poverty

Apache is functioning normally

More than one in five adults age 65 and older reported not taking medications as prescribed due to cost, according to a 2023 study published in JAMA Network Open.

There’s help available, but many beneficiaries might not be aware of their options.

“Far too many people don’t know that there are resources out there to help them,” says Amy Niles, chief mission officer at the PAN Foundation, a nonprofit organization that helps people get needed prescription drugs and medical treatments.

Here are three potential resources that might help you or a loved one afford medications with Medicare Part D.

Still deciding on the right carrier? Compare Medicare Part D Plans

1. Government assistance programs

If you qualify, Medicare’s Extra Help program covers all costs for your Medicare Part D plan and covered prescription drugs, with the exception of copays of up to $11.20 per drug in 2024.

The eligibility requirements for Extra Help are fairly strict. The income limit is $22,590 per year for an individual or $30,660 for a married couple in 2024, which is 150% of the federal poverty level. There are also limits on resources, the label given to assets you own and convert to cash to support yourself if needed, such as bank accounts, retirement funds, stocks and bonds.

Extra Help enrollment isn’t automatic, and many people might be missing out because they haven’t applied. “Three million people are eligible for the program but not yet enrolled,” according to a February 2024 press release from the Centers for Medicare & Medicaid Services.

“Medicare Part D beneficiaries should apply for all Medicare Savings Programs, including Extra Help,” Michele McCourt, executive director of CancerCare’s Co-Payment Assistance Foundation, said in an email.

Most states also have a pharmaceutical assistance program and/or some kind of discount prescription program. Benefits and eligibility requirements vary, but it’s a good idea to look into what’s available where you live.

2. Help from foundations

Nongovernmental organizations can help if you or a loved one are struggling to afford health care. For example, the PAN Foundation offers assistance across about 80 different disease funds, Niles says, and the “overwhelming majority” of people who receive its financial assistance are Medicare beneficiaries.

These charitable foundations might be more flexible on eligibility requirements than government programs. For example, Niles says the PAN Foundation usually can offer assistance to people at or below 400% to 500% of the federal poverty level. (500% of the FPL is $75,300 per year for an individual or $102,200 for a married couple in 2024.)

If you’re not sure about Extra Help eligibility, McCourt said it may be best to apply for Extra Help and help from foundations at the same time. (If you find you’re eligible for Extra Help, contact the foundations to let them know you no longer need assistance, she suggested.)

Foundations often offer help with more than just prescription drug costs, too. Assistance might be available for health insurance premiums, transportation, lodging, childcare or pet care, for example, as well as counseling, navigating insurance rules, and referrals and coordination with other patient advocacy and assistance groups.

The PAN Foundation, Accessia Health and CancerCare are three charitable organizations that might be able to help patients struggling with costly prescription drugs or other medical expenses. Other options include the HealthWell Foundation, Good Days and the National Organization for Rare Disorders.

The foundations’ websites offer details on eligibility and application processes for their individual programs.

3. A new $2,000 out-of-pocket cap

Medicare Part D will have a new $2,000 out-of-pocket cap on copays, coinsurance and deductibles for covered prescription drugs starting in 2025. But many beneficiaries might not know this change is coming.

Only about 40% of registered voters age 65 and older are aware of the law capping out-of-pocket prescription drug costs, according to an April-May 2024 tracking poll by KFF, a health policy nonprofit.

“The $2,000 out-of-pocket cap will have a significant impact on beneficiaries,” Anna Brown, vice president of marketing and communications for patient assistance nonprofit Accessia Health, said in an email.

“However, it’s important to acknowledge that while the $2,000 cap increases affordability for Americans, we know that many will still struggle to afford even this reduced out-of-pocket maximum, especially those with chronic and rare medical conditions,” Brown said.

Both Brown and Niles indicated that their organizations are committed to continued advocacy, education and direct support to make Medicare prescription drug coverage even more affordable in the future.

Source: nerdwallet.com

Apache is functioning normally

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Understand how first-gen Americans can achieve financial success with tips for balancing cultural obligations and wealth-building strategies.

How can first-generation Americans grow their wealth and protect their money? How can you set financial boundaries with family and friends while staying committed to your long-term financial goals? Hosts Sean Pyles and Kim Palmer discuss the unique financial challenges faced by first-generation Americans and immigrant families to help you understand strategies for achieving financial independence. They begin with a discussion of tips and tricks on managing dual financial pressures of supporting oneself and one’s parents and breaking cycles of poverty through self-compassion and financial education.

Jannese Torres, host of the personal finance podcast Yo Quiero Dinero, joins Kim to discuss the importance of building a strong financial support network tailored to individual needs. They discuss strategies for identifying trustworthy financial advisors, setting and maintaining financial boundaries with family and friends, and gracefully declining costly invitations in favor of ensuring long-term financial success. This episode is essential listening for anyone navigating cultural and familial obligations while striving for financial independence.

Check out this episode on your favorite podcast platform, including:

NerdWallet stories related to this episode:

Episode transcript

This transcript was generated from podcast audio by an AI tool.

Sean Pyles:

Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.

Kim Palmer:

And I’m Kim Palmer.

Sean Pyles:

On Smart Money, we are all about answering your money questions, and today we’re tackling an important one: How can first-generation Americans grow their wealth and protect their money? Kim, in her role as the host of our regular book club series, is here to guide the conversation. So Kim, who are you talking with?

Kim Palmer:

I am speaking with Jannese Torres, author of the new book, Financially Lit!: The Modern Latina’s Guide to Level Up Your Dinero & Become Financially Poderosa. She is also the host of the personal finance podcast Yo Quiero Dinero, and we are joined by my fellow Nerd Melissa Lambarena, a writer on the credit cards team, who also serves as an English and Spanish language spokesperson here at NerdWallet.

Sean Pyles:

Sounds great. Well, I will let you all take things from here.

Kim Palmer:

Great. Thank you. Jannese, thank you so much for joining Melissa and me today.

Jannese Torres:

Thank you so much for having me. Excited to be here.

Kim Palmer:

Let’s start with what’s unique about money for first-generation Americans and immigrant families. You write about how money is often not talked about, for example. Can you share some of those financial challenges that first-generation Americans often face?

Jannese Torres:

Absolutely. So I think at its core, it can start with something as simple as the language barrier. For many first-gen kids, we could be the family translators, oftentimes in financial situations. And so it’s not uncommon for us to take on the responsibility of helping our parents file their tax returns, navigate balancing a checkbook, or any number of other financial tasks that, for folks who can speak English, it’s just so much easier to do that.

So that’s one thing. But then I think there’s a lot of, maybe I would call them cultural nuances, that make the financial industry and first-gen communities kind of be at odds in a way. And I think some of that comes from the fact that there is this lack of culturally competent education and information oftentimes. It’s really even really hard to find alternate language content from a banking institution or a financial institution.

And also, there’s a lot of trauma associated with finances, especially if your parents have come from another country where maybe the economic situation is not as stable. There’s a big mistrust of financial institutions. So a lot of those things can compound in a way that make us very fearful of money and also the institutions that control it.

Melissa Lambarena:

I can definitely relate to that as a first-generation American, having to help my parents with a lot of these, figuring out different documents and a lot of these financial questions. Another thing that impacts us is that we might have to save for our own future, but also support parents who lack retirement savings in the present. And this is something that you talk about in your book. What do you see or want for people who find themselves in this situation?

Jannese Torres:

Well, I think first off, it requires a lot of self-compassion because what I find is there can be a lot of resentment and frustration amongst first-gen kids who feel like, well, why didn’t mom and dad do better? And it’s like we have to have the context and understand that they couldn’t do what they didn’t know. It’s not like financial literacy information is pervasive regardless of where you’re from, but especially when you’re from an immigrant community.

And so I like to refer to the oxygen mask analogy, for especially first-gen kids, because at the end of the day, the foundation that you are building as a wealth builder is only going to be as stable as you make it. If you overextend yourself or just find yourself continuously helping everybody else, but at the expense of your own future self, then it’s just going to perpetuate this cycle of poverty and struggle and feeling like we keep working towards a goal that we never actually achieve.

So I do recommend that folks prioritize their own financial stability. But then also, if you know that you’re going to be in a position to have to financially take care of someone, start having those conversations early and often so that you can start to understand the scope of what that’s going to look like and then make a plan accordingly.

Kim Palmer:

In the foreword of your book, it notes that a lot of personal finance publishers really have a blind spot, and they’re mainly writing for wealthy, white older readers. When did you realize the need for a podcast and a book like yours, and what kind of questions do you get from listeners that they might not hear anywhere else?

Jannese Torres:

I’ve been consuming personal finance content since 2016. And after about three years, I realized that the voices just didn’t 100% resonate with my lived experience as a first-gen Latina. And so that’s when I decided to stick my foot in and decide to launch the podcast, which inevitably led to my opportunity to write this book.

It’s definitely been inspired by the numerous conversations that I’ve had on the podcast where folks feel a lot of imposter syndrome for wanting wealth, a lot of fear because there is that lack of knowledge and a lack of trustworthy resources that we can go to, to learn more about this information. And I have found that it really moves the needle when people can hear stories from folks that they can resonate with.

And that’s why I think it’s so important to have that cultural context when we’re talking about money. Because for example, I think a lot of the mainstream personal finance content is very individualistic-based, especially here in America. Whereas for a lot of communities of color, it’s not unheard of to have multigenerational households where people are contributing collectively towards financial goals.

And just the idea of the bootstraps narrative and picking yourself up and working hard, but just for yourself, it doesn’t really align with how we operate most often in our communities.

Melissa Lambarena:

And financial trauma is something that you approach in your book that is often not seen across many personal finance books. Is this something that is left out of other personal finance books, and how can people get to the root of their financial trauma to make progress on their financial goals?

Jannese Torres:

I mean, I think the whole conversation around mental health and money is something that it needs to be more prevalent. Because I’ve found time and time again that it doesn’t matter if you tell somebody what they should be doing, whether it’s budgeting, saving, or investing — if they have mental health issues and financial trauma, that is going to prevent them from taking those steps. And so getting to the root of your money beliefs is a critical part of this whole journey.

For me, it was really important to include that information in the book. One of the things that I do is I walk readers through understanding where those narratives that we have internalized come from. If you have a perception that wealth is somehow intrinsically bad or immoral, did you grow up in a household where maybe that was the messaging from a religious aspect? Or did you see your parents fighting over money, and so it makes you afraid to talk about it with your partner? All of those things are subconsciously impacting how we operate with money, and I think it’s important for folks to have that context because oftentimes there’s just this shame and guilt that we feel about us not being able to make progress. But you have to understand why you feel the way you do about money before you can start to change those narratives.

Kim Palmer:

I totally agree. I’m so glad that we’re having those conversations more now. I don’t know if you’ve noticed this too, but I do feel like in the personal finance space, people are willing to talk about the mental health side of things more. It seems like something that’s coming up more often.

Jannese Torres:

Absolutely. I think there is less of a stigma when it comes to just talking about mental health in general, but I think that has not necessarily been at the same pace depending on where you’re from. I think for especially communities of color, there still is a lot of stigma about first talking about mental health and then letting folks know that you might be working with a therapist.

So I think the more that we normalize these conversations, the less they’ll be taboo, and the more open that people can be. Because you often realize once you start talking to other folks, there’s a lot of people that are going through the same exact emotions, and it just helps you feel less alone when you know that there are safe spaces where you can talk about this.

Kim Palmer:

Yes, absolutely. You also write about the importance of making yourself more financially secure with multiple income streams. And I love your personal story with this, how your side hustle started with a blog. So I’d love if you can share how your own side hustle helped you after an unexpected job loss and why it’s so important to have those multiple income streams.

Jannese Torres:

So I consider myself an elder millennial. I graduated about six months before the Great Recession. And so even though I went to school and got a degree in order to “get the stable job,” I did not experience that as soon as I got into the workforce. I found a lot of folks having unexpected layoffs.

And seeing especially people who had dedicated 20, 30 years plus to a company and be walked out the door with nothing more than a thank you and a box to collect their things, I think that for me was a very jarring realization at a young age that maybe it’s just not so stable out here in the corporate world. I always had that in the back of my head that I did want to diversify my income.

And then when I got laid off in January of 2014, it was confirmation of all these feelings that I’d had about just not putting all your eggs in one basket when it comes to your financial stability. I had been dabbling with content creation with the blog in early 2013. And when I got laid off, I took a couple of months. Instead of rushing back to get another job, I decided to double down and really learn on how you could turn an online content-based blog into an actual business.

And so I started learning about things like affiliate marketing and brand partnerships and how do you put ads on your website. And so that led me down a rabbit hole of entrepreneurship, which led me into the personal finance space. It’s been a really interesting experience seeing how you can have the power to create your own income streams just with ideas that you come up with with your head.

I like to encourage folks to really take a look at their skill sets, whether those are personal or professional skills, and see how you can turn them into a side hustle. Because at the bare minimum, you’ll be able to make extra money to pay off debt or save and invest. Best-case scenario is you might be building your new career.

Kim Palmer:

For sure. And then, as you found, if your main job source or source of income disappears, you have that to fall back on.

Jannese Torres:

Absolutely. There’s just a sense of power that comes from knowing that nobody can mess with you financially, especially if you have different ways of making money.

Kim Palmer:

Yes, I love that.

Melissa Lambarena:

I think a lot of our listeners are going to be inspired by that story. It’s important to stay aware and just read up on what other people are doing out there. And on that note, some people might not want to quit their job if they enjoy what they do or they like having that security of a full-time job. In that situation, what are some options that people may have to create multiple income streams, and have you stumbled upon any success stories throughout your work?

Jannese Torres:

Well, I think that at the bare minimum, we should all be using some of our disposable income to invest. Because when it comes to making that sexy passive income that everybody wants to make, that’s the easiest way to do it. Creating an additional income stream through dividend investing and through capital gains, that’s number one. If you don’t have access to an investment account through your job, anybody who has earned income can open a traditional or a Roth IRA.

So just think about what those options are for you. It doesn’t have to be that you’re building a business. There’s folks who decide to purchase real estate, and that’s how they create a secondary income stream. There’s folks who decide not to buy physical real estate, but they can invest in REITs or real estate investment trusts and be getting paid monthly rental income just by being an investor.

There’s other ways to make money versus just starting a business. But I think it’s just, like I said before, not put all your eggs in a basket. And at the bare minimum, I think it’s really important, especially in this uncertain time that we’re living in, to think about bulking up your emergency funds just because it is taking longer for folks to find jobs if they do get laid off. And knowing that you don’t have to take the first offer and you have room to breathe and figure out what your next steps are, I think that’s something everybody should be thinking about.

Kim Palmer:

You also write about the importance of creating a support network for people when it comes to their money. Can you explain what exactly does that look like? How can we create that support network?

Jannese Torres:

Absolutely. So I did find myself at various points of my personal finance journey feeling unqualified to make decisions, whether it was thinking about am I ready to leave my job and take on entrepreneurship full time, or how do I start investing on behalf of my family, knowing that I want to be able to help them financially? And so in those scenarios, I needed a second opinion and I started working with a certified financial professional.

I’ve worked with an accountant now through my business. I have an attorney. So there’s different folks who are experts in their field who are going to be able to help you navigate moments where you just don’t feel like you have all the information that you need. And I think it’s important to know that you don’t have to figure all of this out alone, and oftentimes you probably shouldn’t.

Like in the case where I was thinking about creating an estate plan, I did not feel comfortable taking on some DIY template and hoping that that was going to pass the bar in the event that I needed to use it for legal purposes. And so in that instance, I decided to seek out an estate planning attorney to help me figure that out. So I think it’s just important for you to know there are people out here who can help answer these questions so that you don’t feel this overwhelming pressure to figure it all out yourself.

Kim Palmer:

For sure. One thing you write about, too, though is that it can be hard to know who you could trust, and you talk about the importance of boundaries and what to do when family members ask you for money. And today on social media, when there’s people who call themselves experts talking about all kinds of things, how do you decide who you can trust in this scenario when you’re trying to build your own support network like that?

Jannese Torres:

I think it’s important to trust, but verify. So not just taking all of your information from a single source. There’s so many different places to learn about personal finance that I like to diversify my education the same way that I like to diversify my income. Doing your due diligence, making sure that you are researching somebody just to understand what information is out there about them.

When we’re talking about financial professionals, there are certification boards and different places that you can look for, making sure that they are still in good standing. I like referrals too. There’s something about working with someone who has a direct relationship with someone that you know. That can be a good strategy. Also, going online and searching for reviews.

There’s no such thing as too much research when it comes to figuring out who you can trust. And I like to think that people naturally reveal themselves after a certain amount of time, so be on the lookout for that too.

Kim Palmer:

Yes. I like that phrase that you used about diversifying your education and your sources. That makes a lot of sense.

Melissa Lambarena:

It’s also important to gather support for your financial goals, and that’s something that you talk about in your book. Some family members or friends may not understand what we’re trying to do, and setting boundaries around money can help you fulfill those goals that you might have, whether it’s to save or get out of debt. What are some ways that you’ve had to navigate this and what advice can you share with our listeners?

Jannese Torres:

I think the first thing is to understand that it’s not going to be very productive to ask someone for directions to a place that they’ve never been. When I say that, I mean, if you were the first person to be investing in the stock market, it’s probably not going to be very productive to talk to your family about this if nobody’s doing it. And so just the idea that you can create your own community of support, I think it’s an important thing to consider.

Because most often we look to the people that we already know to validate what we’re trying to do and to understand, and it’s not necessarily their job. It’s your job to understand the mission that you’re on and then to rally the troops, if you will, create community, whether that’s in person or online. I have found an incredible community of entrepreneurs who support me from all over the world online.

And it’s the same thing with being a first-gen wealth builder. When you start talking about this stuff, you’ll naturally find the people who are aligned with where you are and where you’re trying to go. And so I think it’s just important that you don’t necessarily limit your scope for creating that community amongst the people that you already know. It might require you to be in new spaces and have conversations with new people.

Melissa Lambarena:

What about when it comes to setting boundaries around money? When family members say they want to go on vacation or those weddings come up or holidays, how do you navigate that in a culture that sometimes isn’t used to talking about money at times?

Jannese Torres:

Those scenarios are absolutely challenging. I don’t want to make it seem like it’s not going to be difficult to stand up to the people that you love and say, “You know what? I just can’t swing this. I’m working on other goals and this is just not at the top of my list.” You’re going to have to be okay with people not getting it. And unfortunately, sometimes that’s going to mean maybe offending somebody.

But at the end of the day, we have to develop a thick skin when it comes to staying true to what our values are and understanding that this short-term sacrifice is going to then allow you to potentially be in a position in the future where you can splurge, where you can actually be the one that’s treating your family to these awesome experiences because now you’ve put yourself in a financial position to be able to do so.

I think it’s just important to maintain that long-term perspective and to understand that not everybody’s going to get it, but it’s not necessarily for them to get.

Kim Palmer:

Yeah, and that’s really motivating too. I wanted to delve into some of your specific tips and why they matter. So I picked out a few to highlight. First, your practice your salary negotiation script idea. I love this one because it’s something my own dad also told me about. So tell us why that’s so important and why it can be helpful.

Jannese Torres:

Yeah. Well, at the end of the day, negotiation is an art form. It is a skillset that you have to hone in. You have to work it just like a muscle. And so I think oftentimes when folks even start thinking about negotiation, it’s usually in the context of a salary or a promotion. And that can feel very life or death for some people. It’s like, oh my god, if this doesn’t go right, what’s going to happen? And so I like to encourage folks to start with the basics.

Calling up your credit card company and seeing if you can negotiate a lower interest rate, or when your renewal term is coming up for a streaming service and they want to double your rate, give them a call and say, “You know what? I can’t do this. I’m only going to stay on if you guys can match the introductory rate that I already had.” You’d be surprised how often companies want to retain you as a customer and are willing to make those negotiations.

And so the more comfortable that you get with those small things, when there are bigger things at stake, whether that’s negotiating the price of a car or a house or your salary, you’re going to have more practice and you’re going to have more confidence because you’re going to have more of those wins under your belt.

Kim Palmer:

Yes, that is so true. The second one I wanted to highlight is applying the 50/30/20 budgeting rule. At NerdWallet, that’s also something that we talk about a lot. Can you explain why it works so well?

Jannese Torres:

Well, I think it’s a good baseline for a lot of people to understand where they should be with regards to their fixed and their variable expenses, as well as their savings goals. Now, the thing that makes it an eye-roll situation for a lot of people is depending on where you live, those percentages can be wildly different. If you live in a very high-cost-of-living area, it’s not uncommon for you to be spending 60, 70, maybe even 80% of your income on those fixed expenses.

And so I think it’s a good baseline for folks to set up their first budgets, but I don’t think that you should let it discourage you if you have to tweak those parameters. Because at the end of the day, budgeting is just like personal finance. It really is an individual-based journey, and you have to figure out the system that works best for you.

Kim Palmer:

And finally, you say create sinking funds, which I don’t think everyone is familiar with that term. So can you explain how sinking funds work?

Jannese Torres:

Sure. I love a good sinking fund, and I had no idea what they were until I started down the rabbit hole of personal finance. And essentially, you’re just creating buckets of money for specific purposes. I think most folks are familiar with an emergency fund, and an emergency fund is just a type of sinking fund that you’re saving specifically for emergencies. But I encourage people to think about all of those goals that you have, whether that’s buying a home or upgrading your car or taking a luxurious vacation.

We can create sinking funds for all of these different goals that we have, and that way your money is clearly earmarked for that purpose. It’s easier to see when you’re making progress towards those specific goals instead of having all of your savings in one pot and then hoping that you have allocated enough for all of the things that you want to do. There’s something very visual about being able to track your progress for those individual goals that makes it much easier for a lot of people to maintain that momentum versus just having a pot of money with no designated purpose.

Kim Palmer:

For sure. And also helps you stay organized, I think, and just make sure you’re on track.

Jannese Torres:

Absolutely.

Kim Palmer:

Well, thank you so much, Jannese. Do you have any closing thoughts to share with our listeners?

Jannese Torres:

Well, I like to always remind folks that personal finance and getting your money stuff together is a journey. It is a marathon. It is not a sprint. And so the best thing that you can do is just be a perpetual learner, a continuous student, and never be afraid to ask a question because this world is changing so often, so rapidly. So keep learning, keep growing, and keep applying what you learn.

Kim Palmer:

That is the perfect note to end on. Jannese Torres, thank you so much for joining us on Smart Money.

Jannese Torres:

Thanks so much.

Kim Palmer:

And that’s all we have for this episode. To share your thoughts on money, shoot us an email at [email protected].

Sean Pyles:

Visit nerdwallet.com/podcast for more info on this episode. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

Kim Palmer:

This episode was produced by Sean Pyles, Melissa Lambarena, and myself. Tess Vigeland helped with the editing. And a big thank you to NerdWallet’s editors for all their help.

Sean Pyles:

And here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Kim Palmer:

And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

About 43 million Americans hold federal student loan debt and, for some, paying off that debt can be a burden. Many borrowers have access to programs that can pause or reduce their payments, but a new survey finds some borrowers may be forgoing the proper channels and stopping repayment entirely in hopes of student loan forgiveness.

Nearly one in three (31%) student loan borrowers have slowed the repayment of their loan(s) because they hope to see their loans reduced or forgiven by the federal government, according to a recent NerdWallet survey conducted online by The Harris Poll among more than 600 U.S. adults who currently have student loans. And nearly one in four (23%) have stopped their student loan payments altogether for the same reason.

Notably, the survey didn’t ask whether borrowers who slowed or stopped their repayments did so after entering into forbearance or deferment plans. Further, student loan delinquencies have remained largely unchanged since the COVID-19 payment pause ended last October, according to data from the New York Fed. This is likely due to a one-year “on-ramp” grace period set to expire Sept. 30, during which the Department of Education is not reporting any borrowers who miss payments as delinquent.

A worry for borrowers, and a top election issue

Despite the Supreme Court blocking the Biden Administration’s broad plan to cut up to $20,000 in student loan debt per eligible borrower last June, the White House has forgiven roughly $168.5 billion over the last four years, largely through existing forgiveness programs like Public Service Loan Forgiveness and income-driven repayment plans. The president’s current “plan B” student loan forgiveness plan would reduce or eliminate loan debt for a more targeted group of individuals.

There’s no guarantee this plan or anything resembling it will go into effect. Just as legal challenges derailed the administration’s first, broader push for debt relief, lawsuits could force the administration or its successor to further scale back this set of proposals. This fall’s elections could also determine how debt relief proceeds — if at all.

Borrowers seem to have taken note.

A quarter (25%) say they are concerned recent student loan forgiveness efforts will be reversed by the courts. And more than one in five (22%) say that student loan forgiveness is one of the most important issues when choosing a presidential candidate.

Not paying student loans can hurt you

There are consequences if you fail to keep up with your student loan payments.

If you have federal student loans, loans become delinquent as soon as you miss a payment. Loan servicers can begin charging late fees 30 days after that. After three months, servicers may begin reporting the debt to credit reporting agencies, dragging down your credit score. Eventually, student loans enter default and your loan holder will be able to garnish your wages and withhold tax refunds and Social Security payments from you.

The default process happens even faster for student loans held by private lenders.

Pick the repayment plan that’s right for you

While the repercussions of not paying student loans can be serious, the good news is you have several repayment options for federal student loans. (Private student loan repayment options vary by lender.) Use the Education Department’s loan simulator to estimate your monthly bills and overall repayment journey under different repayment plans.

Standard repayment: Under this plan, you’ll pay the same amount each month for a decade. This is generally the fastest way to pay loans off, and therefore you may pay less total interest. You’re placed into this plan by default when repayment begins.

Income-driven repayment: If payments under standard repayment seem too high, you can apply for income-driven repayment (IDR). Under IDR plans, you’ll pay a portion (usually 10-20%) of your discretionary income each month for a set period of time (usually 20-25 years), after which your remaining debt will be forgiven.

Graduated payment: Consider the graduated payment plan if an IDR plan isn’t a good fit, but you want to lower your monthly bill right now. Under this 10-year plan, your payment will start low and increase every two years. The advantage is you’ll be able to free up money in the short term for other needs. The downside is you may end up paying more in interest than under the standard repayment plan.

Extended repayment: If you owe more than $30,000 in loans, you can apply for the extended repayment plan. This plan gives you up to 25 years to repay your loans and you can choose to pay the same amount each month or a gradually increasing amount as under the graduated plan.

Borrowers seem to be taking advantage of these options, as a third (33%) say they’ve changed their student loan repayment plan in order to make their payments more manageable, according to the recent survey.

Before defaulting on your loans, consider deferment, forbearance or an IDR plan

If you simply can’t afford to make any student loan payments right now, you still have options: namely, deferment and forbearance. More than a quarter (27%) of student loan borrowers have used one or both of these programs to pause their federal loan payments, according to the survey.

Both pause your payments and protect your credit from taking the hit it otherwise would if you simply stopped making payments. But the similarities end there.

First, look into deferment. Under deferment, interest does not accrue on your subsidized federal student or Perkins loans while payments are paused (interest will continue to accrue on unsubsidized federal or private student loans).

You must meet a qualifying life event in order to qualify for deferment. Qualifying events include attending school at least half time, being active duty military or in the Peace Corps, experiencing unemployment or earning less than 150% of your state’s poverty guidelines, receiving some forms of public assistance or undergoing cancer treatment.

If you don’t qualify for deferment, consider forbearance. Under forbearance, interest will continue to accrue on your loans (whether federal student loans or private loans) while repayment is paused, and you’ll be limited to a 12-month break from payments.

An income-driven repayment plan can also help you manage payments. If you’ve lost your income, or you earn under a certain threshold, you may qualify for $0 payments under an IDR plan — and you’ll still make progress towards IDR forgiveness while making these $0 payments. Even if you don’t qualify for $0 payments, IDR plans can lower your bills to a more manageable level.

METHODOLOGY

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from July 16-18, 2024 among 2,076 U.S. adults ages 18 and older, among whom 625 have student loans. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.5 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].

Disclaimer

NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.

Source: nerdwallet.com

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If you’re delinquent on your student loans, you may experience garnishment if your student loan debt is with a state or federal government or part of a federally insured student loan program. (Garnishment means withholding a tax refund by automatically sending it to your loan servicer to repay a defaulted loan.) Private creditors may also collect your tax refund to repay your student loan debt.

Obviously, garnishment is a difficult situation. Read on to learn more about your alternatives if you are potentially dealing with this scenario.

Can Student Loans Garnish My Tax Refund?

If your loans came from a state or federal student loan program, the federal government may garnish up to 100% of your tax refund if you’re in default repaying your loans. Default is defined as the failure to repay a student loan according to the terms of your promissory note.

You’re considered to be in default if you haven’t made a payment in more than 270 days. You may also experience legal consequences and will lose eligibility for more federal student aid.

However, it’s worth noting that if you are just 90 days or more behind on your payments, you are still considered to be delinquent in your payments. The three major credit bureaus (Equifax®, Experian®, TransUnion®) will likely be alerted. This information may possibly lower your credit score.

Also, only federal loans in default can result in tax refund garnishment, not private student loans, though your servicer might take other steps to get the funds they are owed.

💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Options for Managing Student Loans

Fortunately, you may be able to avoid default and avoid worrying about the government garnishing your refund. You can head off tax refund garnishment using a few different methods.

It can be wise to talk with your student loan servicer about all your available options. They can help you identify the right repayment strategy for your unique situation. If you have private student loans, you can also talk to your provider to determine the right course of action.

That said, here are a few options to consider:

SAVE Plan

The Saving on a Valuable Education (SAVE) Plan, which replaced the Revised Pay As You Earn (REPAYE) Plan, offers a potential alternative to tax refund garnishment of federal student loans. The SAVE Plan is an income-driven payment plan that lowers your federal student loan payments, taking your income and family size into account to determine your monthly payment.

The plan determines your payment based on your discretionary income, or the difference between your adjusted gross income and 225% of the U.S. Department of Health and Human Services Poverty Guideline amount for your family size.

The SAVE Plan eliminates monthly interest for both subsidized and unsubsidized federal student loans if you make your full monthly payment due. The government covers your monthly interest, meaning your loan balance won’t grow due to accrued unpaid interest.

Under the original SAVE Plan, if you initially borrowed $12,000 or less, after as few as 10 years, your loans would be forgiven (meaning you wouldn’t have to continue to repay your loans after you satisfy all the requirements and guidelines of the plan).

However, it’s important to note that two U.S. district judges (one in Kansas, the other in Missouri) recently placed an injunction on the next phase of the SAVE program and blocked it from providing additional loan forgiveness. The next phase of the SAVE program was scheduled to take effect on July 1, 2024. This is a still evolving situation as of this article’s publication date and one to monitor carefully.

Recommended: Can Student Loans Be Discharged?

Offer in Compromise

You can also take a different tack and work directly with the IRS (Internal Revenue Service) to avoid wage garnishment instead of approaching your student loan servicer. An Offer in Compromise (OIC) may also help your situation.

In an OIC, you pay the IRS less than your total tax debt if you owe the IRS more back taxes than you can afford to repay. If the IRS accepts your OIC, you must meet all the terms of your offer agreement — the IRS will only release your federal tax liens and levies once you fulfill those obligations.

You can fill out the OIC prequalifier tool to learn about your eligibility for an OIC.

Federal Student Loan On-Ramp

Most federal student loan borrowers began federal student loan repayment in October 2023 after the payment pause ended.

To ease borrowers into repayment, the Department of Education created an “on-ramp” period through Sept. 30, 2024, which prevents borrowers from suffering the worst consequences of missed, late, or partial payments, such as:

•   Being considered delinquent (meaning your loan payments are 90 days or more late)

•   Reports of delinquency to credit scoring companies

•   Loans going into default

Note that interest will still accrue, and not making payments means you’ll owe more money on your student loans over time. Your loan servicer may eventually have to increase your monthly payment to ensure you pay your loans off on time.

Also be aware that you can only qualify for the on-ramp if your loans were eligible for the payment pause. You don’t have to do anything to enroll in the on-ramp period.

The Takeaway

If you are not up to date on repaying your student loans, you could be in a situation in which your loan servicer can garnish, or directly take, a tax refund that was heading your way. If this could happen to you, it may be time to consider other options, such as the SAVE Plan, an “offer in compromise” with the IRS, the federal student loan on-ramp option, or another alternative. Talking to your loan servicer can be a smart move, whether you have federal or private loans.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Will student loans affect my tax refund?

If you continue to repay your federal student loans on time and in full, you won’t suffer any consequences to your tax refund. It’s only when your federal loans go into default (meaning they are 270 days or more late in terms of payment) that the government may garnish your tax refund to satisfy student loan debt repayment.

Can my spouse’s tax refund be garnished for my student loans?

A refund from a joint tax return with your spouse may be subject to tax refund garnishment, even though your spouse isn’t liable for your loan default. Your spouse may qualify to reclaim their portion of the refund by filing IRS Form 8379. Check with your tax preparer or search online for more information and details.

What happens if my student loans are in default?

Your federal student loans are considered in default if you don’t make your scheduled payments for at least 270 days. “Default” for private loans may be longer or shorter than the 270 days — ask your service provider for details. The consequences of defaulting on federal loans can include the entire unpaid loan balance and interest becoming due in a process called “acceleration,” lost eligibility for more federal student aid, no eligibility for deferment or forbearance, and lost ability to choose a repayment plan. Your credit score could be negatively impacted, and your wages or tax refund could be garnished.

Photo credit: iStock/MTStock Studio

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

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Source: sofi.com

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Thinking about spending your college years in Virginia? You’re making the right call. This state is home to some of the most beloved college towns in the country.

From tech majors to aspiring artists, there’s a place for all in Virginia. Whether you’re an undergrad on the hunt for your first apartment in Richmond or a career academic looking for the perfect house in Charlottesville, you’ll find what you’re looking for in Virginia.  

Let’s take a closer look at Virginia’s top college towns and uncover what makes each one stand out. From campus life to strong community ties, you’ll see why Virginia is the place to be for your college journey and beyond.

1. Charlottesville – University of Virginia

Population: 46,553 | Student population: 26,005 | Average 1-bedroom rent: $1,702

Charlottesville is home to the University of Virginia, renowned for its business, law, and medicine programs. The McIntire School of Commerce offers a top-tier undergraduate business program, consistently ranked among the best in the nation. The UVA School of Law is one of the oldest and most prestigious law schools in the country. The School of Medicine is also highly respected, particularly for its research in cancer, cardiovascular, and neurosciences.

The bond between the university and Charlottesville is evident throughout the town. The Downtown Mall, one of the longest pedestrian malls in the country, is a favorite spot for students and locals alike. Local businesses often collaborate with the university, offering internships and job placements that provide students with valuable real-world experience. 

Apartments near University of Virginia | Houses for rent near University of Virginia 

2. Blacksburg – Virginia Tech

Population: 44,826 | Student population: 31,000 | Average 1-bedroom rent: $1,233

Blacksburg is where you’ll find Virginia Tech, famous for its engineering and computer science programs. The College of Engineering is one of the largest in the country, with programs that include aerospace, civil, and electrical engineering. The Department of Computer Science is known for its cutting-edge research in artificial intelligence, cybersecurity, and data analytics. Students also flock to the School of Architecture, known for its innovative approaches and strong emphasis on practical experience.

Virginia Tech and Blacksburg share a deep connection that enhances the college experience. The Virginia Tech Corporate Research Center hosts over 180 research, technology, and support companies, offering internships and co-op opportunities. The Moss Arts Center, a sizable venue, hosts performances that enrich the community culture.

Apartments near Virginia Tech | Houses for rent near Virginia Tech

3. Williamsburg – William & Mary

Population: 15,425 | Student population: 9,654 | Average 1-bedroom rent: $1,740

Williamsburg is home to the College of William & Mary, known for its excellent programs in history, law, and business. The history program is particularly strong, leveraging the town’s rich colonial heritage for immersive learning experiences. William & Mary Law School, the oldest law school in the United States, offers students a rigorous and prestigious education. The Raymond A. Mason School of Business is highly rated for its undergraduate and MBA programs, emphasizing leadership and ethical business practices.

The college’s relationship with Williamsburg is a rare mix of academia and history. Colonial Williamsburg, a living history museum, offers students opportunities for internships and volunteer work, providing a deeper understanding of American history. The annual An Occasion for the Arts festival, sponsored by the college, brings together artists, musicians, and performers.

Apartments near William & Mary | Houses for rent near William & Mary

4. Harrisonburg – James Madison University

Population: 51,814 | Student population: 22,166 | Average 1-bedroom rent: $758

James Madison University (JMU) is known for its strong business and health sciences programs. The College of Business is nationally recognized, with standout programs in finance, marketing, and management. The Department of Health Sciences offers popular programs in nursing, dietetics, and athletic training. Students are also drawn by the School of Media Arts and Design, which provides hands-on learning in digital media, journalism, and graphic design.

The relationship between JMU and Harrisonburg is solid. The Gilliam Center for Entrepreneurship supports local startups, offering students real-world business experience. The collaboration with Sentara RMH Medical Center provides health sciences students with clinical placements and research opportunities. Additionally, the annual Harrisonburg International Festival, supported by JMU, celebrates the town’s commitment to fostering the next generation of artists.

Apartments near James Madison University | Houses for rent near James Madison University

5. Richmond – VCU

Population: 226,610 | Student population: 28,594 | Average 1-bedroom rent: $1,470

Virginia Commonwealth University (VCU) is known for its arts and health programs. The School of the Arts is one of the most esteemed in the nation, offering programs in visual and performing arts. The VCU Medical Center is a leading healthcare facility, providing top-notch education and training in medicine, nursing, and dentistry. The College of Humanities and Sciences also stands out for its diverse range of programs, from psychology to forensic science.

VCU and Richmond are deeply intertwined, especially in the arts and healthcare industries. The Institute for Contemporary Art at VCU is a vector for modern art, where students can showcase their work and even meet with renowned artists. The medical school’s partnerships with local hospitals and clinics offer students extensive clinical experience. Additionally, the annual French Film Festival, hosted by VCU, attracts filmmakers and enthusiasts from around the world.

Apartments near VCU | Houses for rent near VCU

6. Fairfax – George Mason University

Population: 24,146 | Student population: 38,628 | Average 1-bedroom rent: $2,238

Fairfax is home to George Mason University, known for its programs in public policy, economics, and computer science. The Schar School of Policy and Government offers top-ranked programs in public administration and international relations. The Department of Economics is noted for its research in experimental and behavioral economics. The Volgenau School of Engineering is highly respected, especially for its cybersecurity and data analytics programs.

George Mason University and Fairfax benefit from a synergistic relationship. The university’s proximity to Washington, D.C., provides students with internship and job opportunities in government agencies and nonprofits. The Center for the Arts on campus hosts performances and exhibitions. The Mason Enterprise Center supports local entrepreneurs, offering resources and mentorship to students and community members.

Apartments near George Mason University | Houses for rent near George Mason University

7. Norfolk – Old Dominion University

Population: 238,005 | Student population: 23,494 | Average 1-bedroom rent: $1,322

Old Dominion University is known for its engineering and maritime programs. The Batten College of Engineering and Technology has programs in mechanical, electrical, and civil engineering. The Strome College of Business is also popular, with strong programs in management, marketing, and finance. Students interested in marine science can take advantage of the unique opportunities provided by the university’s coastal location.

Old Dominion University and Norfolk have a strong connection, especially with the maritime industry. The university’s partnerships with local shipyards and maritime companies provide students with hands-on experience and job opportunities. The International Maritime, Port, and Logistics Institute offers specialized training and research opportunities in marine science and technology. 

Apartments near Old Dominion University | Houses for rent near Old Dominion University

8. Lexington – Washington and Lee University

Population: 7,320 | Student population: 2,238 | Average 1-bedroom rent: $973

Lexington is home to Washington and Lee University, known for its strong law and business programs. The School of Law is excellent, offering a rigorous curriculum and extensive clinical training. The Williams School of Commerce, Economics, and Politics is renowned for its programs in accounting, business administration, and economics. Students appreciate the small class sizes and personalized attention from faculty.

The university and the town of Lexington enjoy a close-knit relationship. Local businesses frequently hire students for internships and part-time jobs, providing valuable work experience. The Shepherd Poverty Program connects students with community service opportunities, addressing local issues. 

Apartments near Washington and Lee | Houses for rent near Washington and Lee

Methodology

College towns are qualified as towns or cities with at least one college or university and fewer than 350,000 people according to U.S. Census data. Average rental data from Rent.com in May 2024.

This is not a comprehensive list of all of the towns and cities in the state meeting those requirements.