Student loan payoff strategy - check out the new SAVE plan & Fresh Start - WEBINAR LINK ADDED 9/15

[pamlur1]

Yes, I have seen things about Medicaid but the reference was to Medicare. I have heard of children being presented a bill for Medicaid; don't know anybody personally who has/had experience.

 

[tinkerbellandpeterpan]

Yes, I have seen things about Medicaid but the reference was to Medicare. I have heard of children being presented a bill for Medicaid; don't know anybody personally who has/had experience.

Oh sure, I wasn't saying you misread. I was just wondering if the original poster of that particular message made a mistake. Didn't mean to imply anything other than that.

I should have done the double quote so it was a little more clear.

 

[NotUrsula]

That's MedicAID, not MediCARE; what is being referenced is the Federally-mandated Medicaid Estate Recovery. There has been some talk lately on getting rid of, or at least substantially revising, that rule, because now that it has become mandatory many states say that they are paying more for the associated legal costs than the amount they stand to recover, (often largely because the bulk of the money paid out ends up as profit in the hands of the nursing home owners due to capitated payment arrangements; the value of the home is a pittance in comparison.) The vast majority of heirs who get hit with it are families that have no other assets but a home that has been in the family for generations. (Extended families with more secure assets can afford to hire legal help, and often do, so that the "family home" ends up in a trust long before the residents need MedicAID.) MediCARE does not have such a rule, largely because it doesn't pay for long-term care at all.

One of the most standard pieces of advice that working-class families are often given when older folks start to slow down is to have the older folks and one of the younger branches of the family trade homes, so that the "family home" is not the one listed as the MedicAID recipient's home for the clawback. Often the arrangement is that the older folks move into a younger family member's rented home and the younger nuclear family takes the larger, paid-for "family home" but still pays the rent on their former residence so that the older folks on a fixed income will not have that expense.

Sometimes early defensive actions don't need to be that complex, but each state differs a bit on what counts: in my state, filing a beneficiary deed on the home at any time will protect it, because my state only pursues assets subject to probate, which a beneficiary deed bypasses here.

 

[tinkerbellandpeterpan]

That's MedicAID, not MediCARE; what is being referenced is the Federally-mandated Medicaid Estate Recovery. There has been some talk lately on getting rid of, or at least substantially revising, that rule, because now that it has become mandatory many states say that they are paying more for the associated legal costs than the amount they stand to recover, (often largely because the bulk of the money paid out ends up as profit in the hands of the nursing home owners due to capitated payment arrangements; the value of the home is a pittance in comparison.) The vast majority of heirs who get hit with it are families that have no other assets but a home that has been in the family for generations. (Extended families with more secure assets can afford to hire legal help, and often do, so that the "family home" ends up in a trust long before the residents need MedicAID.) MediCARE does not have such a rule, largely because it doesn't pay for long-term care at all.

One of the most standard pieces of advice that working-class families are often given when older folks start to slow down is to have the older folks and one of the younger branches of the family trade homes, so that the "family home" is not the one listed as the MedicAID recipient's home for the clawback. Often the arrangement is that the older folks move into a younger family member's rented home and the younger nuclear family takes the larger, paid-for "family home" but still pays the rent on their former residence so that the older folks on a fixed income will not have that expense.

Sometimes early defensive actions don't need to be that complex, but each state differs a bit on what counts: in my state, filing a beneficiary deed on the home at any time will protect it, because my state only pursues assets subject to probate, which a beneficiary deed bypasses here.

Please stop giving legal advice because some of what you have posted is incredibly incorrect for other states. There is also a five year look back period you are disregarding. I explicitly made the distinction between Medicare and Medicaid for a reason. The laws are complicated and include not only federal but state related laws.

It really needs to be handled by professionals. I know enough after dealing with this issue with a family member that I don't know enough and one would think I'm well versed in this area. One size does not fit all. It is extremely unfortunate that this is such a complicated matter for people to have to navigate. But for the love of God if you are working through this quagmire please seek some competent help.

 

[NotUrsula]

Please stop giving legal advice because some of what you have posted is incredibly incorrect for other states. There is also a five year look back period you are disregarding. I explicitly made the distinction between Medicare and Medicaid for a reason. The laws are complicated and include not only federal but state related laws.

It really needs to be handled by professionals. I know enough after dealing with this issue with a family member that I don't know enough and one would think I'm well versed in this area. One size does not fit all. It is extremely unfortunate that this is such a complicated matter for people to have to navigate. But for the love of God if you are working through this quagmire please seek some competent help.

I didn't mean it as legal advice, and it never occured to me that anyone would take it as such, certainly not on a Disney travel message board. In fact, I meant to illustrate that legal advice is what's needed because the people who primarily end up very disadvantaged in these situations often think they can't afford to get it. (I'm well aware of the Medicaid look-back, but I didn't want to try to explain it, because yes, it's very complex. You'll note that I didn't say what my state is, and that's why.)

So absolutely, don't trust what you read online from someone whose background you don't know; hire an estate-planning lawyer who practices in the jurisdiction in question. Every state is different, and every situation is different, but the key takeaway is that you have to start *thinking* about it years before you'll think you'll need to know, preferably decades before. Even people who believe that they have very solid assets to see them through their later years can see those assets disappear at the speed of light if long-term care comes into play, unless the scenario was planned for *many* years in advance. (To be crystal clear: I'm *not* advocating cheating to game the system; I'm advocating being informed by local expert guidance, exploring insurance options if applicable, and not ending up sacrificing more than is required in your situation.)

Ironically, given that we've slithered off-topic here, is that much the same advice applies when it comes to paying for college. Even if you cannot afford, for whatever good reason, to save enough to pay for your children's college educations, consulting expert sources to learn about the rules of college financing and stay abreast of changes years before they are old enough to go is very important for your entire family's financial well-being. If you wait until the start of Junior year to start learning the ropes, you're probably not going to get an optimal result.

 

[Pea-n-Me]

I'll answer. It's not worth it for me. I don't use my JD. I took an entirely different job with a drastic pay cut during Covid. I wish I had never chosen law school. But I got swept up in being smart, good at school, and somewhat fulfilling my parents' dreams (not their fault just honest truth upon reflection). These loans are a source of tremendous stress. They are quite literally the reason DH and I will never own a house. I have been paying on them for over 15 years and the principal rarely goes down. It's a nightmare. And I have often considered just declaring bankruptcy and praying they go away.

On the other hand I know plenty of people who feel very differently. I would just make sure he is very clear it's a career he wants and that the salary will support the loan payback. I wouldn't wish this stress on anyone.

Thank you for answering. That seems to be the consensus of a lot of others I’ve talked with, too.

 

[HeatherC]

I have a question we have yet to find the answer to. When you make a payment, how do they apply it? If you have six or seven loans, do they randomly pick one to apply it to? Do you say which one to apply it to? We are still trying to even find out what my daughters payment will even be but have yet to get an answer.

 

[LuvOrlando]

May I ask what you mean about Medicare being a loan to be paid after death? And inheritance taxes don't apply until your estate is valued above $13 million and even then, the tax is only on the excess. If you do have a sizable estate, I suggest a Revocable Living Trust to avoid a lot of probate issues.

OK, sure minor thread detour. Whichever it is if I used the wrong word, care or aid ONE of them that helps people get care. I assure you most people won't care who got it just that it is gone, you can count me among them.

If you research the process closely, in many states they have laws where they collect whatever medical expenses were accumulated during life from the estate after you pass, which was news to me because that sounds like a loan payable upon death IMO.

So if you think you had a nice house fully paid for and will be leaving all the proceeds of that to your kids you may be completely wrong. Here is one such article, once you know what you are researching for there are shockingly many stories.
https://www.npr.org/sections/health...9490515/they-could-lose-the-house-to-medicaid

The more I read the more I am certain the best way to give to our kids a solid start was via education which is why we did things this way instead of assuming the kids will get it in the form of property.

 

[LuvOrlando]

Do you mean that you're more defensive with your household budget due to inflation....meaning, budgeting to pay off debt more quickly, or defensive as in your risk with respect to your retirement savings or investment portfolio?

Household finances & 401K etc due to a theme of uncertainty in many things but I don't want to derail here.

WSJ did an article about 529 that can slide into other financial vehicles, I like our State 529
https://www.wsj.com/articles/WP-WSJ-0001167345?mod=article_recs_pos2_sb_hp&next_redirect=true

 

[dvcgirl67]

OK, sure minor thread detour. Whichever it is if I used the wrong word, care or aid ONE of them that helps people get care. I assure you moist people won't care who got it just that it is gone, you can count me among them.

If you research the process closely, in many states they have laws where they collect whatever medical expenses were accumulated during life from the estate after you pass, which was news to me because that sounds like a loan payable upon death IMO.

So if you think you had a nice house fully paid for and will be leaving all the proceeds of thast to your kids you may be completely wrong. Here is one such article, once you know what you are researching for there are shockingly many stories.
https://www.npr.org/sections/health...9490515/they-could-lose-the-house-to-medicaid

The more I read the more I am certain the best way to give to our kids a solid start was via education which is why we did things this way instead of assuming the kids will get it in the form of property.

Yes, my in-laws were in this boat....paid for home, 150K left in nest egg and she goes into the nursing home. At that time, we had no idea that she'd die six weeks later, and so we followed the advice to start the "medicaid spend down", where we quickly started spending down her half of the nest egg on any and all allowable expenditures according to Medicaid rules. My FIL replaced his car, got a new roof.....and then she passed before we could get through her half of the money. He's down to about 100K now....and the house, at age 92.

So, if he needs long term care, first we go through the 100K. Then the house sits there in case it's just a shorter rehab stay...or even a longer term stay, as he might return home. When the sad day comes when he passes, we'd have to sell the house and pay back medicaid. His "stuff" has to pay for what he owes. Depending on the situation, we might even sell his home to get him in to a higher quality nursing home and skip the medicaid process altogether.

On the other topic you mentioned....about paying for college being the best thing you can do for your kids, another cautionary tale. My in-laws did just that for their son (my DH). They were always pretty frugal, excellent savers, but terrible investors (far too conservative). They retired in their mid to late 60s, with a 200K paid for home (back in 2000) and a nest egg of 400K.

They're pretty frugal people, but because their nest egg was invested so conservatively...and she passed at nearly 89, and he's still going strong at 92, so they began to run out of purchasing power. It wasn't until a little over a decade ago that we realized this (they never told us their nest egg amount), and began subsidizing their lifestyle. We noticed they weren't taking as many day trips or going out to eat...etc. And so over the last decade we've sent them more than they paid for my husband's education, in today's dollars. I don't regret this for a moment, but technically, they should have been more concerned about their retirement savings over my husband's education. And they should have been invested in something other than bonds and CDs. You can't take out loans to pay for retirement....and not everyone has adult children that can send thousands a year to subsidize your life.

 

[Pea-n-Me]

I have a question we have yet to find the answer to. When you make a payment, how do they apply it? If you have six or seven loans, do they randomly pick one to apply it to? Do you say which one to apply it to? We are still trying to even find out what my daughters payment will even be but have yet to get an answer.

I wish I knew the answer for you. I asked DD and she wasn’t sure, either. Sorry!

 

[tinkerbellandpeterpan]

I have a question we have yet to find the answer to. When you make a payment, how do they apply it? If you have six or seven loans, do they randomly pick one to apply it to? Do you say which one to apply it to? We are still trying to even find out what my daughters payment will even be but have yet to get an answer.

I have a payment with one loan company that covers several loans. They show clearly how they allocate the payment. It's not random and the payment isn't applied to just one loan. If you make payments in excess of the minimum required then you can direct where that payment is applied (i.e. to the smallest loan to knock it out or the one that has the highest interest rate). I hope that's helpful.

 

[LuvOrlando]

Yes, my in-laws were in this boat....paid for home, 150K left in nest egg and she goes into the nursing home. At that time, we had no idea that she'd die six weeks later, and so we followed the advice to start the "medicaid spend down", where we quickly started spending down her half of the nest egg on any and all allowable expenditures according to Medicaid rules. My FIL replaced his car, got a new roof.....and then she passed before we could get through her half of the money. He's down to about 100K now....and the house, at age 92.

So, if he needs long term care, first we go through the 100K. Then the house sits there in case it's just a shorter rehab stay...or even a longer term stay, as he might return home. When the sad day comes when he passes, we'd have to sell the house and pay back medicaid. His "stuff" has to pay for what he owes. Depending on the situation, we might even sell his home to get him in to a higher quality nursing home and skip the medicaid process altogether.

On the other topic you mentioned....about paying for college being the best thing you can do for your kids, another cautionary tale. My in-laws did just that for their son (my DH). They were always pretty frugal, excellent savers, but terrible investors (far too conservative). They retired in their mid to late 60s, with a 200K paid for home (back in 2000) and a nest egg of 400K.

They're pretty frugal people, but because their nest egg was invested so conservatively...and she passed at nearly 89, and he's still going strong at 92, so they began to run out of purchasing power. It wasn't until a little over a decade ago that we realized this (they never told us their nest egg amount), and began subsidizing their lifestyle. We noticed they weren't taking as many day trips or going out to eat...etc. And so over the last decade we've sent them more than they paid for my husband's education, in today's dollars. I don't regret this for a moment, but technically, they should have been more concerned about their retirement savings over my husband's education. And they should have been invested in something other than bonds and CDs. You can't take out loans to pay for retirement....and not everyone has adult children that can send thousands a year to subsidize your life.

Every family is different. I suspect your inlaws investing in their son's education is why he can help them now. To me that is the goal, to have kids with disposable income so they can make it over the hurdle for the next rung on the ladder. There is only one way to get my kids to the next level, most of it is on them but I need to give them the tools and a debt free start is the most important tool as far as I can tell otherwise they are indentured servants.

I do not expect to keep up a special lifestyle as I age and am now feeling far more pragmatic about how I want to age. Thoughts now turn to hedging the situation with deliberate choices, slowing down is inevitable. Best guess is we will rent in the temporary lifestyle we want to experience now while purchasing a much downsized and pragmatic spot for aging in place where upkeep is cheap, the area is safe and calm, taxes are low and which is handicap accessible with an eye towards the inevitable.

Slow and steady wins the race, I know my lane

Maybe this should be a different thread?

 

[LuvOrlando]

I have a question we have yet to find the answer to. When you make a payment, how do they apply it? If you have six or seven loans, do they randomly pick one to apply it to? Do you say which one to apply it to? We are still trying to even find out what my daughters payment will even be but have yet to get an answer.

Hi, when you log into the servicer the monthly payment due should be bolded right on the front page,my kids had no trouble finding it in MY LOANS.

You can pick by choosing the loan grouping, the groupings have letter designations that correspond to the semester the loan was incurred so Spring 2022 would have it's own letters and interest rate different from Fall 2029 etc.
I selected the highest interest groups with a check mark and paid them. Now, I paid some groupings off in full but I think I read that people can choose how to distribute their required monthly payments too.

So, if you know you need to pay $500 a month you should be able to click next to the highest interest groups and designate the $500 to that one. At least it looked this way to me, we only did the lump so no follow up or ongoing payments tried yet. I would call your servicer and ask this week but I am fairly certain I read about people doing this as I did research on the topic. I wouldn't do it blindly and end up needing to make another payment, always confirm first.

**I found this:

https://nelnet.com/how-payments-are-allocated#:~:text=You may have more than,be in a group together.​

I'd call to ask how it works, it may be you can only select groups when making principal payments above and beyond amount due.

 

[dvcgirl67]

Every family is different. I suspect your inlaws investing in their son's education is why he can help them now. To me that is the goal, to have kids with disposable income so they can make it over the hurdle for the next rung on the ladder. There is only one way to get my kids to the next level, most of it is on them but I need to give them the tools and a debt free start is the most important tool as far as I can tell otherwise they are indentured servants.

I do not expect to keep up a special lifestyle as I age and am now feeling far more pragmatic about how I want to age. Thoughts now turn to hedging the situation with deliberate choices, slowing down is inevitable. Best guess is we will rent in the temporary lifestyle we want to experience now while purchasing a much downsized and pragmatic spot for aging in place where upkeep is cheap, the area is safe and calm, taxes are low and which is handicap accessible with an eye towards the inevitable.

Slow and steady wins the race, I know my lane

Maybe this should be a different thread?

Yes, of course it's nice for your child to come out of college without any debt, you just have to be able to truly afford it. His college degree (he graduated in 91), was 50K, so it wouldn't have been something that set him/us back significantly.

In getting kind of back on topic....the real reason he/we are able to help was his choice of degree....computer science. It's a really good "bang for your buck" degree. He's been called a lot of different titles over the year...from software engineer, to software developer...to senior software architect as of late. It's a field with a great return on investment with respect to college costs. You make nice money out of the gate, and it just grows from there.

 

[luv2cheer92]

Timely thread! DD just sent me this, for undergrad (BSN)!

View attachment 790168

She’s about a month away from finishing up her MSN, and between education benefits and a nice scholarship from the hospital, she’ll have just about $3K left to pay on that, then she’ll be completely done.

DS is still plugging away at his, but fortunately they’re not too high. He never paused them, and I paid interest while they were still in school, so it’s pretty do-able. He is considering taking out a large school loan for another form of education, but I really hope he doesn’t. Payments would be overwhelming. Currently he’s picking up OT shifts and paying out of pocket instead while starting down that path.

Curious for those here who have substantial loans for post graduate education. Do you have any regrets about it? If you could change anything, what would it be? Was it worth it to be stuck with school loan payments for years and years?

Don't regret it a bit. It hasn't really had any impact on my ability to do the things I want. I have bought a house on my own, bought a new car, and travel extensively, while still having the loans to pay. I mean sure, if I could have done it for free or substantially less, I would obviously prefer that. But that is very far from the norm for my chosen career path, which I had no intentions on changing because of the loans.
Plus having an incredibly fulfilling career sure helps.

 

[LuvOrlando]

I agree and am confused by the original statement. My relative, who recently passed, owned her own house and she was able to to successfully qualify for Medicaid to cover her nursing home care and still shelter a portion of her assets. This did require the assistance of an attorney. Don't get me wrong, Medicaid took a large chunk, as they should because they covered her care for a long time. I know people often confuse Medicaid and Medicare so there may be some confusion there.

The only time I can think of that Medicaid is paid after death is if the surviving spouse stays in the home and there are Medicaid costs outstanding for the first to die. Upon the s/s dying then those costs for the first spouse are paid back from the sale of the primary residence. But I am definitely open to more information on the topic.

I think there needs to be a new thread on this topic to avoid derailment.

 

[LuvOrlando]

I'll answer. It's not worth it for me. I don't use my JD. I took an entirely different job with a drastic pay cut during Covid. I wish I had never chosen law school. But I got swept up in being smart, good at school, and somewhat fulfilling my parents' dreams (not their fault just honest truth upon reflection). These loans are a source of tremendous stress. They are quite literally the reason DH and I will never own a house. I have been paying on them for over 15 years and the principal rarely goes down. It's a nightmare. And I have often considered just declaring bankruptcy and praying they go away.

On the other hand I know plenty of people who feel very differently. I would just make sure he is very clear it's a career he wants and that the salary will support the loan payback. I wouldn't wish this stress on anyone.

Uggh, I am so sorry this happened to you.

Seems we are all in a great awakening right now. I feel nothing but compassion for everyone such as yourself who got caught up. All most parents want is a better life with more stability for their kids & that American Dream drive is super easy to mess with all the time. We all follow people who seem to know things & have the answers when we don't know those things and end up following the Pied Piper, it stinks .

Maybe the SAVE plan can offer you some relief, I am no expert so call and ask but it doesn't look like this is only for new graduates.
https://www.nytimes.com/2023/08/22/your-money/student-loans-income-driven-repayment-save.html

 

[HeatherC]

Hi, when you log into the servicer the monthly payment due should be bolded right on the front page,my kids had no trouble finding it in MY LOANS.

You can pick by choosing the loan grouping, the groupings have letter designations that correspond to the semester the loan was incurred so Spring 2022 would have it's own letters and interest rate different from Fall 2029 etc.
I selected the highest interest groups with a check mark and paid them. Now, I paid some groupings off in full but I think I read that people can choose how to distribute their required monthly payments too.

So, if you know you need to pay $500 a month you should be able to click next to the highest interest groups and designate the $500 to that one. At least it looked this way to me, we only did the lump so no follow up or ongoing payments tried yet. I would call your servicer and ask this week but I am fairly certain I read about people doing this as I did research on the topic. I wouldn't do it blindly and end up needing to make another payment, always confirm first.

**I found this:

https://nelnet.com/how-payments-are-allocated#:~:text=You may have more than,be in a group together.​

I'd call to ask how it works, it may be you can only select groups when making principal payments above and beyond amount due.

That is the problem. It is not showing the payment at all anywhere. It is with Mohela. Have spent hours trying to get through on the phone too. It does show all the loans and how much they are but nothing about any amount for payment. So frustrating. Even when you click kn each individual loan there is nothing other than the interest rate.

 

[LuvOrlando]

That is the problem. It is not showing the payment at all anywhere. It is with Mohela. Have spent hours trying to get through on the phone too. It does show all the loans and how much they are but nothing about any amount for payment. So frustrating. Even when you click kn each individual loan there is nothing other than the interest rate.

So did she create a new account? One of my kids needed to recreate another new account to get access with a different servicer. I was reading something about dual authentication throwing some accounts off so maybe that is part of the issue, the new account creation was suggested as a way to deal with it. Try to find other social media sources that talk about it.

If you can't get in maybe try to calculate each segment one by one and prepare for that guesstimate.