Episode 41: The 26 Reasons that Make Your Student Loan Plan Unique

Do you wonder why our student loan plan consult form has you give so much information? Hear the Student Loan Planner® consultants — Travis Hornsby, Justin Harvey, Rob Bertman and Lauryn Williams — break down all 26 questions and explain how your plan is unique.

In today’s episode, you'll find out:

• How the consultants react to learning someone’s occupation
• Why the consultants want to know what metro area you’re
• How community property states affect student loans
• How your choice of school might affect your loans
• The consultants’ thinking on different loan balances
• Why knowing the different kinds of loans you have is crucial
• How your current income affects possibly refinancing
• Why your payoff plan involves your projected income
• How interest works with student loans
• What your retirement savings lets the consultants know
• How savings illustrates your financial mindset
• Why the date you took out your loans matters
• How the consultants make a plan based on your information
• Why your spending indicates whether you can afford your loans
• How both empathy and being realistic play into loan plans
• Why savings versus debt matters
• How Parent PLUS Loans and PSLF factor into the consult
• Why filling out the entire consult form is critical
• How the consultants will be divvying up appointments from now on

Links mentioned: 

• StudentLoanPlanner.com/Voicemail

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Episode 41 Transcript

Travis Hornsby [00:00:01]I've got a real special treat for you today. I've got every single one of the Student Loan Planner® consultants in the room. How's everybody doing?

Justin Harvey [00:00:07] Doing great.

Rob Bertman [00:00:07] Awesome.

Lauryn Williams [00:00:09]I just got my hair done, so I'm looking beautiful and feeling great.

Travis [00:00:12] Well, today we're going to talk about the 26 reasons that make your student loan plan unique. I think this is pretty interesting. So, Justin, you did a talk to a bunch of veterinarians recently, right?

Justin [00:00:22] That's right. I did.

Travis [00:00:22] Yeah, and you said something about — they asked you a bunch of questions, and what was your response to them?

Justin [00:00:26] Pretty much in every case it was, “I'd love to answer your question, but it depends. It depends on a bunch of different factors.”

Travis [00:00:32] Yeah. So, I've definitely been accused of things like, “Why don't you just make a software solution to all the stuff that you do and just have this, you know, scalable product that can answer everybody's questions. And that would be the best thing to do.” But it's not that easy because this stuff's pretty complicated. So I thought we'd do an episode where we prove it.

Travis [00:00:47] So, the first question that we ask on our consult form — I basically came up with the – I made a list of our 26 questions we ask in our consult form when we're doing plans for people. So, I thought we would go through each one of those and explain why it matters and why we ask it. And so you could kind of understand our way of thinking about why we ask these kinds of questions and what it means for your financial future. So I thought this would be a really fun episode for everybody to chip in on.

How the consultants react to learning someone’s occupation

Travis [00:01:08] My first question on the consult form is, “What is your occupation?” Maybe y'all can share. What are your thoughts of what you think when you see what someone's occupation is. What pops into your head right away?

Lauryn [00:01:18] Well, I've seen attorney. I've seen auto maintenance. I've seen plumbing. I've seen social worker. Veterinarian. Physician. It runs the gamut.

Travis [00:01:28] So it's not just all doctors?

Rob [00:01:29] And for me, I mean, when I see the profession, I can normally tell what trajectory they're on in terms of their income and probably how much they have in student loans. And also, you know, what are their other abilities? What are their planning needs? What other life goals might they have in mind?

Rob [00:01:42] Like if they're a dentist, obviously, maybe they want to open up a practice. If they're a veterinarian, maybe they're going to stay in a private practice. If they're a PA (physician assistant) or a physician, maybe they're going to have some — You know, we're going to have to take a look at nonprofit versus for-profit employment opportunities. So, a lot of stuff comes up for sure.

Lauryn [00:01:58] That's a really good point, Rob. I think, too, with teachers, that's one that I usually know we're going to be talking about PSLF (Public Service Loan Forgiveness). We're going to be talking about teacher forgiveness. At the $0 to $200k debt range, Justin and I work a lot with nurses. And so there's a there's options for nurses’ forgiveness in addition to PSLF. So yeah, the occupation is going to tell us quite a bit, right out the gate.

Justin [00:02:17] One of the things that I've seen that is really helpful for understanding the occupation is different occupations have different availability of PSLF opportunities. So, if we're looking at forgiveness in PSLF and you're a doctor versus a lawyer versus a veterinarian — which are the top three most popular professions with which we consult — those all have very different profiles with regards to access to PSLF. And it goes from pretty likely or a lot of opportunity with physicians, depending on the specialty. To lawyers, it's kind of half and half. To veterinarians, have very little opportunity.

Justin [00:02:49] And I don't know what you guys have seen as far as PSLF opportunity. But that's something I try to help our clients think through, is like, what are the odds you're going to be able to get forgiveness in 10 years tax-free with your employment versus maybe there — especially if you're a veterinarian — there's just not a lot of PSLF opportunities out there, and you're looking at either a taxable forgiveness opportunity over 20 or 25 years. Or probably just paying them off in full.

Travis [00:03:13] That's a great point. And another thing, too, is, for example, you know, we have — maybe half of our physicians are going for PSLF, whereas maybe 5% of our dentists are because of the type of work that you have to do in dentistry for public health. It's just high volume, and it really breaks your body down, whereas physicians, you can last in that kind of a job for 30, 40 years, in a no-for-profit job. So, definitely a great point.

Why the consultants want to know what metro area you’re

Travis [00:03:33] Now, for our second question, we ask what metro area people live in. So, why is that any of our business?

Rob [00:03:38] Well, it probably takes into account some of the cost of living. You know, how to balance student loan repayment versus discretionary income that they have left over after normal living expenses. For certain professions, it could mean a higher or conversely a much lower income. And then there are obviously other factors.

Justin [00:03:55] Yeah. If you're in a very high cost-of-living area — even if you're wanting to repay your loans in full, ultimately — you may be in a place where, if you're just getting established in your career and you're living in the Bay Area, you need to be on an income-driven plan for a few years while you're getting your feet under you and becoming established in your profession and starting to grow your income so that ultimately, you can knock out your loans.

Justin [00:04:18] But if you have a very high percentage of your income going to just keeping yourself alive with a roof over your head and food on the table, it's tough to jump right into full repayment, even if you know it's the right thing in the long term. And using an income-driven option for a period of a couple of years to lay a solid foundation first can be a really helpful sort of safety valve.

Travis [00:04:35] Lauryn, what about if you're living in Minnesota versus Wisconsin? You know, in a community property state? How could that impact things?

How community property states affect student loans

Lauryn [00:04:42] Yeah, that's a good point. I circle as I go over the type form and understand everything that's there in looking at our consult form, I always circle the community property state right out the gate because we have the breadwinners' loophole if you're the higher earner.

Lauryn [00:04:55] We also have, you know, splitting it so that you can keep your payments low and maximize your forgiveness. There's a lot of different strategies that are going to come into play if a person is in a community property state and also going for PSLF. And even sometimes when they're going for taxable forgiveness.

Travis [00:05:09] That's a great point. Yeah. Because basically, we see situations where, in community property states, you can equalize the income on the tax return. And filing separately — that gives you a pretty good deal, in terms of what you can pay.

How your choice of school might influence your loans

Travis [00:05:19] So, our third question I won't dig into a ton because I don't think there's quite as much there. We like to ask people what university you were at when you borrowed most of the debt. You know, that's kind of helpful just to understand: Are you above average, or are you below average? Because we can pretty much project what kind of debt everybody should have based on their university that they attended if they got no family help. We kind of have that data.

Travis [00:05:40] So, when we know where you went to school, we know that, “Oh man, how did you end up with $500k in student loans for this in-state dental school? Must have been out of state.” Or, “Oh, how did you end up with an extra $100,000 going to this place?” Or, “How did you end up with less? How did you end up with only this amount of money going to this school? Well, you must have had parental assistance.”

The consultants’ thinking on different loan balances

Travis [00:05:58] So I guess, question four is just, what is your student loan balance? I know this might be kind of obvious why we need to know that. But what are y'all's thoughts when you see different levels of student loan balances? What kind of things go through your head with different numbers?

Lauryn [00:06:11] Well, if I've already looked at the form and I know what your profession is, I can kind of guess what your income may be, like you said. We get to that relatively soon, but when I'm looking at your student loan balance, I'm saying, “OK, you likely have income to be able to support paying this off.” Or, “You're not going to have income, you know, in the profession that you've named above toward paying this off.”

Lauryn [00:06:30] We're going to be looking at this. We're going to be having a conversation probably more so about refinancing. Or if you're in a PSLF job, we're going to be having a conversation more about how much credit you already have. So, is there going to be enough to actually warrant you getting PSLF forgiveness?

Lauryn [00:06:44] So, it tells you quite a bit to say, “OK, here's the loan balance. Here's what we're working with,” in helping you back into what the options might be for an individual.

Why knowing the different kinds of loans you have is crucial

Justin [00:06:53] Yeah. And attached to the loan balance — sort of implicit in that question — is the balance of the different types of loans. So, understanding federal versus private. Understanding Direct versus FFEL loans, which FFEL is Federal Family Education Loan — that's sort of the older generation of loans which don't qualify for PSLF forgiveness and some of the other newer income-driven plans. Understanding the balances of each of those different types.

Justin [00:07:17] Also understanding, you know, each different type of loan. In doing one loan consult, if there [are] some Parent PLUS Loans and some federal Direct Loans and some private loans, we're essentially doing three mini loan analyses in order to come up with a comprehensive plan for that person. And understanding the breakdown is really critical to being able to give good advice.

Travis [00:07:35] So, Rob, if you're looking at spouses' total student loan balance, you know — let's say that you see the primary person [who] filled out the consult form's balance and then the spouse's loan balance. You know, how does that impact your thoughts about whether or not somebody should file jointly versus separately?

Rob [00:07:50] Yeah. You know, this is — spouse student loan debt is one of the more — things that makes the consult more complex. Depends on, you know, who has the majority of the debt? Who's making more money? Who's making less money? Do they have the ability to file separately? You know, if one of them has loans, then filing separately could be an option.

Rob [00:08:07] But if both of them have loans — federal student loans — and, depending on the amount, then filing separately could just cost them a whole bunch extra in taxes without actually saving them any money in student loan repayment. So, spouses' student loan balance is, like, a huge factor.

Rob [00:08:20] And also what I see normally is that most couples are not on the same repayment plan as the other. And that really could be costing them a lot of money.

How your income affects possibly refinancing

Travis [00:08:29] That's a good one. One thing that we ask — and we ask this in four separate questions — but we ask what their current income is, what their spouse's income is, and then we ask them what is their spouse's and their expected income in five years.

Travis [00:08:43] One thing that I think is really fascinating when I ask this question is what your current income is, is sort of a factual question, right? So, that tells us kind of what their debt-to-income ratio is. Whether or not, you know, it might be justifiable to do a refinancing or go for forgiveness. Or whether or not they're going to have to worry about, you know, capped payments on something like Income-Based Repayment (IBR) or Pay As You Earn (PAYE) versus no capped payments like REPAYE (Revised Pay As You Earn).

Travis [00:09:05] So, that kind of is an interesting point. But also, you know, when I ask people what their incomes are going to be in five years, I think we have some folks that are pretty realistic and some folks that are kind of like I don't know where they came up with that number. Like, they're a little over optimistic.

Travis [00:09:19] So, I don't know if you guys have any stories, just some kind of, you know, funny projected incomes maybe you want to share? Or, you know, what kind of stuff that you look for and what kind of things that go through your mind what you see what someone's current income is and their spouse's income is versus what they think it will be in five years’ time.

Lauryn [00:09:36] I think this is one of the coolest questions in the consult, and I think this is one of the areas that we really add value outside of just focusing on the student loans. Because [there are] so many people who have not really thought about their income. They've gone to school. They've gotten their education. They thought about the income a little bit when they were getting the job, and they've never really thought about “what's the trajectory for my life going forward? You know, what are the opportunities for promotion? What is the likelihood that I'm going to advance in this career?”

Lauryn [00:10:02] And so it's always been an area where I've been able to add a lot of value in the consult for people who have not thought very much about it and, you know, thrown out kind of a wild number. And we say, “How do you expect the income to grow? Is there some sort of promotion coming up?” They're like, “Just now. I think I should get some raises. And yeah, just — they're going to give me more money. Of course that's how it works.” And it's been really, really cool to make people actually have a conversation around what they want to do in the future.

Rob [00:10:27] That's a great point.

Why your payoff plan involves your projected income

Justin [00:10:28] Yeah. Something that I always think about when I see this question is, with regards to forgiveness: If we think about the repayment decision in terms of full repayment or forgiveness, one of the critical factors is, “How quickly is your income going to grow, and to what extent is it going to grow?” Meaning if your income is going to grow very quickly and grow continually in a period of months and years into the future, it's going to be hard to get forgiveness if you go from making $100k to $200k to $300k over five to seven years and beyond. Whereas if your income is really flat or capped and we know it pretty — with a higher degree of certainty, then it might incline us more towards a forgiveness strategy rather than the full repayment.

Travis [00:11:08] Can I just say something that's kind of funny? And this is always a, you know, a dangerous generalization — whenever you make a generalization — but I've seen a lot more wildly ridiculous five-year projections from men than women. Like, somebody will be making $50,000 now. And it's not a situation where the person is a resident, right? Like, they'll be like, you know, like a lawyer or a chiropractor or something. And they'll be like “$50,000 or $60,000 now,” and in, like, five years, it's like “$500,000.” And it's like, “Oh, interesting. You know, what's the plan to get there?” And they're like, “I'm going to be successful.” Well, maybe we got to think about that a little bit.

Travis [00:11:44] I mean, I'm joking a little bit. Like, the vast majority of y'all are very rational and very, very smart. Have thought through this stuff, right? Like, I'm being a little facetious here. But realistically, I think it's hard — and to be honest, it's hard to say, right? Because if you would have asked me when I retired from being a bond trader what I was going to be making in five years, I would've told you, like, $20,000 selling, you know, flowers on the beach — because I was going to be early retired, right? I would never have dreamed that I was going to found a company. That wasn't my plan.

Travis [00:12:12] So, you know, things can certainly change and throw you off balance. But yeah. So it's important — kind of like — those kinds of questions. I love those questions because they tell us — and we have a huge dataset, you know, so we know, at least within certain number of standard deviations, what that answer should be. Right?

Rob [00:12:27] Right.

Travis [00:12:27] So if you answer, like, a certain number, then we can say, “OK, like, that's makes sense.” And if you answer, like, “no growth at all,” it's like, well, maybe we need to encourage you to ask for some, you know, some raises. If you're going to be employed, make sure that you negotiate every, you know, two, three, four years — because a lot of people don't. And maybe also, if you have never thought about ownership, if that's [an] applicable thing for your situation, maybe we talk about that. So, I love those questions.

Travis [00:12:51] So, the average interest rate of the loan — this is question, basically, No. 10. So, we kind of covered four questions in one there. We like to ask the average interest rate, just to understand kind of what we're comparing it to, you know, if you refinance and just how fast the rate of growth is growing.

How interest works with student loans

Travis [00:13:09] So, one good question for this one would be, how often do y'all think people question you about the growth of their student loan balance over time? They think that we have the wrong formula because they, you know, they know about the rule of 72, and they assume their loan balance is going to explode. And it doesn't, even though their interest rate is really high. Does that come up at all in your consults?

Rob [00:13:29] Oh, definitely. I had someone the other day who — He had about $250,000 of student loan debt, and he did the calculation on his own. And he had calculated that he'd have about $1 million dollars of loans forgiven in 20 years, when actually it was like maybe $300,000 because a lot of people don't know this. And I try to explain this all the time.

Rob [00:13:48] But yeah, just the whole accrued interest, simple interest of student [loans] — the one thing that makes student loan debt better than all other debt. It's like the one thing — is that it's simple interest; it's not compound.

Lauryn [00:13:59] I agree with Rob. I think that helping people understand that is a really important part of the process. And also, like when we talked about income, how it affects you over time. And so, you know, in the situation that Rob described just recently, the gentleman's income might have been going up and how that's all going to play a role into what's going to be left over. But the interest rate kind of being that baseline thing to begin talking about.

Lauryn [00:14:22] And also, average interest rate, I think, is something else that, you know — We ask for average interest rate, and people are just like, “Well, but this 8% — it's killing me.” And then they've got four or five loans that are at 3%. And when we start talking about average interest rate and looking at the average interest rate and saying, like, “OK, like, you know, the bulk of your loans are at this really much lower rate, and this is a realistic projection because of that information,” now it kind of gives pause. And people are like, “Oh, OK. I get it. I understand. And I don't feel like I'm going to be strapped with the student loan debt forever.”

Justin [00:14:53] And if it's a situation where they've got a lot of federal loans that have come in at a much higher rate of interest, you know, you get a bunch of Grad PLUS Loans that are at 7%, 8%. And if we determine that full repayment is going to be the best option, understanding that, well, right now, your loans are at 7% or 8% and if you did a refinance right now, if you're a creditworthy borrower, you might be able to get a fixed interest rate of 4% or 5%.

Justin [00:15:13] And immediately, you've almost cut those — the interest cost in half on an ongoing basis. So, without really doing anything other than a refinance, which is like an administrative thing, we just slash the interest rate — the interest cost — significantly. And so understanding your starting point is really important in that context.

Travis [00:15:30] Yeah. I love it when people send me a list of, like, their 38 different loans with all the different interest rates and the accrued interest amounts. And it's like, you know, I appreciate that, but I actually didn't need that information.

Lauryn [00:15:39] I'll say one last thing, too, is we're looking for information. We're kind of like the detectives as we're walking through this form. So, if you see a double-digit interest rate, that's usually a clear indicator that it's private loans. So, they may not have told you that information above, but it's going to prompt me to follow up and ask the question and makes sure I get the NSLDS (National Student Loan Data System) file because you've got a 12% interest rate, and, you know, that's not typical in the federal system.

Travis [00:16:04] That's a great point because also, whenever I see a 5% interest rate, that's a dead giveaway that that loan probably was issued by the Department of Health. And those loans are eligible to be consolidated and forgiven. But you have to know that it's a Department of Health rate — or loan because everybody assumes it's private, and that's a huge miss that can cost people five figures all the time. So, that's a great point about some of those average interest rate stuff that kind of makes you a detective. That's a great point.

What your retirement savings lets the consultants know

Travis [00:16:28] So, for No. 11 – question 11 — how much are you saving for retirement and what retirement accounts [do] you have access to? Wow, can this tell you a lot. Like, what are some of the thoughts, like, you know, you see somebody that's like, “$19,000. I did my backdoor Roth IRA (Individual Retirement Account). I did my HSA (health savings account). And I've also done my 457.” We definitely have those kinds of people. But then we have a lot of people that are like, “Retirement? I'm working until I'm 90.” What are some of the different ranges of things you see there, and what do you think about those?

Lauryn [00:16:55] One of the things that stands out to me is, you know, we ask, “How much are you saving toward retirement?” And some people will just write down 401(k), or they'll put down the percentage that is associated with what their employer matches.

Lauryn [00:17:08] I think it's really important for us as consumers to be clued into what our retirement savings are. And that's one of the things that I really enjoy about doing these consults are — some people kind of are, “Set it and forget it. I'm doing it because they told me I needed to sign up for something as I was getting my job.”

Lauryn [00:17:24] But we start having that conversation around, you know, well, what do you plan to do? When do you want to retire? And understanding that, you know, you're saving about X percent of your income. Do you realize that that might not be enough if you want to retire at XYZ date?

Lauryn [00:17:36] So, I think it's really rewarding for us to be able to have that conversation with people who may — you know, you come to us for student loans and you're really focused on one pain point, but you get to turn your brain onto other things that are [a] really important part of your full financial picture. And retirement is such a big part in your savings. And I'm sure Travis will talk a little bit about, like, how much more important your savings rate is than your actual — what's happening in your student loan life.

How savings illustrates your financial mindset

Rob [00:17:59] Yeah, and I was just going to say, too, that to me, it's an indication of their mindset. You know, are they taking their financial matters into their own hands? Or maybe they don't feel like they can because they have the six-figure student loan debt. Or maybe they're just not taking the time to do it. But if someone's not saving a whole bunch in retirement, it kind of shows to me that they feel — that maybe they don't understand the impact of that.

Rob [00:18:20] The other thing is, obviously, putting money away pretax for retirement tells us a lot about if they're optimizing their student loan plan on income-driven repayment. Because if they're maxing that out, then we know that they're doing a lot to keep their payments low already. If they're not, then there's a lot of opportunity that we have as consultants to help show them how much more money they can save on their student loan plan and also build a giant nest egg at the same time by putting more money away.

Justin [00:18:42] Yeah, and just to piggyback off of that, Rob: The reason that that is — and people ask us this occasionally — is if you're making pretax retirement plan contributions — in other words, like, a traditional 401(k), traditional 403(b) or an HSA or, you know, 457; there's others — whenever you're making those pretax contributions, you're reducing your taxable income in the current year.

Justin [00:19:01] So, the reason we really like this at Student Loan Planner® is not only are you paying less taxes right now and you're getting money into tax deferred accounts right now, you're also reducing your AGI for this year. And the AGI — adjusted gross income — is an important number because next year whenever you recertify your income based on this year's taxable income, this year's AGI, what's going to happen is your AGI going to be lower. And so your expected student loan payment on an income-driven plan is going to be lower.

Justin [00:19:28] So, anybody who's going for forgiveness, going for PSLF or longer-term taxable forgiveness, if you are able to stuff these accounts full — these pretax retirement accounts — it goes a long way towards reducing your student loan payments, and it's going to boost your forgiveness in the long run.

Lauryn [00:19:43] Yeah. I spend a lot of time talking to people about the Roth and how it's super trendy. I'd say probably 50% of the people that are contributing to retirement always list their Roth. And we have to have a conversation around why redirecting that money to your 401(k) — if you're not maxing it out — or your 403(b) is a good strategy for you if you have student loans versus people that don't have student loans and maybe using the Roth right now.

Why the date you took out your loans matters

Travis [00:20:09] Right. So, we're going to bunch the next set of questions together. So we ask in 12, 13, 14 and 15, we basically ask, you know, when did you start taking out loans? When did you start repaying your loans? What payment plan are you on? And then, how much is your current payment? My observations for this — and if y'all want to jump in — is basically that when you take out student loans matters for whether or not you're eligible for Pay As You Earn (PAYE).

Travis [00:20:34] So, that really matters for things like filing taxes separately. It matters for if you're eligible to get your payment capped. If we have to talk about Income-Based Repayment (IBR) because PAYE is not an option. So that tells us a lot. And then sometimes, we find people posting things like, you know, “When did you take your first loan out?” Like, “1990.” We've had people like that have been digging out loans for a really long time. So, it tells us a lot about what the status is.

Travis [00:20:57] Also, if you took out loans really recently and you're a professional, that means you probably just borrowed for grad school. And then when you start repaying your loans, you know, obviously, if you have not made any credit yet towards forgiveness, we know that consolidating is not too bad of a thing. We know that if you've been making payments for several years, you're a little bit more aware of the process and what it's going to seem like. And so we're kind of showing you a better path to repayment. And if you haven't made any payment at all, then obviously, we're trying to set it up right from the very beginning.

Travis [00:21:23] And so, in terms of [what] your monthly payment is and [which] payment plan you're on, I don't know about y'all, but I find that most people get this wrong. Most people say like, “IDR” — which is not a repayment plan. It's a category of income-driven repayment options. They'll say, like, “PAYE” when they're on REPAYE, and “REPAYE” when they're on PAYE. And they'll say “IBR” when they're not on IBR.

How the consultants make a plan based on your information

Travis [00:21:41] And so tell us maybe a little bit about the detective work we have to do when we figure out what their loan payment is, when we're kind of punching it in trying to figure out what they're actually on. What kind of sources do y'all look to find that out?

Rob [00:21:54] Well, we can start by taking a look at, OK, if we know their income from the consult form, we can sort of guesstimate what their payment would be under each of the repayment plans. And if it's way off, then we know that either their income is off — maybe there was something funny with the income verification — or maybe they're on a different plan than they think they are. So to me, it's like a huge clue on if — the accuracy of the other information or how much they know.

Rob [00:22:20] Yeah. I mean, but it's hard for borrowers because, you know, they name all these things — all these are called income-driven repayment plans, right? And they named one of them Income-Based Repayment. I mean, how much more confusing do you have to be to people?

Rob [00:22:32] So, I don't necessarily blame them, I just think — or like I'm upset with them. But it's good for us to know so that we can help them figure it out for real.

Justin [00:22:39] Totally. And another reason this is important is, if you think you're moving towards forgiveness and you think you're on an income-driven plan — income-driven plans will qualify you either for PSLF or for a longer-term taxable forgiveness. And if you think you're on one and you're not, then you're not actually making progress. You're not getting those PSLF eligible payments or payments eligible for taxable forgiveness. You're basically just treading water. You're paying money that isn't moving you closer to forgiveness, and you need to get on another plan in order to get off the treadmill and start moving things forward. So, it's very important to understand that as soon as possible.

What your spending level indicates

Travis [00:23:13] Cool. So, for this next one: So, how much do you spend on housing, and what do you drive? What's the monthly payment for your car? My wife's a physician. So, I've talked about that in the past. And so sometimes, she'll tell me something like she'll have a surgery the next day. And she won't tell me obviously any information — personal information — because that would violate HIPAA and all that stuff. Right? But she will say something like, “OK, my surgery tomorrow — the patient is 400 pounds. Diabetic. Has all these conditions and has cancerous blah, blah, blah, blah, blah. So, this going to be really hard. And I'm going to be really exhausted, and this is going to a really hard surgery.”

Travis [00:23:49] And so that's kind of how I feel when I see questions 16 and 17. I'm finding out, you know, how much are you spending on housing and what kind of car are you driving and what's the monthly payment — because that tells me how hard the consult is going to be, really. Because those two questions can really tell me what somebody's spending is.

Travis [00:24:06] And sometimes, it's totally fine. Like, sometimes I'm being a jerk and imposing my own views on spending on people, and I have to pull myself back because it's absolutely acceptable for some people to spend way more on housing than somebody else might want to spend on housing. And it's fine to have a monthly car payment. It's more about what those decisions mean that you're not getting to do, if that payment is such that you don't have a lot of savings. You don't have much into retirement, and your student loans are not set up right.

Travis [00:24:32] So, what are some of the responses you've [gotten] on this? And maybe what are some of the most extreme examples you've seen for these two questions about — that we ask people, and what are your thoughts? Do you get similarly freaked out when you see, like, $6,000-a-month of a mortgage and, like, $1,500 a month in car payments with credit card debt? Do you get as scared as I do? Or does that not phase you guys as much?

Justin [00:24:52] Travis, I think the medical example is an apt one. And my wife is also a doctor, and I also hear these conversations. And it's funny because people come to us thinking that, well, the student loans are the things that we need to address. And, you know, maybe somebody will go to the doctor and say, “Doc, my knee hurts. I need you to fix my knee. Give me some pills or give me a shot in my knee.” And really, if you have other factors where you're really overweight and you never exercise, what you need to fix your problem isn't actually a shot in your knee. It's actually a diet and some exercise and some low-impact cardio that's going to be able to address the root issue.

Justin [00:25:25] So, sometimes we look at these consults, and we say, “Well, there's overspending all across the board. And somebody came because they can't afford to pay their student loans.” But really, what we need to do is say, “You need to take a hard look in the mirror and think about your lifestyle expenses. And you've got a bunch of credit card debt. And what you actually need to do with your student loans is put them all into forbearance for as long as you possibly can and try as hard as you can to pay off $30,000 worth of credit card debt. And by the way, you should probably get out a pair of scissors and cut up your credit cards so you stop using them.” And address the sort of fundamental behavioral issues that are leading to the pain of the student loans.

Justin [00:25:57] And only then, after having done lots of other work in other areas, is it appropriate to put the, quote unquote, “loan strategy” into place.

How both empathy and being realistic plays into your plan

Rob [00:26:06] So, I kind of go a different way with this. And I am the budget guy, right? You know, our main priority for these consults is to get them on the best student loan repayment strategy as possible. As financial people, it's really easy for us to say how people should optimize, how much they should be spending on their house or their car or whatever.

Rob [00:26:23] But at the end of the day — and we do have the ability to do that. But what we need to be careful of and what I try to be cognizant of just in general is — let me just start by showing them what it's going to take to pay back their loans and how to save the most money doing it. And then after that, then I'll come back to the credit card debt, the car payment, the house payment and work their way.

Rob [00:26:43] Now, if it's really important for you to become student debt-free or to get these things paid off or to optimize your plan, what are some of the things that you think you can change in your lifestyle that can help you get there faster?

Rob [00:26:53] And obviously, I do spend a good amount of time on that. We talk through how savings rate is the No. 1 predictor of wealth and future financial success and independence. But, you know, there's only so much we can get through in an hour. And it's definitely important to have all this stuff in the back of our minds and to bring it up.

Rob [00:27:09] But I also think we have to be gentle about it. At least, I try to be, and I know we're all trying to do right by people. But sometimes trying to change someone's lifestyle — they're calling for us because they're struggling with student loans, and we can identify those areas that they're struggling in life financially, too, and help them with that after we identify the student loan problem.

Justin [00:27:26] Clearly, Rob is the empathetic and kind-hearted one. Travis and I are just taking the gloves off.

Travis [00:27:33] I'm the jerk. So, Lauryn, maybe you can share some situations where you call me in to be a jerk to somebody. You know, I think — I feel like one a couple months [ago], we had a situation where I felt like Lauryn was getting all of the people with $50k of credit card debt and tons of car loans and tons of mortgage payments.

Justin [00:27:49] Like, if I had to make a ranking of, like, nice student loan consultants, I'm pretty sure we all agree Rob is No. 1. Right? Like, in terms of nice rankings.

Justin [00:27:57] Definitely.

Travis [00:27:57] I feel like Lauryn is probably number — Lauryn is No. 2. You know, Justin is No. 3. And I'm the jerk, you know, because I don't have a problem telling somebody that, like, “Hey, you know, you're doing something really stupid if this is your goal. If this is not your goal — to have the option to retire at 60 — then do whatever you want.” I say it in a nicer way than that. I've learned some diplomacy over the years.

Travis [00:28:17] But, you know, if somebody is — For example, I was driving my wife to work at the hospital one day for surgery. I literally see this, like, 80-something-year-old woman with the little drip, drip thing, you know, that she's holding walking around in her hospital gown. And she's like chain smoking. OK?

Travis [00:28:33] I don't want to be a jerk, but, like, what's the point? If you're just, like, chain smoking. You're 80. You're connected to your tubes and everything and on oxygen and stuff, I don't know. Like, why bother with — I don't know. Maybe that's a terrible thing. I'm probably going to get hate mail.

Travis [00:28:45] But here's a good example: So, like, I got a knee surgery done one time when I was a lot younger. I jumped on a zip line, the zip line came out of the tree and I fell and crashed landed on the ground. So, I had this knee surgery to repair it, and the orthopedic surgeon basically said,” I would not recommend you play basketball ever again because the impact on your knee and the acceleration that it's going to take, you know, when we're going to have to do a knee replacement.”

Travis [00:29:07] And so I took his advice, and I appreciated getting that. I'm glad I heard that. But I kind of ignored it. And that was good. That was better — actually was a good thing. Because if he had held his mouth and not said anything, yeah, that would have made me probably happier in the moment. But because I got his advice, I try to do more things like bicycling instead of running where it pounds my knee.

Travis [00:29:26] And try to — Rob and I play pick-up basketball sometimes. For those of you don't know, Rob is a killer for the three-point line. I'm more of a killer from the foul. That's all I can do, is foul. I'm not very good.

Rob [00:29:37] I disagree.

Travis [00:29:38] But the thing is, is I'm so glad that — that part of the advice I filtered out and modified — but I'm glad I heard it. So, that's kind of my philosophy. I tell people, like, the only bad thing that we can do to you in one of these consults is if we see a problem — like, a glaring problem with your finances, right? If you tell me your knee hurts but your arm is gushing blood, it needs to have a tourniquet applied or else you're going to die.

Travis [00:29:59] Obviously, financially, nobody is going to die finally from finances. But if that's the analogy going on, like, we're going to tell you, and we're going to risk you being upset because that's what needs to happen. Rob and Lauryn are a lot nicer in the way they say it. Justin is pretty nice. You know, I'm a jerk. But, you know, we're — I'm glad that we say it.

Rob [00:30:15] Well, it is an important part of the financial conversation. And, you know, I think just me being the senior number — the senior member consultant in age — you know, I'm 40 now. I just turned 40 this month, and I have three kids. So I've seen a lot, and I've seen my friends go through a lot. You know, the more life we live, the more we see people go through. So I just generally try to think about what circumstances have they gone through that has led them to this point, you know, with their finances.

Rob [00:30:41] We can correct it. But some people — they already know that they're spending too much. But maybe it's an escape, or maybe that's the way that they were raised. Or maybe it's a spousal issue. I just say, you know, I don't even know what they're going through. This is a symptom, kind of like what you were saying, and we definitely need to address it during the call because it is really, really important.

Rob [00:30:58] But we need to look at it in the context of their student loan plan and their overall life to get — really get them to understand the importance of change and then commit to doing it. Because understanding that you have to do something and then committing to it are two totally separate things.

Why savings versus debt matters

Travis [00:31:11] Lauryn, for the questions 18 and 19, when we ask about what your savings amounts are that you have stashed away and what your credit card debt is, what goes through your mind, Lauryn, when you see that? And maybe Rob and Justin, if you want to jump in and share your thoughts.

Lauryn [00:31:23] Yeah. This is a really good indicator of your ability to put something away after we've just looked at your car and your home payment. So generally, when you see a bigger emergency fund or a bigger set of cash savings, you also see a lower housing payment. You see, you know, zero, my car is paid off in the previous two questions. But it's a really good indicator of financial health.

Lauryn [00:31:44] And if I've seen the savings number and know that there is some savings, then usually the credit card number is zero. There's a lot more frequent times where I see, you know, savings as $500 cash that you have available — $500 bucks. And then the next question is credit card debt, and you say $50,000.

Lauryn [00:31:59] And these are the ones where I kind of freak out, and I get ready to cry before the call because I am the nice cop. And it's like, how do I tell somebody that they're in a really tough place and that they need to make some changes? One of the things I've learned is that there's a lot of factors. You know, we've talked about a bunch of them today. But there's a lot going on in people's lives.

Lauryn [00:32:20] One of the stories I heard recently was that someone went and purchased a TV. Their financial adviser was, you know, yelling at them by having purchased a TV. But the TV was actually something to keep the kids in the household so that they weren't out in the community getting into trouble because they were in a really dangerous neighborhood.

Justin [00:32:36] Yeah. For me, every now and then, I run into these situations where I see somebody who's got, like, $45k in cash and $20k in credit card debt. Now, this may seem like a no-brainer, but I'll ask the question: “Are you carrying $20,000 of credit card debt? How come you haven't paid that off? You've got a bunch of cash.”

Justin [00:32:51] And sometimes, people just don't think and realize, well, you know, if I've got cash that's essentially collecting dust in a savings account and I've got a credit card that's got $20,000 of balance that's accruing interest at between 20% and 30%, potentially, you know, the most financially rational thing to do is to take your money that's earning nothing, and to use Travis's example, stop the financial bleeding and just knock that out.

Justin [00:33:15] And so instead of having $20k of credit card debt and $40k of cash, you now have $20k of cash and no credit card debt. And that's a much better place to be in because you're not incurring additional costs as you go. And that's kind of ancillary to the student loan situation, but I run into it more than I would suppose that I would. And that's just something important to think about.

How family size factors in

Travis [00:33:33] Cool. So for the last couple of questions — for 20 and 21 — we like to ask the family size. What's your current and future expected family size? So obviously, that impacts your future IBR plans. You know, the people who lied on the forms recently — it was in the news that somebody said they had a family size of 93. You know, we're not able to model that in our spreadsheet, unfortunately.

Travis [00:33:56] We had one legitimate family size, I think, that was 15 once. And he really did have, like, 13 children. And he just reached out and said, “You know, my spreadsheet — the spreadsheet doesn't work for me.” And I asked him his family size, and I figured out that's just because I hadn't programmed it to handle that. So. So that's why we ask that. We fixed the spreadsheet. So, just in case the Duggar family, you know, hires us for a student loan consult, we're covered, you know.

Travis [00:34:19] And then we ask — just running through some of these because we're close to time. Question 22 is, are your loans in default or delinquency? Some of these, we're able to handle. Some of these, we're not. One example is, we had somebody who was eligible for this huge, like, reduced amount that she had to pay because of the fact that she lived in a certain kind of setup in New York City. And that made her eligible for some sort of weird consumer protection law.

Travis [00:34:43] So, you know, a lot of times, we'll — if it's very straightforward with the delinquency or default — we'll do that consult. Otherwise, we're going to refer that out, just because we don't feel comfortable giving legal advice.

Travis [00:34:51] And then we ask if you've consolidated. Obviously, that restarts the clock. And then the Parent PLUS Loans, we like — that's question 24. We like to ask, you know, if you have Parent PLUS. We try to give a lot of the Parent PLUS consults to Rob, since he's the senior member of the team and can relate to those clients the most. But Father Time is another nickname for — for — Just kidding. We love Rob. He's a 40-year-old [with a] 25-year-old's energy, you know.

How Parent PLUS Loans and PSLF factor into the consult

Travis [00:35:16] So our — The last two questions— questions 25 and 26: Are you working for a not-for-profit employer? And do you want us to model PSLF? So, that just shows, like, if you're potentially eligible for it — or if you're even thinking about it. Just want to come back to each one of you to see if you have any comments on those last few questions that we ask in the consult form.

Rob [00:35:34] Yeah. Well, it sort of shows how all this stuff ties together, too. Because as Justin said earlier, if someone is going for PSLF but they're on a Graduated Plan or they think they're on Pay As You Earn but they're not — they're not on an income-driven plan at all — then this is where kind of, like, all the questions lead to having a unique situation.

Rob [00:35:53] Because the loan repayment and how much credit they have and if they're going to go for this, it dramatically impacts the projections of how much it's going to cost, what payment plan they should be using, what strategy they should be doing and so forth.

Rob [00:36:04] And also, you know, going back to the top two, if they're married with someone's student loan debt — one's going for Public Service Loan Forgiveness; one isn't — all this stuff really intertwines and makes everyone's situation unique.

Lauryn [00:36:15] Yeah. And Parent PLUS Loans, I think, is also a really big question because that changes the scope of everything that was above. There are options that are available to you. Are there Parent PLUS Loans that your parent has for you — is a question if it looks like a younger person based on your previous information. Or are you the parent, and you're calling to get information about how to handle the Parent PLUS Loans you've taken on behalf of your child? That definitely changes the scope of what we're thinking because there's a lot more limitations around Parent PLUS Loans.

Why filling out the entire consult form is critical

Rob [00:36:43] Just one more thing I was going to say about the consult form in general is, there's a lot of information. And as we've gone through, we need every single bit of this information if we're going to have a really effective consult and help people get the best repayment strategy. And there are some times, too, where the consult form, based upon the answers, we need additional information.

Rob [00:37:00] So, filling out the consult form in advance helps us also be able to reach out to clients before we have the meeting and say, “Hey, I noticed this in your consult form. Can you send me just this extra piece of information?” That way, when we actually get on the call, we can be super-efficient and get their money's worth — get the maximum value for that hour of time that we spend together.

Rob [00:37:18] So, the consult form is super important. That's why if someone doesn't fill it out, we just we just cancel the consult because we just can't give them any value — or nearly as much value — as if we have all this information.

Travis [00:37:28] That's a great segue into just showing why Justin's comment to those veterinarians about “it depends” wasn't just a typical cop-out that, you know, you hear from professors, right? When they're — When you're trying to peg them down for a question — an answer to a question, right? It is very unique and individual. And so that's why the people that give the plans at Student Loan Planner® are named Justin, Lauryn Rob and Travis and not API, blah, blah, blah, blah, blah. You know?

Travis [00:37:53] One part — I guess, also the reason is I'm not an excellent programmer, so that could be part of that. All I can do is program in Excel and that's pretty much it.

Travis [00:38:01] So, we actually tried to offer a course, too, specifically for student loans. We had our investing course that was wildly successful. We had hundreds and hundreds of people sign up for that. But when we made the course for the student loans, we didn't have very many people at all sign up for it.

Travis [00:38:15] And partly, that was because our email list is a lot smaller than it used to be. But also just because people want the plan. They want that conversation with somebody that's done hundreds and hundreds of these plans, and they want to have that context for all this stuff. They don't want to just hear what the right answer is exactly.

Travis [00:38:31] I mean, some people do. But most people want to hear, like, how does this affect my life? Like, how does this affect my mindset? How does this affect me going into work every day and what I need to be thinking about and what kind of options I have for my future? What kind of life goals do I want to have? And how do the loans get the way? And how do they not need to get in the way?

Travis [00:38:46] I don't know. I just love doing what we're doing. Anybody have any last thoughts?

Lauryn [00:38:51] I would just say that you're a really awesome programmer, Travis. So don't undermine that. That student loan sheet has changed millions and thousands of lives.

Justin [00:38:59] Yeah. I mean, you said just Excel. What else is there besides Excel? I thought that was —

Lauryn [00:39:05] It's the only thing that matters.

Justin [00:39:05] — like the only programming language you needed.

Travis [00:39:07] Yeah. I don't know. I mean, sometimes somebody is like, “Oh, I have numbers.” I'm like, “Well, shoot. I'm screwed.”

Justin [00:39:15] Judging you so hard right now.

Travis [00:39:17] Oh, I know. It's like, I apologize, but you know. And I just — Google Sheets is just too open source for my taste. It's not powerful enough. You know? But yeah, like, I love playing around in Excel and making programs and doing that kind of stuff. It's, you know, obviously what kind of led to this thing in the first place, was just showing how many — how much bad advice was going on out there because of people not understanding the math behind all this.

Travis [00:39:36] But as important as the math is, the emotional behavioral component of it is probably even more important. So, that's what you're getting when you work with us. So, obviously, you can book with any one of those — any one of us at StudentLoanPlanner.com slash book.

Travis [00:39:49] And then I'll also make an announcement that Rob, Lauryn and Justin are all getting promoted because we're going to —

Justin [00:39:55] Whoo whoo!

Travis [00:39:55] — have Lauryn and Justin doing higher-debt consults now in addition to those lower-debt consults because they've passed the hundreds-and-hundreds-of-plans threshold. And Rob is going to be helping me out with those $400k-and-up consults.

Travis [00:40:08] This is partly to advance the options for your booking, so that you don't have as limited time slots where you can book. And it's also frankly because they're capable of doing it, and they should do it. And it's going to allow us to scale more and serve even more people. Because I'm going to focus more on the business kind of thing. And I'm still going to do consults. I'm always going to be doing some level of consults because I enjoy it. But I'm definitely going to scale back where I'm doing fewer, and they're going to be doing more.

Travis [00:40:33] And you might ask, you know, why do we charge different levels, then, for the different prices? I mean, it's the best proxy for complexity that we have, is how much you owe. And I can guarantee you these things are way more complex the higher and the higher the debt you go.

Travis [00:40:45] And it's also, frankly, a lot bigger risk to our business when you owe $600k versus if you owe $150k. Because yeah, you can screw up $150k, but if you screw up $600k, that's just a lot worse. It's an order of magnitude level of the mistake that you can make.

Travis [00:41:02] So, that's kind of the reason for the way we do it. But I'm excited for that. So, when this podcast gets released, Justin, Lauryn and Rob are all going to be helping out in these higher-debt segments, so I'm excited for that.

Travis [00:41:11] If you want to leave us a question, go to StudentLoanPlanner.com slash voicemail. We would love to do a Q&A episode where we debate the right answer to your questions on a future episode, where we have sort of a gab fest with all the consultants present. So, thanks so much for listening to the show, and you have a wonderful week.