Investing your money for the future might be one of the quickest ways to grow your wealth, whether saving for retirement or making a large purchase. While most people know investing is a potential way toward a more manageable financial future, some may find investing challenging and somewhat scary. Here are a few simple steps to help overcome your investing fears.
Step 1: Start SmallDon't get caught up thinking you must invest a lot of money to get started. Start with the amount of money you are comfortable risking, and once you feel more confident with the investing process, revise your investing plan to include more significant investments.1
Step 2: Get EducatedOnce you decide you are ready to invest and how much to risk, take the time to educate yourself on the available investment options. You may feel less anxious if you understand how an investment works and what to expect. If you don't understand how an investment works, consider avoiding it.2
Step 3: Set Realistic Investing GoalsMake a list of goals that you want to accomplish with your investment. This may include where you want to be financially in the next five to 10 years and how much you need to save to accomplish those goals. During the research phase, you should determine how each investment works and should set target dates for specific goals. Just manage your goals to be realistic and attainable, or you may end up frustrated down the road.1
Step 4: Come Up With an Investment StrategyOnce you set your goals, you need to develop strategies to work toward obtaining them. Having an investment plan in place may make the process and decisions easier. Remember that your strategy is changeable. You may change your method and refine it over the length of the investment. When choosing a strategy, it is always a good idea to keep it simple, as more complicated strategies may lead to higher stress levels.1
Step 5: Pick Your Investments and Get StartedAfter researching and choosing the investments that may work with your financial desires and risk tolerance level, it is time to jump in and start. In the beginning, be sure to stick with your original investment strategy, as you may “tweak” it along the way if needed. If you are anxious about getting started, you may want to consider more conservative investments such as a 401(k) or individual retirement account (IRA) held in certificates of deposits (CDs) at an FDIC-insured bank.2
Step 6: Stay the CourseOnce your investments are made, be prepared to stay the course, and avoid getting discouraged over setbacks. Avoid panicking in the short-term, and try not to change your investments too often. Understand that investing may have ups and downs. You may need to get through the downs to reap the financial rewards of the up-cycles.1
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal.
Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal.  Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax.
CD’s are FDIC Insured and offer a fixed rate of return if held to maturity.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05376140
Footnotes1 Removing the Barriers for Successful Investing
https://www.investopedia.com/articles/stocks/07/barriers.asp
2 Don’t Panic! 5 Strategies For Controlling Your Fear About Stock Market Turbulence
https://www.forbes.com/sites/johnjennings/2020/03/11/dont-panic-5-strategies-for-controlling-your-fear-about-stock-market-turbulence/?sh=2b2d34733a53

You often hear people discuss "saving for retirement,” but in many cases, they're actually referring to their investing. The adage "you can't save your way to wealth" is simplistic, but has a kernel of truth; putting your money in a savings account often won't be enough to outpace the rate of inflation, which can erode the value of your savings over time. Below, we discuss some of the key differences between investing and saving and how to choose the most optimal course of option for you.
Saving: A Low-Risk Way to Set Aside Funds for the FutureSaving is just a method to set aside money for future use, whether you're putting it into a general "emergency fund" or earmarking it for a new vehicle, a home down payment, or medical expenses. You can keep savings in a checking account, a regular or high-yield savings account, a certificate of deposit (CD), or even certain types of government bonds.
Investing: Putting Your Money to Work for YouInvesting, on the other hand, involves putting your money into financial instruments like stocks, bonds, exchange-traded funds (ETFs), and mutual funds. Investing is riskier than saving, but can also earn higher returns over the long term. Even accounting for recessions and depressions, the S&P 500 (composed of the U.S.'s 500 largest companies) has averaged just over 11 percent per year in returns since 1980.1
Investing can be one of the most efficient ways to reach your long-term financial goals like paying for a child's college education, purchasing a home, or retiring. For example, if you're saving $100 per week toward your retirement and keeping it in a savings account earning a minimal amount of interest, you'll have about $52,000 in 10 years. If you instead invested this money and achieved an average 10 percent annual rate of return, you'd have around $82,500 in a decade. This is more than a $30,000 increase in value over regular savings.2
Differences Between Saving and InvestingOne of the key differences between saving and investing is the security of your funds. Savings is low-risk and low-reward, meaning that over time, you won't earn enough in interest to overcome inflation, but you also won't risk losing your initial funds.
With an investment, you have the opportunity to have a double-digit rate of return over time; but if you're investing in an individual stock and the company goes bankrupt, your funds are gone.
This means it's a good idea to seek some degree of balance. You'll want to keep an emergency fund or any money you expect to use over the next couple of years in a low-risk account, like a savings account or CD. This will ensure the money is there and accessible whenever you need it.
But for longer-term funds, like retirement funds, it can be helpful to try and get ahead of inflation by investing these funds in the stock market. You can invest in whatever you'd like, from conservative bond funds to an aggressive growth portfolio. A financial professional can work with you to assess the best investments based on your risk tolerance, desired asset allocation, and retirement timeline.
 
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.  All indexes are unmanaged and cannot be invested into directly.
Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market.
An investment in Exchange Traded Funds (ETF), structured as a mutual fund or unit investment trust, involves the risk of losing money and should be considered as part of an overall program, not a complete investment program. An investment in ETFs involves additional risks such as not diversified, price volatility, competitive industry pressure, international political and economic developments, possible trading halts, and index tracking errors.
Investing in mutual funds involves risk, including possible loss of principal.  The funds value will fluctuate with market conditions and may not achieve its investment objective. Upon redemption, the value of fund shares may be worth more or less than their original cost.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
CD’s are FDIC Insured and offer a fixed rate of return if held to maturity.
S&P 500 Index: The Standard & Poor's (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05376140
Sources:1 “Stock Market S&P 500 Returns Since 1980,” https://www.officialdata.org/us/stocks/s-p-500/1980
2  “Compound Interest Calculator,” https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

Planning for your financial future and retirement looks much different now than in previous years. Some people must supplement their Social Security to have enough to maintain their desired lifestyle. This means financial planning is now a critical component of retirement. While having a financial professional on your side is vital to managing your financial future, so is visualizing what your future may include.
Visualizing Helps You Determine How Much You Need in RetirementOne of the most important reasons for visualizing your future is that it may help you understand how much money you might need to afford the retirement you want. Imagine what your retirement may look like for you. Might it include travel? Do you anticipate making significant purchases? Do you want to leave a large estate to family members? Consider what you want to have in the future and calculate how much money you may need to accomplish those desires.1
Visualizing Helps You Consider Aspects of Retirement That May Affect Your Financial NeedsVisualizing your retirement may help you determine what steps need to be taken and how your retirement may be affected by certain aspects of your future. You may decide working longer is the ideal way to get to the future you visualize. You may also find that your plans could involve downsizing or upsizing your living situation, which may lead to adjustments in your financial plan.2
Part of Your Visualization Needs To Consider a Few Inescapable FactorsCertain parts of the future, such as aging and retirement, are inescapable. To improve your visualization and planning, here are a few things that you might want to factor in:

• You may live longer than expected: With advancements in technology and better health care, people are living much longer than the average life span used to be, so you may need to manage your financial plan in order to provide you with enough money to get you through the remainder of your life.
• You may face major health care bills: For most people, getting older means more health concerns and higher medical bills. As medical costs continue to rise, this challenge is expected to get worse in the future.
• Inflation: The cost of living may continue to increase as you age. In some cases, the inflation cost may be significantly higher than expected. During your visualization, you must account for the fact that prices might increase from now through your retirement and make sure you plan accordingly.

Planning for retirement involves trying to see into the future, so you may imagine how to cover your wants and needs. One of the easiest ways to start your plan is by visualizing what you want your financial future to look like. With the help of a financial professional, you might then come up with the necessary steps in your plan to help you get there.
 
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by WriterAccess.
LPL Tracking #1-05376140
 
Footnotes1 How To Prepare For Retirement Through Visualization
https://www.businessinsider.com/prepare-for-retirement-through-visualization-2011-4
2 Visualize your way to a better retirement
https://www.cbsnews.com/news/visualize-your-way-to-a-better-retirement/
 

Loss aversion, or the phenomenon of experiencing losses much more severely than gains, can lead to unwise investment decisions. Whether you're hanging on to a loser of a stock for longer than you should or are afraid to invest at all for fear of purchasing at a high point, making emotion-based investment decisions could mean leaving money on the table.
Below, we discuss how fear and anxiety can negatively impact your investing decisions, as well as some steps you can take to minimize this impact and reduce the stress of investing.
How Loss Aversion and Other Fears Can Impact InvestingFear of losing your hard-earned money may lead to irrational behavior and bad decisions. In behavioral psychology, loss aversion is incredibly common; this means that most people will be more upset about losing $100 than they would be happy to find $100.
For investors, this means you could find yourself hanging onto an investment you've lost money on, despite the opportunity cost of having that money tied up, just because you don't want to cash out and realize the loss. This not only risks a further decline in the investment, but it can also prevent you from allocating these funds in a wiser way.
Loss aversion also comes into play during recessions, depressions, or other volatile markets. No one wants to lose money on an investment, so the temptation to cash out when the market is on a downswing can be overwhelming. However, this also may mean that you may be equally reluctant to re-enter the market when it's back on an upswing. This approach has a double negative impact: instead of buying low and selling high, you're selling low and buying high.
How to Manage Emotional InvestingInvesting with your heart instead of your mind could result in losing money. Instead of letting emotions drive your investment decisions, try the following strategies:

• Review asset allocation. If the way your funds are invested no longer meshes with your risk tolerance and investment timeline, rebalancing your funds could help avoid making snap decisions.
• Consider a buy-and-hold or "set it and forget it" approach. The more closely you monitor your investment balances, the more tempted you may be to take action. By checking investments periodically to ensure they still fit into your desired asset allocation, then consciously leaving them alone until the next scheduled checkup, you should be able to reduce a great deal of financial stress.
• Work with a financial professional. Having a financial professional on your team can make investing less scary and provide an appropriate check on your decision-making process. A financial professional can help talk you through investing decisions to make sure they make logical sense and fit into your overall wealth-building strategy.

By focusing on rational, prudent trading strategies, you can mitigate many of the most common traps that can arise when loss aversion and other psychological phenomena may impact your judgment.


Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
Asset allocation does not ensure a profit or protect against a loss.
Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
This article was prepared by WriterAccess.
LPL Tracking #1-05376140

On June 8, 2023, the S&P 500 index closed at 4,293.93, just over 20% higher than its lowest recent closing value of 3,577.03 reached on October 12, 2022.1 According to a common definition of market cycles, this indicated that the benchmark index was officially in a bull market after a bear market that began in January 2022. By this definition, the current bull market began on October 13, 2022, the day after the bear market ended at its lowest point.
In more general terms, a bull market is an extended period of rising stock values. Bull markets tend to last longer than bear markets, and bull gains tend to be greater than bear losses. Since the end of World War II, the average bull market has lasted more than five years with a cumulative gain of 177%. By contrast, the average bear market has lasted about a year with a cumulative loss of 33%.2
Although a bull market is typically a time for celebration by investors, the current bull is being met cautiously, and it is unclear whether it will keep charging or shift into retreat. While it is impossible to predict market direction, here are some factors to consider.
Still lagging the highOne reason the new bull might not seem convincing is that (as of late June) the S&P 500 remains well below the record bull market peak in early January 2022.3 Investors who hold positions in the broader market are still looking at paper losses and could face real losses if they choose to sell, a situation that may not generate the kind of widespread confidence that often drives extended rallies.
The current bull is already eight months old, and it's unknown how much longer it might take to recover the total bear loss of about 25%, but recent history offers contrasting possibilities. The last bull market regained the pandemic bear loss of 34% in five months and went on to a cumulative gain of 114%. The long bull market that followed the Great Recession took more than four years to recover an even steeper loss of 57%. But that bull kept charging and went on to a cumulative gain of 400%.4–5
A more pressing question is whether the recent surge could be a temporary bear market rally that quickly slips back into bear territory. This happened during the bear markets of 2000–2002 and 2007–2009.
However, in 12 other "bear exits" since World War II, a gain of 20% from the most recent low was the beginning of a solid bull market.


A narrow rallyAnother key concern is that the current rally has been driven by large technology companies, which have posted big gains, due in part to excitement over the future of artificial intelligence.7 The S&P 500 is a market-cap-weighted index, which means that companies with larger market capitalization (number of shares multiplied by share price) have an outsized effect on index performance. As of May 31, the ten biggest companies, including eight technology companies, accounted for more than 30% of index value.8 Fewer than one out of four S&P 500 stocks have beaten the index in 2023, and nearly half have dropped in value. While it is not unusual for a relatively small number of companies to drive a rally, the current situation is more imbalanced than usual, and it remains to be seen whether exuberance for Big Tech will spread to the larger market.9–10
The market and the economyWhile the stock market sometimes seems to have a mind of its own, it is anchored over the longer term to the U.S. economy, and the current economy continues to send mixed signals. The long-predicted recession has so far failed to materialize, and both consumer spending and the job market remain strong.11 On the other hand, inflation, while improving, is still too high for a healthy economy. Although the Fed paused its aggressive rate hikes in June — one reason for the market rally — a majority of Fed officials projected two more increases by the end of the year, and Fed Chair Jerome Powell confirmed the prospect of higher rates in Congressional testimony on June 21.12
Higher interest rates are intended to slow the economy and inflation by making it more expensive for consumers and businesses to borrow, which should slow consumer spending and business growth — and could send the economy into a recession. Although it may seem counterintuitive, bull markets usually begin during a recession, or to look at it another way, the market usually hits bottom while the economy is down and recovers along with the broader economy. Along the same lines, a bull market typically begins when the Fed is lowering interest rates to stimulate the economy, not when it's raising them to slow it down.13 The current bull will have to buck both of these trends to sustain momentum. And if a recession does develop, it could turn the bull into a bear.
Corporate earningsAlthough investor enthusiasm can carry the market a long way, corporate earnings are the most fundamental factor in market performance, and the earnings picture is also mixed. Earnings declined by 2% in Q1 2023 — less of a loss than analysts expected but the second consecutive quarter of earnings declines. The slide is expected to continue with a 6.4% projected decrease in Q2, which would be the largest decline since the pandemic rocked the market in Q2 2020. The good news is that earnings growth is expected to return in the second half of the year, with robust growth of 8.2% in Q4. As with the current market rally, however, the surge is projected to be driven by large technology companies.14
Clearly, this bull market faces serious headwinds, and it may be some time before its true character emerges. While market cycles are important, it's generally not wise to overreact to short-term shifts and better to focus on a long-term investment strategy appropriate for your personal goals, time frame, and risk tolerance.
The return and principal value of stocks fluctuate with changes in market conditions. Shares, when sold, may be worth more or less than their original cost. The S&P 500 index is an unmanaged group of securities that is considered to be representative of the U.S. stock market in general. The performance of an unmanaged index is not indicative of the performance of any specific investment. Individuals cannot invest directly in an index. Past performance is no guarantee of future results. Actual results will vary. Forecasts are based on current conditions, are subject to change, and may not come to pass.
1, 3–4, 8) S&P Dow Jones Indices, 2023
2, 5) Yardeni Research, October 28, 2022
6) MarketWatch, June 8, 2023
7, 9) CNN, June 9, 2023

• Associated Press, June 8, 2023
• Fitch Ratings, June 8, 2023
• CNBC, June 21, 2023
• Bloomberg, June 5, 2023
• FactSet, June 9, 2023

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal professional.
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.
This article was prepared by Broadridge.
LPL Tracking #1-05374585
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2023

Most of us who have experienced college are all too familiar with that intimidating mountain you have to climb upon graduation: repaying your student debt. Seeing our children struggle financially is heart-wrenching, and though we want to see them prosper and be resilient, life today just isn’t the same as it was when we were young. The cost of living, inflation, and education expenses has continued to soar over the years, leaving our new graduates with debts far exceeding their entry-level incomes. Here are nine ways parents can help their kids repay their student loans.
 

1. Offer to match your child’s monthly payment

A large debt like a student loan can seem overwhelming for a new graduate. Times have changed. To help keep them motivated to pay off their debt as quickly as possible, save money on interest, and avoid default, consider offering to match their payments monthly or bi-monthly. Everything helps. 
 

1. Assist them with in-school payments

Generally, if a student is enrolled at least half the time, they are only required to repay their student loans after graduation and the grace period concludes. If a parent makes in-school payments, this generosity can help to lower the debt your student would have later on.
 

1. For birthdays and holidays, give them loan repayments as gifts

A lot of parents out there are uncomfortable just giving their child money. They worry the child might become spoiled or feel entitled. If you use birthdays and holidays as reasons for giving your child money to help repay their loan, they may appreciate the gift more and use it wisely.
 

1. Cosign a refinancing loan

First-year undergraduates can only borrow up to $5,500 annually in federal loans. Therefore, some students will need other financing options to pay for the rest of their education. These borrowers can take advantage of private loans. However, some students might not have the necessary credit to qualify. In such cases, parents can cosign a loan, helping their child secure the loan with a reasonable interest rate that can make paying for college more manageable and less stressful.
 

1. Consider a parent PLUS loan

A parent PLUS loan offers money to help you pay for your child’s undergraduate education. Eligible parents include biological and adoptive, and in certain circumstances, stepparents may also qualify.
 

1. Help them with day-to-day expenses

Life today is expensive, and the cost of living is through the roof. Inflation has been steadily increasing, and young people, especially those with entry-level positions, may need help as they find themselves living paycheck to paycheck and realize they simply can’t put aside enough to repay their school loans confidently. Helping them with their day-to-day expenses can allow them to use the extra money to repay their loan faster, saving them money in the long run from accrued interest.
 
Consider consulting a financial professional to see which method works best for you and your financial goals. Everybody’s situation is different, and understanding how your decisions will impact you and your child’s future can help your family prepare for whatever challenges may arise.
 
Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
 
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
 
This article was prepared by LPL Marketing Solutions
 
Sources:
Parent PLUS Loans | Federal Student Aid
Cosigning a Student Loan: Pros and Cons - Earnest
 
LPL Tracking # 1-05374812

Navigating health insurance, retirement accounts and real estate
 
Divorce, while an emotionally taxing experience, also comes with several financial implications that, if not properly managed, could result in long-lasting financial strain. It's essential to understand these hidden costs to effectively navigate your post-divorce financial life. Here are three key areas where hidden costs often lurk: Health insurance, dividing retirement accounts, and transferring real estate and mortgage refinancing.
Health Insurance: The Unexpected CostIt's a common scenario for one spouse to be covered under the other's employer-sponsored health insurance plan. Post-divorce, the covered spouse may no longer be eligible for this benefit, leading to a sudden, potentially significant, expense.
Cobra continuation coverage can extend benefits from an ex-spouse's employer's plan for up to 36 months. However, this coverage can be costly, as you would bear the entire premium cost plus a 2% administration fee. Alternatives include seeking coverage through your own employer or the Health Insurance Marketplace. Yet, these routes may also involve increased out-of-pocket costs or changes to your health care providers.
Additionally, consider potential changes to life insurance policies and disability insurance. It's essential to account for these potential changes early in your financial planning to minimize the financial impact.
Retirement Accounts: The Tax TrapDividing retirement accounts in a divorce can lead to substantial tax implications if not handled correctly. For instance, if funds are withdrawn from an individual retirement account (IRA) or a 401(k) without a Qualified Domestic Relations Order (QDRO), they may be subject to income taxes and a 10% early withdrawal penalty.
A QDRO is a court order that allows for the transfer of retirement funds from one spouse to the other without immediate tax implications. It's critical to ensure that this document is in place and correctly executed to prevent unintended tax consequences.
Moreover, be mindful of the future tax implications of the retirement assets you retain. Traditional 401(k) and IRA funds will be taxed upon withdrawal, and if withdrawn prior to age 59 ½ may result in a 10% IRS penalty tax, whereas Roth accounts have already had taxes paid. In a 50/50 split, these could be vastly different in value once taxes are considered.
Real Estate: Hidden Fees and CostsReal estate is often the largest asset involved in a divorce. Transferring property ownership can carry substantial costs, including title search fees, escrow fees, notary fees, and recording fees. Moreover, if the spouse keeping the house cannot afford the mortgage on their own, they may need to refinance.
Refinancing a mortgage incurs costs, including appraisal fees, origination fees, and potential prepayment penalties on the existing mortgage. Additionally, the refinancing spouse must qualify for the new loan based on their income and credit, which can be more challenging post-divorce. Also, don't overlook the capital gains tax implications if you decide to sell the property.
Property transfers and mortgage refinancing require careful financial planning and decision-making. Seek professional advice to help you understand the full range of potential costs.
Ask for HelpDivorce introduces numerous complexities to your financial life, some of which may not be immediately apparent. Understanding these hidden costs associated with health insurance, retirement accounts, and real estate can help you navigate this challenging period and lay the groundwork for financial stability.
Engage a financial and legal professional with expertise in divorce to help you make informed decisions for your financial future.


Important Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
This article was prepared by FMeX.
LPL Tracking #1-05374402

In a 6 to 3 vote, the Supreme Court struck down the Biden administration’s student loan forgiveness plan denying a chance for at least 43 million eligible participants to eliminate up to $20,000 of their debt.


Despite new actions announced by the White House in a continued fight to provide debt relief and support to as many student loan borrowers as possible, borrowers still must stay vigilant should they find themselves with debt to be repaid.


When calculating a repayment plan, the government uses discretionary income, the difference between your annual income and the money left over after you pay for essential goods and services like housing, food, and taxes.


Here are nine tuition repayment strategies that you may find beneficial.

1. Standard repayment plan

 
Time Frame
A standard repayment plan involves you making equal monthly payments over 10 years (within 10 to 30 years for Consolidation Loans).
 
Borrower Eligibility
All borrowers are eligible for this repayment plan.
 
Eligible Loans
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Subsidized and Unsubsidized Federal Stafford Loans
• All PLUS loans
• All Consolidation Loans (Direct or FFEL)

 

1. Extended repayment plan

 
Time Frame
A fixed or graduated repayment plan gets paid back in up to 25 years.
 
Borrower Eligibility
All borrowers are eligible; however, Federal Family Education Loan (FFEL) and federal direct loan borrowers must owe more than $30,000.
 
Eligible Loans
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Subsidized and Unsubsidized Federal Stafford Loans
• All PLUS loans
• All Consolidation Loans (Direct or FFEL)

 

1. Graduated repayment plan

 
Time Frame
This repayment plan does not consist of equal monthly payments. They start at one amount and then increase over time until the loan is paid off.
 
Borrower Eligibility
All borrowers are eligible for this repayment plan.
 
Eligible Loans
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Subsidized and Unsubsidized Federal Stafford Loans
• All PLUS loans
• All Consolidation Loans (Direct or FFEL)

 

1. Pay as you earn repayment plan (PAYE)

 
Time Frame
PAYE takes monthly payments at 10% of discretionary income but never exceeds what you would pay on a Standard Repayment Plan.
 
Borrower Eligibility
Eligible participants must be a new borrower on or after Oct. 1, 2007, and must have received a disbursement of a direct loan on or after Oct. 1, 2011
 
Eligible Loans
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Direct PLUS Loans made to students
• Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

 

1. Revised pay-as-you-earn repayment plan (REPAYE)

 
Time Frame
This repayment plan involves monthly payments calculated by dividing 10% of your discretionary income by 12 months.
 
If you are married, your and your spouse’s income and loan debt will be considered, regardless of whether taxes are filed separately or jointly (with certain exceptions).
 
Eligible participants include any Direct Loan borrower with a qualified loan.
 
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Direct PLUS Loans made to students
• Direct Consolidation Loans that do not include PLUS loans (Direct or FFEL) made to parents

 

1. Income-Sensitive Repayment Plan

 
Time Frame
This repayment plan is based on annual income and paid over 15 years.
 
Borrower Eligibility
Eligible participants include Federal Family Education Loan borrowers.
 
Eligible Loans
The eligible loans include the following:

• Subsidized and Unsubsidized Federal Stafford Loans
• FFEL PLUS Loans
• FFEL Consolidation Loans

 

1. Income-based repayment plan (IBR)

 
Time Frame
Repayment plans are set up based on monthly payments determined by calculating 10% or 15% of discretionary income based on when you borrowed. However, never more than you’d pay on a 10-year Standard Repayment Plan.
 
If you are married, your spouse’s income or loan debt will only be considered if you file a joint tax return.
 
After 20 or 25 years of payments, you may be eligible for Public Service Loan Forgiveness. You may have to pay income tax on any amount that is forgiven.
 
To be eligible, you must have a high debt relative to your income.
 
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Subsidized and Unsubsidized Federal Stafford Loans
• All PLUS loans made to students
• Consolidation Loans (Direct or FFEL) that do not include PLUS loans (Direct or FFEL) made to parents

 

1. Income-contingent repayment plan (ICR)

 
Time Frame
This repayment plan involves monthly payments that are the lesser of 20% of discretionary income or the amount you’d pay over 12 years with a fixed payment based on your income.
 
Borrower Eligibility
If married, your loan debt or spouse’s income will be considered only if you file a joint tax return or you choose to repay your Direct Loans jointly with your spouse. Any outstanding balance will be forgiven if you haven’t repaid your loan in full after 25 years.
 
Eligible Loans
Eligible participants include any Direct Loan borrower with an eligible loan.
 
The loans eligible for this plan include the following:

• Direct Subsidized and Unsubsidized Loans
• Direct PLUS Loans made to students
• Direct Consolidation Loans

 

1. Income-driven repayment (IDR)

Time Frame
This plan extends your loan term to 20 or 25 years, depending on the debt you hold.
 
Borrower Eligibility
All IDRs have similar features; however, each has slightly different rules. IBR (mentioned above) is an income-driven repayment plan for federal student loans.
 
Eligible Loans
Only federal student loans can be repaid under the income-driven plan. Private student loans are not eligible.
 
Eligibility for ICR, PAYE, REPAY, and IBR repayment plans is not guaranteed from year to year. Whether you are eligible and how much you pay get recalculated based on your family size and household income annually.
 
Choosing a Repayment Option that Works for You
Looking to pay less interest?

• Standard repayment. If you can afford this plan, you can pay less in interest and pay down your loan faster than you would on other repayment plans.
  
  

Looking for lower monthly payments and student loan forgiveness?

• Income-driven repayment. Payments can be as small as $0 if you are underemployed or unemployed, and the repayment amount changes annually. At the end of the term, you get IDR student loan forgiveness on your remaining debt. However, you may pay taxes on the forgiven amount.
  
  

Do you have a high income but want lower initial payments?

• Graduated repayment plan. This is a good option because graduated repayment lowers your payments at first, even as little as the interest amount on your loan. Payments then increase every two years until you finish your repayment schedule over 10 years.
  
  

Don’t want payments connected with your income?

• Extended repayment plan. This plan lowers payments by stretching them out to over 25 years. Remember, you must owe more than $30,000 in federal student loans to be eligible.
  
  

Want to pay off your loans faster?

• You can prepay your loans through any repayment plan; however, the Standard Repayment Plan is most beneficial. This is a great way to save money on interest. Remember to inform your loan servicer to apply the extra payment to your principal rather than toward your next monthly payment.

 
Need to pause payments temporarily?

• Income-driven repayment. Some loans accrue interest during deferment, and all accrue interest during forbearance periods. This increases the debt you owe. Income repayment plans can help reduce payments sometimes to $0, and those payments count toward forgiveness.

 
Public Service Loan Forgiveness Repayment Options

• Income-driven repayment. A federal program is available to government employees, public school teachers, and specific nonprofit employees. Those eligible can have their loan balance forgiven tax-free after making 120 qualifying loan payments.
  
  

Private Student Loan Options

• Private student loans don’t qualify for income-driven repayment; however, some lenders provide options that may temporarily reduce payments. If you struggle to repay a private loan, you should contact your lender to discuss any options.
  
  

 
Consulting a financial professional can help you determine how repayments may impact your financial situation and long-term goals. It only takes a few minutes to schedule an appointment and the benefits can last a lifetime.
 
Important Disclosures
Content in this material is for educational and general information only and not intended to provide specific advice or recommendations for any individual.
 
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
 
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
 
This article was prepared by LPL Marketing Solutions
 
Sources:
Discretionary Income Definition (investopedia.com)
Repayment Plans | Federal Student Aid
Supreme Court strikes down Biden's student loan forgiveness plan (cnbc.com)
Student Loan Repayment Options: Find the Best Plan - NerdWallet
Income-Driven Repayment Plans | Federal Student Aid
 
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