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15. What to do about student loans with Meagan Landress at Student Loan Planner
123 Plays2 years ago
Meagan Landress is a student loan consultant for Student Loan Planner. Meagan was the first person in Georgia to acquire her CSLP® designation, as a Certified Student Loan Professional®. Her specialized education around student loan debt allows her to guide borrowers through informed repayment decisions, taking into account their full financial situation and financial goals. Meagan joined Student Loan Planner in 2019 and since has consulted on $160M+ of student loan debt for over 900 households.
Check out https://www.studentloanplanner.com/ for more information and to schedule a consultation.
--- This episode is sponsored by · Anchor: The easiest way to make a podcast. https://anchor.fm/app
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Transcript
Introduction to the PA School Experience Podcast
00:00:13
Speaker
Welcome to the PA School Experience Podcast. I'm your host, Sebring Sands, and I take you through the behind the scenes look of PA School and explore what it takes to become a PA.
Managing a Podcast with Anchor
00:00:33
Speaker
If you have been wondering how I could do this podcast in PA School, I'll tell you, I use an anchor. This is the easiest way to make a podcast. Let me explain. First, it is a free hosting platform which allows anyone to start a podcast with no upfront cost. It has built-in tools which allow you to edit and record a podcast. You can even record it from your phone.
00:00:56
Speaker
Anchor will distribute your podcast for you so it can be heard on Spotify, Apple Podcast, and other major podcast platforms. You can make money from your podcast with no minimum listenership. Anchor has everything that you need to make a podcast. They make it so easy for you. Download the free Anchor app or go to anchor.fm to get started. That's anchor.fm
Megan Laundress on Student Loan Repayment Plans
00:01:26
Speaker
Welcome everyone to another amazing podcast episode of the PA School Experience. Today we have an amazing guest for you today.
00:01:36
Speaker
She is a consultant for Student Loan Planner and she's going to be talking all about a good overview of repayment plans, what we can do with our student loan from little student loan debt to a lot of student loan debt.
00:01:55
Speaker
And I got to tell you that I am one of those that have a lot of student loan debt. I go to a pretty expensive private school and I live in an expensive area.
Sebring's Personal Loan Struggles
00:02:06
Speaker
So basically double my debt every year. So I've quite a bit. I live in a family. I don't share rent. I have to feed three people.
00:02:14
Speaker
So it gets to be quite expensive. So it was awesome to talk to her to kind of reduce my anxiety of knowing what the options are for repayment.
00:02:26
Speaker
Megan Laundress is a student loan consultant for Student Loan Planner. Megan was the first person in Georgia to acquire her CSLP designation as a certified student loan professional. Her specialized education around student loan debt allows her to guide borrowers through informed repayment decisions, taking into account their full financial situation and financial goals.
00:02:51
Speaker
Megan joined Student Loan Planner in 2019 and since has consulted on more than 160 million of student loan debt for over 900 households. I will want to welcome you to this awesome interview I had with Megan. Thank you Megan for joining me today.
Anxiety and Resources for Student Loan Management
00:03:11
Speaker
Of course, I can't wait to nerd out with you today.
00:03:14
Speaker
I'm not that big of a nerd, but I have had a lot of anxiety about this topic, so it's awesome to get you on and to talk about just all the options to kind of educate and clear the air to reduce the anxiety because there's a ton. Go on Reddit, talk to your peers, pre-PA school. Everything is like student loans.
00:03:37
Speaker
me finding student loan planner has reduced most of my stress with it. I haven't yet done a consultation, but it's just because I haven't not making any money yet and still have a little bit of ways to go.
High Debt-to-Income Ratio in PA Profession
00:03:53
Speaker
You probably know this Megan, but the PA profession is one of those health professions where sometimes a lot of the times you have a larger income to debt ratio. We get a lot of debt, we don't have as much money, don't make as much money as per se like doctors or some of these higher income professions. So there's a lot of anxiety about loans and
00:04:15
Speaker
how can I avoid them
Megan's Transition to Student Loan Planning
00:04:17
Speaker
or pay them? So this is what we're going to talk about. So if you don't mind, Megan, why did you go into this industry? And specifically, why did you go into student loan helping people with student loan planning?
00:04:30
Speaker
Yeah, so I, I started, I guess my finance interest in high school, I started working as a bookkeeper for a gym in my hometown, and transferred to the one that was the gym location that was close to my college.
00:04:47
Speaker
And I liked the numbers. And what's funny because I hated math growing up, but I liked the applicable numbers to finance. And so I decided to go to school for finance, quickly figured out I didn't really like corporate finance. I wanted to do more personal finance, working with people and families. And so I found myself working at a financial planning firm after school and interning during school.
00:05:14
Speaker
loved it. But I quickly found out that the financial planning space, there's of course, just like with any profession, we have practice areas. And the majority of I think the financial planning space, even today, caters to folks that already have money, that have money to invest. They want to be your investment advisor. They want to take care of those investable assets.
00:05:40
Speaker
but doesn't really help too much with folks who are just starting out that don't have investable assets, but wanna get to that point.
00:05:48
Speaker
and they're kind of left to their own devices to do so. And so I, at the time set out on my own, did some consulting, but then started my own financial coaching practice to work with people who weren't quite at the point to invest a ton of money, but needed the basics of their financial plan set up. And I quickly figured out the student loans were going to come up almost always for anyone I was working with.
Motivation to Specialize in Student Loan Planning
00:06:12
Speaker
It seemed like, so I needed to get educated in it and
00:06:15
Speaker
Um, I, I did. Uh, so I, my first client, I almost cried when she told me how much student loan debt she had because she had about 300,000 of student loan debt. That was her biggest concern. And she said, I really need help, but there's not an advisor who can help me with this. Can you help me? And I jumped the gun and said, yes. And I looked at her statement later and you know, I was scared, but I did a lot of digging learned that there was a lot of.
00:06:43
Speaker
nuance to the student loan system, a lot of planning opportunity there and quickly found out that with just the right student loan plan that can really unlock a lot of other planning opportunities and a lot of freedom financially and mentally. So that's what got me hooked on it. So I specialize in it, continue to
00:07:04
Speaker
focus on student loan debt and people who had student loan debt and met Travis at a conference with student loan planner and joined the team and never looked back. So that's a little bit of my story. That's awesome. And I feel like this is definitely
00:07:20
Speaker
a very noble part of the financial industry because you're really helping people trying to get ahead, trying to, you know, pass barriers and they just have all this debt and don't know what to do with it. So this is really awesome.
Repayment Options for Student Loans
00:07:36
Speaker
So we're going to start by talking about what are all the different options we have for repayment of student loans.
00:07:44
Speaker
Mm hmm. There's probably about nine options when you got them up. And let me maybe start with there's federal loans and then there's private loans. Private student loans are a lot more straightforward in the sense that we have to pay them back. There's, you know, you committed to a schedule when you borrowed them, you pay them back on that schedule.
00:08:04
Speaker
Federal loans, on the other hand, though, you have traditional repayment options where you take the payment, you spread it out over a period of time, and you pay it all off. You could do that on a fixed schedule where the payment stays the same, or a graduated schedule where the payment increases every two years. Or you can go on an income-driven plan. And there's four of those that base the payment off of the derivatives of your income, either 10%, 15%, or 20%.
00:08:34
Speaker
of your income and those, you know, so lots of options which I know is confusing because it makes it hard to know what option is best for you.
00:08:45
Speaker
That's very true. So how would you maybe some options for people that have a lower debt to income ratio? And can you explain kind of, I've been using this terminology because I listen to tribes this podcast and that's, that's, that's how you guys kind of approach it because incomes vary, debts vary, but when it's, you know, comparison to your, the debt to income that can change a lot of things.
00:09:11
Speaker
It can, yeah. And I think the rule of thumb in the student loan planning space is that if our balance is less than our income, then we should be treating it more like a debt, paying it off maybe sooner rather than later, trying to reduce the interest cost. Where on the flip side, if our balance is much greater than our income, then we might want to be considering looking at a forgiveness path or a passive approach to the loans
00:09:40
Speaker
looking at the income-driven plans. And so a lot of times people can quickly kind of sort themselves in one of those buckets. They know generally that their balance is less than their income and will be, because they don't plan on an income drop. And so those folks would need to look at maybe the fixed plans to pay the loans off or maybe even refinancing, taking the loans out of the Fed system to reduce the interest rate,
00:10:08
Speaker
Whereas on the other end of the spectrum, if someone has a much larger balance, they know that their income isn't really gonna catch up to it, or they work in a public service capacity, which that's another topic we could touch on. But if their balance is greater than income, then they could look at the income-driven repayment options because they have forgiveness after either 20 or 25 years. And whatever balance is left over at the end of that timeframe,
00:10:37
Speaker
can then be forgiven. And that mathematically can be much better for someone where the debt to an income ratio points us in that direction, where the balance is much greater than income. Okay. And that makes more sense. So can you talk a little bit about the PSLF loan forgiveness compared to like an income driven repayment and the differences and maybe the benefits or cons of, of both?
Understanding Public Service Loan Forgiveness (PSLF)
00:11:03
Speaker
Yeah, so public service loan forgiveness or PSLF. I do see quite a bit in the PA space. This is where your employment or your future employment is with a nonprofit or a 501c3 organization or a government entity.
00:11:21
Speaker
So this could also be in academia if you went back and taught or you worked for the VA or at a nonprofit hospital. So there's a lot of jobs or a lot of employers that could qualify. But this program will forgive your loans after you make 120 qualifying payments. And a qualifying payment would be you're working full time for this public service entity. You're paying on an income driven plan. So there's a
00:11:50
Speaker
relationship there like PSLF is not a repayment plan. It's a program that you can pursue that you actually need to be on an income driven plan for to to pursue and we have to have direct loans and make 120 payments which shakes out to be about 10 years if you are consistent with employment. You don't have to be consistent or consecutive
00:12:13
Speaker
I see that a lot where someone will take maybe a break either for maternity leave, like long-term, like to stay with the kids or they go private sector for a little bit, but then come back into public service. So moral of the story with PSLF is it's just once you hit 120 payments working full-time in public service, you get the loan forgiveness. It doesn't have to be consecutive. Whereas the income driven repayment plan forgiveness
00:12:42
Speaker
that's 20 or 25 years, doesn't matter what you do for work. You know, it's just a matter of fact, did you pay for that long? And if so, you get the loans forgiven at that point. Okay. Um, so I'm under the like, I've heard this on the pockets and stuff like that of people not being able to
00:13:05
Speaker
qualify for the public service on forgiveness. But it sounds like what you're talking about pretty sure for sure thing if you work at one of these places. Is it just that people that shouldn't be applying apply and don't get it? Or is it really hard to apply for and to get into this program?
00:13:24
Speaker
That's a good question. And I actually wrote an article on this maybe last year, because I think what I think everybody and their brother has heard is, you know, there's a 99% rejection rate for PSLF. Like 99% of people that apply get rejected. And that of course sounds terrifying. Like if anything had a 99% rejection rate, why go for it? Why do it? But some context needs to be had there.
00:13:53
Speaker
Historically, so this program started in 2007. So the first time we could have ever seen anybody be eligible was 2017, like late 2017. And we do have to check all those boxes. And what was, I guess, unfortunate beforehand was there wasn't a way to track forgiveness, like a real time way to track where your payments were.
00:14:18
Speaker
And there was, so what people would do was that they would apply for loan forgiveness. And especially when 2017, 2018 rolled around, there was whispers about PSLF and people just applied to see what would happen. And they didn't check the boxes or they hadn't made 120 payments yet. And it didn't mean that they weren't on track. It just meant that they weren't quite there yet.
00:14:42
Speaker
And so people, what they would do for a while until there was a tracker developed, they would submit for forgiveness every so often just to see where their payment counts stood because otherwise they didn't know unless they went back and manually counted up their payments. And so that contributed to the rejection rate. Unfortunately, it wasn't that they were intending on applying for the forgiveness and expecting for it at that point.
00:15:10
Speaker
There wasn't a way to check your payment account at the time, so that was one of the biggest reasons just people hadn't made 120 payments yet that was part of the rejection number. Another big piece to that rejection number was missing information on applications.
00:15:27
Speaker
So maybe the signature for the employer was missing or wasn't dated appropriately. So they made measures to try to improve this as well. So we have a PSLF payment tracker now. We also have a standardized form where it generates this employment certification form for you through studentaid.gov. All you have to do is get it signed by your employer and submit it.
00:15:54
Speaker
cuts down on missing information because the only thing it can miss at that point is not getting it signed, but that's the point of printing it out. So that's helped quite a bit as well. And I guess the other maybe reasons for rejection were because people weren't at an eligible employer. Maybe they didn't know or they were a contractor for an eligible employer, but not employed directly by that entity. That's
00:16:20
Speaker
Sometimes a common mistake I see is if you're a contractor and you apply, you're not going to be eligible unless you're hired directly by that employer. And then people in the past have had the wrong types of loans. There's what's called FFEL loans, which were issued pre-2010.
00:16:44
Speaker
if you don't have loans from pre-2010, you don't have to worry about this, but if you borrowed before then, those loans weren't eligible for PSLF. They can be now, and you can convert them into the correct loans. And as I'm talking, I'm realizing there are a lot of boxes we have to check, and there's a lot of things we have to know.
Improving PSLF Application Process
00:17:07
Speaker
And to know this, you have to
00:17:09
Speaker
you know, seek out that information because the loan servicer is not going to knock on your door and tell you that you need to apply for this, unfortunately. So it's, I think a combination of, you know, just some flaws in the system in the past, but also maybe not the awareness about the program or lots of misconceptions about the program and not the, it's, it's not, there's not help, you know, not a lot of help out there, I guess you could say.
00:17:38
Speaker
That's really awesome. It sounds more of a for sure thing if you meet those criteria. Yes. Because I probably will be doing that. How easy is it to find an employer? Is pretty much every hospital going to be qualifying for this loan program? Not every single hospital, but a lot of hospitals, yes. A lot of hospitals are 501c3.
00:18:06
Speaker
Where I see PAs not being eligible is if they work in a private, like a doctor's private office, like a private practice office, that's not going to be eligible. But hospitals, VAs, teaching hospitals, anything for the state or the city, those would be eligible. Okay.
00:18:29
Speaker
And like you were saying that this was an income driven repayment kind of a thing.
Reducing Payments on Income-Driven Plans
00:18:35
Speaker
Like the point of these programs is to pay as little as possible with, you know, clearing your debt. How do you reduce those amounts in a traditional income driven repayment or this one, any income driven repayment? How do you reduce those amounts every month you have to pay?
00:18:53
Speaker
Yeah, you've got the exact right idea going towards forgiveness you want to pay as little as possible to maximize the forgiveness. So ways that you can reduce one, make sure that you're on the right repayment plan for you. So pay and repay.
00:19:08
Speaker
Those two plans are the cheapest. They're based on 10% of discretionary income. So make sure that if you're listening to this, you're on the cheapest plan possible. And then another way that you can reduce what the payment would be is reducing your adjusted gross income. So adjusted gross income is a number that the federal system pulls from your tax return.
00:19:33
Speaker
And it's gross income, but not including anything that you contribute to retirement like 401k, 403b, 457, employer retirement plans or HSAs. That's another example, like a health savings account or an FSA flex savings account. Those things reduce your adjusted gross income.
00:19:58
Speaker
while helping you pursue forgiveness more efficiently so you're saving, not only for your future and for your health needs. But you're also reducing what your student loan payment is so it's mutually beneficial there and and can keep the payment lower. One other option is if you're married, this is where sometimes it gets a little complicated, but if you're married and you have student loan debt, but your spouse doesn't.
00:20:23
Speaker
When you file taxes as a joint married couple, the income driven payment can be based off of that joint income. So another way to keep the payment lower or off of just your own income is by considering filing taxes separately and being on an income driven plan that allows for the payment to be just off of your income.
00:20:45
Speaker
So those are three main ways you can reduce it. Okay. I've married and I have a child. Do children help in this? Do they reduce amounts? They do. Cause they make your family size bigger. They reduce it a little bit. Okay, good. That's great. They're worth it now. Perfect. So, um,
00:21:06
Speaker
With the income driven repayment, I know that at the end, the amount that's due is taxable and you guys like to call it the tax bomb. So how do you plan for that?
Preparing for Tax Implications of Loan Forgiveness
00:21:19
Speaker
Do you just monthly, you set aside a certain amount for that, or you just kind of a few years beforehand, just start saving a lot of money. How's that work?
00:21:31
Speaker
Yes, so the tax bomb is what we call it. And this is with the longer term forgiveness. So not PSLF, but if you work in private sector, you're going towards the 20 or 25 year timeline. So what is supposed to happen is the forgiven balance is supposed to be taxable to you as income in that year that it's forgiven. That is an IRS rule. It's not a student loan rule. That's the case for any debt that's canceled or forgiven.
00:22:00
Speaker
So that can cause a big tax bill, especially if you get a large balance forgiven. So what we suggest and what we plan around is, if we're going that route, we project what is the balance going to be at the time of forgiveness and how much of a tax implication might that
00:22:18
Speaker
pose to you. And then we do the math to figure out how much would we need to save per month to prepare for this. And we recommend saving for it early, like now. And just factor that into your student loan plan. So mentally, we have our payments towards the student loans, and we have our savings going towards the tax implication. And that's our tax on our income for the profession we chose.
00:22:46
Speaker
So that's a great way to tackle it. What I say, I sounded a little hesitant about the tax implication at the beginning because no one's ever paid this tax implication before. Reason is these income-driven plans are not old enough. Well, we have seen people get the longer term forgiveness as of a couple of years ago, but they've waived, they've temporarily waived this tax implication until 2026.
00:23:14
Speaker
partly because of COVID, partly because there's discussions about whether they want this tax implication to exist at all. So people have gotten the loan forgiveness and they're not gonna have to pay taxes on it. So we think that could set a precedent for the future to where maybe they do eliminate it permanently, but we are still planning as if it's going to exist and best case scenario is it doesn't and you have that bucket of savings that you could put towards something else.
00:23:43
Speaker
OK, and that makes more sense. So how does how does interest factor into these income driven repayments? Does it significantly increase your amount you're paying over time in the long run? How's that affect things? Yeah, sometimes this is a little bit of a confusing topic because income driven plans are not designed to pay the loans off. So that's the first thing we have to realize.
00:24:12
Speaker
is it's not a regular payment that is calculated off of your balance and your interest. It is only calculated off of your income. So your income driven payment may not be enough to cover the interest cost per month. And if that's the case, interest that is not paid off each month will accrue and it doesn't compound. So that's one thing that's a little different about federal loans is interest doesn't compound on itself
00:24:41
Speaker
it accrues in its own like accrued interest bucket. And that will potentially make your balance grow. If you're going towards loan forgiveness, your balance will potentially grow on the way to get there, which is a fact of the nature of that plan. And that's okay because whatever balance is leftover gets forgiven, including the interest. So it's all factored in.
00:25:07
Speaker
And interest is less important if we're going towards forgiveness because we're not trying to pay the loans off. Now, if we're trying to pay the loans off, that's different. We would want to make sure that our payments were enough to cover both principal and interest so we can work the balance down. And that's where maybe refinancing might be a good option because that's a way to reduce the interest rate if we're not trying to go towards forgiveness.
Student Loan Refinancing Options
00:25:32
Speaker
Okay. What's an example of a refinancing? Because when you're refinancing, you're trying to take the higher interest amount and making it into a lower interest amount. How much, like right now, how much of a difference is that?
00:25:50
Speaker
So, well, we are in an inflation period right now that is negatively impacted debt interest rates in general. So, at the time of this recording, July of 2022, things are a little different, but traditionally,
00:26:07
Speaker
refinancing we were seeing averages between three and five percent for a successful refinance where that means we take our higher interest loans which federal system has kind of averaged between I'd say maybe six to seven percent over the years so not significantly higher definitely not as high as credit card debt for example but
00:26:31
Speaker
but certainly higher, higher than what we could get with refinancing potentially. We would take those higher interest loans, combine them, and take them to a private company. Only reason we would do this is if we can get a lower interest rate, and that lower interest rate makes our cost of interest go down over time. You get to choose the term with refinancing, that'll dictate what your payment's going to be,
00:27:00
Speaker
and how long it takes you to pay off the loans. So that can factor into the cost difference between your original plan and the new refinancing plan. But generally, you'd want to refinance only if you can get an interest rate lower than what you already have. And the goal doesn't have to be to pay it off like your hair is on fire, especially if you get a really low interest rate.
00:27:24
Speaker
but you would wanna pay it down pretty efficiently and reducing the cost with interest is a way to do that for sure. Okay. Can you talk a little bit about the different loans? Are all of the loans I can get for grad school, are they all direct loans?
Types and Limits of Federal Loans for Graduates
00:27:43
Speaker
They are now. And as long as you don't intentionally go and borrow private student loans, which you'd have to apply for, they do a credit check,
00:27:53
Speaker
then your loans will be direct. You could have direct graduate loans, graduate plus, or direct unsubsidized loans. So those are the two types of loans that you might see within your federal loan profile. The difference between the two really is, so one is the interest rate. Unsubsidized loans will be a little bit cheaper than your graduate plus, usually by about a percentage point.
00:28:20
Speaker
and then the loan limit. So for unsubsidized loans, you can only borrow up to $20,500 for the year, where Graduate Plus, you can borrow up to the cost of attendance. So if your program is more than $20,500, you can borrow the unsubsidized for up to that max and then spill over into the Graduate Plus if you need to.
00:28:44
Speaker
Okay, good. So everything I'm going to do and apply for on the studentaid.gov or FAFSA is going to be eligible for all of these different repayment programs. Is that correct? Good. Awesome. Because the naming gets a little weird sometimes. So that's great.
00:29:06
Speaker
Yes. So here's a question for me. I had to my cost of living as a family. I live in a really expensive area at a private school that's expensive. So I, my cost of living actually exceeds the cost of attendance, which is, I feel like is underrated for a family.
00:29:28
Speaker
If you're not in that situation where you have to take out all your loans, do you suggest as much as you can just to survive? Or if you know you're gonna be doing forgiveness just to do whatever, how would you kind of think about that?
00:29:43
Speaker
Mm-hmm. It does get a little interesting when you factor in forgiveness. If we know forgiveness is the path, and this is also what I think colleges have figured out, you can borrow up to the cost of attendance. There's no limit. You could choose not to. You can choose to reject a portion of what you're offered. But you can borrow all the way up to the cost of attendance, even if you don't need it.
00:30:12
Speaker
And if you're going towards loan forgiveness, then what you're gonna pay, when you look at it mathematically, what you're gonna pay in your monthly payments is going to be the same as if you borrowed 300,000 or if you borrowed 150,000, depending on your income, of course, but generally if your path is forgiveness, your monthly payments are based on income, not the balance.
00:30:37
Speaker
So it doesn't give us necessarily permission to just borrow as much as possible and blow money. I don't think that's appropriate, but it also doesn't incentivize us to try to keep costs down. In the same way, it does not incentivize colleges to keep the costs down.
00:30:57
Speaker
Because they know people have the ability, if they can't pay off the loans for what they say cost of attendance is, they know people have a fallback option of loan forgiveness that could be mathematically beneficial to them. They won't have to pay off that large balance. And so schools don't have an incentive to keep the cost down. So it's interesting thinking about it that way. I can argue it both ways to where, you know, morally, ethically, should you borrow more than you need?
00:31:26
Speaker
Probably not. Fiscally, probably not. But do colleges do it? Do they jack up the cost of attendance because they know they can? Yeah. I could argue about the ways there. That makes more sense, the way you think about it.
00:31:48
Speaker
What would you say?
Pursuing Career Goals Despite Student Debt
00:31:50
Speaker
There's a lot of talk, you know, go on Reddit, which I suggest everyone not do. And you talk to family members and people that discourage you from either going to PA school or graduate school because of the debt. What would you, what could we say to them or what, what could you say to us to like, is this a good option? Should we pursue this just because of the debt amount? How do you go about doing that?
00:32:18
Speaker
I think that's a great question. And I know a lot of people maybe struggle with that now, especially with where costs are going with schooling. But the reality is you cannot be a PA without going to school. And school is the cost of attendance is what it is. You can do all you can to reduce the cost as much as possible.
00:32:41
Speaker
But, you know, at the end of the day, if you have to borrow because we don't have those funds and cash today, we're going to have to borrow. So I think, you know, what I suggest or what I tell folks, because we also do pre-debt consultations where we help people navigate, like, what will this student loan balance look like in the future? Like, how do we pay this back later? But what I tell folks is if you're if this is what you've wanted to do, like, this is your career choice, this is your dream,
00:33:11
Speaker
You could see yourself being happy with this way of life in the future, your career path. Go for it. It will cost money. We may have student loans, but there will be a game plan for you to be able to pay them back. Now for, yeah, I think just in general, I think going to school is going to cost something and you don't want to sacrifice what you want to do with the rest of your life because of the money.
00:33:41
Speaker
aid financial aid is there to get you to the other side to get you through school. And there will always be a plan that can make sense, whether that be go towards loan forgiveness, whether that be, you know, working a private sector job that pays a lot of money compared to public service and you're able to pay off the loans like
00:34:01
Speaker
There's going to be a game plan that we can take advantage of. Just know that the student loans will be kind of a tax on your income for the profession that you're choosing. That's a way to maybe positively think about it versus thinking about it because it's not an irresponsible decision. I think sometimes
00:34:20
Speaker
Our older generation doesn't quite understand that because they hear like, you know, you have how much in student loan debt? What? Well, back in my day, like, well, it is not back in their day anymore. Their things have changed significantly in the, in the past like 10 years, things have changed.
00:34:39
Speaker
Um, so I always, I get like very like big sister, like I want to protect you against like those negative, you know, naysayers or people to that kind of try to talk you out of doing what you really want to do. I think as long as you have a game plan for it, really at the end of the day, do what you want because you'll, you'll have an option to pay these loans back.
00:35:02
Speaker
I think I rambled a little bit on that one, but I'm so protective about it. It's very comforting. Well, Travis on his podcast, this blew my mind because you mentioned it too, was that
00:35:15
Speaker
like you were mentioning the 10% on income as one of the income driven repayments. And you can say like, really, you can think of it as you're living in a nicer place and getting taxed that much. And it being a tax rather than this like humongous debt that you have to, you know, pay off in 30 months and sacrifice everything, sell all your organs to be able to pay off. But maybe
00:35:45
Speaker
living in a little bit higher income area and still being able to do what you want. So I thought that was very very awesome of him kind of dispelling a lot of this like angst and anxiety like oh it's just like a 10% tax and I just pay it for 20 years and I'm done and stuff like that so.
00:36:08
Speaker
Yep. I think that's a healthy way to look at it. I mean, it, that's the way that instead, exactly, instead of thinking about it as a debt, it is, but it's not a normal debt. Not at all. It's just a tax on your income. That's all.
00:36:23
Speaker
awesome. So I've been, so a friend of mine, I'm not going to name names because we're not in the business of naming names, but send me a podcast of this guy. He's in the industry of personal finance and his PA coming on. And she was just like, she busted her butt during COVID.
Moral Obligation and Perspectives on Debt Repayment
00:36:42
Speaker
Birkin crazy almost like all week worth of hours crazy extra time and she paid off her debt and like 38 loan and she had a bunch over 250,000 which is kind of like what I'm at and I couldn't help stop thinking about just like this mentality of moralizing debt. I
00:37:04
Speaker
What are your thoughts on the moralization of debt and the moral obligation that the older generations have put upon us to pay off the debt as soon as possible and stuff like that?
00:37:20
Speaker
Yeah, that great question. And I run into consultations, not often, but enough to where we've had these conversations where people do feel like a moral obligation to pay back what they borrowed. And I can understand that.
00:37:39
Speaker
I always present the facts. We walk through the numbers. We compare the forgiveness route compared to the payoff route. At the end of the day, finance is personal. Personal finance, it is personal. So I'm not here to make your decision for you. That's your decision. And so I have worked with folks in the past who we ran through the numbers and they
00:38:06
Speaker
they were more drawn towards paying those loans off within a very short period of time.
00:38:11
Speaker
And they were okay with the sacrifice it was going to take. Like they were okay with the overtime. They were okay with living with mom, you know, for a couple of years to do it. So, you know, if that's your, you know, that's totally, you're right. If that's the direction you want to go, even though mathematically that doesn't make sense, or even though it might mean you miss out on certain things, like that's not my position to say, you shouldn't do it.
00:38:38
Speaker
But I like to present all options, talk through all the pros and cons so someone makes an aware and informed decision about what they want to do.
Student Loans vs. Traditional Debt
00:38:48
Speaker
And I like to talk about it because it doesn't have to be that way. And I think the older generation makes it sound like it has to be that way. And that's not the case. If you don't wanna work overtime, you're more interested in a three-day, four-day schedule and have time to be with your family and friends on the weekend, great. That's your motto, your objective, go for it.
00:39:16
Speaker
I think that's what's really nice about student loan planning is it doesn't have to be what your friend does or what someone on a different podcast did. That story might inspire you, but it might not be what you want to do with your life and your situation.
00:39:37
Speaker
And also, I said this before, but student loan debt is unlike any other debt out there, meaning other debt like credit cards or other consumer debt. There's not income driven repayment options. There's not forgiveness opportunities. So student loans are just a different ball game. It's not like what debt used to be.
00:40:04
Speaker
what I think the older generation thinks about is how debt was, and debt was very expensive at one point.
00:40:12
Speaker
for example, mortgages used to be at 12, 14%, where right now, well, it's inflation right now. Inflation has messed up our rates, but we were at like three to 5%, so very inexpensive debt. And so I think just our market has changed, debt has changed a bit, student loans are a different ball game. And I also like to bring up, and I said this also, the cards are almost stacked against you in some cases,
00:40:41
Speaker
where schools have figured it out that they don't have to have a limit on cost of attendance. You can go towards forgiveness if their school is super expensive and they know you're not gonna make enough to pay it off. So we're just playing the same ball game as them if we're going towards forgiveness and that is an okay decision. So that might've been a long-winded way to say, do what you want with your money.
00:41:07
Speaker
And also another long one is a plug for you guys. You guys need a consultation, which I recommend I'll put I'll put your information in the show notes for everyone because these guys like they know how to do
00:41:23
Speaker
That's as they're advertising six-figure debt from all these health professions. They know how to do it. We're running out of time, a couple more minutes. Is there one question that you get a lot that you can talk about with your consultations or people you talk to about student
Impact of Student Loans on Mortgage Eligibility
00:41:45
Speaker
loans? What's one question that people constantly ask you?
00:41:51
Speaker
This might be going kind of a different direction, but all the time I get the question, how does my student loan plan affect my ability to buy a house? And this can also be translated into other things like affect my marriage plans or affect my retirement savings in the future. But the mortgage conversation is interesting. And I'll touch on that because it might be something that folks want to do after college.
00:42:19
Speaker
is buy a home. And people get nervous because they know that if they go the forgiveness route, their balance is going to stay large. It might increase over time. So that makes you think that you might not be approved for a mortgage in the future. But reality is mortgage brokers don't look at the balance necessarily. They look at your monthly payment obligation. And they factor that into your monthly debt to income ratio.
00:42:46
Speaker
which needs to be below a certain threshold. And so the income driven plans can help in that aspect if you have a very large student loan balance, but you're on an income driven plan that keeps the payment proportionate to your income.
00:43:00
Speaker
So it's absolutely doable to buy a house and have student loan debt. As long as we have a plan for that student loan debt, that's the key. And yeah, I don't want it to sound like I'm telling folks to be irresponsible with their student loans, not at all. Like we're talking about having an efficient structured plan. If you have that, then you can buy a home, you can get married,
00:43:26
Speaker
save for retirement. You can do all those things. You just have to have a game plan for it. Awesome. That's great because that's one of my concerns is I want to be able to have a house before my daughter leaves the house and have more kids and all the things. That's great to hear that's possible and you just need to plan.
Accessing Student Loan Planner Resources
00:43:47
Speaker
Where can we find that plan? Where can we find you guys at?
00:43:52
Speaker
So you can look us up on the Google machine or type in student loan planner calm that's where we are and we've got a bunch of free content on our website free articles PA specific articles and blog posts. But you can schedule a one on one consultation with us if you want some help navigating your student loan situation.
00:44:13
Speaker
Or you could use our free calculators online, whichever floats your boat for what you want to do. Awesome. Well, thank you so much, Megan, for taking time out of your busy schedule and talking to the likes of me. Very small audience talking about love. So thank you so much. Yeah, thank you. Thanks for having me.