For Financial Professionals
Greetings fellow
Financial Professionals!
Welcome to Student Loan Coach (SLC). As financial coaches, planners, and advisors you understand best the complexities of the personal finance decisions our clients have to make in order to create the financial reality of their dreams.
One area of financial expertise that we didn’t learn about in CFP school or through our Coaching certifications is student loans. You know, that pesky little $1.6 trillion dollar problem that many of our clients have.
When it comes to giving guidance to our clients on their student loan debt, unfortunately, many financial professionals treat student loans like every other debt; BUT… Student Loans DO NOT work like any other debt our clients may have!
Like federal tax law, Federal Student Loans are COMPLICATED! (okay, maybe not quite as complex as tax law but complicated all the same - you get it - the government seems to enjoy complicating our financial lives)
​There are at least 10 different types of federal loans that were issued at varying timeframes over the years, each with its own set of rules. Then you get to mix and match that with over 10 different repayment options. Each option has its own set of rules concerning eligibility, repayment terms, and payment calculations. Take all of that information and mix in: 8 different Forgiveness Programs, 7 different Discharge Programs, Tax consequences for some forgiveness programs, Tax considerations for couples filing married filing joint, 2 different types of Forbearance, 8 different types of Deferment, Consolidation strategy that can vary from person to person (mistakes made during Consolidation are irreversible), and 10 different trigger events for interest capitalization. And then there is the question of whether to refinance federal loans into private loans and what benefits a borrower gives up by doing so. PLUS… the government seems to change the rules or offer limited-time waivers to some federal loan programs.
WHEW – that’s a lot to take in!
I applaud anyone that has not been specifically trained in this area of financial expertise that understands the complexity of the federal student loan system and is able to strategically maximize their client’s repayment plan based on their individual circumstances and other financial goals.
Oh, and can we talk about educating our clients on the devastating consequences of Negative Amortization and the Capitalization of Interest? Also common features of federal student loans that don’t happen on most other types of loans.
Typical Scenario (also a recent real-life client story):
By the time I meet with Average Borrower fifteen plus years later, they are frustrated and at their wit’s end, confused as to how they borrowed $50,000, repaid $30,000 to date, and still have a student loan balance of $80,000. What would you tell this client?
If your client does not have a personalized PLAN to repay their student loan debt, it’s highly likely they will end up on the merry-go-round of never-ending interest accrual working against them indefinitely or until they qualify for some long-term income repayment forgiveness program after 20 to 25 years! If that’s the case, you also owe it to your client to help them prepare for the dreaded - TAX BOMB that comes with that forgiveness. Ex. If they borrowed $40,000 and that debt has grown to $100,000 after making payments less than the interest accrual for 25 years, they will have to claim the amount forgiven, in this case, $100,000, as income in the year the debt is forgiven. How do you help your client prepare for that? (the American Rescue Plan Act waives federal tax implications on student loan forgiveness between 2021 to 2025. State tax treatment for forgiven student loan debt varies by state)
Giving the WRONG advice can cost your client THOUSANDS of dollars over the life of their loans and some student loan action MISTAKES are IRREVERSIBLE such as consolidation and refinancing. Both consolidation and refinancing strategies should be offered with extreme caution only after completing a comprehensive review of a client’s student loan data and future goals.
Another real-life client story:
Client was contacted by a private refinancing company offering a great interest rate to consolidate their federal student loans which would also give her a lower monthly payment. Client almost said yes as it sounded like a great option for her, but decided to book a student loan consult to get an expert opinion before she made the leap to the private side. We were both glad she did! After only 20 minutes of running numbers and comparing options, we discovered the client qualified for the public service loan forgiveness program; an option that she would have lost forever if she had chosen to blindly refinance. The move to the private side would have COST her over $30,000!!!
You owe it to your clients to refer them to a student loan expert who can provide them with the guidance they deserve. I work as a Fee-Only Financial Coach ensuring your clients will receive the best objective plan and recommendations in regard to paying off their student loans. Each client receives a personalized BREAK FREE from Student Loan Debt Report that details their loan types and balances, interest rates, repayment option comparison illustrations, forgiveness and discharge program review, and action plan along with their own BREAK FREE DATE (the date their student loans will be paid off if they follow their plan) that aligns with their personal financial goals, values, and budget.
This is all backed up by our BREAK FREE GUARANTEE. If any of your clients are not completely satisfied with the information provided during their session - we guarantee to make it right or provide a full refund. No Risk - Just Reward!
If you are interested in setting up a complimentary consultation to discuss how working with Student Loan Coach can benefit you and your clients, please email renee@studentloancoach.com
THANK YOU for trusting us with your clients - Happy Coaching and Planning to all!