the lower courts, the two big suits described above made it through the gauntlet and pose a real threat to the program’s survival.
So what happens now?
Well, it could take weeks or months for these two big lawsuits to play out in court. And until then, the 8th U.S. Circuit Court of Appeals has blocked the Biden Administration from providing a penny of debt relief — or even taking new applications.
That said, the program isn’t canceled; it’s just on pause until litigation gets resolved. It’s entirely possible that these suits will fizzle out just like the others, and that you’ll get your $10k or $20k by mid-2023.
It’s also possible that these efforts will succeed and student loan forgiveness will be blocked indefinitely. Or that the lawsuits will be drawn out until 2024.
Point being, hope for the best and plan for the worst.
What about repayment extensions?
If there’s a silver lining for borrowers, it’s that the program’s legal challenges gave Biden the opening to further extend the pause on repayments.
On Nov. 28, he announced that federal student loan payments would be paused until 60 days after the lawsuits are resolved. They were previously scheduled to resume on Jan. 1.
As a borrower, what steps should you take as you wait?
Here are four steps every borrower can take as you wait for all this to be resolved:
Read the rest of this guide — As of now, the terms of the original plan are exactly the same. So be sure to educate yourself on whether or not you qualify and for how much.
Subscribe to updates — The U.S. Department of Education has two newsletters I’d recommend: Federal Student Loan Borrower Updates and Top News from the Department. They’re the top two on this list.
Don’t plan on receiving relief — There’s nothing wrong with crossing your fingers, but don’t plan your 2023 budget around debt relief since it isn’t guaranteed.
Shrink your debt in other ways — Check out our guide on how to manage student loan debt for ways to manage your debt and pay it off faster.
Who exactly qualifies?
Here are the qualifications for receiving $10,000 in student loan forgiveness:
You’re a single filer with an adjusted gross income of under $125,000 on either your 2020 or 2021 tax returns. For joint filers or heads of household, that number rises to $250,000.
You took out a federal student loan, including PLUS loans. Loans taken out by you or your parents on your behalf both qualify.
You took out your loan prior to June 30, 2022.
If you meet the above requirements and you received a Pell Grant, you may qualify for an additional $10,000 in relief for a total of $20,000.
Which loan types qualify?
Most types of federal student loan debt qualify. That includes:
Direct loans (subsidized and unsubsidized)
Direct PLUS loans, including Grad Plus and Parent Plus loans
Direct consolidation loans
Some (but not all) Federal Family Education Loans
The trick with Federal Family Education Loans (FFEL) is that some are held by private companies. If your FFEL qualified for the payment pause in 2020, it may qualify for forgiveness. If it didn’t qualify for the payment pause, that’s a sign that it’s privately held and won’t immediately qualify for the $10,000.
That being said, there’s still hope. The Washington Post reports that the Biden Administration is working with private FFEL lenders to see if they can fold their borrowers into the relief program.
Will I get the full amount? Or is there a sliding scale?
If you meet the above qualifications, you will get the full $10,000 in forgiveness ($20,000 for a Pell Grant).
There is no sliding scale based on income, or anything like that.
What steps do I have to take? Or is it automatic?
It depends.
If the Department of Education already has your income information from 2020 and/or 2021, you’ll automatically qualify. According to the Biden administration, they already have income information from 8 million out of 43 million qualified relief candidates.
If you qualify but you’re not sure if the DoE has your income information, you’ll soon be able to fill out a form that certifies your qualification.
The form is scheduled to release sometime between now and when the repayment freeze expires. You can subscribe here for Department of Education updates — be sure to check the first box for Federal Student Loan Borrower Updates.
You’ll also want to double-check that your loan servicer has your latest contact and address information. If you’re not sure who your loan servicer is, check here on the DoE’s official page.
How will student loan forgiveness affect my remaining monthly payments?
It kind of depends on how your loan servicer wants to interpret the loan forgiveness program. At the time of this writing, we’re not sure if the bulk of them will choose to:
Lower the amount you have to pay each month, or
Keep your monthly payments the same and shorten your term.
They may end up letting borrowers choose, but again, who knows? The New York Times asked Scott Buchanan, executive director of Student Loan Servicing Alliance, what borrowers should expect. His response was basically:
“¯_(ツ)_/¯ “
We do know that if you’re on an income-driven repayment (IDR) plan, any amount of forgiveness you receive probably won’t shrink your monthly payments since your payments are income-based, not balance-based.
That being said, Biden has big changes in store for IDR plans, too.
What about the updates to the income-driven repayment (IDR) plan?
If you’re on an IDR plan like PAYE, REPAYE, ICR, etc., you’re probably used to paying 10%, 15%, or even 20% of your discretionary monthly income towards your student loan balance.
While capping your required payments is helpful, even 10% can be pretty steep for low-income borrowers struggling to make ends meet as the cost of living rises.
Read more: How little can you live on in 2022?
That’s why the Biden administration has proposed a new rule that would cap monthly payments at 5% of your monthly discretionary income versus 10% or higher. The new rule would also raise the amount considered “non-discretionary” and forgive balances after 10 years of payments instead of 20.
The rule is expected to take effect in summer 2023.
Will I have to pay taxes on my student loan forgiveness?
Nope! Congress eliminated taxes on loan forgiveness through 2025.
Will the student loan repayment freeze be extended (again)?
Yep!
The student loan repayment freeze that began in 2020 was originally slated to expire on Aug. 31, 2022, then bumped to Dec. 31, 2022, has now been extended again pending the lawsuits.
Payments are paused until 60 days after the lawsuits are resolved. If that hasn’t happened by June 30, 2023, payments will resume on Sept. 1, 2023.
Should I hold off on refinancing until forgiveness kicks in?
Oh, most definitely.
Generally speaking, refinancing your federal student loans with a private lender only makes sense when you qualify for a much lower interest rate than you’re currently paying, as is often the case when your credit score rises.
But private loans often lack some or all of the protections of federal loans, such as payment freezes and income-driven repayment plans. That’s why refinancing federal student loans with a private lender should be a careful, calculated decision.
Check out our full guide on student loan refinance options for more info.
And even if you qualify for a lower interest rate — say, 3% versus 7% — that’s not enough to offset $10,000 in instant forgiveness. Wait for the Department of Education to knock $10k off your principal, and then reassess your options.
I paid off my loans during the freeze. Is there any kind of relief for me?
Actually, yes!
If you:
Meet the qualifications for loan forgiveness, and
Made student loan payments after March 13, 2020,
you’re actually eligible for a refund! The Department of Education advises that you contact your loan servicer to request your refund and get the ball rolling.
I haven’t applied for student loans yet. Is there any relief for future borrowers?
There’s no direct monetary relief for borrowers who took out loans after June 30, 2022, or plan to in the future. That means if you borrow $50,000 this fall, you won’t automatically get a $10,000 discount on your principal.
That being said, the Biden administration claims that three new policy adjustments can improve the outlook for future borrowers:
Setting an income-driven repayment plan at 5% instead of the standard 10% to cut required monthly payments in half
Fixing the “broken” Public Service Loan Forgiveness program to broaden who qualifies for forgiveness, and overall streamline a complex and messy system
“Holding schools accountable when they hike up prices,” thereby strengthening overall accountability “to ensure student borrowers get value for their college costs”
For more on how to make college more affordable, check out:
The bottom line
If Biden’s plan means you’re suddenly debt-free, you might start having a little extra capital at the end of the month to invest.
So where should you put it?
Well, you’re definitely in the right place to find out! Check out: