Are student loans preventing you from making the career moves you want, or are student loans preventing you from the work/life balance you deserve? Student loan forgiveness for doctors is a real thing – yes, even for high earners, and those with LOTS of debt.
In fact, worry about student loans and salary changes are among the very top concerns from my listeners who want a career change. There’s a lot to learn, so I brought in a true expert! The laws are tricky, and some are time sensitive (thanks, COVID) so listen TODAY to understand more about your student loan forgiveness options. You may have more than you think!
In this episode of The Career Rx we’ll discuss:
- The history of student loan forgiveness legislation and recent changes
- How to find trustworthy, experienced help to review your unique situation
- Time-sensitive student loan forgiveness issues you’ll want to explore STAT!
Today’s episode is an interview with Travis Hornsby, CFA and CFP, with special expertise in six-figure student loans for physicians, veterinarians, and other healthcare professionals. We take a deep dive into the history of loan forgiveness and some detailed steps on how to review your loans and possibilities for forgiveness.
In speaking with Travis for this episode, I learned that some policies intended for COVID emergency relief will be ending on May 11th, 2023 – unleashing the potential for new sets of rules, expiration of certain opportunities, and even some lawsuits to add to the chaos. So, I literally bumped all of my other episodes in the publishing queue and put this out immediately. I hope it helps you! And while I don’t get any kickback or referral fee, if you happen to reach out to Travis, please let him know I sent you 🙂
In this Episode:
[1:50] Welcome Travis Hornsby, Founder of www.studentloanplanner.com
[5:35] Student Loan Forgiveness: A Brief(ish) History
[20:00] Changes are coming May 11, 2023 (but listen even if you missed it)
[28:30] What to know about financial experts and student loan credentials
[31:25] The options keep coming and changing – for better or worse
[40:10] You can book a consultation without a credit card or cancellation fee! Click Here.
Please note: the information and opinions expressed in this interview are those of the guest speakers and do not necessarily reflect the views of the host, nor any of the host’s affiliated entities.
Links and Resources:
Book your Consultation with Travis at www.studentloanplanner.com
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TRANSCRIPT: Episode 114 – Student Loan Forgiveness for Doctors with Expert Travis Hornsby
Today, I am so excited to welcome to the show Travis Hornsby, student loan planner. He is a CFA, CFP® and I’m really excited to have him as a guest today because I know you many of my listeners, when you talk about what you’d like to do differently with your career, your career advancement, your career pivots, one of the things at the top of the worry list or the top of the things that holds people back is a concern that they will for one reason or another, not be able to make that move because of student loans, they feel like either they won’t be able to make enough money or they won’t be able to somehow manage the huge amount of debt that they’re in from medical school. And Travis is an expert in this area. So Travis, thank you for being here. Welcome to the career prescription.
Thank you for having me, Marjorie,
It’s great to talk to you. I was wondering if you can begin by telling us I mean, what I know about you is that you started student loan planner in late 2016. Because you’d help your wife who is a physician, as well as a few of her physician friends with some of their questions and their issues with their overwhelming student loans, which is basically where all of us have all of us physicians anyway, can you tell us a little bit about about how student loan planner came to be?
Sure, I used to be a bond trader, and it was fun, but it wasn’t my calling, I just didn’t feel just super excited about taking the train. And at 5am in the morning. I was, you know, managing money for extremely wealthy people, which is a good thing to do.
Well, anything you do, you should try to do well, right. But I just didn’t feel like that was what I was meant to do on Earth. And so my wife, who was then my girlfriend, you know, she was talking about our student loans and how kind of large they were and kind of when we were getting dating more seriously, you kind of have the money talk, right?
And so I took a look at them. And it was like, Oh, well, you just pay, you know, whatever a month and pay him back. And I did more research and realized, oh, my gosh, this is a lot more complicated. And not only was it more complicated, you had to pay based on your income, you could get loan forgiveness, you can also pay it back, but you could pay it back on a private lender with a lower interest rate.
So being a bond trader, I did what any good bond trader would do. And I built an Excel model that measured all of the different options that she had. No. And, you know, and then found out that she had been getting bad advice about how to pay back her love.
And she was a good candidate for forgiveness. But she had lost a bunch of credit towards that. And I thought, oh my gosh, you know, here I am trying to eke out an extra 0.1% 1% return in the bond markets.
Meanwhile, my SIP any significant other last six figures with bad student loan advice? Oh, wow, one of these, which one of these two is easier and better uses my skill set? Yeah. And so, so really, she kind of was the one that suggested that I talked to her friends about it, because nobody was really doing this, you know, at the time.
And so I did and people were just so desperate for the information with all the income base plans. And at the time, there was still a ton of skepticism as to whether or not these forgiveness programs were even real.
You know, a lot of people kind of felt like there was sort of fake news, you know, and so I got into doing it, and then got overworked doing it myself at our first consultant. Now we’ve got a team of 10 consultants, and we’ve advised on something like 2.5 billion student loans, which, you know, we accidentally become the biggest provider of student loan advice in the country.
Yeah. So billions with a B, 2.5 billion in student loans, you’ve helped people, that’s tremendous. I want to back up actually, maybe for a minute, because this really dates me. So, you know, I finished medical school in 2003.
And at that time, maybe I was oblivious, but I wasn’t aware of any. I knew there were certain specific jobs like you could go work in a specific designated underserved area for a specific organization, and, and or the military and get loan forgiveness in that regard. But otherwise, at least as I understood it, I was signing up to pay, you know, a large sum of money over a 30 year term.
And I was fortunate that interest rates at that time were low. So I did manage to consolidate all of that in 2003 at a nice low interest rate of about 2.8%, which is super, but to my knowledge other than that, you know, those couple of limited opportunities of the military or specifically designated underserved area, I don’t think I was aware that these programs existed, so maybe you can help me with that.
Was I living under a rock? Like, did they exist? Or is this something that happened while I was a busy bee as a professional, and I just didn’t, I didn’t know about it until recently.
So like the long history of student loans, and like 30 seconds, you know, Sputnik happened. And then we thought, “Oh, crud, we’ve got to go send more people to college.” And so then the government got involved with guaranteeing student loans and where people would go to college.
And in this kind of period up to the 2000s, the role of the government was more just like guaranteeing the lenders and a good interest income, and then the lenders would make the loans available to whoever. And so like, they were kind of protecting these banks against default, right.
And sometimes they would sort of juice the subsidies where you would get a 2.8% interest rate, which is below what the government was even borrowing at. Right? So you know, that was under an old program called the Fel program that existed before 2010.
In 2007, a bipartisan agreement between a Democratic Congress and George Bush was passed that created the Public Service Loan Forgiveness Program. So this also created income based repayment at the same time. But before that, there was only one income based option, and it was a really bad option, it was 20% of your income, no deduction really to speak of. So basically, no physician could qualify at all.
In 2007, some very smart lobbying occurred with the implementation of that rule, where the, I’m not sure exactly who it was, I’m guessing maybe the AMA, but they basically got residency and fellowship to count towards the 10 years needed for PSLF, which is a big deal, because that wasn’t necessarily guarantee that that would happen that way.
And so with income based repayment, suddenly physicians could pay 15% of their income for 10 years and have the whole thing forgiven, but because the way the program is structured, you really only have to pay 15% of a large number for maybe three, four or five years, and you’re still getting a ton forgiven.
Now, the problem with this program is it did not take into account the fact that there was a fell program, which is this guarantee bank guarantee program, and then it was the direct program, which is where the government was the direct lender. And there were these two big programs, and they kind of overlapped each other.
And the PSLF program was only created for the one that was the direct program. In other words, the bank guaranteed loans, which is how most physicians were taken out their loans, you know, because the low interest rates, and just because of how the programs are structured, physicians that were taken out, under loans under that program did not qualify for PSLF, it was not promised to them in that law that was created in 2007.
And then wonder why so many people were confused, then.
So many people were confused, because it’s very weird and technical and kind of a very random arcane oddity. Right. And, and what happened is, is, you know, the Obama administration, you know, really juiced up the power of these forgiveness programs during the era of the ACA act.
So like, along with the ACA, they made it so that you could pay 10% of your income instead of 15. And, you know, a bunch of other really generous things, right? But the problem was, they again, wrote the rules in such a way where these bank kind of guaranteed loans were not included, unless you converted them to government loans, by consolidating them with the government.
But to know that you had to consolidate, you had to really know that there was a problem in the first place. Yeah, and you know what I mean? So it’s like, you’re not going to know that like, unless you have some level of research or knowledge in this area.
And so people would be going towards what they thought was, was an income based option, paying under an income based option based on their old loans that were under this old loan program that was predating the PSLF law, and then get to the point where they hit the 10 years and say, I’m ready and they applied and they got denied. I see. And, and that’s, that’s how all this stuff happened is basically,
Congress wrote a really bad law. The executive branch did nothing to correct it. And they got all these folks hitting the 10 years finding out that they were under the wrong program. Now, the way the Congress wrote the law is whenever you reset your loan to a government loan, by consolidating it, it also wiped away all of your credit that you built up.
So it’s not it was not retro, it wouldn’t look back and say they wouldn’t look back.
Yeah. So this was essentially just a very poorly designed long that. I can say, like people that oppose PSLF would say it never meant to include physicians. You know, I mean, there would be strong disagreement about that. Some people would say, “Well, that was the Congress’s intent all along was to include physicians”, others that oppose PSLF would say, “Well, no, it was supposed to be for teachers, firefighters, and that kind of group of people.”
Yeah, it’s just how you see it talked about the media, of course, whenever people were talking about PSLF Sure. And anyways, what ended up happening is, there was a lot of attention before the pandemic about The low approval rate of PSLF. And how nobody was getting it? Well, nobody was getting it because Congress wrote a bad law.
You know, and people didn’t understand what was going on why they weren’t qualifying, you know, yeah. And so and so then the pandemic happened, you had this unprecedented pause of student loans, it’s been going on for more than three years. And then you had a switchover in who controlled the White House where Biden took over.
And he said, “Hey, you know, what I’m gonna do because some emergency authority that allows me to waive, like, the requirements of the law, I’m gonna go and make this PSLF waiver thing and make it so that anybody can get credit for any kind of payment, before the consolidations, any kind of forbearance or deferment, any kind of, you know, sort of other payment plan that people were on. And I’m going to make it so that all people have to do is apply, you know, by October 2022. And we’re gonna give you all this credit that you got for payments that previously couldn’t have been counted.”
And so a whole lot of people that had these kind of loans from the 2000s suddenly were able to get credit, and many had their loans forgiven, because of this temporary executive authority that Biden did. So that was the first one.
The second one is the income driven repayment waiver, which currently ends at the end of 2023. So that’s something that’s still ongoing, that’s something that you do have to be, you know, kind of being a little patient, because the rules on that are still not fully out yet.
But that could result in a lot of people getting credit that they wouldn’t have otherwise qualified for too. And so what we have seen right now is like everybody that goes to medical school now has the right kind of loans for all these programs by default. So these kind of prior messy problems that existed in the 2000s are mostly not a problem anymore for most people. And it’s definitely an easier thing to not make a huge mistake, like my wife did.
Well, it makes sense that if you were getting your loans now or recently, that there’s a lot more information out there, a lot of problems, I suppose have been fixed, or at least streamlined. And it’d be easier to understand at least, what you’re getting into.
It sounds like if I understand my own situation correctly, this stuff really didn’t exist or apply to me at the time that I finished school at 20, in 2003, but incrementally from 2007 on became something that might have been relevant. And since I was working at government organizations, I was at UCLA and UNC which are, you know, it’s an employment of the government, so therefore, qualify as nonprofits?
My understanding is that that type of work, or whether you’re a physician, or you, you know, do anything else, frankly, build the building, that that qualifies as the type of employment that would be necessary. Is that correct?
Yeah, like if you were trying to get PSLF, let’s say you had six figures of loans, what you would do at this moment is consolidate them to government held loans.
Well, there, they might already be government held, but you’d probably consolidate them, again, to direct consolidated loans, that you’d probably apply for PSLF by submitting the some PSLF application, and that’s it student aid.gov/pslf. And what might occur is that you might get several years of credit added towards the 10, that you would need to get the loans discharged. Now, the only amount of credit you’re allowed to count is credit since 2007. So it would have to be full time credit since 2007.
And you’d have to get employer signatures for any kind of employment that you had between 2007. And now, you also have to be at a not for profit employer, when you get the forgiveness.
That’s also a restriction. So like, say you had the 10 years right now. They were before in October, and before they were not requiring you to be at it not for profit, because of the emergency pandemic rules they had implemented. They’re starting to phase those out. So that one of the things that’s been phased out, as you know, you do now have to be at a nonprofit to get the forgiveness.
One thing that I’ll say, though, is there’s a little bit of a misnomer as to forgiveness. So a lot of physicians treat loans, like I’m either gonna go the public sector route and do the 10 year program, or I’m gonna pay it back, right?
Those are people’s kind of two precede options that they have, there’s actually a third option, which I jokingly refer to as the “go be a baker” option, because it’s actually totally fine to do this.
So the way that this works is you can get your loans forgiven in either 20 or 25 years, if you do one of these income based options and that does not depend on the type of employment that you have at all.
So you could be working part time, you can be working not at all, you can be working in a private company. It does not have any employment restrictions whatsoever. And that’s a program that a lot of physicians… this is a lot more commonly understood in the dental and veterinary community because those folks typically don’t have that easy access to not for profit employment that pays well, right?
Like all the dentists and veterinarians out there pretty much just have to go work at private clinics and make a living that way, and they still have the huge loans physicians do. And so our clients in that community are very familiar with these 20 and 25 year options.
But in the physician community, I think that there’s so much awareness now, especially among younger physicians about the 10 year option. Everybody sort of myopically focuses on I’ve got to get my loans forgiven and 10 years, or my life is over. That’s my only option. And that couldn’t be further from the truth.
So I would say, especially people that they know, primary care, lower earning specialties are people that have exceptionally high balances. Yeah, do that work in the private sector. Those folks are actually decent candidates for forgiveness as well.
Can we go back just really quickly, I want to, I want to be sure that people can write down if they’re interested, you said in order to begin to apply for these. So you would need to go, did you say student aid.gov?
Yes, student aid.gov/pslf. And then, and then there’s also consolidating. Now, the problem right now is, Department of Education is sort of stuck in a very fierce political battle, which is a little unusual, you know, Department of Education is usually one of the sleepier agencies that, you know, people fight over it. But it’s more like messaging fighting.
And right now, the Department of Ed is very much in a fierce political battle over its actual budget. And kind of the reason is that the Department of Ed spent a lot of its money trying to implement President Biden’s cancellation initiative. And, you know, the House Republicans didn’t like that. And so then they basically pulled back a lot of the funding from the Department of Ed, or at least did not increase their budget, like they need to, to implement all these different initiatives.
So the Department of Ed not having the money they need to do the full job they’re being asked to do is now picking and choosing what they get to show because of scarce resources. And so what’s going on right now is all these executive orders are sort of supposed to be implemented, but they’re consistently getting delayed and their implementation.
And so one of the examples of this is this income driven repayment waiver, which is supposed to count all the previous credit. So what I was gonna say about your loans is if you started paying in, did you start paying in 2003? Would you guess? Or when did you start paying?
I have to look, but to the best of my recollection, when I was in residency, you could differ, right? Remember, first the deferment, or if it was economic hardship, forbearance, it was one or the other, because you know, you don’t make money as a resident to your some, but via one or the other, which is probably important.
I don’t believe I had to make any payments during that, during those four years. So from 2003 to 2007. I don’t think I made payments. You were saying that that time might qualify, but only if a person was making payments or would deferment?
Yeah, so there’s so many different initiatives that will make your head spin. You know, what one of the ones that would probably apply to you, if you’re in private practice, or you know, a private sector employer, right, is the IDR waivers more relevant than the PSLF waiver.
And the reason for that is because they’re going to count all forbearance and deferment, if it’s of a certain type. So for your loans, if it’s deferment before 2013, all of that counts. And then for forbearance, if you have at least 36 months of total forbearance across your career, then all of that forbearance would count as well.
So it also depends on what kind of loan that you have. So if you have one of these FFL loans, if you consolidate, the government has promised that they’re going to give you credit for all of that forbearance and deferment and prior payment history.
So the reason I bring it up is if you say you started for bearing slash paying in 2003, you did something with your loan since 2003. Right?
And let’s say that it is a federal, you know, FFL loan, then if you consolidate that best case scenario, you would get approximately 20 years to credit towards forgiveness. And then in that case, if you have, you know, their loans from medical school, you’d have five more years left to go if you paid me your income, and then the whole thing would be forgiven.
Oh, that’s interesting. So, because I know this is a complicated topic and you and I were having this conversation, I went and looked up, you know, some of the details about my own loan and and because I knew I had consolidated but I didn’t really know with whom, right?
Just because yeah, well banks have, or loan servicers right have changed over the years. So who I write the check to so to speak has changed, but they both say that they are FFELP loans, which I think you’re talking about right now.
Right? Yeah, exactly. Yeah. And so the problem with all this sort of what I would call IDR waiver mess, is the problem is that the pandemic emergency ends May 11th. When that pandemic emergency ends, President Biden’s folks are saying that they can continue having emergency authority over the student loan portfolio. Obviously, Republicans are gonna feel a different way.
And we don’t have all the details about what they’re going to do with how they’re going to count forbearance and deferment. And so what we think could happen is like some random lawsuit might pop up after the pandemic emergency ends from like a very random investor and one of these types of loans, and then your consolidation might not get all that additional credit.
Right. It’s interesting. And so for people listening, so he’s just on May 11th, May 11th is coming right up. And it does sound. This is something that not only has been pretty dynamic, but fairly controversial, right? And there are different groups trying to accomplish different things. And that all is trickling its way into law that is temporary and up for revision, I guess.
Yes. No, it’s I mean, it’s extremely. I mean, it’s extremely chaotic. I mean, extremely chaotic. I mean, like, the PSLF waiver, here’s some weird stats: The PSLF waiver made $145 billion eligible for forgiveness that wasn’t previously eligible, if people had to apply for it. And in many cases, they had to consolidate. And of that total amount that was eligible, only 25 billion was actually forgiven, give or take, and when and why? It’s because people had to take action, and a lot of people did it.
Well, and you know, what’s so interesting to me about that is, again, the the way that this came on my radar is I’ve seen this flurry in the past, I don’t know, maybe six months of a physician colleagues in various places, Facebook groups, and otherwise, you know, talking about and asking questions about this. And the single first action, at least, from what I could glean seem to be something along the lines of what you had said, which is you go to student aid.gov, forward slash peel PSLF, and you put in your information, and then you consolidate your loan, as I understand, these are both really pretty easy things to do, but are so intimidating, I guess, and without a a guarantee, like you just don’t know, is it going to work for me? And so it seems like a lot of people are literally doing nothing.
Yeah. And it’s interesting. So, you know, I said, student aid.gov/pslf, that’s a pretty friendly URL. Yeah. And, and, you know, people might say, well, I want to do this consolidation thing, you know, what’s the link to do the consolidation? Because this is the government, they don’t have a good URL for this at all.
So I’ll just, I’ll just read the URL real quick. Okay. It’s https://studentaid.gov/app/launchConsolidation.action. Oh, wow. So So action, you would, yeah, so you would never find this, I actually just made for the listeners, I just made a link, it’ll take you to the right place. So studentloanplanner.com/consolidate.
So if you just type in studentloanplanner.com/consolidate, it’s going to take you to the federal website, that you can start that consolidation with. So who should really do this, if you have loans from before 2010, you should definitely do this, as soon as you listen to this podcast, because the upside of getting years of credit towards forgiveness is very much better than the risk of having your interest rate go up by 1%.
Or, you know, maybe having to track down your new service or something like that. Because of that lawsuit likelihood. I don’t want to get too down in the weeds. But there was a judge that actually upheld Biden’s cancellation because of him saying that there was just no standing for the parties to sue over it.
So Edwards, he’s kind of like pro Biden on the ruling, but he said that, you know, if you do anything that interferes with these FFELP loans, that’s illegal. And then, and so this IDR waiver is a huge opportunity. And it definitely interferes with the investments of these banks in these FFELP loans that people have. And so if somebody’s going to sue over it, all it takes is one one group. Right?
So I think they’re definitely going to sue over it. I think they’re probably intentionally waiting on the final rules to be developed. And they’re also probably waiting on May 11. So, that’s why I’d say somebody that’s got those kinds of loans. I mean, it depends on the person’s situation, right? If you’ve got 20,000 of loans, maybe it’s not that worth it.
But then again, if you have 30,000 of loans that are undergrad loans, you only need 20 years to get the forgiveness. So you might actually already be eligible for the whole thing to be wiped away.
So yeah, well, so this sounds like a great time for me to remind our listeners everyone’s situation is totally different. And obviously these laws are very much in flux. So, yeah, certainly none of this is my advice.
But even though it’s Travis’s expert advice I would recommend to my listeners, you know, to consult with someone like Travis or Travis himself, but certainly to, to get personalized advice before you take major action on huge sums of money. That seems like a prudent thing to do. Because I’m just trying to provide some information, as I know, this is not intended to be specific advice for any particular person’s situation.
And I would use my wife as an example. So she’s a, you’re a gynecologist, and if you ask her about the appropriate dosage for a two year olds, Motrin, she’s gonna text her pediatrician friend, because she’s just not going to want to say, right, and so I would say that’s the similar analogy for student loans.
So just because somebody is a CFA, or CFP or CPA, the vast majority of the people with those credentials have no clue about what’s going on with student loans.
And that’s without any temporary programs, like that’s just like baseline, they don’t understand student loans, with all these extra executive orders that are out that they’re temporary. Yeah. And they’re bypassing the usual statutory requirements. People have no clue about this stuff.
Like even experts, like people that say they’re experts don’t really follow, like the nuanced details of some of this, in some cases. It’s really pretty wild. So I mean, I think that there’s a couple things you could do, if you want to roll the dice and do it on your own, then I would say the studentloanplanner.com/consolidate. Just kind of go consolidate your loans, and then go apply for PSLF. Right after that. So that’s studentaid.gov/pslf.
So that’s if you don’t care if you make a big mistake, you’re super frugal, and you I don’t know, keep your own home without electricity. I’m joking around. But you know, if that’s someone’s personality, where they just want to do it themselves.
That would be the socket work for everybody. But it’s the best, like, free path. And yeah, and that’s the generic path. And then if people need more customized help, that’s what we do for a few 100 bucks for a one time flat fee with our CFP and CFA team. So that’s just our websites to studentloanplanner.com.
Yeah,take a second and tell me this is something I wanted to ask you earlier, but we just got into so much into student loans, which is obviously complicated, and it’s great that you know, so much.
But I did want to ask, you know, I mentioned that you are CFA, and a CFP, and those are just the initials after your name from your website, there might be more relevant credentials. Can you take a second and tell my audience what that means?
And then secondarily, I think what you were starting to touch on there before, which is, if someone is looking for specific advice in this area? Is anyone holding those credentials qualified? I feel like I’m hearing you say no, but So talk us out a little bit.
Yeah, the answer would be no, like, you know, so. So I would say a see a CFP as somebody that goes through, you know, a series of courses on financial planning and then passes an exam, it’s, you know, fairly difficult, but it’s, it’s not nearly as hard as, as you know, it, it would look like a joke compared to medical school, let’s put it that way.
And then, and then there’s, but that’s legitimate credential. And like, if somebody has that credential, it means they’re a professional.
It doesn’t mean they’re great, but it means they’re professional. And then the CFA is more investment focused. So that is the typical credential, you see, you know, people that manage mutual funds or pension funds, portfolio managers, you know, high net worth, money managers, those kinds of people tend to have that credential.
So that’s, you have to pass a series of three exams over the course of two or three years. And, and so then there’s, you know, the CPA, as well. And that’s similar, you know, to the other two coursework, plus passing an exam. So any one of those three credentials is fine. That’s kind of a good first check to make sure somebody has one of those.
And there’s also something called CSLP, which is sort of more of a, that’s a student loan specific thing that, you know, really, I would say is not nearly as hard as the other three, but it does show a little bit more specific expertise.
Okay. I think that the the reality is, you know, the event physician’s trying to get help, you know, what you want as somebody that’s going to put your interests first in their fiduciary, that’s if you want to hire them for recurring financial advice, and he just need a one time student loan plan. That’s what we do. We’ve done that for 11 or 12,000 clients.
So we do it all the time. So again, kind of an analogy would be somebody that does, you know, 100 of an operation a month versus somebody that does one or two, you know, that would be the example so most I would say a lot of financial planners refer their clients to us because we more efficiently handle that for their clients than they can.
And I’ll tell my listeners just for transparency. So Travis and I have not spoken before this conversation that we’re having right now, or we’re recording this, and nor did I send him any questions in advance to say what I even wanted to talk about.
So all of the information that you’ve heard Travis give us today about the history of the student loan, forgiveness programs, and the various legal updates has really all been off the top of your head. So sorry to put you on the spot like that.
Travis, I’m just, I’m happy to know that you’re so facile with it, that you’re they can tell us what’s going on. It sounds like what’s going on is also likely to change or at least, certainly at risk of changing in the near future. So what a lot to keep up with?
Well, and what you know, it’s fine to know stuff about student loans, but really, there needs to be an application for it for it to be valuable. Right. So one of the things I wanted to talk about, specifically for your listeners, as people that are interested in career changes, or changing up their lifestyle or something like that, yeah, you know, there’s a new income based plan coming out probably later this year called the New Repay Plan.
There’s, you know, a gazillion acronyms, the new replace, well, literally, literally, there’s income, there’s old Income Based Repayment, there’s new income based repayment, there’s income contingent, there’s page one, revised page one, and this is new revised pay as you are new, revised, pay as low. So there’s like six different income based repayment plans.
So this new one, supposedly, is going to be better than all the other plans. That’s how it’s being marketed by the Biden administration. It’s not, it is very good, but it’s not better than all of them always.
And so this particular plan is going to be allowing people to take a much bigger deduction before they have to pay 10% of their income, and it allows people to file separately for taxes, meaning that you can exclude your spouse’s income.
So just as a hypothetical example, let’s say you are just really burned out. And maybe you want to do medicine, because you get paid high, high wage per hour, and you want to keep your license active, but you want to create space in your life to do something else.
So you want to cut down, you know, maybe maybe make 100,000 a year, but you feel like, you know, can I really afford to do this with my tutor 50,000 of medical school loans, that I need to work full time and get them forgiven first. So that’s a misnomer, because that’s not true.
So let’s say that you have a couple kids and a spouse, and, you know, you really want to cut your hours back, right. So if you have $100,000 of income, instead of your normal $250k of income, what happens is your payment on this new plan will be based off of $100k minus the deduction you get based on how big your family is.
So for this new plan, that deduction is going to be really large. So you’d get to deduct about $56,000, before having to pay anything. So I don’t want to jump too fast into the math, right?
But you know, you are able to pay 10% of $44,000, instead of, you know, $100,000. So 10% of that $4400 a year, little unreal, maybe like $380 a month, something like $383-90 a month. So excuse me, and this new plan is going to also subsidize all the interest above what you have to pay.
So if you’re getting all the interest above that 380 A month payment subsidized, what that means is your 250 K stays the same. Inflation actually devalues that loan over time, in terms of the value of that money is less and less.
And you’re making a $300 something a month payment, you’re making basically less than a car payment, or your children at the KFC to loans. And if you continue this path for long the long term, then it’s forgiven at the end of 20 years or 25 years.
So and if you don’t, let’s say you go back to medicine at some point, well, you’re not returning with 400k of loans, you’re returning back to what you left off with, you’re returning with 250 K of loans, you’re returning just both what you left with what you left with.
So it sounds like a really important part of what you have just said is this is not the same as you know, some of the plans that people think about where you have an economic hardship where you get to pay less, but interest is still accumulating in that and that the loan, the loan amount is ballooning, while you are doing whatever else it is you’re doing. You’re saying that amount is subsidized. Is that right?
Under the new income based rules, yes. So right now, everybody’s been getting a subsidy of 100% of everything, unless you have bank owned loans, because it’s the pandemic. And you know, this 0% is for everybody. But that’s going to end, it’s probably going to end in court because there’s a company suing to end this pause right now. Biden might also just decide to end it himself later this year, in a couple months.
So you know, this is going to end and then suddenly people are going to have the rude awakening of having to make payments again after three years of not having to make them and react reality is… I just kept paying mine, was that a bad move?
Well, yeah, I mean, so no, I don’t want to, I don’t want to make you feel bad. But yes, yeah. Because you could validate them and actually get the 0%. So instead of paying 2.8, or whatever you’re paying, yeah, zero is zero is better than 2.8. Sure, no.
So, you know, that’s an, you’d actually still get the 0%. If you consolidate now, you’d get that 0% probably until the end of September. And then the real question is, does it make sense to try to pay it off? Or does it make sense to try to go for forgiveness, just based on what your income is? And what the new rules say?
Yeah, that’s what I mean, because some of the people are sitting here thinking like, paying $300 a month, like on my $250k of loans of no interest, like, that sounds like, that sounds like a hack. That’s not legitimate.
Right? And so anyway, and so that’s what my point is, don’t blame yourself on this. The rules are the rules, we don’t make them policymakers do you shouldn’t feel guilty for it, because the opportunity exists.
Yeah, absolutely. And, you know, what you just described, I think it’s very, very common, you know, I, I do have clients and students who have, who have not, not gotten far into their medical careers, and they already just just know, this is not actually right for them, you know. It’s something they can do, it’s certainly something that they’ve taken out a lot of money to do.
But it’s not something that feels like it’s, it’s their real calling in life, or, or at least not under the type of employment constraints that they’re in. And then others who have been in practice for a very long time, and really just want sort of another chapter in life, they want to do something. And, and the common denominator if there is one, really across the board, because these are remarkable terms.
I mean, for anyone listening who’s not a physician doesn’t know that my loan has a 30 year term. That’s why we can talk about 2003. Like, oh, it all started back in 2003, that’s 20 years ago, and I’m still in the middle of it. Because these are really long. These are huge sums of money, they’re very long term.
And they do feel like especially to people who want to make major changes, like, it’s an enormous thing to be managed, because unlike a house, you can’t just say, I’m going to sell my big house and move to a small apartment.
You can’t do that with your student loan, or at least it doesn’t seem like you can what you’re describing seem like some options where maybe you can, the more we’ve done this, the more and more It’s like, oh my gosh, like there’s so many weird things that people don’t think about when it comes to these loans.
Like, for example, if somebody wanted to go back to school, you can stack loans. So if you have a bunch of medical school loans, let’s say you have $200,000 medical school and you decide I want to become a lawyer, you could go back to law school and borrow another $200,000 through the government have $400,000 of loans, and then pay based on your income on that new $400,000 loan when you get out and get it forgiven after 10 or 20 years.
So what an enormous amount of information. I mean, I’m thinking about what you’re saying. And I’m also thinking, I know, there will be some listeners who, who have like an aversion to the idea of hacks or loopholes, but what what you’re saying to me sounds like everything you’re talking about, while perhaps bizarre is totally legit, as bizarre as the laws are written today, and, and I’m just really struck by how much there is, potentially to know about it, and why so many people do basically what I’ve done, which is nothing, because it’s hard to figure out what to do.
Now, I don’t feel like I’m in jail. So which is maybe one of the reasons I’ve done nothing, right, I feel like I do my loans, they’re out, they were consolidated at this low interest rate, I’ve got my, you know, 30 year term, etc. And, and I’m, I’m not looking at a situation where I wouldn’t be maintaining my income, at least, that I’m aware of, I guess, one never knows.
But, uh, but nonetheless, I mean, just the magnitude of what you know about in order to be able to put these personalized plans together for your clients, and what your other team team members need to know about is just a huge amount of money. It’s not surprising to me at all, that most people essentially are just, like, very, very curious and then totally paralyzed.
Yeah, I would say that’s very common, right. People that are truly drowning, you know, probably don’t necessarily have the resources that they were they want to pay a few $100s for a plan, I guess. I mean, a lot of people, a lot of people get our stuff for free, and they kind of get some level of help from that.
And I think people that, like you said, are kind of comfortable. Like it might be that your strategy is the best strategy like that. That also might be the case is that maybe the income based options aren’t a good fit for you based on your individual circumstances and your loans. And, and sometimes that’s the answer, I would say 90% of the time.
It’s not though, you know, 90% of the time somebody is missing out something that’s very significant. Yeah. You know, and with all these temporary roles in the factory, it’s all changing. You know, there’s a lot that people just are just totally unaware of.
Absolutely. I mean, when I think about it now, mid 2023, looking back, it’s easy to say, Oh, well, that’s a missed opportunity. And there could be another six months or some unknown amount of benefit in the future.
And I guess a lot of it must also boil down to people’s personal preferences and comfort level for how active they like to manage their things, to decide what to do. But this has been incredibly informative.
I’ve learned so much from talking to you. I really appreciate it. Can you tell my listeners a couple of things about first of all, you mentioned, you know, people get some things from you all for free. I think that’s because you have a blog, right on your website.
Yeah, www.studentloanplanner.com. Yeah, like if you just type in “student loan planner”, plus, whatever you’re thinking about on student loans will have an article on it, almost surely.
We’ve got, like 1500 blog posts on our site. We’ve got a lot of calculator tools where people can model like this new income based plan that’s coming out and see how you know what the impact is on their situation.
And we’ve got an email newsletter, where people can sign up for it student loan planner.com, where we do weekly updates on what’s going on like, the latest executive actions and what to do, what actions to take.
And we also got the Zillow and planner podcast where we do something very similar with this, once we talk about what’s going on. So there’s tons of I didn’t even need to have you on the show, Travis, I could have just listened to your podcast, that’s fine.
I mean, you know, we’ve got so we’ve got tons of free, free stuff. And I think a lot of people, a lot of physicians are stressed, tired, overworked, got other things they’d rather be doing with their free time. That’s, that’s the core person that decides, Hey, I just, you know, know that I’ve done my due diligence, I just want to book a consultation with you guys. You know, we’re gonna be extremely busy, I think starting in May, because the pandemic emergency is going to be winding down, there’s gonna be a lot of people rushing to submit their consolidations before a potential lawsuit.
There are, you know, repayments going to start up possibly in July, August or September. So people are going to start needing to get plans around that time. And people can also book like, one or two months in advance, we don’t actually require a credit card for somebody to book a plan. So you could book it and reschedule it or cancel it later, as needed.
So that’s something that I would recommend is if somebody thinks, hey, I want to get a plan, but I want to get it kind of an April or early May, they could use that booking link and kind of reserve a time in the future.
Oh, that’s great. So they can go to www.studentloanplanner.com. And they can book directly with you without needing a credit card or anything like that. And that they can cancel, if they should need to in the future. That they might do in a forward thinking way for when things are about to change up later this summer.
Yes. And if you are, I would say if somebody’s at all, you know, worried about, well, am I gonna get value out of this, like we actively cancel calls that we can tell, or there’s not going to be any value provided? It’s very, very unlikely, very unusual. You know, what would be an example of that?
Well, somebody that’s got all truly private loans that are 3%, you know, we’re probably going to cancel that call, because there’s not necessarily any value that we could add beyond just a general financial planning type of conversation. So, I would say that, you know, somebody that books is gonna get a ton of value if you have a certificate balance for almost 100% sure about that.
Yeah. I mean, that’s so great. It sounds like, and isn’t this. I mean, this is really what I think professional satisfaction is, at least for people like me and people like you. It seems like you’re doing something, obviously, making a great business, building your own livelihood around, but really, really helping so many people.
I mean, it’s a huge number of people, and of course, a huge number of dollars, that you have helped over the years. And it’s really something that I know people, they value very much.
So yeah, kudos to you. Well, and kudos to people that are trying to think about what makes them happy as they are in medicine. I know I know how hard it is from a distance, you know, I’m a spouse of a physician.
And, you know, this business has been successful enough where luckily I’ve been able to hire a lot of people to do the things that we need to do to deliver the value for our customers and clients like this morning.
Both kids are sick. I forgot the antibiotics at home when I dropped them off at the in-laws had to double back delay in my morning, collectively three hours from getting going because of just the kids just being a wreck and you know, allergies and all these things. And my wife had to be in surgery at 7am. You know what I mean? Right?
It’s hard to move. One of those inflexible OR times.
Yeah. And if you’ve got 50 patients for a clinic, that’s also pretty doggone hard to move to. Yeah. And maybe, you know, maybe people are. Maybe the physicians are listening, maybe they’re the high income earners, their family?
Or maybe they’re not, maybe they feel called to it, or maybe they just like maybe they’re single parents, there’s all these different iterations. Right, right. And, maybe they want to be able to move things or they want to be able to be the person that comes to pick up the sick child at daycare.
Yeah, maybe, maybe that’s not what they need. And that’s totally fine, too. But I think what’s really important is to push back on this idea that just because Medicine says it has to be this way, then it’s got to be this way. Because you do have a lot more agency, I think, than people realize, and you have a lot more choices than you realize. And you should absolutely go down the rabbit hole of your podcasts.
So you’re content to explore what those options look like. And I just want to encourage people to do that. Because I think you know, life is hard sometimes. And you know, and medicine is this thing where people from the outside look at you and think, why are you complaining?
You know, you’re rich, you have a high income, you know, you have nice cars, nice house, I mean, that stuff can oftentimes kind of be kind of a substitute or sort of like a replacement for what that true yearning is right?
Not always, but you know, so I just want to encourage people to go down the rabbit hole with your content too, and just try to find their best life. And know that from the financial standpoint, there. There’s definitely ways to make it work. It’s just you’ve got to be willing to just say yes to that.
Yeah. So well said so well said and you know, it’s so much easier to say yes, when you have trusted help, right, someone that you can call. So I hope that this episode is educational for people listening, I hope that people will come and find you.
And my listeners, I hope that if you feel like you are stuck somehow because of your loans, or whether it has to do with pandemic or loan forgiveness or career change or whatever. I hope that you’ll take advantage of Travis, his podcast of the free resources 1500 articles if you don’t want to read all those items.
I do think it sounds like a good use of time to book a consultation, frankly, but I hope people will find tremendous value in it. I know I have. Thank you so much, Travis, for being on the show.
Absolutely. Thanks for having me.
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