Ensuring Financial Wellness
Student loan debt can make financial freedom seem far away. Don’t be discouraged.
By learning how to balance the money you have with the money you owe, you can achieve financial wellness. Just follow these tips:
Here are 10 basic steps toward financial wellness:
How you manage credit influences your life. Not paying your bills or paying them late may stop you from buying the home of your dreams or getting the job you want. Take charge of your credit by understanding how it works and remembering that good credit matters.
Consumer reporting agencies calculate credit scores, sometimes called FICO® scores, by using a statistical model developed by Fair Isaac. The higher your score, the lower risk you pose to potential creditors.
Scores can range from 300 to 850, with the majority falling in the 600s and 700s. There are no official standards for a “good” or “bad” score—but many creditors look at scores higher than 660 favorably, and scores less than 600 with caution.
Your credit score is part of your credit report. Together, these reflect your credit history and other information about you. In fact, a credit report can contain a lot of sensitive information:
It is important to know what is in your credit report and to make sure it is correct. The Federal Trade Commission offers information about managing your credit.
The Fair and Accurate Credit Transactions Act entitles you to 1 free credit report per year from each of the 3 major consumer reporting agencies.
You are also entitled to an additional free copy of your report within 60 days of having a company take adverse action against you based on information in your report, such as denying your application for credit, insurance, or employment.
Contact the consumer reporting agencies directly to request free copies:
Equifax Credit Information Services, Inc. 800.685.1111 www.equifax.com
Experian 888.397.3742 www.experian.com
TransUnion Corporation 800.888.4213 www.transunion.com
There are a lot of credit score websites. Be aware that some are not affiliated with the federally mandated free credit report program. For one that is, visit www.annualcreditreport.com.
The consumer reporting agency and those that gave them financial information about you are responsible for correcting inaccurate or incomplete information in your report. To report and correct an inaccuracy in your credit report, do the following:
Every consumer can follow 5 simple rules if they want to increase their credit score:
This document was prepared for informational purposes only and cannot be considered credit counseling advice or otherwise. Please see your credit counseling professional for additional guidance.
Borrowing federal student loans gives you certain tax advantages. Whether you are in repayment, taking classes, or working, you may be eligible for these incentives.
All of these deductions and credits have distinct eligibility requirements. Before claiming any incentives, consult a tax professional. For more information, consult IRS Publication 970.
You may qualify for a tax deduction just by paying your student loans.
You may be able to deduct qualified education expenses—including tuition and fees—paid for you, your spouse, or a dependent.
Your employer may provide you with education assistance benefits for undergraduate or graduate courses tax-free each year.
You may be eligible for the Lifetime Learning Tax Credit and the American Opportunity Tax Credit, but some restrictions apply.
Lifetime Learning Tax Credit: You may claim a Lifetime Learning Credit for qualified education expenses each year you are in school.
American Opportunity Credit: The American Opportunity Credit benefits students who are enrolled at least half time for at least 1 academic period during the tax year.
Students must be pursuing an undergraduate degree or other recognized education credential.
You may be able to increase your income tax refund with the credits or deductions outlined above—but which forms do you need to claim your benefits?
In Publication 970 , the Internal Revenue Service (IRS) outlines the details and instructions for claiming your education-related tax benefits. It also explains which forms to use when you file your return. You’ll want to review the publication to see detailed tax filing information. But, to simplify matters for you, we’ve listed the required forms for some popular credits and deductions found in Publication 970.
If you are a college student, your1098-T will be mailed by January 31st from your school in early February. This form contains the information you need to claim the American Opportunity Tax Credit, the Lifetime Learning Tax Credit, or the Tuition and Fees Deduction. All of these programs have the same eligibility requirements, but you can only use one of them each year. So, be sure to identify the one that provides the greatest benefit for you.
Form 8863 is also required to claim either the American Opportunity Tax Credit or the Lifetime Learning Tax Credit. You can download form 8863 from the IRS website. Use the information on your 1098-T to fill out your 8863. Then, submit the completed 8863 to the IRS along with your return.
To claim the Tuition and Fees Deduction, you’ll use your 1098-T to fill out form 8917. You can download form 8917 from the IRS website. Submit your completed 8917 to the IRS along with your return.
If you are claiming a student loan interest deduction, you will need to use form 1098-E to document the amount of interest you paid last year. If you paid at least $600, your 1098-E form will be mailed from the organization you made your student loan payments to by January 31st. However, you may be able to deduct interest paid on your federal student loans even if you were not sent a 1098-E form. If you paid less than $600 in student loan interest, you can contact your loan holder to find out how much interest you paid in the previous year. You may be able to print your 1098-E from your loan holder’s website or call them to request it if you did not receive it. If you do not know where your student loan are held, you can go to www.NSLDS.ed.gov to find this information.
If you have a defaulted student loan loan held by ASA and need more information about the interest you have paid, please call 617-728-4200, ext. 5002.
Enter the information on your 1098-E directly on your return and submit it to the IRS. You are not required to fill out additional forms to claim this deduction.
Adjusted gross income is calculated by adjusting your full (gross) income—which includes wages, alimony, Social Security, and business, investment, and dividend income—downward based on certain deductions. This amount is then modified by adding back certain items (including student loan deductions) to determine your modified adjusted gross income.
This document was prepared for informational purposes only and cannot be considered tax advice or otherwise. Please see your tax professional for additional guidance.
If you need information on your student loans but aren’t sure who to contact, the National Student Loan Data System (NSLDS®) is an excellent place to start.
NSLDS is the U.S. Department of Education’s (ED) central database for federal student aid records. It tracks your loans from the time you apply until you complete repayment. NSLDS allows you to see details about all your federal student loans at the same time (private loans are not in NSLDS). This includes:
If you’re currently in school and aren’t sure how much you owe, you can use NSLDS to start keeping track. If you’ve already graduated and need help figuring out how much you owe and who holds your student loans, NSLDS can help with that, too.
New loans are reported to NSLDS within 30 days of funds being received. If you have been making payments on a loan, the outstanding principal balance listed by NSLDS may be as much as 120 days old. Contact your loan servicer (the agency you will or currently make payments to) for more up-to-date information.
To get started, go to www.nslds.ed.gov and click the Financial Aid Review button, then log in. After you’ve logged on, click the blue numbers in the far left column to find the details for each of your federal student loans.
You can download or write down your information, or return to check it at any time. Be sure to note your servicer information, which you can find at the bottom of the screen.
NSLDS only shows information regarding your federal student loans. Private, state, and institutional student loan data is not available on NSLDS, but you can get a free annual credit report to find the information you need if you have any of these types of loans.