In case you missed it, the Supreme Court struck down an executive order in June that would have canceled up to $10,000 in federal student loans ($20,000 for Pell Grants) for borrowers who met certain income requirements.
The decision is impactful. About 26 million borrowers have applied for relief since President Biden announced the plan in August 2022.
There is some talk of the White House pursuing alternative approaches to student loan relief since the Supreme Court strike down, but we will believe it when we see it. In the meantime, this should be a wake-up call for anyone who feels politics should inform their financial plan.
When funding education, here are a few rules to consider:
- Don’t make plans based on campaign promises.
- Always remember that an executive order made by one president can be overturned by the next president.
- When you take out a loan, expect to pay it back.
- Do not enroll in higher education until you have a plan to pay for it.
Bodnar Financial helps students (and their parents) create education funding strategies that are tailored to their own financial circumstances. No two plans look exactly the same because every family is different.
Here are some things we consider before making a plan:
- Where you live
- How many children you have
- The ages of your children
- The health of your retirement savings and where education fits into the big picture of your long-term financial plan
- Your income, assets, and financial aid eligibility
- Other liabilities on your balance sheet that need to be paid off
We also help students and families sort through loan options, and understand exactly what they are committing to.
All college students should know the basics of their loans:
- Where are they located?
- Are they federal or private?
- How much do you owe in principal?
- What are the interest rates on your loans?
- On your current payment schedule, how long will it take to pay them off? Should you adjust your payment strategy to pay off the debts quicker?
- When does your grace period end? Can you start making early principal payments before the interest kicks in?
- If you can’t make early payments, are you setting aside money each month to start paying off your principal debt as soon as possible?
Unlike other financial planning firms, Bodnar Financial does not have net worth minimums for its clients, which means we help everyone who is motivated to work toward financial stability, regardless of their starting balance.
In fact, many of our younger clients (in their 20s, 30s) are making decent money, but starting with a negative net worth because of loans. We also have some married couples who are just starting to have kids, and are paying off their own student loans while opening 529 education savings plans for their babies at the same time.
It doesn’t matter where your starting point is, it matters that you get started. Let’s make a plan for education funding that fits your life, nobody else’s.