WASHINGTON, DC – FEBRUARY 22: U.S. President Joe Biden speaks during an announcement related to … [+] Getty Images Nobody ever said paying off student loans would be fun. Despite Biden’s efforts to forgive some student loans, change is tricky and slow. For freelancers whose financial situation is constantly changing, student loan policy is even more complicated. Here’s what you need to know. Biden’s plan has three parts : a final extension of the student loan repayment pause, a one-time cancellation of up to $20,000 in student debt for eligible borrowers, and a reform of the income-driven repayment (IDR) plans. As of mid-2022, if your total income is less than $125,000, you should qualify for up to $10,000 in student loan forgiveness under the American Rescue Act. And I say “should,” because we’re still awaiting a court decision on whether or not it will come to fruition. But—the current pause aside—let’s assume you’re a freelancer with student loans. It’s a match made anywhere but heaven, as freelancing is unstable, and student loans are annoyingly stable. Extremely, extremely stable. In fact, your loan payment can be the same for months and months and months, and your principal will barely decrease—it’s nice to have a shred of predictability in your life! How Biden’s Plan Will Affect You It depends on your income. But if you’re a freelancer, that’s not quite a straightforward calculation. The number you should be looking at is your adjusted gross income , which means that you get to deduct your business expenses, if you’re a freelancer. So if you make $150,000 and spend $30,000 on an office, you’re in the clear. If you make $125,003 and buy one business-related latte, you should also be in the clear (and if you’re not, make sure to get it with oat milk). But, while no one’s income is 100% steady, freelancers’ incomes mimic those pirate ship rides you see at street fairs. The ones that make little kids vomit. Not only do most freelancers not earn the same amount every year, many of us don’t earn the same amount every week. So, what if your income is sometimes above $125,000, sometimes below? What matters is what you filed on your 2020 and 2021 taxes . If your Adjusted Gross Income is less than $125,000 either of those years, you would qualify. Caixin Services PMI Exceeds Expectations As Chinese Semis Rally The Best Tummy-Control Swimsuits With Flattering Support The good news is that the extension of the student loan repayment pause means that you don’t have to make any payments on your federally-held loans for 60 days after the Supreme Court gets around to deciding on it. If there’s no decision by June 30, 2023 (a date that quite literally gets closer every day), payments pick up 60 days after that. This applies to everyone with federally-held student loans—even freelancers. What You Can Do Before Biden’s Plan Is Passed I want to offer general advice on how freelancers can manage student […]
