Here's your monthly round up of what's happening in the world of personal finance.
In Brief: Student Loan Forgiveness
Just days before payments were going to be due again, President Biden extended the pause on student loan payments until January and has announced plans to forgive student debt for qualified individuals.
So far there aren't a lot of details about how this is going to work and if history serves as a track record, there will be some hiccups and probably some confusion along the way.
Two important things I've learned so far :
- If you have paid off your student loans or made any payments at all since the pause was issued on March 13, 2020, you are eligible to be refunded, in cash. Contact your loan servicer about this. I would do it now before their wait times get super crazy in the next month or so.
- If you were on an income-based repayment (IBR) plan, and had been providing documentation of your income, your forgiveness could be automatic. If you were NOT on an IBR plan, you will need to fill out an application for forgiveness, and we should have details on how to do that in October. For now, just make sure all your contact details are updated with your loan servicer.
Here is a simple, straightforward FAQ that I found helpful:
I Bonds - What's the frenzy about?
Series I bonds are government issued savings bonds. Sounds like something from 1950, right? Here's the draw: The rate on I bonds is based on inflation rates, which as you should know are through the roof. At the moment, you can purchase an I Bond and get a guaranteed 9.62% return. People are going nuts, and with good reason - you're lucky to get 1.8% on an online savings account right now.
Here is what you need to know:
- The rate is reset every 6 months, with the next update happening on November 1. That means if you bought I Bonds right now you'd be locked in to the current 9.62% rate for the first 6 months. Wait until after November 1 and you'll get whatever the new rate is.
- You need to leave your money in for at least a year, so this is for medium/long term savings only.
- If you redeem before five years, you lose the last 3 months of interest. If you redeem after 5 years, there is no penalty.
- You can start at $25 and there is a maximum investment of $10,000 per calendar year per person.
- The interest rate can go lower or higher, but will never be less than 0%. It's rarely been below 2% so this is going to tend to outperform your savings account.
The catch? You have to use a terrible government website to buy them. It's a bit of a hassle, but probably worth it if you have excess cash sitting in a bank account getting very low interest (and you don't think you'll need that money anytime soon.)
Here's an overview of how to purchase I Bonds
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