Episode 38: Case Study on Whether Parents Should Help Pay for Graduate School

Jake wants to attend dental school while Carissa has enrolled in an occupational therapy program. In this episode, see how they plan to finance their educations, why Public Service Loan Forgiveness is a good option and why parents often shouldn’t help pay for grad school.

In today’s episode, you'll find out:

• How Jake and Carissa decided on their specific programs
• How their choice of schools affects their future student debt
• Jake’s plan for financing his degrees
• Their plan for future work post-graduation
• Carissa’s plan for financing her degree
• Why parents helping pay for a child’s education can be a bad idea
• Why PSLF is a good gamble
• Possible scenarios if Carissa chose to work in the private sector
• Why trading PSLF away isn’t a good deal
• Why Travis recommends Jake and Carissa borrow the max amount
• The possible future of tax bombs — and why it’s political
• The low downside risk of PSLF and tax bombs
• Should you pay interest or investigate forgiveness while in school?
• Why don’t we hear more about student loan forgiveness?
• When refinancing can also be a valuable option

Links mentioned: 

• The College Scorecard: University of Nevada, Las Vegas (UNLV)
• The College Scorecard: Touro University Nevada
• StudentLoanPlanner.com/Betterment
• StudentLoanPlanner.com/Private
• StudentLoanPlanner.com/Voicemail

Like the show? There are several ways you can help!

• Subscribe on Apple Podcasts, Stitcher, Spotify or TuneIn.
• Leave an honest review on Apple Podcasts. 
• Follow on Facebook, Twitter, or LinkedIn

Feeling helpless when it comes to your student loans?

• Try our free student loan calculator
• Check out our refinancing bonuses we negotiated
• Book your custom student loan plan

Episode 38 Transcript

Travis Hornsby [00:00:01]Before we get into the episode, just a quick reminder: If you have questions that you want answered in our podcast, please go to StudentLoanPlanner.com slash voicemail and ask any question you want. We will respond to some of them live on the show.

Travis [00:00:15] Today, I have the wonderful honor of having Jake and Carissa Boyd on the Student Loan Planner® Podcast. Jake is thinking about going to dental school, and Carissa is going to occupational therapy school. And this is really exciting to try to make sure that they don't mess up the student loan situation on the front end rather than trying to fix something that's already broken. Right? So, y'all, thanks so much for being on the show.

Jake Boyd [00:00:39] Thank you so much for having us. We appreciate it.

Carissa Boyd [00:00:42] I know. We really, really do.

How Jake and Carissa decided on their specific programs

Travis [00:00:44] The thing that I'm real interested in knowing first is, how did you all decide that you wanted to go into your respective programs?

Jake [00:00:52] Well, first and foremost, my family is a family of dentists. So I was kind of reared in that career. My father is a periodontist. My brother is a general dentist. So, we're very familiar with that. And, you know, just being reared up in that gives you a certain desire to follow in the footsteps. You see the good lifestyle. You see the — the fruits of the labors, I guess.

Jake [00:01:13] And so that's the main purpose why. And as I've gotten more exposure to the field, I've really started to fall in love with it, and so I think that's the main reason for me.

Carissa [00:01:24] For me, my little sister, she was born with cerebral palsy. And so I very much grew up in the special education world volunteering in her schools, and I really just found the passion for that. I got my undergrad in special education and thought teaching was the realm that I was going to kind of go down towards.

Carissa [00:01:46] But as I was in the schools more, I just realized all the — all the extensive work that teachers did and how they're not always working one on one with the students.

Carissa [00:01:56] And then I saw occupational therapists (OTs) that were able to work one on one with the students who had a lot better schedules. My aunt is an OT, and she — My mom from a young age was like, “You should look into what Aunt Stacey does because she works with special kids with special needs, but it's also a lot more of a stable job.” And you don't work as crazy of hours and the pay is a lot better than a teacher. So, [those are] kind of the main reasons for me.

Travis [00:02:25] Cool. So tell me a little bit about the application process for school. When did you decide that you were going to go to a program, and how did you apply to these different ones? And what was that thought process like, as to where you wanted to go to school?

Jake [00:02:39] Yeah. So for me, it was probably about two years ago where I started to just get everything organized as far as starting the shadowing hours, compiling all the service hours and making sure all my grades were in order — sorting through the data and so forth.

Jake [00:02:54] As far as the actual application, when I applied all over the nation really, but I placed an emphasis on the cheaper schools — mainly because that's what I've gotten from your podcasts a lot. Search for the cheaper schools, you know?

Jake [00:03:08] And so I ended up getting into two schools. One was a private school, which was very expensive. And then I got into this one that I'm currently set on going to, and it's a lot cheaper.

Jake [00:03:20] And so that was kind of the main thing, as well as having family where we're at right now. That was the main draw for me attending the school.

Carissa [00:03:31] So for me, I was not as set as Jake. So, once he started applying — because I just thought I wasn't going to be able to get in because it's so competitive, and it's so hard. And so what really drew me to the school that I'm going to is that they don't require the GRE (Graduate Record Examinations).

Carissa [00:03:50] And so I really got serious my fall semester of last year, so kind of around September. And that's when I started compiling all my hours, and that's when I took — I had decided to take the prerequisites that semester just because I was really sure that I think I wanted to apply. But I just wanted to do it in case. And then the more I got into the semester, I was like, “OK, like, I'm going to do this.”.

Carissa [00:04:18] And so I was a little late submitting. I think I submitted right before Thanksgiving, and I applied to two schools — one over where Jake got accepted over on the East Coast and then at the school that I'm going to. And we chose the school that I'm going to because we both got in here in this area, and they were both a little cheaper.

Travis [00:04:46] So, Jake and Carissa, you know, if it's not too scary, can you tell us the names of the programs that you're going to be attending?

Jake [00:04:52] Yeah, sure. So I'm attending UNLV School of Dental Medicine, and Carissa is at Touro University for occupational therapy.

Jake [00:04:59] OK. And those are both in Vegas, I guess?

Jake [00:05:03] Yes. So, UNLV is in Las Vegas, and then Touro is in Henderson, so about 15 minutes out.

Travis [00:05:08] OK. So you guys are going to be going to a lot of Raiders games then, huh?

Jake [00:05:12] That's right. Raider Nation, right here.

How their choice of schools affects their future student debt

Travis [00:05:14] That's real funny to me. So these two schools — unfortunately, they are a little bit on the high debt side. So I did some research for this, and, you know, high debt is relative. It's very relative because Roseman University in Utah is actually the — has the highest average student loan debt of any dental school. So, that one is about $350-something thousand, according to the most recent stats that were released by the College Scorecard — basically by the Department of [Education].

The cost of Jake's program

Travis [00:05:42] And then the UNLV program, I looked up this data — they just released this. Now, this is for the Class of 2016 and 2017, but the people leaving UNLV in 2017 that were dentists had a cumulative principal balance of $291,000. OK. And that was the average.

Travis [00:06:05] Now, what's really interesting for your purposes is that the median balance was $326,000. So the thing is, is the median is higher than the mean. OK? And whenever the median is higher than the mean, you have a skewed distribution. Right? So going back to, like, stats 101, you know, when you have that different kind of a number, then what you have is you kind of have this real skewed distribution where you're going to have a whole lot of very small values dragging down that average. Right?

Travis [00:06:36] And so here's how that happens. The difference between in-school and out-of-school tuition for UNLV is $40,000 grand per year. Do you know which rate that you're going to be getting going there? Is it going to be in-school or out-of-school tuition — Or in-state. I kept saying in-school.

Jake [00:06:51] No.

Travis [00:06:51] Sound like a fool.

Jake [00:06:53] So the first year, I'm going to be out-of-state. But then the remaining three years, I'll be a resident of Nevada, so I'll get the in-state rate for the remaining three years.

Travis [00:07:02] OK. And is it — I mean, Touro is just a private university, right, Carissa?

Carissa [00:07:07] Correct.

Travis [00:07:08] OK. So here's how that would impact things. So you've got all these in-state students. You've got some out-of-state students. And the majority will of course be in-state — because if you were going to borrow with the out-of-state rate, you're basically borrowing at a really high-cost private university.

Travis [00:07:22] The interesting point there is that the cost — the average debt, if you will — is going to be influenced by a lot of these people [getting] an in-state rate at UNLV. And they're going to be people that — maybe their dad or mom was a dentist. Maybe they were married in school to somebody earning an income, so they helped subsidize their living expenses. Because of that, you're going to have a distribution of debt at UNLV that's going to be very — Like, you're going to have a lot of people that have, like, $100,000 or $150,000 of debt.

Travis [00:07:54] The reason why those people don't have way more than that is because they had parental or family support for their program. Whenever you're looking at, like, an average student loan debt number from any program that you're kind of going to, you have to be real careful about that because most people just trust what the average is.

Travis [00:08:11] And if you think about the idea of making $200,000 a year as a dentist with the $291,000 average debt, that doesn't sound too bad. Like, you know, OK, $3,000 a month. I can swing that if I'm making $200,000 a year. Right?

Jake [00:08:23] Right. Right.

The cost of Carissa's program

Travis [00:08:23] And that sounds a lot better than going and working at some corporate job and making $60k. You know? I mean, it's one of those things where — OK, like, it's kind of a no-brainer it feels like just to go. But that's not the full story. And here's kind of some other things to think about. And don't worry, Carissa. We're going to pick on your OT program, too.

Carissa [00:08:41] OK, I'm ready for it.

Travis [00:08:43] Yeah. So here are the estimates that I came up with. If you took out in-state tuition only — so I didn't take into account this three-one structure, where you're, you know, you're getting one year out-of-state.

Travis [00:08:56] But if you did in-state only, you basically want to assume about $30k per year for living expenses. In addition, you want to assume — Well, it's about $60k per year, according to their website, for tuition. Right? And all the various extra fees on top of that, I think.

Jake [00:09:11] Right. Right.

Travis [00:09:13] And then I think the last year was less; so the last year, I think, was like $40k or something in tuition instead of $60k. So, your total tuition costs are about $220,000, and your total living expenses, let's say, are $120,000. If you're just multiplying that out, that comes out to about $340,000 of total debt.

Travis [00:09:35] But that average student loan debt figure that was quoted, that is the principal balance. That doesn't include the accrued interest. And when you borrow at dental school, every dollar you borrow over $40,000 causes you to have to take out Grad PLUS Loans, which is about a 4.25% origination fee on top of a 7% interest rate.

Travis [00:09:54] So the Grad PLUS debt really accrues interest at a pretty fast level. That $340k, if you actually took into account the fact that you will have Grad PLUS origination fees, you will have accrued interest.

Travis [00:10:07] And the other thing we don't talk about is tuition inflation. The Raiders are expensive. That stadium is not going to build itself. Right?

Jake [00:10:14] That's right.

Travis [00:10:15] Of course, I'm joking. You know, it's going to have no correlation to funding the Raiders Stadium in Vegas, what your tuition is going to go up to. But it's almost certainly going to go up. We know that's just because you can look at the past and just see that most of these dental schools raise tuition at (a) rate (of), like, 2% or 3% above inflation every year. Sometimes they let it stay flat for a year, just to take a break. So it's not relentless, but they usually do increase that.

Travis [00:10:38] Then, based off of that — if you got no help at all or no support whatsoever from family — then my estimate is that, using the forward-looking numbers, you would leave school with $425,000 of student loan debt.

Jake [00:10:49] Right.

Travis [00:10:52] $425,000 is the projection that I would have for you. Now, of course, that old statistic showing only the average student loan debt for UNLV dental school, according to that database — that federal database— is to $291,000. So there's a big difference between $291,000 and $425,000.

Jake [00:11:08] It's a huge gap, no doubt.

Travis [00:11:09] Of course, you'll have to borrow for one year at the out-of-state rate. So we'll also want to throw in $40k for that differential for tuition for one year. Now, that will probably be $50k when you throw in all the extra interest charges. So, we're going to be looking at $475,000, probably, if you have no support at all from dental school.

Are these costs realistic for Jake and Carissa?

Travis [00:11:28] So let me ask you first, is that realistic? You know, did you plan on getting any financial assistance from any outside sources? Or are you going to have to be financing the whole thing?

Jake [00:11:38] We're going to have to be financing the whole thing for my school, for sure. And we were prepared for that, you know.

Travis [00:11:44] Sure.

Jake [00:11:45] It's definitely a bomb. It's — it's a lot when you look at it, and [you've] got to be careful about it. But we were prepared for that, for sure.

Travis [00:11:53] So, best-case scenario, you probably come out with $400,000 if you're really frugal. And then worst-case scenario, you're probably at $475,000.

Travis [00:12:00] Another question for you guys is, are you thinking about having kids while in your programs? Or is that going to be something that you're going to be waiting on?

Jake [00:12:08] As far as kids go, we both want kids, but we'll probably wait until after at least Carissa is done with her program, which will be in three years. So, we'll wait a little, little bit of time before we get going on that.

Travis [00:12:20] Yeah, I mean, that makes sense. Like, the huge debts I see are when people have kids in school. Those are the — Those are the ones that are like, “Oh, how do you owe a million dollars in student loan debt? Oh yeah, you had, like, three kids while in dental school, you know. And your spouse was in a professional program, too.”

Jake [00:12:34] Right. Right. Right.

Travis [00:12:35] OK, so we have, you know, this $475,000 type figure for Jake, and let's pick on Carissa a little bit. So Carissa, can you share a little bit about maybe what you were told when you started going through the orientation process when you decided, you know, you were going to go to to this OT program. Tell us just more about the program, you know, and what it is and what the selling features were.

Carissa [00:12:57] Yeah. So, when I went to interview early in January, the interview process was really, really great — a really warm and inviting school, something that I really liked, just from the faculty and everything.

Carissa [00:13:10] They did have a financial lady come in and talk with us, and she kind of gave us a rough estimate of everything. And it was stuff that I kind of already knew just based on looking at their website and seeing what tuition was. At the time, they were saying tuition was about $12,500.

Carissa [00:13:30] And then obviously in addition to that — they didn't really emphasize this a whole lot, but I kind of knew — [was] textbooks. That kind of adds up because each trimester, you have new textbooks, and they tend to be thick and kind of expensive.

Carissa [00:13:47] So they were saying around $100,000 grand just for the schooling. And then as I've started and as I've had to pay for more different fees — whether it's textbooks or polos that I have to wear for field work — I've kind of realized it's a little more than $100,000.

Travis [00:14:10] Yeah. So, here [are] some numbers that I secretly stocked online here. For the Touro program, it seems like the average debt is about $145,000. And again, this is according to the College Scorecard, and we'll try to put that in the show notes. So, $145,000, you know, average debt. Median debt is about $150,000.

Travis [00:14:32] So the difference between the median and the mean is not quite as extreme as it is for Jake's program. And so that tells me that, you know, you're probably looking at a range of debt from the $125k to $200k kind of range. That's interesting.

Travis [00:14:45] So, you know, the extreme debts are not as extreme for an OT program, but that also makes sense because the tuition is a lot, lot lower. And, you know, you're also in a three-year program instead of a four-year program, so there's less time for accrued interest to grow, too.

Carissa [00:14:58] For sure.

Travis [00:14:59] One thing that I can say is with this $150,000 number that's online — including all the accrued interest and all those things, then you're probably looking at, like, $200,000. And then based off of tuition increases and things like that, I would anticipate that if you borrowed the full amount, you'd be looking at, like, $225,000, give or take, for this program.

Their plan for future work post-graduation

Travis [00:15:18] So let's talk about post school a little bit. Right? So, let's pretend that everything goes perfectly. You do really well in school. You get your degree programs. What would life after school look like in a perfect world? Like, where do you want to practice? Where do you want to work? You know, maybe Carissa, if you have an idea of what kind of employers you want to be at. Jake, if you're talking about maybe owning a practice. So maybe share some of that.

Jake [00:15:39] I have a brother actually practicing in town. He's a general dentist here. He actually spoke to you, and that's how we originally heard about you. He owns two practices now and is currently building more. And so I see after my graduation in four years getting in touch with him and getting on the road to practice ownership sooner than later.

Jake [00:15:59] I know, you know, from listening to your work and doing my own research as well, it's a lot more profitable if you can own your own practice. And so I think that's something that I'd like to get into as soon as possible. Obviously, it's not — probably not realistic to jump right in out of school, you know. But as soon as I possibly can, I want to get into practice ownership. And so that's my goal.

Jake [00:16:21] As far as owning a home and so forth, it's more of when it's right, it's right, financially speaking. We don't have a set date or a set goal when we want to do that or anything. But it's, you know, it's in the cards. It's in the — I'd say we want to at some point. But yeah, as far as that goes, we're not entirely sure. It's not an essential thing at this point.

Carissa [00:16:41] And also on that, I think we're planning on staying in the Vegas area for a good little bit. And we're both pretty OK with that, just because for OTs, Las Vegas is one of the highest-paying cities for occupational therapists. So that's a really big draw for me.

Carissa [00:17:05] I could definitely see myself — With my background in education, I would love to work in the school systems. They don't make as much as you would in a skilled nursing facility, but that's the lifestyle that I really like in the sense that I could be — when we do have kids, I could be on the same schedule as my kids. I can have the summers off. So, that's something.

Carissa [00:17:29] And we've talked about that. We're willing to sacrifice for the long run, especially with benefits and everything. But I'm very much open to all different types of practices, whether that's in a hospital setting, whether that's in different settings. I definitely plan on working a good bit after school.

Carissa [00:17:47] Obviously, we'll have kids relatively soon-ish after, and I would prefer to work during that time, obviously. I think it'll be a lot harder when I'm actually in it. But I think that's, like, the general idea for now.

Carissa’s plan for financing her degree

Travis [00:18:06] We know that Jake said that he's going to be taking out the full amount of the debt. But Carissa, for you, what is your thought in terms of how to finance your OT program? What kind of sources of funding are you looking at?

Carissa [00:18:17] Yeah. So for right now, my parents are loaning us the money for my first year. They — We're going to touch base every year just to make sure, just because it's such an expensive amount of money, to make sure we're on the same page and that everyone's OK.

Carissa [00:18:36] My brother went to law school, and my dad helped fund two of those three years. And that equated to about $100,000. And so his kind of whole thing was, Well, Carissa's school is going to be around $100,000. So I'm more than willing to loan [Carissa] the money for that.”

Carissa [00:18:54] Because he wants us — He had to pay for — My father is an attorney as well. And he had to pay for all of his school and had debt and other things. And he just wants us to avoid that as much as possible because of his personal relationship that he had to have with that, which is very, very generous of my parents.

Carissa [00:19:15] And so, as of right now, they're loaning us the money for the first year. And I could anticipate the next two years, but I don't want to be presumptuous by any means.

Travis [00:19:25] Sure.

Carissa [00:19:25] So, that's the plan as of now.

Travis [00:19:28] OK. And then when is the first tuition bill due?

Carissa [00:19:31] At Touro, you pay per trimester. So I already paid — I believe it was $1,250. I had to do that a week before my trimester started, and my trimester started in July. It was $1,250 because I did put a $500 deposit down —

Travis [00:19:46] OK.

Carissa [00:19:46] — a couple of months prior. So my next trimester starts in November, and I have to pay a week before that. So, probably the last week of October is when I'll have to put down another $13,000.

Travis [00:20:00] OK, so you've already put down $13,000 initially.

Carissa [00:20:04] Correct.

Why parents helping pay for grad school can be a bad idea

Travis [00:20:05] OK. So, I'm glad you're on the hot seat. I would not be doing this. So, I commend your parents. Right? I think this is a wonderful thing. But holy cow, get a check and put it in the bank. Don't give it away for free.

Travis [00:20:19] This is not just a bad idea. This is a terrible idea. I'm glad you're on the show, and I hope some other people that are going to grad school are listening.

Travis [00:20:30] Let me tell you a story. A good friend who went to a PA program — physician assistant program — in a big school in, like, Washington, D.C. So, like a Georgetown, George Washington University, that kind of a place. Right? And so she borrowed about, I want to say, $250,000, and her parents wanted to help her out. So the parents covered $125,000, and she borrowed $125,000.

Travis [00:20:55] And she had a similar kind of personality, like, loves helping people, loved the idea of working for kind of like a school system or — not really a school system, you know, like a not-for-profit kind of charitable place. Right?

Travis [00:21:07] And so I ran the analysis for her when she graduated, and we determined that even though she was going to be making about $95,000 a year, when you accounted for saving for retirement and doing things like this, she could still get a whole lot of her loans forgiven under the Public Service Loan Forgiveness program. Have you heard about that program before, Carissa?

Carissa [00:21:28] I have heard about it a little bit. Jake's brother is doing that for his student loans through dental school. And I just don't know a whole lot about it, and I'm a little skeptical.

Travis [00:21:39] Sure, you should be. So here's how it works. You pay based on your income for 10 years — cumulative not consecutive. So, for example, if you took some time away from work, Carissa — like, for example, to have baby or because you needed to take some time or you changed jobs — that's fine. It's just a cumulative 10 years of credit.

Travis [00:21:57] So, you pay based on your income, which means you're paying about 10% of your income less a deduction for how about your family size is. You know, this kind of equates to roughly 8% of your pretax salary that you're paying towards your loans under this program. And you do that for 10 years, and then the remaining balance of your loans is forgiven tax-free.

Travis [00:22:18] So, just to do some quick-and-dirty math here. Say you're an occupational therapist making $60,000 grand a year. You would pay roughly $5,000 a year because, again, you get a little bit of a deduction before they take that 10%.

Carissa [00:22:29] OK.

Travis [00:22:30] $5,000 a year times 10 is $50,000 grand. So what's interesting is I did the same math for my friend — the friend that was the PA — that took out half private loans and half federal loans because her parents wanted to give her less debt to start with — or but, you know, the parents covered half of it, and she had to cover the other half.

Travis [00:22:45] What was interesting is the payments that she had to make on her loans were the exact same if she owed $125,000 or she owed $250,000 — because it's a percentage of your income. While she could have obviously refinanced that $125,000, she'd pay about $1,200 or $1,300 a month. And under the Public Service Loan Forgiveness program, she would pay about $400 a month.

Travis [00:23:10] So I absolutely could not recommend that she refinance her loans when she could pay $400 a month instead of $1,300 a month. And over a 10-year period, that was going to save her a lot of money.

Travis [00:23:22] Now the thing that happened that really, really hurt was that extra $125,000 her parents covered for her, under the program that she qualified for, she literally would have been eligible to have that completely forgiven and wiped away.

Carissa [00:23:37] Interesting.

Travis [00:23:37] Effectively, what this friend of mine did is her parents ended up giving the government $125,000 as a free gift.

Jake [00:23:47] Oh, man.

Why PSLF is a good gamble

Travis [00:23:48] OK? That's really, really bad. Now here's the thing. You might say, “Well, OK, but what if this program doesn't happen?” Right? What if this PSLF thing doesn't work out, and then I have all this extra debt? And we could have paid down the interest, and we could really push that down quite a bit. What the heck, right? Like, that was terrible advice.

Travis [00:24:04] If you run the math, in general, the very worst-case scenario of the extra interest costs that you'll build up if you do not utilize the forgiveness program is about 10% of the balance. So, that means if, for a $225k balance that we're talking about you taking out if you borrowed in full, then about $22,500 of that would be the extra interest that you would add on by pursuing the wrong strategy.

Travis [00:24:31] That's the worst-case scenario because, keep in mind, federal loans are like 6% or 7%, refinancing is like 4% or 5%. So the spread, the difference between those interest rates times 10 is basically your worst-case scenario, and that's even overestimating it a little bit. But that's your worst-case scenario in terms of if the forgiveness thing doesn't work out.

Travis [00:24:50] And then if the forgiveness thing does work out, then the projected savings for you would be in the $250,000 to $300,000 level because you would get this entire balance forgiven tax-free if you worked for 10 years at a qualifying employer. Right?

Travis [00:25:03] So I want to put you on the set of “Deal or No Deal.” You ever seen that show on TV?

Carissa [00:25:11] I have.

Travis [00:25:11] Yeah, I mean, I watched it like crazy in the mid-2000s with my dad. So basically, I've got a deal or no deal for you. We have no idea what's in the case, right? Getting loan forgiveness or not getting loan forgiveness. That's a 50-50 shot.

Travis [00:25:23] So, there's one case on stage, and you're holding one case where you're at. And on the stage or in the case you have, there's a figure that basically says negative $22,500. In the other case, there's a positive $250,000 to $300,000, depending on what all the accrued interest ends up being when your loan would be forgiven.

Carissa [00:25:44] Yes.

Travis [00:25:45] So, you've got a 50-50 shot at losing $20,000 grand or gaining $250,000 to $300,000 grand.

Carissa [00:25:51] OK.

Travis [00:25:52] Which one do you take? Do you take that gamble?

Carissa [00:25:54] You'd take the positive one.

Travis [00:25:56] You'd take the positive one, especially if you are in a situation where your parents are really — You're really lucky that you have parents that are able to financially help you. Right? So, if they are wanting to help you, then the smart thing to do is to accept that help after the fact. If you end up not doing a forgiveness program, not taking that help on the front end.

Carissa [00:26:17] OK.

Travis [00:26:19] Does that kind of makes sense?

Carissa [00:26:20] Yes, that makes a little more sense.

Travis [00:26:23] Yeah. So what's going to happen is, you're going to graduate, and your debt —you're still going to have some kind of debt, probably a little bit of debt. And so let's say you only have, like, $50,000 to $100,000. Well, the Public Service Loan Forgiveness program is still very likely going to be the best program for you to utilize when you graduate if you do that career plan that you told me about. That means your payments would be the exact same if your parents helped you or didn't help you at all.

Carissa [00:26:47] OK.

Travis [00:26:48] Basically, that's an argument for you taking out only federal loans and asking your parents instead for that money in cash because of the way this forgiveness program works.

Travis [00:26:58] So, the simple way to explain this to your parents — obviously besides having them listen to this podcast episode — is basically by saying, “Well, because of my career goals, I actually could qualify for a loan forgiveness program that would forget almost all of my debt tax-free. And, you know, basically, you know, if you look at the rules, there's a good chance that when we're covering all this tuition that you're paying for me that we could have instead had that money wiped away and not have to pay it at all.”

Travis [00:27:29] So, that's a pretty compelling reason for them to give you a check and have you deposit it in the bank rather than use it for your student loans.

Travis [00:27:37] Now your situation is actually compounded by the fact that Jake also is taking out a lot of debt.

Carissa [00:27:42] Yes.

Travis [00:27:44] OK. So this role — it's real interesting, too, because what's going to happen is, you're going to graduate, let's say with $475,000. So, I don't want to reveal anything about your brother, Jake, but he's a hard worker. He's making a good income, and I expect you'll make a good income, too. But that said, Las Vegas is not the easiest town in Nevada to do dentistry, I think. Would you say you've heard that?

Jake [00:28:06] I've definitely heard that.

Travis [00:28:07] All right, so it makes sense. Like, basically what I tell people is, if you're in a decent-sized metro area with a major international airport nearby and you have a dental school in the same city that you're going to practice, you're going to have a ceiling on your income most likely. You know, it's just — There's going to be too many people graduating. There's going to be too much competition to be able to shun all of the low-paying dental insurance carriers, and, you know, make a killing.

Travis [00:28:34] Now, you can still do really well. But, you know, after write-offs, let's assume you're making $250,000 to $300,000 eventually, which I think that would be pretty good. That's after write-offs, so we're assuming you're doing depreciation. You're deducting interest or maybe deducting different kinds of taxes on the building, if you own it. That kind of stuff.

Travis [00:28:54] So it's very likely that you would pursue a loan forgiveness program long term anyway. So, in other words, like a 20-year kind of program. And if Carissa had no debt at all, then filing taxes separately probably makes a lot of sense because you would be able to do the Pay As You Earn program.

Travis [00:29:13] And Nevada is also a community property state. So I don't want to get super complicated with this stuff because it will lose people, but you could pay a very low amount of money on your debt in Nevada because of some loopholes that exist.

Travis [00:29:26] The thing is, is if Carissa takes out the normal amount of debt, then you guys could actually just file taxes jointly and both be on something like the Pay As You Earn program. And then what you could do is just basically keep it on that program. And then Carissa, you're either going to eventually get PSLF and get your loans forgiven — or you're not going to be, right?

Carissa [00:29:48] Yes.

Possible scenarios if Carissa chose to work in the private sector

Travis [00:29:49] So, is there a scenario where you work [for] a private employer? Maybe you could tell me if there is and what that would look like.

Carissa [00:29:54] For occupational therapy, there's definitely private practices. My aunt that I was telling you about, she has her own practice, and she does very well. She's back in Southern California, and she — Hospitals will hire her. School districts will hire her. I'm not as familiar with other settings. I know there's one in town. It's a pediatric outpatient clinic. There's definitely fewer of them, as far as private practices go for OTs. And that's not something I'm super interested in. I'd like more so the stability of the schools or a hospital or something like that.

Travis [00:30:36] Sure. So it seems like it's a lot more likely that you end up at a qualifying employer for this loan forgiveness program anyway. But let's say you didn't — just for the sake of argument — because that's the other scenario where you might say, “Well, maybe I should just have my parents pay for it.”

Travis [00:30:49] So, in the case where you did do a private practice, here's what would happen. Your payments on your loans would really not be all that different. You know, you would have to pay about $500,000 over the course of 20 years for both of your loans combined, if you both worked in the private sector.

Travis [00:31:07] I did some numbers, made some estimations. That's how I came up with that figure. And then, if you took out $700,000 grand, which is the total figure that I would expect you would graduate with combined, then that $700,000 grand would grow into about a million.

Travis [00:31:23] Now, it's not going to grow nearly as much as you might think because student loan interest grows at a slower rate than people would expect because of the, you know, the interest protections that exist. So, it's going to grow into a million.

Travis [00:31:35] And then in the private sector, you have to pay income taxes on that forgiven balance. Let's say federal tax rates are 40%. And you're living in Nevada, which has no state income tax. You're going to pay 40% of that million dollars. That's $400,000, and you're going to pay that 20 years from now. Right?

Jake [00:31:54] Right.

Travis [00:31:55] So, this is what would happen if you had a situation where, Carissa, you paid off your loans in full. Then instead of having a million left to forgive, you'll have like $700,000 left to forgive. Like, you're just literally taking your amount that you would have borrowed and taking it off the final million-dollar balance, basically.

Carissa [00:32:13] Yes.

Travis [00:32:14] OK. Then what would happen is, you know, you're paying taxes on that. So instead of like $400,000 grand in income taxes that you would have to pay, you'll pay like $280,000 on, like, a $700k balance. The thing that I wanted you to see there is by you paying off your $250k in loans in full — or $225,000 or whatever it would end up being — what you're saving is not $225,000 plus the interest that would have accrued. You're saving $120,000 of income taxes.

Carissa [00:32:46] OK.

Travis [00:32:46] Does that kind of make sense?

Carissa [00:32:48] Yes, it's kind of all piecing together.

Why trading PSLF away isn’t a good deal

Travis [00:32:51] So, in other words, here's the tradeoff. If you worked in the private sector, then you're paying like $200-something grand to save $120,000, 20 years from now. Twenty years from now, if you, like, adjust for inflation, $120k is probably like $50k today.

Travis [00:33:11] So, I've got a trade for you. Give me $250,000, and I'll give you $50,000. How does that sound?

Carissa [00:33:17] No.

Jake [00:33:17] It doesn't sound good.

Carissa [00:33:19] No.

Travis [00:33:19] Yeah, that's pretty bad, actually. Obviously, trading $250,000 grand for $50,000 grand is a bad trade. Now, with Public Service Loan Forgiveness, it's even worse. And that's what your expected career path is.

Jake [00:33:33] Right.

Travis [00:33:33] What I would do is this: I would go to the financial aid office. I would see if I could even get that money refunded and borrowed for in debt instead.

Carissa [00:33:41] What I paid for tuition already.

Travis [00:33:43] Yes. Now, you probably can't do that. But I would just — I mean, this would probably be a good opportunity for the financial aid office to get a little educated about the stuff themselves. Because honestly, most of the financial aid offices that I talk to, they have no clue about this stuff.

Travis [00:33:58] And it makes sense because financial aid offices — the only way you get fired is if you don't get people paying their tuition on time. Right?

Carissa [00:34:06] Yes.

Travis [00:34:06] I mean, that's the way to get fired as a financial aid officer, is not getting the school paid. And if you give people, like, questionable advice about the debt that they're taking out, that's not going to be the end of the world. I can say that because my mother-in-law is a financial aid person. But — But, you know, I mean, it's just a reality that you're not going to be able to get that really solid counselling. It's just going to matter, like, can you get the money or not.

Travis [00:34:28] So that's what I would ask them. They might say that's not possible, which is fine. I wouldn't lose any sleep over it. It's a one-time payment, right?

Travis [00:34:35] But the thing is, you know, your parents worked hard for this money, and the loan rules are so different than when your dad went to law school. So, so different. Your dad went to law school probably when law school was — I'm going to guess his law school bill was probably $10,000 grand a year, maybe?

Carissa [00:34:50] I think something around there.

Travis [00:34:52] Yeah. So lawyers probably made $50k to $100k, and law school is $10,000 grand a year. So obviously, having debt that you have to pay back — it stinks, no matter what it is. But it was way, way easier to pay back.

Travis [00:35:04] Now the federal programs, they have such high debt because there's no cap on borrowing. There's no incentive for the schools to try to reduce the cost of the program at all. And since the programs exist as they do, rather than kind of being an idealist about it and just saying, “Well, this is not the way it should be,” we have to be a realist about it and just say, “Well, this is the way it is.”

Travis [00:35:24] And if you go to this program, there's basically no chance, I think, that they eliminate Public Service Loan Forgiveness before the election. And the proposals to repeal it that have been attempted have always said that we're going to grandfather in people that are in a school program for the entire length of their program. So there's very, very, very low risk that this program would go away while you're still in school.

Why Travis recommends Jake and Carissa borrow the max amount

Travis [00:35:48] So, I think that the terrible advice that I have for you is that you should borrow absolutely everything you possibly can. How does that make you feel?

Jake [00:35:57] It's just funny because you hear such different things, you know, from the school. But this makes so much more sense when you're educated about it, you know?

Travis [00:36:05] Well, yeah, I mean, like, it would be — If the school told you to borrow as much as you possibly can, like, that would raise some red flags, right?

Jake [00:36:12] Right. Right.

Travis [00:36:13] And actually, what's interesting is the loan system was so screwed up that the advice they should be giving to everybody is take absolutely every last dollar you can get and put it in the stock market if you can, if you have extra — because that's what the system encourages. Then the system would absolutely collapse, and Touro would not even be able to get anywhere near this amount of debt for their program. And they potentially would have to close their program.

Jake [00:36:39] Right.

Travis [00:36:39] And — And I heard actually a “Planet Money” episode with NPR (National Public Radio) recently where they interviewed this university president, kind of off, like, somewhat off the record, so they didn't quote the person. But the guy's quote was, “If there's no margin, there's no mission.”

Jake [00:36:55] Oh, wow.

Travis [00:36:56] And I thought, “Holy cow, how can you call yourself a not-for-profit when you're literally saying you have to have a huge profit margin to stay in business?”

Jake [00:37:06] Yeah, no kidding.

Travis [00:37:06] You know?

Carissa [00:37:06] Oh wow.

Travis [00:37:07]  I mean, wow. I'm a little cynical about the state of higher education in this country because of everything that I've seen from the hundreds of millions of dollars of folks’ debt that we've helped with. But I think that's fair. I think it's realistic to say that.

Travis [00:37:20] So, since I don't care about what's in the best interests of the schools or anybody else but the people, that's kind of why — You know, we do give some talks for schools, but we don't give a ton. And part of that is because I like being independent and being able to call schools out for their junk. You know? To — You know, because this is a family podcast, I have to say “junk.” But I want to make sure that you guys are making the right decisions for your finances.

Travis [00:37:45] Given that you both are confident in making this decision, I think personally, under the current loan rules, it would be very irresponsible to take a bunch less debt out and have your parents cover most of it because there's almost a certainty that you're going to be needing to go for some sort of forgiveness program.

Travis [00:38:00] And the cool thing is this: If you have a bunch of debt, you can really think of it as a tax. So, in exchange for your degree programs, you're agreeing to the government to give them 10% of your earnings for 20 years. Plus, you know, you have to pay the tax bomb, so you might say 15% of your earnings for for 20 years or so, if you include, like, you know, 5% going towards the tax bomb.

Travis [00:38:22] Would you make that trade, you know, instead of what you would have done otherwise? What are your thoughts on that? Like, would you rather be a dentist than an OT and pay 10% to 15% of your earnings to the government? Or would you rather kind of do what you would do without degrees?

Jake [00:38:34] No, I think that makes a lot of sense when you put it that way — because you're going to be making a high income, you know, in comparison to the average American, you know what I'm saying? So, if you put it that way, it's a great tradeoff, with you just paying a sort of tax. You know? And so that makes a lot of sense to me personally. That makes a whole lot of sense.

The possible future of tax bombs — and why it’s political

Carissa [00:38:53] It just worries me about the loan forgiveness how — just how it's, like, kind of unsure in the sense that with different — Because you were saying, like, there's a high chance that, like, it won't, like, it won't be affected with difference with, like, the government and everything like that and how you have to pay a little bit each month. But then you have to save up for this giant bill that you have to pay in 20 years, and that just kind of makes me uneasy.

Travis [00:39:24] Can I let you in on a secret?

Carissa [00:39:26] Yes.

Travis [00:39:27] The government is not going to be able to collect that.

Carissa [00:39:29] How sure are you of that?

Travis [00:39:32] Well, I'm not positive, which is why absolutely everybody that gets a student loan plan from Student Loan Planner® gets a detailed analysis of what they need to save to prepare for that tax bomb. On the record, I want everybody pretending and knowing that they do have to pay that — because I don't want anybody planning that that's not going to be there. Because then people are going to not save enough and not have enough assets, you know. Because people basically having no expectation of a tax bomb for their student loans is going to give them license to consume more.

Travis [00:40:01] And what matters more than anything based on the math that I've done is your savings rate. So, that means you need to have retirement accounts, and you need to have money going into brokerage accounts. And the brokerage account money is, if you're putting, like, $500 a month in there, it's probably enough for most people's tax bombs, actually.

Travis [00:40:17] You know, so, the thing I'd say about the tax bomb is this: The government under the current rules is going to be facing hundreds of billions of dollars in taxes that people will have to pay 10 to 20 years from now because this stuff started about 10 years ago. That's the current state.

Travis [00:40:34] Now, the average American family has, like, I think about 60 — I want to say like 60-something percent of Americans have less than $5,000 cash in the bank. Grad school folks probably have, on average, much more than that. But let's just say, like, your typical grad person has like $50,000 to $100,000 of, like, liquid assets they could potentially get access to. If they're going to owe $200,000 to $400,000 grand in tax bombs, then how are they going to be able to afford to pay that without taking out a second mortgage on their home?

Travis [00:41:06] And politically, this is — this debt is owned by the government. It's not owned by Goldman Sachs. Which means that — What are you seeing right now in the Democratic primary? Every Democratic candidate basically has some form of “let's forgive a big chunk of this.” Some of them say, like, “Let's forgive, like, a small amount.” Some of them, like Bernie, want to forgive all of it. And then there's Elizabeth Warren, who wants to forgive only the people with the smaller debt loads.

Travis [00:41:33] And then there's, like, Kamala Harris' plan — which is pretty hilarious, by the way, if anybody wants to look it up. It's, like, jump up and down on your leg for, like, a day and, you know, rub your stomach and pet your dog three times on the head, and you'll get $20,000 of loan forgiveness, you know. It was the most complicated plan I think I've ever seen, and it was just so confusing.

Travis [00:41:51] So basically, all the Democratic politicians want to forgive student loan debt in some way. And there's been multiple bills that have attempted to eliminate the tax bomb that have not passed. And the reason they haven't passed is that — my guess is that Republicans are terrified of the idea of having absolutely no incentive at all for people to not care at all about their student loan balance.

Jake [00:42:12] Yeah. Yeah.

Travis [00:42:12] Right? Because then, if you're just paying a percentage of your income, well, screw it, man. I'm going to get an OT degree. I'm going to get a pastoral counseling degree. I'm going to get a, you know, an astronaut degree. And then I'm going to go back to school, and I'm going to get a basket-weaving degree and a nuclear engineering degree, too. And who cares if I pass any of them? You know, seriously, right? There's literally — There's no reason why you wouldn't just go back and get a bazillion degrees.

Travis [00:42:34] And also, like, rather than go to, like, freaking — no offense to Iowa. I love Iowa, if anybody's listening. But, like, you know, I'm not running for president, so I'm going to attack it. So, you know, somebody going to, like, middle-of-nowhere Iowa so that they can pay like $50,000 grand for their education — why would you do that? Holy cow.

Travis [00:42:52] Carissa, like, let's say you weren't married, go to, like, freaking New York, right? Like, go to New York and spend like $3,000 grand a month on rent. And party it up and go to Broadway shows. And go see, you know, the, you know, “Hamilton” every week, you know? And why would you — why would you care about what you're borrowing if there's absolutely no tax bomb. Right?

Carissa [00:43:12] Right.

Travis [00:43:12] That's the problem under the current rules, is there's absolutely no cap on borrowing. So live it freaking up. I mean, you know, go to — go to school in SF (San Francisco) and New York. Don't go to school in, like, Iowa, if there's no tax bomb. You know, that's such an old-fashioned way of thinking, to just pay your debt back. Who does that?

Travis [00:43:29] So that's why the tax bomb hasn't gone away. And the reality is, is when the tax bomb really does explode and just [vomits] all over itself and, like, the government is having all this trouble collecting these bills, people that are wealthy might have to pay it. But people that are not super wealthy are definitely almost surely not going to have to pay it, just because they won't be able to pay it. And the government is not going to be willing to kick people's retirement date 10 years down the road because this is a political question.

Jake [00:43:52] Right. Right.

Travis [00:43:53] You could literally win probably millions of votes by doing something that's a lot cheaper than fixing Social Security and Medicare. That's why I think it's something that you shouldn't really worry that much about.

The low downside risk of PSLF and tax bombs

Travis [00:44:04] But, you know, again, I like to talk about (how) I used to be a bond trader. So bond traders, they're never really interested in upside. They're always interested in the downside risk. They want to know, “What are the situations where I don't get paid my money predictably on time?” That's the way that you're trained to think.

Travis [00:44:19] So, that's why I kind of show people, like, your downside risk is not, “Oh my gosh, suddenly this debt is, like, going to kill you.” It's like, OK, you might have to pay, like, an extra-low five figures of interest. That's literally the downside risk. Because if you borrow this, you'll have to pay extra interest if it doesn't work out. And that's not like, you know, suddenly the government steals $300,000 from you. Well, you know, you were already going to pay it anyway out of pocket.

Jake [00:44:45] Right. Right.

Travis [00:44:45] So you could argue that, well, there's 7% versus maybe my savings are getting zero. Well, if your savings are getting zero, you could check out StudentLoanPlanner.com slash Betterment, and you can get, like, 2.4% on your savings now. You know? So, the difference in yield of 2.4% and 7%, I mean, you're talking about a hit of 4% or 5% or something in your money by not paying the debt down. So that's a very measured cost. It's not an out-of-control thing.

Travis [00:45:15] I mean, yeah, but heck, I mean, if they do away with the tax bomb, I mean, Carissa, just go to, like, the Bellagio and just, like, bet — you know, take your tuition money and put it all on black. And you know, maybe you could pay it off that way, you know?

Carissa [00:45:24] That would be great.

Travis [00:45:25] If it doesn't work out, you're just paying a percentage of your income anyway. Holy cow, I hope no policymakers are listening to this, right? You know, I'm just kidding. I mean, it's not my fault. I blame Congress. So, you know, that's my story, and I'm sticking to it.

Should you pay interest or worry about forgiveness in school?

Travis [00:45:40] Do you guys have any more questions that you want our listeners to hear? Or any kind of thoughts or things that are on your mind? I'm sure this is just kind of like holy cow.

Jake [00:45:48] No, for sure, I do. And by the way, you should run for president, Travis. I'd vote for you for sure.

Travis [00:45:52] Thank you. I have zero interest.

Jake [00:45:54] I have a question. So, paying off interest while in school, do you think that's a good idea? What's your view of that? Because I know a lot of students do that.

Travis [00:46:03] Yeah. Bad idea. Again, if you're going for forgiveness, you want to pay the absolute minimum possible. You do not want to pay any dime of money towards your student loans at all because you're just, again, all you're doing is paying a dollar of your forgiven balance 20 years from now.

Travis [00:46:18] So every dollar you pay on your loans in school — if forgiveness is the right plan, I want to stress that because sometimes refinancing is the right plan. That's why we have the refinancing links on our website. But if forgiveness is the right plan, then all you're doing is trading a dollar today for 40 cents and 20 years because of that tax situation.

Jake [00:46:35] Right. OK. That makes sense. And so essentially, it's looking like forgiveness is the clear winner in our situation.

Travis [00:46:42] In your situation, right? And it's different for everybody.

Jake [00:46:45] Exactly, yeah. With our balances, it looks like, you know, that would be the best, most efficient way for us.

Jake [00:46:51] So, upon graduation then, is just something that you choose, you select? Or is that something I do on the front end? Or how does that work exactly?

Travis [00:46:59] Yeah. You can't even do anything until graduation. So live it up. Again, go to the free events in Vegas. You know, just don't gamble, right? Because there's so many great entertainment options, as long as you don't put any money down. But yeah, you literally should not be worried about your finances while you're in school. I will say this: Develop a good budget. Like, develop good habits. If you don't feel comfortable taking the max, I understand. Just — You can feel free taking less if you want to.

Jake [00:47:25] Yeah.

Travis [00:47:26] Even though the incentive is that you would take it, literally put it in your bank account and build up an emergency fund. But feel free to just try to develop good financial habits — budgeting, reading investment books, like, listening to different podcasts about, you know, the business of your professions. Yeah, that's what I would focus on while you're in school and just learning the material.

Why don’t we hear more about student loan forgiveness?

Jake [00:47:43] Got it. That makes sense. I appreciate that. Do you have any questions, Carissa?

Travis [00:47:49] Carissa is just like — She's dumbfounded. She's like, “How am I going to explain this to my parents?”

Carissa [00:47:53] I'm taking it all in because I feel like with the loan forgiveness, I haven't heard a whole lot about it. Do a lot more people do it, and I'm just not made aware of? Because when we were talking to my mom about it, she was like, “Well, it, like, sounds too easy. Like, wouldn't everybody just do that then, if they just had to make small payments and then just save up for a potential bigger bomb?” She kind of just thought it was, like, almost too good to be true, and why don't more people do it if it is so great. Or are more people doing it, and we're just not aware of it?

Travis [00:48:30] It's the latter one. Right? Because again, the rules aren't exactly easy. Like, there's a reason that people pay us money for plans. Right? It's because it's kind of complicated to figure it all out on your own. And so when people are not aware of — Actually, I would wager that the majority of Americans are not even aware of where Nevada is on a map.

Carissa [00:48:51] True.

Travis [00:48:52] If you asked most Americans, like, “Where is Las Vegas on a map?”, like, they'd probably point to, like, Montana. OK? This is a complicated program. Like, this is something you have to know about in detail before making the decision of how to borrow.

Travis [00:49:05] And this is a program that has been around since 2007, but it's really been around since more like 2009, 2010. And so it's 10 years of service you have to do, you know, to get it. And so we're just now seeing the first several people that have gotten the forgiveness. And I've actually got several people in my inbox that have said that they've gotten it and proven it.

Travis [00:49:25] So, you know, this is a program that has an exponential type adoption rate, and so that's why you're not hearing about it. It's because we're way to the left on that curve, and we're not, you know, years into the program existing. And so it's just one of these things where all the money has already been promised. It just hasn't all been delivered yet, and that's why you're not aware of it.

Carissa [00:49:44] OK. That makes that makes more sense.

Jake [00:49:47] That makes sense.

Travis [00:49:47] Well, any last words of advice or encouragement for other people thinking about going to school out there?

Jake [00:49:54] Get into the cheapest school that you can. For sure.

Travis [00:49:56] Yeah. Don't — don't — don't have to go through this, right? Go to, like, a — go to a super-cheap program. Or just, you know, sign your life away to the military and take out no debt. Right?

Jake [00:50:06] That's right. That's right. It's a great option, for sure.

Travis [00:50:09] Yeah. Now, if you do want to make a lot of money, I know I was picking on Iowa earlier, but holy cow, I think the richest dentists I've ever consulted with have all been from Iowa, for whatever reason.

Carissa [00:50:20] Wow.

Jake [00:50:21] Oh, wow.

Travis [00:50:21] So yeah. And you know, I don't think it's because presidential candidates bribe you, you know, or anything. I think it's just because it's such a great environment for dentistry there.

Travis [00:50:30] So anyhow, thanks so much, Jake and Carissa, for coming on the show. We will put all this information in the show notes. This will be Episode 38. So, StudentLoanPlanner.com slash 38. We'll have all the details you can check out. And I want to wish the both of you the very best as you pursue your degree programs.

Jake [00:50:47] Thank you so much, Travis. We really appreciate it.

Carissa [00:50:49] Thank you.

When refinancing can also be a valuable option

Travis [00:50:52] In the example that we covered today, Jake and Carissa both had debt that was so large that they need to take out all federal debt because they're probably going to be going for forgiveness. However, if you're only needing to borrow a small amount over and above your Stafford Loan amount, then it might make sense to take out a private loan to cover your Grad PLUS debt instead.

Travis [00:51:12] So, for example, let's say that you went to FSU (Florida State University) law school, where the average debt is $80,000. Lawyers can borrow $20,000 a year in Stafford Loans, and anything above that, they'd have to borrow in Grad PLUS. Well, Grad PLUS is a lot more expensive. Costs 7% interest plus a 4.25% origination fee.

Travis [00:51:32] Instead, you could probably take out a private loan and get a lower cost of interest of maybe 5.5% to 6% with an origination fee of 0% to 2%. If you know that you're going to be paying back your debt — either for an MBA program, dental school, medical school, law school, whatever it is — then you might be able to qualify for a private loan that will have a better term.

Travis [00:51:51] Now, you should not do this if you're like Jake and Carissa today on the show because they needed to go for forgiveness. But if you do know that you need to pay back your debt, then you might consider borrowing for in-school purposes with a private loan. And to learn more about that, go to StudenLoanPlanner.com slash private.

Travis [00:52:08] And that's the end of today's show. If you know that you need a student loan plan, get one set today at StudenLoanPlanner.com forward slash book. If you know that you need to refinance your loans, check out StudentLoanPlanner.com forward slash refi — r-e-f-i — and get a cashback bonus so you can start saving money in your interest today.

Travis [00:52:26] And finally, if you like the show, leave us a review in the favorite place that you listen to podcasts or share it with someone who owes more than you.