CPA Steve Levy stops by to explain to Casey and Jarrod what Student Loan Forgiveness is, who qualifies, which loans qualify, and how to apply.
Announcer:
Hello, everyone. Welcome to the Millionaire Dentist Podcast brought to you by Four Quadrants Advisory. On this podcast, we break down the world of dentistry finances and business practices to help you become the millionaire dentist you deserve to be. Please be advised, we do speak with an honest tongue and may not be safe for work.
Casey Hiers:
Hello, and welcome. This is Casey Hiers back at the Millionaire Dentist Podcast in studio with cohost Jarrod Bridgeman and frequent guest Steve Levy. Love all those letters after your name, pal. Uh, we got an attorney, after an attorney's mind, uh, meshed with, uh, an accountant CPA mind. Our listeners need to hear from you more. Welcome.
Steve Levy:
Um, thank you. Thank you.
Jarrod Bridgeman:
Wait till you get him started on, like, Star Wars and Marvel.
Steve Levy:
Look out (laughs).
Casey Hiers:
(Laughs). Um, so kind of a public service announcement. This is something that's been of conversation, um, and- and it's something that's emotional to a lot of people, but specifically dentists and specialists who have a lot of student loan debt. Student loan it- it's emotional. This is certainly a hot topic with practice owners who may still have some student loan debt. So the student loan forgiveness program, Jarrod I'm gonna have you ask a lot of questions.
Jarrod Bridgeman:
Sure.
Casey Hiers:
Because I- I listened to something earlier, this is one of those weird things that Congress actually hasn't voted on the student loan forgiveness program, but yet you can't spend taxpayer money without Congressional approval. Probably gets into some weeds in politics so we won't quite go there, but...
Jarrod Bridgeman:
(Laughs).
Casey Hiers:
It's an interesting topic. And- and ultimately we're gonna dive into it to see if practice owners can maybe get some student debt forgiven.
Jarrod Bridgeman:
Sure. We'll go for it. Steve, first of all, what is the student loan forgiveness program?
Steve Levy:
It's a loan forgiveness program for students.
Jarrod Bridgeman:
Oh.
Steve Levy:
That it can be up to $20,000 in debt relief. Now, it's either 20,000 or 10,000 depending on if someone received a federal Pell grant, which if you're not sure, there's actually uh, a site you can got to, to see what all you've received in federal aid.
Casey Hiers:
That's good to know.
Jarrod Bridgeman:
Is- is this time sensitive? Is this something that you, like, you- you miss out if you don't hit a date?
Steve Levy:
Well, the ultimate deadline is December of 2023, but they recommend that you should apply by this year of November 15th because that's when the freeze on payments would expire in conjunction with the end of this year.
Jarrod Bridgeman:
Right.
Casey Hiers:
And so, and so this is either 10 grand or 20 grand?
Steve Levy:
Correct.
Casey Hiers:
So I'm- I'm like the negative Nelly, the cup's half empty, so hey practice owners just do a couple big cases. Let's go (laughs).
Steve Levy:
Well, it- it's the easiest application that you can do.
Jarrod Bridgeman:
It really is. It's like three or four questions.
Steve Levy:
You don't really need to provide any information except the information that already have. Your name, your email, social security, and date of birth. And they dip into the database and get all your eligibility information.
Jarrod Bridgeman:
So let me ask you who, okay. That sounds great. How do you qualify? Who qualifies?
Steve Levy:
There are some parameters with that. The main parameter is what your adjusted gross income is, which is a total of your wages, your practice income. Now if you're married, that needs to be below $250,000. Also, if you file as head of household. If you're single or file, married filing separately then that income needs to be at $125,000 or less. So that's kind of the parameters. And that is based on 2020 income where a lot of people weren't doing as well. Or 2021 income. It can be either, or.
Casey Hiers:
Well, that's a good point. I would say for our listeners, these numbers aren't big enough to matter or they would surpass some of the income, but to your point, there was a lot of layoffs. Maybe if a spouse of a practice owner that occurred, or the office was shut down. So okay, uh, I'm warming up to this.
Casey Hiers:
Mm-hmm.
Steve Levy:
Also, if you're a stud- if you have a dependent student, that dependent, they look to the parent's income. So they can still have forgiven loans in the student's name, but the income that they're gonna look to is gonna be the, that of the parent.
Jarrod Bridgeman:
Kind of like when you get a loan in the first place.
Steve Levy:
Yeah.
Jarrod Bridgeman:
So you said, we should apply by the 15th now. Are- are we still in the pre- preliminary registration period of it? Or is that officially launched?
Steve Levy:
It's launched. You can go right into it. I will say based on kind of what's happening right now, there's some lawsuits, that there's a temporary hold on processing the discharges. But you can apply and they are still reviewing them. As soon as things are all cleared up then they'll go ahead and discharge the debts.
Jarrod Bridgeman:
Is there anything bad that could happen for, uh, if you apply?
Steve Levy:
Not at all. There's really nothing, and I will say at the federal level, the debt discharge is not taxable. So it's, it has that. Now states are- some states are different.
Jarrod Bridgeman:
Some states are taxing it.
Casey Hiers:
So nobody's got any money yet?
Jarrod Bridgeman:
No. Not that I've heard.
Steve Levy:
It does take four to six weeks to have the processing done so even those that applied, like, in September, which is probably the earliest people were doing it, then they still might not have it yet.
Casey Hiers:
So I shouldn't have paid off my debt from the 90's? Is that what you're saying?
Steve Levy:
Well, uh.
Casey Hiers:
C-cause my- my dad paid for half and he goes...
Steve Levy:
Yeah.
Casey Hiers:
You're paying for the other half. You got to have some skin in the game, boy. And I, it- it worked. I studied more than I probably would have, but I also paid that back.
Steve Levy:
Right and it doesn't matter if it's discharged or not. If it's still existing, that is obviously eligible. It just needs to be loans.
Casey Hiers:
Wh-what's that mean discharged?
Steve Levy:
Well if it's been paid off.
Steve Levy:
Or default really.
Casey Hiers:
So how, if I had it paid off for many years I can't get- be forgiven?
Steve Levy:
It- it doesn't matter.
Casey Hiers:
It's bullshit (laughs).
Steve Levy:
As long as (laughs). As long as it- it was dispersed by June 30th, 2022. That's the only rule, so you can go in the way back machine and, it- it and go on this website. It's actually student aid dot gov. And click on my aid and, you'll be able to pull up with your federal aid has been and see what you had.
Jarrod Bridgeman:
Okay so you said it takes like four to six weeks to process. But that's actually when they start processing?
Steve Levy:
When they start. As soon as you apply and submit, then you- then it's gonna be four to six weeks before you find out. They may ask for more information which could delay the process.
Casey Hiers:
If you're a practice m- owner making over 250 you don't need to apply.
Steve Levy:
Yeah, that, that wouldn't. It- it depends on 2020, and 2021.
Casey Hiers:
Gotcha.
Steve Levy:
So it's either of those years on it.
Casey Hiers:
Okay.
Steve Levy:
One- another point is if you have paid off all your loans then it comes to you in a refund situation. If you still have some loans outstanding then it would apply to those loans, it would lower the amount that you owe there.
Jarrod Bridgeman:
Do I just wake up one day, say it's all processed and done, do I just wake up one day and check my you know whatever site I use for my student loans and I just see a big fat zero? Or do I get like uh, is it like an insurance thing where you get a check and you can do whatever you want with it?
Steve Levy:
You'll get a check yeah. There would be a check if it's over that amount. Now your- you should get notification from the lender that's coordinating your loan as well. They need to notify you of what happened with that debt forgiveness.
Jarrod Bridgeman:
Okay so now I'm confused. So then I would take that check and then turn around and spend it on loans?
Steve Levy:
No, if you have debt forgiveness then that debt forgiveness will apply to the loans you have existing, you do not get a check.
Jarrod Bridgeman:
So let's say I owe, let's say someone owes $15,000. They get- they had Pell grants, they're forgiven for 20.
Steve Levy:
Correct.
Jarrod Bridgeman?
So it's just, so like plain?
Steve Levy:
So forgiven for 20, they get 15 off their loan to bring it to zero and a refund of $5,000.
Casey Hiers:
I'll tell you what's exciting I heard over the weekend. 401k contributions for 2023 go up to 22, 5 and if you are, is it over 50?
Steve Levy:
Yes.
Casey Hiers:
It goes up 30.
Steve Levy:
Yeah.
Casey Hiers:
That's exciting.
Steve Levy:
That is exciting as well.
Casey Hiers:
Yeah.
Jarrod Bridgeman:
Okay so we know who can qualify, how you apply, so I know there are different types of student loans out there, um, what types of loans actually qualify for this?
Steve Levy:
So really it's anything that is Department of Education owned or, or uh, coordinated. It even applies to consolidated loans. Say you had a Department of Education loan and you decided to consolidate it in a private situation. As long as those loans were still uh, funded by the depa- Department of Education and coordinated by them, that would still apply. The only real issue is if there is a private loan. Um, if it was just straight private. That's really not anything that you- would- you can get any kind of debt relief on.
Jarrod Bridgeman:
Is there any possibility someone had a Department of Education loan that then became private somehow? Is that a thing that happens?
Steve Levy:
Well, the consolidation I would say.
Casey Hiers:
Oh, oh.
Steve Levy:
In- in- in that situation. And then you can kinda look to the um, underlying loan that was consolidated. And that, that again you can find out from student aid dot gov. Under the my aid tab and see what you have.
Jarrod Bridgeman:
Student aid dot gov right?
Steve Levy:
Student aid dot gov, exactly.
Jarrod Bridgeman:
Well Steve you were fantastic as always coming to us with brilliant ideas and brilliant things to tell us, uh, so I usually don't understand at all, but that's why you break it down in such a great way for us.
Steve Levy:
Well it's hot topic, it's still in the news, and people are asking about it. So they should know just the basic rules. Apply, if you don't qualify no big deal. But if you do hey $20,000 or $10,000 is pretty good money.
Casey Hiers:
Thank you sir.
Announcer:
That's all the time we have today, thank you to our guests for their insight and for sharing some really great information. And thank you to you, the listener for tuning in. The Millionaire Dentist Podcast is brought to you by Four Quadrants Advisory, to see if they might be a good fit for you and your practice go on over to Four Quadrants Advisory dot com and see why year after year they retain over 95% of their clients. Thank you again for joining us and we'll see you next time.
