Student Loan Strategy
Do you have student loans?
You need a strategy!
Do student loans drag you down? Are the payments too high? Do you have money left to save for a house? Or grow your family? Or save for retirement?
Student loans can be a huge burden.
Student loan repayment options are complicated.
Explore your options and take control of your student loans!
Why should you have a strategy for your student loans?
Consulting a student loan expert can save you time
Having the right information can save you money
Have peace of mind that you're doing what's best for your situation
How We Can Help You
We can create a customized student loan strategy for you.
Schedule a free 15-minute call with a Certified Student Loan Professional to assess your student loan situation and find out what we can do for you!
Jennifer, a pharmacist chooses an IDR plan
Jennifer is getting married to John. They are expecting major life events- having a baby, buying a house, possible change in jobs or work hours- and want to have a strategy to save for retirement while managing Jennifer's pharmacy school debt.
Jennifer’s student loan balance is more than twice her income:
Jennifer’s annual income: $100,000 (John also makes $100,000)
Student loans: $250,000 (Direct Unsubsidized Loans, Grad PLUS loans @ 6%)
Jennifer wants to temporarily take time off from work or work part-time when she has a baby.
Jennifer’s question:
“Is there a repayment strategy that allows for flexibility around changing life circumstances?”
Sample Strategy:
Enroll in an Income-Driven Repayment (IDR) plan.
How it works:
Jennifer has the flexibility to change her monthly repayment amount if she keeps her student loans in the federal system. For example, if she enrolls in Pay-As-You-Earn (PAYE), her required monthly payments could start at $613. However, Jennifer and John can choose to pay for their living expenses with John’s income and Jennifer can, for example, repay $4000/month for about 6 years to pay the entire loan balance. If Jennifer has a baby before the loan is paid off and decides to temporarily work part-time, and therefore, take a break from the $4,000/month payments to cover for extra baby expenses, she can request a recalculation of her minimum monthly payment. Her monthly minimum payment could be as low as $223 if she is at a $60,000/year income level and files her taxes as “Married Filing Separately”.
Amanda, a prosecutor pursues PSLF
Amanda just graduated from law school and is working as a prosecutor. She expects to keep working as a prosecutor and she is single.
Student loans: $250,000 (Direct Unsubsidized Loans, Grad PLUS @ 6%)
Amanda's annual income: $60,000
Amanda wants to save as much as possible using federal loan forgiveness
Amanda’s question:
“How do I qualify for Public Service Loan Forgiveness?”
Sample Strategy:
Enroll in an IDR such as PAYE and only pay the minimum amount for 120 required payments
The result:
Amanda can qualify for Public Service Loan Forgiveness (PSLF) by making 120 qualifying payments in an IDR plan. Since she is pursuing loan forgiveness, she should only pay the minimum amount required. If Amanda qualifies for and enrolls in PAYE, her monthly payments start at $340 a month. if she stays on track for PSLF, she would pay a total of $46,828 over 10 years and would get the remaining balance forgiven tax-free.
Compared to the 10-year standard payment plan, Amanda saves $286,233 by pursuing PSLF.
Mike, an attending physician refinances his loans
Mike is married to Michelle, who is staying home to take care of their newborn baby.
Mike’s income is greater than his medical school student debt:
Mike's annual income: $280,000
Student loan balance: $250,000 (Direct Unsubsidized Loans, Grad PLUS @ 6% interest rate)
Mike wants to pay off his loans quickly and focus on growing his family, wealth, and plan for retirement
Mike’s question:
“Should I refinance my student loans?”
Sample strategy:
Refinance his federal student loans and save over $40,000!
The Result:
Let’s say Mike just started his 10-year Standard payment at $2,776/month. If he is able to refinance his federal student loan with a private lender at a 2.99% interest rate with a 10-year term, he would pay $2,413/month and save $43,518 in total. If Mike is comfortable paying $4,491/month for a 5-year term, he can save $63,598.
Frequently Asked Questions:
It depends! There many repayment options available for federal student loans. If you are pursuing loan forgiveness, you should pick an Income-Driven Repayment (IDR) plan with the lowest monthly payment for which you are eligible for.
If you already have private student loans, you can always shop around for lower interest rates! However, if you have federal student loans, you need to to consider the pros and cons of refinancing to a private loan with a lower interest rate and the benefits and protections available only for federal loans.
There are different types of loan forgiveness/discharge/cancellation programs for federal loans. Each program has its own rules for eligibility, such as working for the right type of employer for a specified length of time, the type of loans you have, and being on the right repayment plan. Examples include Public Service Loan Forgiveness, Perkins Loan Cancellation, Teacher Loan Forgiveness, Total and Permanent Disability Discharge, etc. Unfortunately, similar forgiveness programs may not be available for private loans. But it's worth contacting your lender to work out repayment options if you are having trouble making your private loan payments.
Student loans can be very complicated because they are quite different from other types of consumer loans. Every situation is different and it may take a lot of time and energy to learn about the complexities of student loans. Book a 15 minute assessment call to find out if we can help you figure out a clear path forward given your unique situation!
Check out some of our blog posts on Student Loans