(Ep. 256) Student Loan Forgiveness, Refunds, and Fresh Starts for Borrowers

Welcome to another episode of the Student Loan Planner Podcast. I am Lauren Williams, one of the senior consultants here at SLP. I've been hanging out at this wonderful company since 2018. But as you all know, payments are beginning in October, things are going a little bit crazy. And you guys have been knocking the door down saying, Hey, we need a consultation. And you can imagine why after three years of not having to do anything, lots of people are like, Oh my goodness, let's get this party started. What do I do? And are reaching out to Student Loan Planner. Because we have so much demand right now, we've had to bring on some new members of the team and they are just as awesome as the rest of us. But I wanted to spend a little bit of time today, introducing them to you. And of course, like you said, because payments are starting, things are always changing. We've got to make sure that you guys are not confused because we are hearing that borrowers are more confused than ever with all the changes. So we've got some really cool case studies that we want to share with you to make sure that you have the information you need to be ready to begin repayment. So without further ado, let's get started with you. Marcel, welcome to the Student Loan Planner podcast. Welcome to the Student Loan Planner team. Tell us a little bit about yourself. Where are you from? You know, what do you like to get into? Like long walks on the beach? Is that your thing? Thanks a lot, Lauren. Happy to be here. I've kind of bounced all over, um, originally from the Midwest, Cleveland, Ohio, born and raised there, kind of stayed in Ohio, kind of through my mid twenties, fought my way over to New York city for about 10 years working in the financial services industry there. Just recently I moved to Austin, Texas and I launched a financial planning practice. I got linked up with the folks over at Student Loan Planner. I'm working on, um, you know, helping out with the student loan consultations. There's a huge demand for that. And, uh, you know, just, just exploring Austin. I've only been here for a short time thus far. It's been really great. It's been really hot, you know, so far so good. My wife and I just bought a house down here. We got a puppy about four months ago, so she's six months old now. So, you know, we're kind of exploring with the dog and doing all of that stuff. We're really into kind of like the food scene, trying new restaurants, wine, things like that. That's sort of what I've always been into, um, kind of growing up over the last 10, 15 years or so. Well, welcome to Texas. I am a fellow Texan now. I live in Dallas and I would say that the heat has been a little bit just ridiculous this summer. I mean, it's always hot in the summer in Texas, but I think it's been like a serious of like record breaking days of over a hundred. So I'm sure it's a bit of a adjustment for you, but you'll make it. Don't worry. We are just weeks away from the weather getting better. And also in Austin, they have quite a bit of hiking. Um, are you guys into hiking as something that you like to do? I mean, I, I could see myself getting into hiking. We were living in New York city, no car for the last 10 years. So, uh, difficult to hike in those circumstances, but yeah, I mean, I like being in the outdoors and yeah, I'm, I'm aware that there are good, uh, hiking areas around here. We're actually very close to, uh, McKinney state park over in Austin. So bunch of hiking. So yeah, we're looking forward to doing that here in the fall coming up here and, uh, should be nice. Do you think your dog will go hiking with you? Did you get like a little, like teacup that goes in a person can't walk very far or do you have like a, you know, built for tough kind of dog? She's, she's a Cavapoo. So, uh, a King Charles Cavalier poodle mix. So I think she might, might like some short hikes. I'm not sure how, uh, inclined she'll be on, uh, going on a three to four hour hike, but we'll find out, you know, she's never really been on a hike and, uh, I'm hoping that she really is eager to do it, but I'll, I'll report back Lauren. Don't you worry. Yes. Cute. Keep us posted. I know you have the, I know you have the great Dane who probably loves hikes. Yasu is not a hiker either. He's, he's a little bit more of a seven to 10 minute walk kind of guy or hang out with his buddies and like romp. He loves to wrestle. With other dogs, but not a hiking dog by any means. All right. Moving on to you, Jake, tell us a little bit about you. How'd you find student loan planner? What are you up to in life? I am living in Dayton, Ohio with my wife and two dogs, Labrador retrievers, so very active dogs. And, um, I was born and raised in Dayton, Ohio. I went to Ohio university and, uh, kind of fell into the financial services industry by, by kind of happenstance in terms of landing a job at a consulting firm, uh, immediately out of college where I learned everything there is to know about this industry. As much as I could, I guess, I guess you could say, but yeah. So in terms of where I'm at right now, I mean, I have a child on the way coming in January. So, um, that's something that we're looking forward to. That's going to be a big lifestyle change for us. So we're just getting mentally prepared for, for being parents, not just dog parents. And then in terms of, you know, how I started with student loan planner, I've always been a big fan of what Travis has done for the student loan industry. I've been an avid listener of this pod for probably a couple of years now, because I work with younger individuals that oftentimes have student loans as a part of their financial situation. I've used the student loan planner podcast and as well as the newsletters, et cetera, to help me learn more about ways to help borrowers. And then when I saw that there was openings for consultants here, I jumped on the opportunity because I was excited to, to join such a fascinating team that helps so many people. One of the things about financial planning is like you said, you can kind of look for all the cracks and the crevices and the pieces of the puzzle, but finances are so vast. And the one thing I learned as I got into the CFP was that this was not a topic that they were covering. So I finished, I was so proud of having my CFP. My very first client had 300, over $300,000 of student loan debt, 150K of income, and I had no idea what to do. But our love and our passion for learning as financial professionals is like what leads us down that rabbit hole. So I'm not surprised at all that you're like, okay, let me find a good resource. And we're proud that student loan planner is that great resource that is helping not just borrowers, but also financial professionals get their clients the advice they need. You said you run your own firm as well? Yes, I do. Yeah. What do you kind of specialize in? I work with millennials specifically, and usually it's millennial couples with young children. And most millennials went to school, went to college during the financial crisis, right? In 2009, 2008, I graduated high school in 2009. I remember when I went to high school or when I was graduating high school, we pretty much didn't have any other option, but to go to college at that point, because not a lot of companies were hiring while they were worrying about making payroll during the really beginning parts of the financial crisis there. And so there's a lot of people in that position. They've got pretty successful careers now. They have the income coming in, but they still have these student loans sort of hanging around. And it's definitely a major pain point when they're trying to upgrade their house or pay for their kids' education. So they don't have to take out student loans, that sort of situation. So it's becoming a huge pain point in the clientele that I typically work with, which is like basically that late 20 to late 30-year-old sort of clientele that I work with right now. I think they said that we are 26 to 42 years old is the official. I don't know how official it is, you know, kind of broad the way that they describe us nowadays. And I think older generations definitely want to say like Gen Y and Gen Z are the same thing, and all of us are millennials. I'm like, no, the kids that are 18 right now are not millennials. That's a totally different realm and operation there. So I also work with millennials. And yeah, I kind of stick to that 26 to 42. I'm turning 40 this year. So I'm an older millennial, but I'm still a millennial. You'd still qualify for my help. So you're still you're still in that bracket. Are you taking new clients? Like, I might be looking for a new client right now. Yeah, I mean, it's great, because I think millennials just in general. I mean, there's there's never been a lot in terms of just like the historical ways that people receive advice. There's never been so much access to so many different pieces of information when it comes to their finances. And unfortunately, with the rise of social media, it's been harder and harder to decipher what quality of advice is compared to what they're hearing on TikTok and an Instagram. And so that generation, I think, just in general is receptive to advice. It's just a matter of making sure that they're receiving the right advice for their sort of situation, I think, is key. Well, we got some really smart millennials because they're listening to this podcast that does give great advice and great advice is just around the corner. All right. Let's talk a little bit, because like you said, there is a lot happening in the student loan world right now. We've got a lot of information we want to get to you today. So let's kick over to you, Marcel, to talk a little bit about what you've been seeing recently related to student loans. I know that Kaiser doctors have been the biggest thing that have been like just knocking down the student loan planner doors because there was a cool rule that just came out that said that doctors, specifically in Texas and California, that are hugely affected by this, who are employed by for profit companies, but they go to work every day at a nonprofit employer. They've been able to now qualify for public service loan forgiveness. And so many doctors are reaching out to figure out how exactly do they qualify, what exactly paperwork they need to fill out. And it's a pretty big deal. So if you're working in health care, especially in California or Texas, this might be something that's relevant to you as the the PSLF related to being a physician working at a for profit entity while actually doing your job every day at a nonprofit entity. Marcel, that you had something that you saw interesting related to Kaiser doctors recently. I've been on a number of different calls with Kaiser doctors, and it's really been eye opening to me. I mean, you know, I think it's especially satisfying to help folks that, you know, spend all of their days helping other people. So when I've been on these calls that, you know, the recurring theme that I've seen transpires that a lot of these doctors who likely expected to be paying their loans for many years, if not decades, all of a sudden come to the realization on these calls with us that, hey, they've already satisfied their public service loan forgiveness criteria of making 10 years of qualified payments or they're right around the corner from meeting that threshold. So for a lot of these folks, it's, you know, hundreds of thousands of dollars in loan forgiveness that they're able to kind of see the end of the road on. And, you know, that's been very kind of encouraging to see just, you know, how big of a difference this is going to make for these folks. And, you know, I think it's always good to kind of help people who help others and kind of, you know, see people like that do well. So that's been really great. And, you know, again, as Lauren mentioned, I'll echo, you know, if you are in that Kaiser system in California or Texas, I mean, these things are very, very meaningful for you. And some of these things will kind of change after the end of 2023. So it's it's of extra importance to look into these things to see if your situation qualifies as such, where, you know, you might be able to make a big dent in your student loans by the end of this year. It's been a huge deal that the income driven repayment adjustment as a piece of the puzzle, because a lot of these doctors were just paying the minimum on their loans. They had really low interest rate, but they had these old loans called FFEL loans and they didn't even get a break during COVID. They had to pay all during COVID while everybody else got to take advantage of these three years of not paying because they had privately held FFEL loans, which are actually still federal loans. I'm sure you guys can see why we have a job, because that doesn't even make sense. Every time I say it, I'm like, wait, what? But time is of the essence to be able to take advantage of doing a consolidation, to get all those payments to count. In addition to getting caught up for things that, you know, when they previously would have never gotten public service loan forgiveness, they're now eligible. So lots happening in that realm. All right, let's kick over to you, Jake. Tell us a little bit about some interesting things you've been seeing in the student loan system as of late. I've seen a lot of borrowers that initially thought that there was basically no option for them, that they were thinking that maybe forgiveness was just not even in the cards. I think oftentimes we have to remind ourselves of what it was like before the COVID forbearance. And we kept seeing or kept hearing articles and seeing articles about the actual ratio of public service loan forgiveness not actually working. Right. So it's like only so many people had qualified for that. Right. When people read these articles in the past, they're like, oh, there's no point in even trying. And for example, I have I had a borrower that we had a consultation for that had multiple parent plus loans for both of her children, as well as her own loans from her own undergraduate and graduate school. And she's a public school teacher. In terms of just the amount of debt that she had, it was about three or four times her income. And she just basically before the COVID forbearance, had basically just given up and said, my plan is to basically have this debt until I pass away. And that was her plan. And it was it was kind of a morbid way to think about it. But I think she just made one last ditch effort of saying, OK, is there anything that we can do? And luckily, with the current rules and regulations today, current changes, there was a fresh start initiative, which basically gives borrowers the option to remove the default status from their student loans and enter in to an income driven repayment plan and make those loans eligible for forgiveness again. With her, I mean, she goes from that plan of basically thinking that she's going to have these loans for the rest of her lives or her life. But she goes into a situation where she just she just took advantage of Fresh Start, and now she's able to qualify for public service loan forgiveness before she retires in six years. Now she doesn't even have to worry about that student loan payment during retirement now. So that's a complete game changer for for her and her family. It's amazing. I've seen many instances of just what Jake has explained, right? So I mentioned the Kaiser situation, but it really goes for people in all walks of life. This IDR waiver adjustment is really doing big things for people across the board, whether you're a PSLF eligible person as far as your work goes or not. Many other people that I've seen have also seen tremendous sort of changes in their circumstances because of this. Right. You know, I've had sad and uncalled consults where people have been talking about moving overseas potentially to help alleviate the burden. And when we go through their options, you know, their eyes become very large and they're very eager to understand that, hey, well, maybe I don't need to take these drastic moves any longer and I can live the life that I really desire to live because these new options available to me that I was not aware of really make it as such where I can pursue the path that I'd want to and not let my loans and my loan payment dictate that path for me. So I think we all have been on pretty much every call that we do where we see outcomes like this. And I think it's really fulfilling for everyone involved at Student Loan Planner to be involved in these consults and kind of really to help people out in a big way. Marcel, I like what you said about that. Not using student loans as a as a way to like dictate what your options are. It's basically like almost like a mindset shift of saying, OK, I'm used. My student loans are going to be there. There are a limitation to what I can achieve going from that to now that we have a plan for it. It's a part of the plan itself. And the plan itself is much bigger than just the student loans. That's basically a part of the plan, because like you said, I've I've met with borrowers that completely upended their life or didn't do something because they had these student loans that were always kind of weighing on them. And that's a complete mindset shift that people can take if they have a plan in place. And it's it's amazing what it can do for their family. And I think that's the value we bring as student loan planners that are also CFP, CFA, you know, the CSLP is the one designation related to student loans. But our expertise is, like you said, being able to look at your full financial picture and always being aware of like while you're calling you, you have this one pain point that you're reaching out to us for, that it is going to affect lots of other aspects of your financial life. And literally in 60 minutes, we have an opportunity to not just help you with your student loan picture, but to help you totally change the trajectory of your overall financial picture. And that is why I am still a student loan planner. Six or seven years down the road when I thought this was just going to be a little quick side hustle while I was, you know, ramping up my own business. I think one thing that's top of mind for me is I think about all the different changes that are happening in the student loan system right now is the idea of refinancing. So pre covid refinancing was probably like 30 percent chance that you might need to refinance. It was a pretty kind of cut and dry formula that we had when people needed to refinance their loans versus not refinancing. And with all the changes that have happened since covid, it has become far less likely that someone would even want to refinance or that they can. You know why? Because interest rates are a bit higher right now. There's a new save plan that makes it a lot more affordable for people to pursue income driven repayment and, you know, a 20 or 25 year forgiveness plan. But one of the things we have seen is like people knew that refinancing was a thing. They were really, really caught up on their interest rates and they decided to refinance their loans during covid when when interest rates dropped dramatically and they maybe weren't a person that should have done it. We were really, really, you know, sad to hear that like people were leaving, going private and, you know, they kind of messed up an opportunity with all these other things that came down the pipeline. But the coolest thing that I think has come around recently is this idea that you can actually take your private loans that you you refinance during covid and turn them back into federal loans. So if they were previously federal loans, you can now turn them back into federal loans by asking for a refund of your student loans. So one thing we're not 100% sure about is that they did say that the last date, you know, is from a time frame of March 13th of 2020 to August 28th of 2028. And this podcast is coming out after that time frame. If you're going to be able to ask for this refund in December, for example, and still get it for that particular time frame, because that was the period of covid forbearance. So we're looking in to see if you can still take advantage of this. But this is one thing that has been a game changer. You talk about people lighting up on a call. I had a gentleman that had about thirty thousand dollars of federal student loan debt and was booking the consultation just thinking that they wanted to just double check. There was nothing else to do with this 30K of federal debt. Well, as we had our conversation, I learned that there was over one hundred thousand dollars that he had refinanced during the course of covid. And he was still within the period to be able to ask for the refund and is getting his loans refunded, putting it back into the federal system because it is a no brainer for him to pursue the long term forgiveness using the new save plan. It's going to save him like roughly eight hundred dollars per month in student loan payments. He's buying a new home. And, you know, now he's going to go from renting at a relatively low price up to a much higher price related to his mortgage. And so he needs that extra eight hundred dollars. Imagine what it's like to not really know. You're just like, oh, better interest rate. This is going to help me over the long term. But really, you're strapping yourself financially with a payment that's unaffordable for the lifestyle that you're living and to be able to reverse all of that because you did a student loan consultation. So when we talk about like literally changing lives in 60 minutes, this work is rewarding. It is unbelievable. And I just I can't say enough like how awesome it is to be able to get someone a plan that is unique to their particular situation. I think that exact situation is one of those that go into the category of it doesn't hurt to try. It doesn't hurt to call your servicer and request that information. There's the only downside is you have to spend your time doing it right. So you might be on hold for a little bit, but it's worth a shot. You know, if you're in that sort of situation, maybe you're a Kaiser physician that starting in July, you're now eligible for public service loan forgiveness. But during covid forbearance, you had refinanced, you know, hindsight's 20, 20 in that situation. If you knew what you knew today, you probably wouldn't have done it. But it doesn't hurt to try as long as with a couple of other things with student loans out there. All right, let's head over and do some kind of semi rapid fire questions. Are you guys ready? Do you guys have rapid? You know, I'm a world class athlete. I can do everything fast. I'm ready. I'll see if I can do my best here. You can keep up. Can you keep up, Marcel? We're going to test to see who is the most long winded. All right. Your best personal finance tip for the borrowers that are listening. I would say to talk about money. Money is a subject that is a taboo subject that not a lot of people like talking about because they feel judged or intimidated. And there's a lot of comparison culture out there about how much money you make, you might make, et cetera. But if we collaborate with our partners, with our family, with our loved ones, we may discover something that we wouldn't have known otherwise if we would have never talked about it. I would say that's one of the things that I encourage with anyone that no matter how much money they make, talk about it, at least set aside some time like every week or every month to talk with your partner and with your with your other loved ones about where you're at and what the plan is at that point. I would say from an investment perspective, when you're building a portfolio to reach your long term goals, nine out of ten times going for the low cost option. So Vanguard, BlackRock portfolios like that are going to probably make the most sense for most people when you're working with a financial professional or if you're even doing it on your own kind of err on the side of going low cost for your investment options. It's almost always going to be the better option for most people. So that's my top level tip. All right. Question number two, what is your worst money habit? I would say for me and my wife would attest to this is I don't like spending money. So I think for her, she would prefer that I spend money on things that I enjoy and that I like. I've always been like more of a frugal type person. So I think, you know, for her, that would likely be her biggest critique of me is, you know, find a way to enjoy the money that you've saved. And worked hard for. So I'll go with that one. And I will also agree with Marcel being a financial planner. You you project out so much and, you know, your net worth and everything and five, 10 years, you're like, well, if we continue down this savings rate and this income trajectory, you know, we'll have this amount of money at that point. And it's like, you know, it's great to think on a spreadsheet, but life isn't all about spreadsheets and you have to enjoy life today. And so I think I have the same habit of especially as you're, you know, you're starting to launch a business and that sort of thing. You kind of you kind of emotionally just feel tied to thinking about money as basically like a a way to or I guess a way to kind of like restrict yourself to make this business over here for grow faster or grow more because you think about that just, you know, your whole life is like the business at that point. It's oftentimes where, you know, my wife will just say, hey, it's not going to be the end of the world if we go through and spend money in a certain way, as long as we're still under that trajectory for your business, you know. But yeah, I would agree with with both of you guys. I think we need like financial planners anonymous for inability to spend the money. And I think one of the things that's like narrative wise, we always talk about people that are spenders and live paycheck to paycheck. And we're trying to encourage people to save more because everybody's spending, spending, spending. But it is a real thing for people to be kind of on the other side of that and to want to like actually have a hard time living their life because they're doing so much saving. So, you know, there's extreme savers and extreme senders. And we we all are trying to find the balance and meet somewhere in the middle where, like you said, you can be responsible with your finances, but also enjoy life. All right. Last but not least, something you do for fun that doesn't cost anything. I'm a big board games guy. So my wife and I will invite people over. We'll play board games. Of course, the board games cost money. And I mean, the good ones can actually cost, you know, north of 30, 40 bucks. But once you buy them, they don't cost anything at that point. And so it is a great way to have fun with other people on a budget. That's my budget friendly hobby. As far as my budget friendly hobby is, well, I'm going to say I really love to cook. I've always kind of been interested in and, you know, something that I look forward to. I also mentioned earlier that I just moved to Austin, Texas. We bought a new house. We have a big yard. I'm going to get a little garden going. So that'll be another, you know, very, very low cost, if not free activity that that I'll be doing, you know, kind of year in and year out. OK, Marcel, if we're all coming over the whole student loan planner team to your place to eat, what are you going to cook for us? Oh, all right. So I make a good Thai curry. So that's one of my specialties. I just made this new dish the other day. This this Mexican pollo asado dish, which is basically like, you know, like braised chicken and like this like pepper tomato sort of sauce that you blend together. Then you kind of braise it for a couple hours. So that was really good. Probably make make one of those two dishes if you made me pick a dish for the outing. Anybody have anything they want to say as we wrap up today? I just say remember the twelve thirty one twenty three deadline for the IDR waiver adjustment. It matters a lot. I've said it about two or three times already, but I can't emphasize any more that how much this can matter to people. I would say if you are a public school teacher, or a public service employee, and you've been working at least 10 years, even if you work in eight, nine, seven, whatever it might be, definitely think about taking some sort of action to take advantage of the IDR waiver, because this is going to be one of those situations that can be like you look back on. It can be a life changing moment for your family's life. So so definitely looking looking to at least do a little bit of research with the the IDR waiver, book a consult with us. It'll be well worth the money at that point. I love it. I love it. It's been great having you all on the show today. If there's someone that really moved you and you're like, oh, my goodness, Jake is my bestie. I want to do my consultation with him. You can email us at help at student loan planner and say, I would like to speak specifically to Marcel or Jake, and they'll send over their personal link so that you can book directly with that person. As we said, we have lots and lots of booking. So I would say if you are feeling like you don't have clarity around your student loan plan, don't wait until September 29th and think that you're going to get your plan together for October. You might be waiting till November or even December at that point. So get on the calendar now. Studentloanplanner.com or help at studentloanplanner.com if you want to send us an email. That is all we have for you today. We're looking forward to seeing you next time around.