Fitting in student loans before 2023 ends

The end of the year is a busy time, but don’t let it slip away before you take care of your student loan to-dos! It feels impossible that November is already half over, and the last weeks of 2023 are filling up with plans, parties, and traveling. In-between family time, Friendsgiving, holiday shopping, and an already packed work schedule, it can feel impossible to fit in one more thing, but make sure your student loans are just as ready for the end-of-year squeeze as you are—it’s worth it!

Taxes, student loans, and more

It may seem crazy to be thinking about taxes already, but you can save on your student loans if you do. It’s open enrollment for a lot of health plans right now, and you might be able to take advantage of opportunities to expand your pre-tax contributions. If you’re like me, you may have an HSA or FSA that’s been under- or unutilized that is just begging for you to put it to use, and some require that you decide how much you’re going to contribute when you enroll. Remember that any pre-tax deductions lower your taxable income, reducing your tax liability; if you have an income-driven repayment (IDR) plan, it also lowers your discretionary income used to calculate your monthly payment.

Student loan opportunities not to miss

If you have federal student loans, you could take advantage of certain forgiveness programs that are currently available, even if you don’t think you qualify. There are probably thousands of borrowers out who unknowingly qualify for forgiveness opportunities, but won’t apply. The IDR Account Adjustment is designed to provide relief to borrowers who have been in long-term repayment, but who have had the wrong type of loans or payment plans, or have been dismayed through administrative setbacks or mismanagement. It will allow borrowers, regardless of previous federal loan type or payment plan, to gain access to forgiveness as long as they get on to an approved IDR plan and consolidate any non-Direct loans, such as FFELs or Perkins Loans. 

Borrowers pursuing Public Service Loan Forgiveness, PSLF, can benefit as well, even if they already have all Direct loans and are on a qualifying IDR plan. A client of ours, Dr. Kate, has federal loans from multiple levels of education, dating back over a decade of education and work. She finished school in 2020 and found a full-time job in a non-profit hospital, but—due to the Covid-19 pandemic—her loans were in administrative forbearance. Kate has been working towards PSLF, but, as of this last summer, her loans had a hodgepodge of qualifying payment counts. She worked at a non-profit a little before going to grad school and made about two years of payments towards PSLF. Loans from her master’s, then medical school, only had the years of administrative forbearance from Covid-19 counted towards forgiveness. By consolidating everything, her new Direct Consolidation Loan has the same qualifying payment count as her undergrad loans did, which means all her student debt will be forgiven in one fell swoop rather than hodgepodge over a few years. 

Even if you don’t fit the precise mold for different repayment and forgiveness programs, it doesn’t mean that you can’t take advantage of them! Borrowers have until Dec. 31 to consolidate any loans they want included in the IDR Account Adjustment. If you have questions about whether you qualify, or any of the other ways you can save money on your student loans, we’re here to help!