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Ensuring Financial Wellness

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:

  • Understand your level of debt. Remember, for student loans, it is important to always know what you owe.
  • Understand what you can afford. Think about your finances as a whole by creating a budget.
  • Understand how to use your credit card. Repay everything you charge because having good credit matters.
  • Understand the additional benefits of borrowing. Take advantage of your student loan debt by knowing the borrower tax incentives.
  • Understand how to find your loan information. Know how to use and navigate the National Student Loan Data System (NSLDS®).

Financial Wellness in Just 10 Steps

Here are 10 basic steps toward financial wellness:

  • Stick to a budget. This may mean focusing on long-term stability, rather than short-term fun.
  • Pay off debt. Commit to paying bills on time, every month.
  • Invest in yourself. If you are investing in your future, remember that debt is not necessarily bad.
  • Plan purchases. A college education, a house, and a car are large purchases that must be planned wisely.
  • Take a class. Learn basic financial management and read financial publications on investing and savings. Talk to a counselor if you need extra help with financial issues.
  • Look for a deal. When borrowing, take the time to look for the lowest interest rate and fees. When saving, look for the highest return on your investment.
  • Plan for the unexpected. Put away money for an emergency.
  • Know your credit score. Establish a history of good credit early, and you’ll always get the best rate when you need to borrow money.
  • Build goals. Set goals for yourself when it comes to saving and paying down debt.
  • Review progress. Every 6 months, look at your debt and savings. Reassess your plans and goals.

More Detail

Managing Credit Reports and Credit Scores

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.

Understanding Credit Scores

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:

  • Where you live
  • Your bill payment history
  • How much you earn
  • How much you owe
  • Your involvement in any lawsuits
  • Your arrest record
  • If you have filed for bankruptcy

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.

Get a Copy of Your Credit Report

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

Experian 888.397.3742

TransUnion Corporation 800.888.4213

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

Correct Errors on Your Credit Report

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:

  1. Contact the consumer reporting agency in writing.
  2. Notify the creditor in writing that you’ve disputed an item they’ve reported.
  3. Have the consumer reporting agency send changes to those who have received your report.

5 Simple Ways to Increase Your Credit Score

Every consumer can follow 5 simple rules if they want to increase their credit score:

  • Make sure all the information in their reports is correct. If you have a dispute, it is best to request a change in writing and always keep a copy of the request for your records.
  • Make it a priority to pay all your bills on time every month.
  • Reduce your credit card balances. Aim to carry balances totaling no more than 25% of your available credit.
  • Keep older credit card accounts open and active. Closing accounts may not increase your score. Keeping them open, and using them, can show a longer credit history while also increasing your debt-to-available-credit ratio.
  • If you have no credit or severely damaged credit, rebuild your credit using a secured credit card.

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.


Tax Incentives for Student Loan Borrowers

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.

Student Loan Interest Deduction

You may qualify for a tax deduction just by paying your student loans.

  • If you are not a dependent listed on someone else’s tax return, it is possible for you to deduct up to $2,500 of student loan interest paid a year.
  • Eligible taxpayers need to have a modified adjusted gross income (MAGI, see below for more information) less than $60,000 ($120,000 if filing jointly).
  • If your MAGI is more than $60,000 but less than $75,000 ($120,000 and $155,000 if filing jointly), you may be eligible for a smaller deduction.
  • If you make more than $75,000 ($155,000 if filing jointly), you are not eligible to deduct student loan interest.

Tuition and Fees Deduction

You may be able to deduct qualified education expenses—including tuition and fees—paid for you, your spouse, or a dependent.

  • If your MAGI is less than $65,000 ($130,000 if filing jointly), you may be able to deduct $4,000 in qualified expenses.
  • If your MAGI is more than $65,000 but less than $80,000 ($160,000 if filing jointly), you may be eligible for a $2,000 deduction.
  • If you make more than $80,000 ($160,000 if filing jointly), you are not eligible for the tuition and fees deduction.

Employer Education Assistance

Your employer may provide you with education assistance benefits for undergraduate or graduate courses tax-free each year.

  • Benefits can be up to $5,250.
  • Payments above $5,250 may also be tax-free if they represent a working condition fringe benefit.
  • Benefits must be paid toward tuition, fees, books, supplies, or equipment.
  • If you paid for the expenses, you may be able to deduct them as an employee business expense.

Education Credits

You may be eligible for the Lifetime Learning Tax Credit and the American Opportunity Tax Credit, but some restrictions apply.

  • You’re ineligible for these credits if you’re married and file a separate return from your spouse or if you’re listed as a dependent on another person’s tax return.
  • You cannot claim multiple credits for the same student in the same year.
  • You cannot take both an education credit and the tuition and fees deduction for the same student in the same year.

Lifetime Learning Tax Credit: You may claim a Lifetime Learning Credit for qualified education expenses each year you are in school.

  • Your credit can be up to $2,000 if your MAGI is less than $50,000 ($100,000 if filing jointly).
  • If your MAGI is between $50,000 and $63,000 ($100,000 to $127,000 if filing jointly), you may be eligible for a partial credit.
  • Qualified expenses include money you’ve paid directly for education or from borrowed funds.
  • This tax credit reduces the amount of income tax you may have to pay, and there’s no limit on the number of years you can claim it.

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.

  • This credit is available for the first 4 years of postsecondary education.
  • You can claim up to $2,500 if your MAGI is less than $80,000 ($160,000 if filing jointly).
  • If your income is between $80,000 and $90,000 ($160,000 and $180,000 if filing jointly), you may qualify for a credit of a lower amount.
  • If the calculated credit exceeds your tax obligation, you may receive up to 40% of the tax credit amount as a refund.

Required Forms for Tax Benefits

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.

Form 1098-T

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

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.

Form 8917

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.

Form 1098-E

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 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.

What Is Modified Adjusted Gross Income?

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.


Know What You Owe With NSLDS

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:

  • Loan type (subsidized Stafford, unsubsidized Direct Stafford, etc.)
  • Original loan amount
  • Date of issue
  • Amount disbursed
  • Loan holder or servicer
  • Loan status (examples: in repayment, deferred, or in default)
  • Amount you currently owe

Your Personal Information

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.

How Current Is This Information?

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.

How to Use NSLDS

To get started, go to 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.