The Student Loan Crisis
According to Forbes, the student loan crisis has hit an all-time high, with over 44 million people owing a cumulative amount of $1.5 trillion dollars. Although Millenials are working now more than ever, some even taking on side hustles and part-time jobs, many still struggle to make ends meet. The U.S. Department of Education states that in 2019, 42 million students owe $100,000 or less and about 2.5 million owe a balance between $100,000 and $610,000. While many hail the charity of people like Robert Smith, who pledged $40 million to pay off a graduating class’ student loans, many are concerned that the government isn’t working fast enough to catch up with the rapid rate of higher education tuition increases.
Student loan forgiveness
When it comes to student loan forgiveness programs, most people think of teachers or doctors applying to serve a lengthy period of time in high-need areas of the country, and that’s what I thought of as well before I met Carl. Carl is a Student Loan Forgiveness Expert. And some people call him an angel. In fact, he’s gotten so good at helping people with qualifying for student loan forgiveness programs, he named his company College Loan Angel. Skeptical? I was too. I wasn’t sure if this sounded too good to be true. Did student loan forgiveness programs actually work? Or was this yet another way people were getting the short end of the stick in terms of their loans? I had to find out.
MYTHS ABOUT student loan forgiveness
Carl and I sat down before the show and he walked me through some of the common myths he’s debunked during his 11 years of running his business and I was shocked to learn I had some big misconceptions about the student loan forgiveness. He stated that the truth was that you don’t have to be a doctor or a teacher to qualify. One of the main qualifications is that you are no longer attending school. In fact, he said, that graduating from your school is also not a qualification.
“You don’t have to be a doctor or teacher to qualify for student loan forgiveness programs.”
sTUDENT loAN fORGIVENESS sCAMS
Carl walked me through some common scams that he’s come across and shared that there is a lot of gray area when it comes to marketing student loan forgiveness programs. The biggest red flag he said was if a company calls and asks for your Social Security number or FSA (Federal Student Aid) ID. You know, the one that you use when you log into applying for FAFSA (Free Application for Student Aid). This is a red flag specifically because the FAFSA website states explicitly that you should never share this information with anyone.
According to Dimailig, if you’re receiving a phone call about student loan forgiveness, it’s more than likely a private company calling. Multiple different types of companies will share ways to apply and potentially qualify for student loan forgiveness programs, helping you to with a few beginning steps while others favor assisting consumers halfway through the process. However, the biggest struggle is in knowing who to trust due to both the complexity of qualifying as well as the amount of tax liabilities that go along with the process of loan forgiveness.
“The more licensed professionals you involve in the process, the more credible it becomes.”
How Carl Helps People Qualify
Carl walked me through how he helps people qualify for student loan forgiveness programs. The first thing he does is an extensive review of income and liabilities. Because of the high amount of tax liability involved with student loan forgiveness, he also involves a CPA in the process. Once he’s able to review income type, such as W2 income or Self-Employed income, he reviews liabilities such as business expenses and expenses related to children. In some instances, married couples have filed separate returns to help keep taxable income low.
Once Dimailig completes his income analysis, he provides a thorough breakdown of student loan payments over the life of the loan before the debt is forgiven, which in most cases is significantly lower than the payments were prior to the application for student loan forgiveness. Once a student loan is forgiven over 20 to 25 years, the cancelled debt becomes taxable income. Because of this, Dimailig and his team of licensed professionals work to factor the amount you would need to save for your tax liability through the use of leveraging interest bearing accounts.
leave it to the pros
So, when it comes to qualifying for these types of programs, Carl gave a word of caution to those who believe that they can do it themselves or listen to the advice of others. Dimailig warns that although it’s possible to try to navigate the amount of complexities of student loan forgiveness programs, it’s also very easy to drastically underestimate the amount of tax implications and liabilities, making it difficult to save and ensure that enough money will be saved once the debt has been cancelled. For more information on College Loan Angel, visit their website. You can also learn more about student loan forgiveness here.