Financial planning for new parents is all about flexibility and foresight.💡 From unexpected hospital bills to surprise baby expenses, it’s crucial to have room in your budget and a solid emergency fund.

“When it comes to financial planning for new parents, I think there’s a few things that you need to take into consideration. There are going to be so many expenses that come up that you weren’t prepared for, that you didn’t think about, and so one of the key things that I tell people who are about to become parents for the first time is make sure that you have flexibility. This could look like having room in your cash flow where you’ve got enough left over each month to cover those unexpected expenses. That can also mean making sure that there’s enough in your emergency fund to pay for the hospital bill you get that you didn’t expect. And so you really want to make sure that there’s enough there to have flexibility to cover any unexpected expenses.”

Discover the intricacies of voluntary separation packages and how they impact your financial future in a recent blog post from our colleagues at Truepoint Wealth Counsel. From deciphering health benefits to understanding the treatment of non-traditional compensation and retirement assets, they guide you through the maze of considerations. 

Offered A Voluntary Separation Package? Ask These Three Questions

Prepare for the unexpected! 💡 An emergency fund isn’t just a financial cushion; it’s your lifeline when unexpected curveballs strike. Building this safety net for yourself grants you peace of mind and allows you to #moneyconfidently.

“When we think about having an emergency fund, we generally recommend having anywhere from 3 to 6 months of your fixed expenses. Things like your rent, your groceries, your utility bills. The things that you have to pay every single month. If you’re a one income household, we recommend closer to 6 months.

If you’re two income household, we recommend closer to 3 months, but anywhere in between is completely fine. We then recommend that you have that in a high yield savings account. This is very similar to a traditional savings account, except you’re earning up to 4% or 5%, as it stands right now. Much better than the pennies that you’re earning in your traditional savings account.“

Student loan forgiveness has been struck down by the Supreme Court. 

President Biden’s original plan to forgive up to $20,000 for eligible borrowers has officially been struck down by the Supreme Court. Even if you applied back in the fall of 2022 and your application was approved, you will not have your loans forgiven.  

Loan repayments are set to restart in October.

Student loan monthly payments have been on pause since March 2020; during that pause, no interest has been accruing. Student loan forbearance has been extended a number of times, but now interest will begin to accrue on September 1^st, 2023 and monthly payments are set to begin in October 2023.  

The Department of Education is also instituting a 12-month “on-ramp” for borrowers. This 12-month period, from October 1, 2023, to September 30, 2024, is to protect borrowers who miss monthly payments. Borrowers who miss a payment during this period will not be reported to credit bureaus, placed in default, sent to collections, or even considered delinquent. 

A new repayment plan is now available to borrowers.

A new income-driven repayment plan will be available to borrowers. This plan stands to be the most affordable repayment plan ever created. The plan is called Saving on a Valuable Education (SAVE) and it will be replacing the Revised Pay-As-You-Earn (REPAYE) plan. To get on the SAVE plan you need to apply for an Income-driven repayment (IDR) plan and select REPAYE. Since SAVE is not currently available, you will apply to be on REPAYE and your plan will automatically switch to SAVE once it becomes available and REPAYE is phased out. The SAVE plan should be available later this summer. 

Highlights of the plan include: 

• Cutting the payment amount from 10% of discretionary income to 5% 
• Increasing the amount non-discretionary income from 150% of federal poverty levels to 225% 
• Opportunities to have loans forgiven between 10-20 years 
• Interest will not capitalize on the loan if monthly payments are made, meaning your loan balance will not grow over time 
• Ability to exclude a spouse’s income if you file your taxes separately 

Your Next Steps 

If you’re already on an IDR plan… 

• Log in to StudentAid.gov and go to your My Aid page, scroll down, and view your loans. Each loan will list a repayment plan. If you see that you are in the REPAYE Plan, that means you’ll automatically be enrolled in the SAVE Plan later this summer. If you’re on a different repayment plan, you’ll need to switch into REPAYE now.

If you’re not on an IDR plan… 

• You’ll need to go to StudentAid.gov and apply for an Income-Driven Repayment plan. There are 4 different plans to choose from and an estimator for which will give you the lowest monthly payment 

Recertify your income. 

• All borrowers will need to recertify their income, but not necessarily right away. Each servicer has a different timeline for when they will start recertifying incomes for borrowers; most servicers will resume in December 2023. If you have FFEL loans, you should stick to your normal recertification schedule.  

Determine which repayment plan you should be on. 

• This depends on your situation and what each plan has for your monthly payment. The new SAVE plan seems promising, and we anticipate many borrowers moving forward with it, as it should have the lowest monthly payment.  

Get ready to start paying on your loans again. 

• It’s been over 3 years since student loan payments have been required. In that time, a lot of Americans have bought houses, cars, picked up new hobbies, etc. It’s time to go back to your budget and make sure you’re able to make your loan payments on time and in full.  

Ultimately, we recommend that borrowers consider enrolling in the SAVE plan—which offers a great opportunity for eligible borrowers to save a lot of money on their student loan repayments—and suggest that most borrowers not take advantage of the 12-month “on-ramp.” Student loans have been a hot political topic for the last several years resulting in a number of unfulfilled promises. While frustrating, we don’t recommend missing your loan payments or waiting until October 2024 to begin repaying based on unreliable public discourse.  

Interested in working with a professional to plan for student loan repayment? We’re here to help. Contact our team for more information.