The Biden administration recently announced a new proposed student loan repayment plan that, according to the Department of Education, will provide millions of borrowers with lower required monthly payments and increase the speed of student loan forgiveness.

Technically this proposal revises an existing plan, not an entirely new plan.

Let’s dive into what the details of the proposed new Biden student loan repayment plan.

Key Details of the New Biden Student Loan Repayment Plan

 
As I mentioned, the proposal does not create a new income-driven repayment plan, but changes an existing one, Revised Pay As You Earn (REPAYE). Including REPAYE, there are four income-driven repayment plans. You can see the details of each of the four plans here.

The revised edits to the REPAYE plan, which I am going to call “New REPAYE” from here on out, can be complicated at times.

Let’s start with the key points and then we’ll unpack each of them in more detail.

• The calculation for discretionary income will increase the federal poverty guideline factor from 150% to 225%

• Required payment will be 5% of discretionary income if debt is 100% undergrad (currently 10% or more for the four existing plans)

• Required payment will be between 5% and 10% of discretionary income if there is any grad school debt (we’ll walk through the calculation in a moment)

• Spousal income excluded when taxes are filed as married filing separately

• Interest will not accrue if a borrower’s monthly payment is so low that they it doesn’t cover the interest portion of the monthly payment

• Loan forgiveness will be between 10 and 20 years for undergrad only debt; if a borrower has any grad school debt, forgiveness will be after 25 years

• Parent PLUS loans will continue to be excluded as they were under existing REPAYE regulations; Parent PLUS borrowers will need to use the Income Contingent Repayment (ICR) plan instead

Now that we’ve covered the key points, let’s unpack them each a bit further.

Required payment calculation

 
There are a number of changes to how the required monthly payment is calculated.

The first one is the change from 150% to 225% of the federal poverty guideline factor when calculating discretionary income. Discretionary income is a key variable, since income-driven repayment plans use a percentage of discretionary income (currently 10% to 20% depending on the plan) to calculate the required monthly payment.

The discretionary income calculation is:
Adjusted Gross Income – federal poverty guideline factor = discretionary income

Let’s walk through an example.

A single individual living in Delaware who has no dependents would have a monthly federal poverty of $14,580. This is at 100% of the guideline. Currently REPAYE uses 150%, or $21,870. New REPAYE would use a factor of 225%, or in this case $32,805.

This individual has an Adjusted Gross Income, or AGI, of $50,000. (Note: AGI can be found on your tax return and excludes things like 401k or 403b contributions).

Under the current REPAYE plan their discretionary income is $28,130 ($50,000 less $21,870).
Under the New REPAYE plan their discretionary income is $17,195 ($50,000 less $32,805).

Now let’s assume that this individual only has undergrad student loans. Under REPAYE they would be required to pay 10% of their discretionary income, but under New REPAYE they would be required to pay 5%.

Under the New REPAYE plan their required monthly payment would be $72 ($17,195 * 0.05 / 12)
Under the New REPAYE plan their required monthly payment would be $234 ($28,130 * 0.10 / 12)

Needless to say, that’s a big difference. The combination of the higher federal poverty guideline factor plus the percentage of discretionary income being cut in half leads to this individual’s student loan payment going down to less than $100 a month.

Want to plug in your own numbers? Download our income-driven repayment calculator by entering your email below. We just updated it with New REPAYE in addition to the existing income-driven repayment plans.

What about grad school loans?

The above example was an individual with only undergrad loans. But what happens if someone has grad school loans?

A good starting point is this: in New REPAYE, a borrower with grad school loans will not need to pay more than 10% of their discretionary income towards their loans.

Well, this is no different than REPAYE, so is there any benefit for grad school borrowers?

The answer is yes, because of the increase in the federal poverty guideline factor, which doesn’t change depending on whether the borrower has undergrad loans, grad loans, or a mix of both.

They also will benefit in the sense that they will pay between 5% and 10% depending on the mix of undergrad and grad school loans.

Let’s say that a borrower has $50,000 in undergrad and $100,000 in grad school loans.

That means that 2/3, or 66.67% of their loans are grad loans.

You would take (33.33% x 5%) + (66.67% x 10%) to get to 8.3% as the percent of discretionary income that they will be required to pay towards their loans each month.

Spousal income excluded when taxes are filed as married filing separately

 
Currently on REPAYE, a spouse’s income is included in the calculation for monthly student loan payments even if you file your taxes as married filing separately.

This has caused some borrowers to switch to the IBR plan (Income Based Repayment) despite it requiring 15% of discretionary income instead of 10%.

New REPAYE changes this. With New REPAYE you are able to exclude your spouse’s income from the calculation as long as you file your taxes as married filing separately.

Interest will not accrue if a borrower’s monthly payment is so low that they it doesn’t cover the interest portion of the monthly payment

 
One of the biggest complaints about the current student loan repayment system is that borrowers can see their balance increase even after years and years of making payments.

Why this happens is because on income-driven repayment plans the required monthly payment may not cover all the interest, let along make a dent in the principal of the loan or loans. For example a borrower may be required to pay $1,050 a month on a standard ten-year repayment plan but on an income-driven repayment plan be required to pay $200. That $200 likely won’t cover the full interest portion of the $1,050 payment. If the interest portion was, say, $400, then $200 of interest ($400 – $200 = $200) would accrue and eventually be added back to the principal.

The New REPAYE fixes this problem. In the above example, the additional $200 of interest not covered by the $200 payment would not accrue.

Loan Forgiveness Implications

 
Changes to loan forgiveness timelines under New REPAYE will be impactful for some but minimal, if not entirely unchanged, for others.

• Loan forgiveness will be between 10 and 20 years for undergrad only debt; if a borrower has any grad school debt, forgiveness will be after 25 years

The easy aspect of this to get out of the way is anyone who has taken out any grad school loans. Their path to loan forgiveness will remain at 25 years, as it is under REPAYE.

For those with undergrad loans only, it’s a bit different. Here’s how it works:

• If a borrower took out $12,000 or less in loans, they will receieve loan forgiveness after making the equivalent of 10 years of payments.

• For each additional $1,000 borrowed above $12,000, the borrower would require one additional year of payments to receive forgiveness.

• No one who borrows only undergrad loans will need to make more than 20 years of payments to receive forgiveness.

With these rules in mind, an individual who took out $13,000 would need to make 11 years of payments, $14,000 would need to make 12 years of payments, and so on until you hit 20 years in which case that is the maximum number of years.

To be clear, this is for income-driven loan forgiveness. Public Service Loan Forgiveness, or PSLF, would still be on a 10-year timeline for all borrowers. Read more about PSLF here.

What else is in the proposal?

 
I focused on the key points here, but there are some other aspects of the proposal I haven’t touched on.

There are some changes to access to income-driven repayment plans for those who are in a delinquient or default status. The proposals here are all positive and move in the right direction. Because of the complexity of student loans many borrowers aren’t aware of all their options and could benefit greatly from moving into an income-driven repaymetn plan. That’s challenging for a borrower when they don’t even know income-driven plans exist.

There are a few proposed changes around what counts as an eligible payment, specifically focused on forbearance and deferment.

And perhaps the most notable thing I haven’t shared yet is that the administration would plan on phasing out new borrowers entering PAYE and ICR income-driven repayment plans, and make it difficult for a borrower to move from New REPAYE to IBR. IBR is written into law and therefore the administration is unable to fully limit access to it.

If you want to plug in your loans or a friend or family member’s loans to see what the paymennt would be under the New REPAYE plan, you can grab a copy of our calculator.

What’s next with the new Biden student loan forgiveness plan in 2023?

 
At this point the New REPAYE proposal is just that, a proposal. The Department of Education “expects to finalize the rules later this year and aims to start implementing some provisions later this year, subject to any changes made based on public comments.”

We will be closely watching this, the upcoming Supreme Court case on loan forgiveness, the ending of the COVID emergency order, and everything else impacting the student loan space. Subscribe to our email newsletter to stay up to date.

See all the details of the first 2020 stimulus check here.

If you haven’t received your stimulus check yet, you can check the status of it using the IRS “Get My Payment” tool.

With the checks being $1,200 per eligible adult and $500 for each eligible child (16 and under), many are wondering if there will be a second stimulus check for COVID?

It’s a valid question. It doesn’t take an economist to realize that $1,200 doesn’t go that far (unless your name is Steven Mnuchin and you are Secretary of the Treasury, who recently said $1,200 would last ten weeks). Heck, depending on where you live and what sort of financial situation you are in, even $2,900 in a household of two adults and one child doesn’t go that far.

There is also the issue of many college students being left out of the first stimulus check. If a college student is claimed as a dependent on their parent’s taxes, there is no stimulus check allocated to them.

Over 30 million applied for unemployment benefits since COVID took hold in the United States. As we explain in our post on COVID unemployment benefits, there is the extra $600 federal unemployment benefit on top of the state unemployment benefit. But again, that only goes so far, and there is limited employment opportunities right now.

All this leads to a reasonable conclusion that millions of Americans likely agree that additional direct payments, including a second stimulus check, to Americans is needed. But taking that concept to reality is more difficult.

What Has the President and Congress Said about a Second Stimulus Check?

 
Traditionally Republicans have been fiscally conservative, and sending checks to Americans doesn’t really align with that political philosophy. They may see the combination of unemployment benefits and stimulus checks as incentive for people not to work. This begs the question of whether they will get on board with a second stimulus check that would likely cost hundreds of billions of dollars.

With that being said, government leaders have indicated a second stimulus check is on the table, including President Trump.

At a news conference on Monday April 5th Trump said:

“We could very well do a second round of direct (payments),” he told a news conference. “It is absolutely under serious consideration.”

In a conference call with Democrats, Speaker of the House Nancy Pelosi said the next stimulus bill will be at least another $1 trillion with additional direct payments to individuals.

Pelosi said there should be additional direct payments to individuals, extended unemployment insurance, more resources for food stamps and more funds for the Payroll Protection Plan that provides loans to small businesses, lawmakers on the call said.

A group of 62 Congressional members have officially stated their support for making monthly payments recurring for the duration of the crisis.

It’s also worthwhile noting that the concept of direct payments from the federal government to Americans has never been closer to the mainstream than it is today. Thank former 2020 Democratic Presidential candidate Andrew Yang for that, whose campaign focused on Universal Basic Income, or UBI as it is commonly referred to.

The Next Round of Stimulus

 
On Friday, April 24th, President Trump signed into law another round of economic relief totaling $484 Billion. Unfortunately for those who would benefit from a second stimulus check, this aid package does not include a second stimulus check for COVID. What it includes is:

• $321 billion for Paycheck Protection Program
• $60 billion for Economic Injury Disaster Loan
• $75 billion for hospitals
• $25 billion for testing

The Paycheck Protection Program, or PPP, was included in the CARES Act and provided $349B of relief to small businesses. This funding ran out on Thursday April 16th, leaving many businesses out in the cold. The Economic Injury Disaster Loan, or EIDL, was also included in the CARES Act to provide small businesses relief.

$2,000 a Month Stimulus Check Proposal

 
Tim Ryan (D-OH) and Ro Khanna (D-CA) have introduced legislation, called the Emergency Money for the People Act – that would provide monthly payments until employment reaches pre-COVID levels. Specifically, eligible Americans would receive $2,000 in cash each month for at least six months, and would continue until the employment to population ratio for people 16 and older is greater than 60%. The payments would not count as income and

Here is who would be eligible:

• Those 16 and older earning less than $130k annually would receive $2,000 a month

• Married couples earnings less than $260k annually would receive $4,000 a month

• In addition to the funds already mentioned, qualifying families with children would receive $500 per child, up to a maximum of three children.

• In contrast to the first stimulus check, this proposal would include college students and adults with disabilities who are claimed as a dependent.

If this legislation made it through the House and Senate it almost certainly would look a little different. For example, it could be another one-time payment instead of a recurring monthly payment.

Additional Recent Updates

 
White House economic adviser Kevin Hassett said at the very beginning of May that another round of economic stimulus may not be necessary. But at the same time he said that unemployment might reach 19% and GDP loss for the second quarter could be as high as 40%. Not to mention negotiations are already taking place for another round of economic relief.

State relief has come into focus. The current issue at the forefront is how much relief states should receive from the federal government. President Trump has hinted at states potentially needing to go bankrupt instead of receiving federal aid, a prospect that – not surprisingly – elicited a strong reaction from Governors.

President Trump has made the payroll tax cut a requirement for the next economic stimulus bill. But Senator Chuck Grassley didn’t seem to think much of the ultimatum, and is concerned that the tax cut could drain retirement funds or leave older Americans with the view that Congress doesn’t take ‘seriously’ the plight of the Social Security Trust Fund.

All this is to say that a second stimulus check could happen, but currently hasn’t dominated conversation – at least publicly – other than Representative Tim Ryan and Ro Khanna’s proposal.

Will the Second Stimulus Check Happen?

 
What we know is this:

• President Trump has indicated that there is a high likelihood of a second round of direct payments.

• Nancy Pelosi has indicated a second economic aid package valued at more than $1 trillion that would include a second round of direct payments.

• Support and awareness of policy that provides direct payments to Americans has never been higher than it is today.

This all leads me to think there is a decent, though certainly not guaranteed, chance that we will see a second stimulus check for COVID. It may not be the recurring payments that some Democrat leaders are pushing for, but there likely will be a second stimulus check hitting your bank account before COVID is over.

Check out Our Other COVID Resources:

• COVID Unemployment Benefits: Everything You Need to Know
• What Is Happening To Your Student Loans During The Coronavirus (COVID-19) Crisis
• 2020 Stimulus Check: What You Need to Know
• 20+ Ideas for Hobbies to Fill your Time

While some of us have had our taxes completed and filed for several weeks, there are those of us who will plan on getting to it every week until April 17th is here.

Wanting to delay the hours worth of paperwork for as long as possible is understandable, especially if your tax situation comes with some complexities.

If you bring in additional income with a side hustle it can complicate matters even more.

It is easy to stress over receiving all of your 1099s forms, figuring out if you owe additional Social Security tax, and worrying that you will be caught unprepared for a higher than expected tax bill.

There is one side hustle that can give you all of the fun of additional income with none of the worries about taxation. In fact, this side hustle comes with no tax burden at all and minimal work to get started.

What is it you ask? It’s Airbnb (or other short term home rental platforms).

I know what you are thinking. “Airbnb income is definitely taxable.” For many people this is true. However, when I was preparing my 2015 taxes, ready to report thousands of dollars in Airbnb income I was pleasantly surprised to learn that I did not have to report any of it.

Why? Because despite earning over $3,000 I had only listed and had my condo booked for thirteen nights of the year. Thanks to a little known loophole in the tax code this income was not only exempt from taxation, it didn’t even need to be reported to the IRS.

The Master’s Rule – The Ultimate Tax Loophole

 
All credit for the tax exemption on fourteen nights or less of rental income in a primary residence goes to rich homeowners in Augusta, GA.

Every year Augusta, GA hosts this little golf tournament you may have heard of, called The Masters Tournament. Thousands of golf fans flock to this mid-size city along the Savannah River over four days in April to watch the best golfers in the world compete for a green blazer.

For years Augusta residents rented their homes at a premium to these tourists. When Uncle Sam tried to collect a share of this money the residents lobbied Congress to exclude these funds from their taxable income. Hence, the Master’s rule was born. It’s very simple. If you rent your home for fourteen nights a year or less, the income you earn does not need to be reported.

With the advent of short term rental platforms like Airbnb, this rule is no longer the domain of those who reside in Augusta, GA. Anyone, renters included, can take advantage of this crack in the tax code to make an uncapped amount of money by renting their space for a few nights per year.

Getting Started

 
In order to start earning tax-free income, the first step is to make the decision to list your space. Platforms like Airbnb, VBRO, and HomeAway make it easy to get started. Be sure to check the laws in your city as more municipalities are putting restrictions on short term rentals.

If you are a renter or live under a homeowners association be sure you are not violating any lease agreements or bylaws. Once you have the all clear, simply register for the platform, verify your identity (usually with a government ID), and create a listing for your place. To make sure you get set up properly, check out these ten expert tips for being a great Airbnb host.

Maximize Your Tax-Free Money

 
I got started as an Airbnb host soon after I purchased my condo. After showing a friend pictures of my newly decorated place he immediately suggested that I become an Airbnb host. Having just laid out a hefty chunk of my savings for the down payment, it didn’t take much convincing to get me to try it.

At the time Airbnb offered the service of a free professional photographer to take pictures of new hosts’ homes. Armed with great pictures and a vivid description of my home and neighborhood, it wasn’t long before the requests flowed in. I quickly learned a few lessons that helped me maximize my earnings.

 
1) If you are not going to host regularly, then list your entire place when you do.
 
Airbnb allows you to choose the option of listing a bedroom, a sleeping area, or your entire apartment. It’s up to you. If you are not keen on co-existing with strangers and travel for two weeks per year or less, it is in your best interest to list your entire space. Why? Because listing more space means you can charge more money.

While a single room can fetch anywhere from $50-$75 per night, an entire apartment or house can easily command upwards of $100. I charge $200 per night for the use of a two-bedroom, two bathroom condo in a trendy neighborhood and consistently book my place when I’m out of town. Be sure to check out similar listings in your area to make sure that you aren’t shorting yourself of additional money you could be earning.

 
2) List your place during peak demand times
 
Just like the Masters Tournament happens every year in Augusta, GA, many cities have annual events that attract a large number of tourists. Chicago, IL has Lollapalooza in August. Indio, CA is the home of Coachella Music Festival.

Even if your town does not host a major event every year there still may be one off occasions like The Big Game, All Star Weekends, or major conferences that will swing through. Check with your local convention center to see if they will be accommodating an event for 5,000 or more people. That’s a good time to take that vacation and leave your place open to guests.

Not only do peak times mean more people are looking for lodging, they also translate to visitors being willing to pay a premium for a place to stay. Take advantage of limited supply and high demand to charge a higher price for your space. Residents in Augusta, GA were making tens of thousands of dollars for listing their homes for under a week. Don’t feel bad about charging an extra $50-$100 per night for your place during these times.

 
3) Make use of up-charges
 
Many short-term platforms allow hosts to charge guests extra for certain needs. Airbnb allows you to charge guests a cleaning fee or require additional charges for guests in excess of a number you set. For example, my apartment can comfortably sleep four people between the two bedrooms. I also have a large couch and an air mattress. Because more people in my apartment usually leads to more wear, I charge an additional fee for each guest after the fourth person.

You can also set different prices for weekends and weekdays, thus capturing more money during higher demand days. Play around with the different levers you can pull to squeeze more income out of your listing.

The Fine Print

 
The Masters Rule is a great way to monetize your space with no tax implications. However, there are two things to remember before getting started. First, the tax exemption only applies if you host guests in your space fourteen nights a year or less. If you hit night fifteen all of the income you have earned becomes taxable and must be reported to the IRS. This could lead to a not so nice surprise when doing your taxes. Keep careful tabs on your nights. I like to plan mine in advance, with preference for high tourism times of the year.

Second, remember that even though you are not required to report income from Airbnb under 15 nights per year, platforms often send the IRS a 1099 for income paid to you. Since the IRS has no way to know how many nights you’ve hosted guests in your place, a number of hosts have been contacted in regard to the extra income for which no taxes were received. Don’t worry. Sending an explanation with proof of nights will easily clear up any confusion.

To ensure you can show your income is tax free you have to keep detailed records. Airbnb allows you to see all of your transactions by year. Simply go into your host account and pull up the transactions. Each guest’s check-in and check-out days are listed. Either print the page or take screenshots.

Final Thoughts

 
Taking advantage of the Masters rule is a great way to dip your toe into the pool of hosting a short-term space. Depending on your living accommodations and location, listing your space on a platform like Airbnb can bring in significant income that can be 100% yours to keep.

If you keep careful track of your days and plan the times you host to coincide with peak tourist times, you can easily earn thousands of dollars in additional income every year. Imagine how much faster you could pay off debt, save a full six-month emergency fund, or reach other financial goals with that much extra cash.

 
 
Related:

• 50+ Ways to Make Extra Money

• 8 Ideas For Making Money With The Sharing Economy

• The Ultimate List of Tax-Advantaged Accounts

• The Most Popular Side Hustles (According to Research)

 
 
Were you aware of the Master’s Rule? Have you considered becoming an Airbnb host? If you already list your space does this change your strategy? Leave your thoughts in the comments.
 
 

While most of the panel seemed to have neutral views on millennials themselves, one member of the panel tore into millennials. They cited millennials lack of work ethic and their need for instant gratification.

This panel member’s opinions stayed on my mind throughout the day. I felt the criticism was unfair because it essentially meant that other generations had better work ethic and didn’t desire gratification as quickly as millennials, among other criticisms.

If we look at generational differences from a macro-level view, though, we see a different story. Millennials are in fact financially subsidizing older generations all while dealing with unprecedented student loan debt and higher cost of living than previous generations at similar points in their lives.

There’s three specific areas where this financial subsidization is undeniable. Let’s go through each.

National Debt

 
The national debt is nearly $20 trillion. Like all debt, our national debt will need to be paid back at some point, and clearly older generations have decided to push that responsibility down the road. Interest on our debt makes up a relatively large portion of the federal budget.

For one generation to simultaneously say that millennials desire instant gratification while at the same time running up a $20 trillion bill is simply unfair. Taking on this unprecedented level of debt is short-sighted and, in my opinion, irresponsible.

 
It’s easy to pass a budget when it’s hinged on debt financing. It’s difficult to pass a balanced budget or to pay down debt instead of taking on more.

Debt can be a tool and there is certainly ways to leverage debt for long-term gains from a personal finance perspective, but at the end of the day debt is debt. At a national level debt enables the government to continue to spend at unprecedented levels instead of restraining them and forcing them to make the tough choices of where tax dollars are best allocated.

I do realize that there are many millennials who are calling for even further debt spending, but until millennials make up the majority of government leadership (and continue the current debt trend) you can hardly blame them for our current debt situation. The debt that’s been incurred so far is certainly not due to millennials.

Healthcare

 
Healthcare is expensive. The fact that multiple companies took on millions of dollars of losses in the health care exchanges shows that even relatively expensive high deductible plans couldn’t overcome the sheer cost of care. And we should expect healthcare to continue to be expensive as people live longer and we see groundbreaking advancements in medicine over the next few decades.

With all that being said, the challenge we are facing now is how to find a balance of making insurance available and affordable for all. Unfortunately for millennials, who are already financially burdened in ways that previous generations were not, policy makers have decided they will be the ones that foot the bill.

The Affordable Care Act put pricing mechanisms in place where premiums can only differ based on age by a factor of three (i.e. can only be three times higher for older people than younger ones). That means lower premiums for older generations and higher premiums for younger generations compared to what they would be without this pricing floor and ceiling in place. The most recent Republican plan would have actually benefited millennials in this specific area as premium pricing would be able to flex based on age by a factor of five instead of three.

Besides being hit with higher premiums, millennials are at the front-end of the movement towards consumers being more responsible for the cost of care. A few years ago high deductible health plans and Health Savings Accounts, or HSAs, weren’t common. For many today it’s the only option they have for health insurance. And you can be sure that decades down the road when HSAs have higher balances that those savings will be used as justification for even further financial burden placed on the consumer.

Social Security

 
It’s widely known that Social Security is eerily similar to a Ponzi scheme. The money you pay in is immediately paid out to beneficiaries, not invested or set aside for your retirement. The first person to receive Social Security paychecks made out like a bandit as they paid in for a very short period of time but received benefits throughout their retirement.

Virtually every millennial I talk to is not expecting Social Security to be funded or available when they reach retirement age, despite currently paying into it and likely paying into it for many years or decades to come.

Considering the fact that millennials have come to accept this and haven’t placed a high level of energy or effort on reforming Social Security flies in the face of criticisms that millennials are self-absorbed and only care about themselves.

On a more technical note, the current structure of Social Security is unsustainable because there is a projected tightening of the ratio of retirees to workers over the next few decades. By the time millennials reach retirement the benefits they receive will need to either be greatly diminished, funded by debt, or eliminated altogether.

 
___________________________________________________

My goal with this post is to simply highlight the financial burdens millennials – and soon generation Z as well – have taken on.

Anyone can attack millennials and make broad generalizations about them, but what they can’t do is deny that younger generations have taken on three huge financial burdens that older generations are either unable or unwilling to deal with themselves.

Another important thing to point out is that millennials for the most part have had little say in any of this. From Social Security to Healthcare, the decisions that negatively impact millennials’ finances were made largely without their opinion or consent.

The biggest question is whether millennials will continue the trend of taking advantage of younger generations financially. It’s easy for me to write my criticisms of older generations, but in twenty or thirty years will a 20-something blogger be writing this same post?

But you can’t work on building your credit score unless you know what’s on your credit report. Credit reports list how many accounts you have (both open and closed). That includes mortgages, car payments, and student loans along with credit cards. They can show negative marks for as long as seven years, so if you’ve had a bankruptcy or foreclosure or skipped payments within that time frame, those will show up.

Another reason to look at your credit report regularly is not just to check up on your own financial habits, but to make sure nobody has stolen your identity and used it to open accounts under your name.

Finally, up to 23% of consumers report finding an inaccuracy on their report — whether it’s because of identity theft, or just because of an error somewhere in the system. You won’t know about whether you’re one of them unless you look at your report.

Luckily, since 2003 the Fair Credit Reporting Act has required that consumers get access to one free credit report per year from each of the three major credit bureaus (Experian, TransUnion, and Equifax.)

It is really easy to get these reports. Most people reading this will just want to go to annualcreditreport.com. You provide your name, social security number, address, and date of birth, and answer a couple of identifying questions. Then you choose which credit report you want to receive, and it appears instantly.

However, you can also call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Don’t pay attention to the many, many websites offering you access to your credit report for a fee! You do not need to deal with them and should never pay for access to your credit report.

By the way, if you’ve already seen your free credit reports for the year, there are other circumstances under which you can get new ones. If you’re denied an application for credit, insurance, or employment because of your credit, and you ask for a report within 60 days of receiving notice, you can ask for another free report. You can also get more than one free report if you’re unemployed and job-hunting; if you’re on welfare; or if your first report was inaccurate because of identity theft or other forms of fraud.

One last tip: if you go to annualcreditreport.com, you can choose whether to get your free reports from the three bureaus all at once, or just to get one. Many people set a reminder on their calendar and get one free report every few months. This allows you to constantly check up on your credit report, for free, throughout the year.

Do you check your credit regularly? Ever found any inaccuracies on your credit report?

The 2016 Presidential Campaign is in full swing, with the Iowa caucus in the books and the New Hampshire primary taking place tomorrow.

The candidates are everywhere, figuratively and literally, on the news, in the media, and even in social media trying to convince you that they represent the best choice for the next president of the United States.

While tax reform, job creation, immigration, foreign wars, and abortion are still mainstay issues for most of the presidential candidates, a new hot-button issue has emerged that we haven’t really seen as strongly in a presidential contest before.

Student loans, student loan reform, and the possibility of making college tuition less costly or even free for all students, has taken center stage. Millennials, the most debt-burdened students in history, are demanding answers.

We want to know: What is your stance on student loans and student loan debt? Are you going to do anything to fix our massive student loan debt problem in the United States? How can we change things to make college a financial reality the next generation?

The following is an unbiased, fact-based listing of the 2016 Presidential candidate’s stance (or lack thereof) on student loans and student loan debt.
 

In his own words, Ted Cruz’s plan as president is as follows, “During my first year, I will fight to abolish the IRS, the Department of Education, the Department of Energy, the Department of Commerce, and the Department of Housing and Urban Development.”

Ted Cruz’s stance appears to lean more towards job creation.

 
 
Donald Trump

In an interview with The Hill, for example, he said, “One of the biggest questions I get is from people in college [about student loans]. They’re in college — they’re doing well but they’ve got student loans up to the neck. They’re swimming in these loans.”

He has since gone on to say that he’ll “fix the problem” but has yet to offer any concrete details on his official campaign website. His student loan plan seems to lean more towards job creation instead of loan management, reduction or revamping of our Federal Loan process.

 
 
Marco Rubio

• Consolidate the higher education tax incentives into one provision

• Reduce the complexity of the federal financial aid application

• Reduce the burden of student loan debt by establishing an automatic income-based

• Allow students to apply for “Student Investment Plans” from approved investors to help Americans finance postsecondary education without taking on the burden of student loans.

• Establish an accountable framework for students to repay loans based on what they earn after college.

 
 
Jeb Bush

• Replace the current federal loan program with an entirely new, income-based financing system that gives students ownership of their student aid and the flexibility to plot their own individual educational path

• Provide all high school graduates access to a $50,000 line of credit through their Education Savings Account. Students would repay this debt by contributing a percentage of their incomes proportional to the amount spent—1% for every $10,000 spent—through their federal income taxes for 25 years.

• Give low-income students, in addition to the $50,000 line of credit, access to an improved need-based Pell Grant through their Education Savings Account.

• Drive down costs and hold post-secondary institutions accountable by forcing them to share the risk of failure with students, thereby incentivizing them to reduce costs, boost quality and ensure that students graduate, find a job and have the skills needed to succeed.

• Give students and families the information they need to make good decisions through the creation of state databases that make information on student outcomes (retention, completion, unemployment, earnings, etc.) available to the public.

• Help existing borrowers successfully repay their loans by allowing them to transfer into the new income-based repayment system.

• Make federal debt collection more transparent, simple and fair and allow private student debt to be discharged in bankruptcy, extending the debt repayment period and easing transition into the existing REPAYE

 
 
Ben Carson

• Use market-oriented solutions to reduce tuition costs and alleviate student loan debt.

• Develop an approach that reflects the American values of free market competition and consumer choice.

• Provide parents and students clear, easy-to-understand information about repayment rates and future earnings projections in their chosen fields of study.

• Simplify and streamline the financial aid system to make it easier for students and families to make informed decisions.

• Reverse President Obama’s nationalization of the student loan market and welcome private sector participation in providing information and financing.

• Ensure that no student has to borrow to pay for tuition, books, or fees to attend a four-year public college in their state.

• Enable Americans with existing student loan debt to refinance at current rates.

• Hold colleges and universities accountable for controlling costs and making tuition affordable

• Close corporate tax loopholes to pay for her plan

“We need to make a quality education affordable and available to everyone willing to work for it, without saddling them with decades of debt,” Hilary Clinton, August 10, 2015.
 
 
Bernie Sanders

• His plan is to make tuition free at public colleges and universities.

• Stop the Federal Government from making a profit on student loans.

• Substantially cut student loan interest rates.

• Allow Americans to refinance student loans at today’s low-interest

• Allow students to use need-based financial aid and work study programs to make college debt free.

• Make college fully paid for by imposing a tax on Wall Street speculators (a $75 billion dollar a year plan).

 
Student loan debt is an issue that is not going away anytime soon. With college students graduating with higher and higher levels of student loan debt, it’s only going to become a bigger issue in Presidential races.

Does a candidate’s stance on student loans or debt matter to you? What are you looking for in a candidate? Will their stance on student loans sway your vote?

While many people are happy about health insurance exchanges and the opportunities they offer individuals for health insurance coverage, the reality for many young adults as a demographic is that their premiums are virtually guaranteed to rise because of Health Care Reform.

The reason why premiums will increase for young adults isn’t because of one factor, but instead a number of reasons. First, reform guarantees insurance coverage to everyone regardless of their health status or pre-existing conditions. This certainly forces insurance companies to raise the premiums of everyone, even the traditionally healthy young adult demographic. Second, rate bands will likely become a more widely used regulation, especially in exchanges (more on rate bands later). Finally, while health insurance companies can factor in age when pricing premiums, they can only do it on a 3:1 multiple.

How Insurance Companies Can Rate Premiums

The new Health Care Reform law no longer allows insurance companies to rate premiums based on health status or gender. In the past something like a pre-existing might not have been covered, or at the very least would have pushed premiums sky-high. Insurance companies can no longer look at health status as a factor for premium rates.

The factors that can be used are the following:

• Individual or Family Enrollment
• Geographic Area
• Age
• Tobacco Use

There are still limits within these factors. For example, the age factor only allows for a maximum 3:1 variation in premiums for adults, thereby capping it’s effectiveness at 3x the lowest rate. While the fact that age is factored in may be good news for young adults, who traditionally as a demographic use less health insurance than the elderly, the 3:1 variation limit puts some upward pressure on premiums for those in their 20s and 30s.

Three Different Rating Reforms

There are a few reforms that already have been implements in a number of states that adversely affect young adults when it comes to pricing premiums. They include:

1) Rating Bands

Rating bands essentially set a ceiling as to how much premiums can vary in a given state. If the rating band was 5, the highest premium could only be 5 times that of the lowest premium. This puts upward pressure on the lower premiums, which likely are made up of the young adult demographic (remember, health status can not be a factor starting in 2014 so it’s irrelevant whether we are talking about healthy or unhealthy young adults).

2) Community Rating

Community rating means that everyone in the same “community” on the same plan must be charged the same rate. This spreads cost evenly throughout the demographics that make up the community.

3) Adjusted Community Rating

A variation of the community rating, adjusted community rating states allow for some variation in the rate charged to individuals on the same plan in the same community. Young adults fare better under this regulation, since age is a factor that allows for fluctuation in pricing and therefore distributes the premiums in their favor.

In an unregulated market there is much more leeway to price premiums according to health status and age. The more reform there is, the more it favors those who have chronic/pre-existing conditions as well as those who are older. Rating bands, community rating, and adjusted community rating all work against healthy young adults, or in the post-reform world where health status and claim experience is not factored in, it works against those who are in the younger demographic.
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Health Care Reform is still being implemented little-by-little. We should start seeing many of the regulations being implemented in 2014, though we won’t see the full effects of Health Care Reform until well past 2014.

One thing that we will see (and to a degree have already started to see) is less variance in premium costs between those in their 20s, 50s, and 70s; costs will be spread out more evenly between demographics. Since young adults generally use less health care than those in their 50s and beyond, their premiums are definitely going to rise as we see reform being fully implemented.

Do you think age should be factored in to a higher degree? Should the multiple for age be higher than 3-to-1? What are your thoughts on Health Care Reform and what do you think could be done differently/better?

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Photo by John Benson

Full Disclosure: I do work for a diversified health and well-being company, but this post is my own opinion and is no way representative of my employer.