Why So Few Talk About Student Loan Debt

Why So Few Talk About Student Loan Debt

You probably know a bunch of your friends have student loan debt.  You probably know that they hate it. But do you know how much debt people have and what they’re doing to get rid of their debt? Chances are you don’t, and your friends don’t know your situation either. Even though the vast majority of college graduates (more than 70%) finish with student loan debt, it’s still a taboo topic of conversation.

Today’s post talks about the problems borrowers face when talking openly about student loan debt and tips for overcoming the challenges. Estimated read time ~5 min Estimated watch time at 1.5x ~3 min.

Uncertainty

The first thing that comes up when someone wants to talk about their student loan debt is a sense of uncertainty. You might wonder Did I make mistakes no one else did? Is my situation bad because I was worse than average at navigating college? The uncertainty of how you stack up compared to others keeps many borrowers from sharing their story.

The easiest way to overcome uncertainty is to start by sharing your story with folks who are close to you and very trustworthy. Think your bestie from college, or that cool cousin of yours from a similar background. The more you talk to other borrowers the less uncertain you’ll be about how you stack up. Turns out almost everyone has student loan debt (more than you’d think), and most everyone made a couple of mistakes a long the way.

Hopelessness

What’s the point of sharing your student loan debt when it’s a hopeless mess you’re never going to get out from under? It’s not like anyone holds some magic key to unlock your student loan debt shackles. Many borrowers feel like there’s nothing that can be done about student loan debt, so why talk about it.

Student loan debt isn’t an entirely hopeless situation. Even if you really extended yourself financially there are repayment strategies that can help you. Talking to someone else going through it can help you learn new approaches and tips for navigating your own situation.

Fear of Criticism

If you share a story about your student loan debt, someone is going to be unhappy about it. That’s the ugly reality of it, someone who went to college when it was 4x less expensive and they could work 21 hours a week at minimum wage to pay for it is going to be critical. Not everyone understands objective financial reality, some only understand their own experience.

I share my story all the time and I get trolled all the time. If you’re worried about it, don’t feel the need to share your story publicly. Share it with your peers, other borrowers with debt and looking to talk, and share it with your younger siblings. There are so many people who can benefit from your story because they’re struggling with the same thing. Don’t feel like the only way to make a difference with your story is to share it big. If even one person picks a better strategy because of your story, you’ve done an amazing thing.

Talking about student loan debt is still a taboo topic. I think one of the biggest ways to solve the problem is for all of us borrowers to talk to each other about it. Think of all the problems you solve based on someone else’s experience. I mean if I want to buy a shirt I probably read at least 10 reviews as I make that decision. We can crowd source information about student loan debt repayment in a similar fashion. Learn from the experiences of those around us.

What do you think? Do you share your student loan debt story with folks or keep it close to the vest? Let me know in the comments below or on the Repayable Facebook Page

How to Assess Your 2018 Student Loan Progress

How to Assess Your 2018 Student Loan Progress

It’s December, and amid the hustle and bustle of the holidays you might be wondering about your personal financial situation. If you’ve got student loans you can’t think about your money without thinking about your debt. So what’s a borrower to do? The answer, a 2018 student loan debt assessment. Read on for the top three things to look at when you assess your progress on student loan debt. 

Estimated Read time ~4 min Estimated watch time ~3 min.

1. Total Balance Change

The first place to start is with the objective progress. Look at your statements back to Dec 2017, and write down your student loan balance. Now take a look at this month’s statement and write down your current balance. How’s your student loan balance looking compared to the end of 2017?

Hopefully your debt has gone down since December of 2017. The degree to which it has gone down will depend on your personal repayment strategy and your interest rates.

2. Current Repayment Strategy

The next thing to review in your annual student loan assessment is your repayment strategy. If you have a mix of Federal and private student loans you might have different strategies for different loans.

Federal student loans will be on one of the federal repayment plans i.e. Standard 10 year, extended repayment, income-based repayment, etc. Private student loans will have a fixed monthly payment for a certain number of years. Your student loans could also be in the grace period, deferment, or forbearance.

3. How Student Loan Repayment Fits

The last thing to look at is how your year of repayment felt. This step is entirely subjective, but here are two questions to ask yourself. How did your student loan repayment approach fit in with all your other competing financial needs in 2018? How does repaying your student loans impact your future financial goals?

Answering these questions will help you decide if your current repayment strategy is working out for you. If you feel like you’ve had enough extra money to spend on wants and didn’t make the progress you wanted on the principal, it may be time to look for a repayment plan with a higher monthly payment or pay extra each month.

Taking time to assess your student loans at the end of the year can set you up for financial success in 2019. I love hearing from my fellow borrowers, so if you want to share the assessment of your student loan progress leave me a comment below or on the Repayable Facebook page.

I’m Grateful For My Student Loan Debt

I’m Grateful For My Student Loan Debt

Yes, this post is hard core cheesin’ being posted right before Thanksgiving. But it’s not some trite gratitude post minimizing the struggles borrowers face. Rather it’s a post about how sometimes struggles, and successfully navigating those struggles, are all about perspective.

This year for the first time, I’m genuinely grateful for my student loan debt. Read on to for what I think my student loan debt has given me. Estimated read time ~4 minutes. Estimated watch time ~ 3 min at 1.5 x speed.

Strong Work Ethic

Like the many of you reading this right now, I sacrificed through college. I worked two jobs and more than full-time every summer, winter, holiday, and spring break. If I had a chance to earn money, I did it to minimize the amount of student loans I had to take out. I did this at the same time I studied and improved my GPA during pharmacy school. I really never viewed anything else as an option.

That work ethic developed and was tested throughout my education, residency, and later as I started a side hustle while working full-time as a clinical pharmacist. Without the constant need for work and crucial impact that made on my mindset, Repayable wouldn’t exist today.

Financial Pressure

$132,000 in student loan debt put a strain on my finances. This amount of debt forced me to make a decision about how I wanted my relationship with money to go. I could choose to follow vague ideas about what to do with money, or I could find a better way on my own.

The financial pressure of my situation helped me set clear boundaries on spending and develop meticulous habits when it came to managing my personal finances. I realized quickly what I valued and what my money could do for me. Then I rigorously cut the extra fluff out.

Something to Fight Against

Most people would try to frame this in the positive, something to fight for. But for me student loan debt serves as more of a villain, something to be defeated.

I like the idea of resistance and striving against something. Villains unleash great motivation and power within me. I tap into a part of myself that’s often sleepy in every day life, I think perhaps the thing I tap into is resilience and the strong desire to be successful in spite of something difficult. 

Empathy

I worked hard, sacrificed, and still ended up with a lot of student loan debt. I often get criticized for the amount of debt by folks who have no clue.  I’ve suffered feelings of defeat, hopelessness, and lack of progress.

While I certainly haven’t lived anyone else’s story I understand how anyone can end up in a bad situation and feel stuck. I’m not here to judge other people’s choices, I’m here to help them make the right choices for their own goals.

In the end my student loan debt has reinforced a strong work ethic, focused my money habits, strengthened my resilience, and given me empathy toward my fellow human beings. Not bad for something that seemed like it may crush me and hold me back from my full potential.

Pursuing Your Goals and Paying Your Loans

Pursuing Your Goals and Paying Your Loans

Sometimes it feels like you’re supposed to “do it all”. When you’re in college you should be, studying, working, volunteering, interning, dating, partying, and laying the foundation for future you. Then you graduate and the next list of shoulds starts in. You should find a good job, work your way up, put in your dues, become an adult, travel, live your life, make friends, get married, buy a house… the list never ends.

But the thing that everyone seems to miss is that some of those goals contradict each other, some of those goals aren’t even your goals, just a list of someone else’s “shoulds”. I say it’s time to forget the “shoulds” and pursue your own goals. Because there’s something that’s going to limit you, and it’s money. Plain and simple, when you finish college with student loan debt, your cashflow is going to be a rate limiting step. And you don’t have enough money to waste it on someone else’s “shoulds” you’ve got enough money to chase down and achieve your goals.

So how do you accomplish your goals with the weight of student loan debt on your back? You set crystal clear priorities and you stick to them. Estimated read time ~ 5 min, estimated watch time at 1.5x ~3.5 min.

Set goals and prioritize them.

Paying back student loan debt is hard, it’s harder for some than it is for others. The more debt you have, the lower your income, and the higher the cost of living, the harder it is to pay back your student loans. That’s why you have to decide what goals you want to accomplish, not what someone else wants for you, or what you think you should do, but what you actually want for yourself.

Start by asking yourself what the most important things are that you want to achieve right now. Write down a list of your ambitions and think about them. Get rid of anything that’s not your personal goal but comes from an external source. 

Tip: If you’re not sure if a goal is yours or external look at the language you use when thinking or talking about the goal. If you’re saying the word “should” a lot, you probably don’t want to do this right now.

Maybe someday a “should” goal will change to something you truly want, but that day isn’t today so that goal doesn’t make the cut. Ruthlessly pare down your list until you get a few core goals.

An example list may look like this:

  1. See new places by traveling
  2. Expand my career, build and use new skills
  3. Build financial independence and positive net worth

Establish the necessary first steps.

What are the very basic first steps you need to take? This is where you’re going to learn how much it really costs you to work on each goal. Remember, some goals are going to cost you money, but career goals can generate income, so it’s not necessarily all negative cash flow.

Look at your financial situation honestly.

Many goals require money; travel, financial independence, buying a home, etc. It’s impossible to make the right decisions to fund these goals unless you understand your financial situation clearly. That means you need to look at your student loan debt, figure out how much that costs you each month, and decide if that repayment strategy is right for you.

Here’s Repayable’s Road Map to Understanding Your Student Loans to get you started.

Once you’re on track with the student loan side of things it’s time to assign funds to your most important goals. You only have so much money to leverage at the end of the day. Think about that carefully when setting savings and investing goals.

For folks with an employer-sponsored retirement fund that has a matching contribution I always encourage you to find a way to get the maximum employer match. By doing that, you’re effectively increasing your pay, although you can’t use that money today. After that, additional contributions are up to you and can be flexible based on your other goals.

What can you get rid of in your life?

Getting rid of stuff isn’t everyone’s cup of tea, but hear me out. You can’t have it all financially, at least not right away. By cutting out things that matter less to you, you can free up money to meet your important goals. Maybe you moved to a city and still have a car that you don’t really need. So you get rid of the car, the car payment, the insurance payment, and opt for public transportation. It’s a sacrifice, but maybe it means you can take one extra trip each year, or pay off your student loans 2 years faster.

Setting priorities and sticking to them is hard. It can be disappointing to realize after a long time spent sacrificing in college, that you can’t have it all and still have a season of sacrifice in front of you. Your financial sacrifice is most intense as you start out, but with careful planning and goal setting you can lessen that intensity over time and achieve your goals.

I want to know what sacrifices you’ve had to make in pursuit of the goals that are most important to you. Leave me a comment below or on the Repayable Facebook Page.

$100,000 of Student Loan Debt Paid Off

$100,000 of Student Loan Debt Paid Off

When you have six figures of student loan debt it can feel like you’re never going to get out. Well, at least that’s my experience carrying that kind of debt. But now that I’ve been repaying my debt for about four years, I’ve finally paid off $100,000 of student loan debt.

Read on for the strategies I’m using to make the final push and pay off the last $31,000 of student loans. Estimated read time ~ 3 min watch time ~2.5 min.

In case you’re unfamiliar with my personal student loan story, it goes like this. I’m a first generation college student and attended a public, in-state university to get my Pharm.D. I worked two jobs during college and got scholarships to help pay for costs. Despite that, I borrowed $118,000 in federal student loans to become a pharmacist. By the time I graduated I owed $128,000 due to interest on my unsubsidized loans. Add on a year of residency to specialize and despite making payments my balance grew to $132,000.

I made the mistake of paying very aggresivly under my existing federal repayment plan. The problem was that my average interest rate was around 6.5%. After a year or so of that I wasn’t making the progress I expected and learned about refinancing. I refinanced my student loans for a 3.36% interest rate and learned an expensive lesson. 

But here we are today and I’ve used my low interest rate to make some major progress on principal. $100,000 of progress to be exact. Here are the strategies I’m using to get me to the finish line and out of student loan debt for good.

Check your student loan balance often.

For me, I check my student loan balance every time I get paid which happens to be bimonthly. Keeping an eye on my balance reminds me how annoying interest is and keeps the reality of my debt fresh in my mind.

Lately, checking the balance has also been very encouraging. I love seeing how fast the principal is decreasing.

Make extra payments.

This is the number one way I’m on track to get out of six figures of student loan debt in the next year. I have to pay more than the minimum monthly payment.

I make a point to make an extra payment every time I get paid. I do it after paying all my bills (including retirement and savings) and before I decide how much “fun money” I have left after all that is paid.

I live in the Midwest and have a relatively low cost of living compared to other parts of the country, so the size of the extra payment you can make is probably going to be different. That’s fine, just keep the mindset that every little bit extra you can pay now gives you returns in time and interest down the road.

Acknowledge milestones.

Be sure to acknowledge and mark your successes paying down your debt. Even if it’s something like acknowledging the fact that you chose the right repayment plan, or slashed your interest rate refinancing, or submitted the employer certification form required for Public Service Loan Forgiveness.

Giving yourself credit where it’s due is great for motivating you to stay on the long path to freedom. Set up milestones that mean something to you and pat yourself on the back for a second before returning to the grind of repayment. Just don’t get too crazy treating yourself!

Imagine freedom.

Spend some time thinking about what your life will look like when you don’t have to make your monthly student loan payment anymore. Think of how that will feel financially. Think of what you’re going to use your money for instead.

Use that vision and the desire to be free from your student loan debt to fuel you to keep on keepin’ on! I know the fight can be a long one but I’m here to cheer you on every step of the way. I know you can find your #debtfreedream

How much progress have you made on your student loan balance? I love hearing everyone’s student loan stories so be sure to leave me a comment below or on the Repayable Facebook Page.

Why 99% of PSLF Applications Got Denied

Why 99% of PSLF Applications Got Denied

It’s been everywhere in the news this week, <1% of applications for Public Service Loan Forgiveness (PSLF) have resulted in discharged loans. That number is shockingly low.

 

If you’re counting on PSLF and feeling terrified at the low approval rate read on to find out what happened based on the data the Dept of Ed released.

 

Estimated read time ~ 5 min. Estimated watch time at 1.5x ~3 minutes.

https://www.youtube.com/watch?v=rcimfDRFyCA&t=0s&index=14&list=PLrMRWofs_WAWOWJscV1j16D2r2aA8aHVo

The Stats

Check out this Federal Student Aid PSLF Report

  • 28,081 unique borrowers submitted applications for PSLF
  • 96 borrowers (0.3%) have had their student loan discharged
  • The average value of the discharged student loan debt is $57,500
  • 289 borrowers (~1%) have had their applications approved 
  • ~8,000 applications (~29%) were denied due to missing information
  • ~ 20,000 applications (~71%) denied due to not meeting program requirements

These numbers might look a little odd because they’re adding up to more than 100% and the news talks about more than 30,000 while I’m only talking about 28,000. That’s because while there are over 32,000 applications, there are only 28,081 unique borrowers. That’s the number I think matters when we’re talking about denying loan forgiveness. The number of unique lives that are going to be affected, not the number of pieces of paper that get rejected.

 

71% of applicants didn’t meet program requirements

 

Not meeting program requirements is likely a nail in the coffin for borrowers hoping to get PSLF. It could mean that the borrower doesn’t have the right loan type (only Direct Loans qualify), or that they’re not working for the right type of employer. In either of these scenarios the borrower isn’t where they think they are and it’s a true denial of forgiveness.

 

29% of applicants were missing information

 

This situation might be a little less nefarious for borrowers. It could mean that they’re missing employment information or missing documentation of some sort. This is a potentially fixable problem that might simply take a few months and a second try but doesn’t rule borrowers out of PSLF completely.

 

1% of applicants have their applications approved

 

These folks are likely just waiting for their student loans to be discharged at the time the report was made (June 30th, 2018). That means this 1% should be getting their student loans discharged soon.

 

0.3% of applicants are free 

 

These guys prove that PSLF is possible, though rare right now. These borrowers completed all the necessary paperwork, jumped through all the hoops, interpreted PSLF correctly, not to mention made payments while working for 10 years in qualifying employment and were rewarded with forgiveness.

 

Whats a borrower to do?

 

PSLF is very obviously a tricky beast as demonstrated by the statistics above. But it’s not impossible to tackle. I suggest reading up on PSLF on the FSA website. You can also check out a few articles I linked below. 

 

Resources

5 Common Loan Forgiveness Mistakes 

Student Loan Forgiveness 101

Do’s and Don’ts of PSLF

Three Major Differences Between Federal and Refinanced Student Loans

Three Major Differences Between Federal and Refinanced Student Loans

If you’ve ever thought about refinancing your student loans but felt like you weren’t exactly sure what would change then this post is for you. Estimated read time ~3 min, estimated watch time at 1.5x ~ 2 minutes.

Eligibility for Federal Student Loan Benefits

Once you refinance your federal student loans they become private student loans and lose eligibility for all federal student loan benefits. The benefits you could lose include access to income-driven repayment plans, loan forgiveness in case of borrower death or permanent disability, and forbearance and deferment.

The ability to enter deferment can be particularly important for borrowers who may go back to school full-time, otherwise they would have to continue to make student loan payments during school.

Eligibility for Loan Forgiveness

The major Federal student loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF), Income-Driven Loan Forgiveness, and Teacher Loan Forgiveness, only work for Federal student loans. Many state-specific loan forgiveness programs also only apply for federal student loans.

Bottom line: if you want student loan forgiveness, don’t refinance.

Interest Rates Based on Your Financial Potential

One of the major benefits of refinanced student loans is that a borrower can save some serious money on interest. We’re talking tens of thousands of dollars for borrowers with the highest amounts of student loan debt.

That’s because refinancing companies base your interest rate on your ability to repay your debt by looking at your credit score, your income, your total debt, and your financial assets. The borrowers with the best finances are very likely to get an incredibly competitive fixed interest rate. In contrast, Federal student loans which have the same interest rate for each borrower.

Do you have Federal student loans or have you refinanced? Let me know in the comments below or on the Repayable Facebook page.

Will my Student Loan Forgiveness be Taxed?

If you’re considering student loan forgiveness to repay your student loan debt you may not have thought about whether that forgiveness comes with a big tax bill. Today’s post gives you the details on which student loan forgiveness options aren’t taxed as income and which option is. Estimated read time ~ 3 min. Estimated watch time at 1.5x speed ~ 2 min.

 

 

Public Service Loan Forgiveness (PSLF)

  • Not taxed as income. The amount of student loan debt forgiven under PSLF doesn’t have a limit and is not taxed as income.

 

Teacher Loan Forgiveness

  • Not taxed as income. The amount of student loan debt forgiven under Teacher Loan Forgiveness is limited to either $5,000 or $17,500 depending on the subjects taught and isn’t taxed as income.

 

Income-driven Loan Forgiveness

  • Taxed as income. The amount of student loan debt forgiven under Income-driven Loan Forgiveness is taxed as income.
  • That means, depending on the amount of debt you have forgiven and your income, you could have a tax bill of thousands or tens of thousands of dollars if you get student loans forgiven under this plan.
  • Here’s a handy Forbes article with the 2018 tax brackets.

 

How to Plan

  • If you’re considering PSLF or Teacher Loan Forgiveness, there’s nothing to plan for.
  • If you’re considering Income-driven Loan Forgiveness you’ll want to talk to a CPA or tax professional to help you plan for the potentially large tax bill.
  • Before you go talk to them it will be helpful to know about how much student loan debt you expect to have forgiven. You can find that out by using the Student Loan Repayment Estimator on the federal aid website.

 

If you’re planning on getting Income-driven Loan Forgiveness what is your strategy for managing the tax bill? Let me know in the comments below or on the Repayable Facebook Page.

Three Major Types of Student Loan Forgiveness

Three Major Types of Student Loan Forgiveness

If you’re considering student loan forgiveness you’ll need to know what the three major federal student loan forgiveness options are. While there are a lot of smaller niche loan forgiveness programs available, these three cover the most common options through the Department of Education.

Estimated read time ~ 5 minutes. Estimated watch time at 1.5x ~ 2.5 minutes.

3. Teacher Loan Forgiveness

What it is: Teacher Loan forgiveness forgives up to $17,500 if a borrower teaches full-time for five complete and consecutive academic years in a low-income school or educational service agency, and meets other qualifications.

Eligible Loans: Federal subsidized and unsubsidized undergraduate loans (both Direct and Stafford). Graduate loans aren’t eligible for Teacher Loan Forgiveness, but if you have a Direct Consolidation Loan the undergraduate portion of that loan is eligible for forgiveness. Only loans made before the end of the five years of qualifying academic service are eligible for forgiveness.

Eligibility Criteria: 

  • Be a highly qualified teacher.
  • Teach at a low income school.
  • Teach full-time for five academic years. *Note: taking summer break is still considered full-time employment.
  • Have an outstanding loan balance after Oct 1, 1998.
  • Loans must be in good standing, not in default.

Forgiveness Amount: Math and science teachers at the secondary level or special education teachers at either the elementary or secondary level are eligible for $17,500 of forgiveness. All other teachers may receive up to $5,000.

2. Income-Driven Loan Forgiveness

What it is: Income-Driven Loan Forgiveness forgives a borrowers remaining loan balance after 20 to 25 years of income-driven payments.

Eligible Loans: Determined by which of the four income-driven plans a borrower chooses. Direct loans that don’t include Parent PLUS loans are eligible for all four of the income-driven repayment plans. Direct Consolidation Loans that are used to pay off Parent PLUS loans are only eligible for Income-Contingent Repayment. FFEL loans that haven’t been consolidated to a Direct Loan can be repaid through the Income-Based Repayment Plan.

Eligibility Criteria: Any borrower with a remaining balance who made payments under an income-driven repayment plan for 20-25 years.

Forgiveness Amount: There is no cap on the amount of student loans forgiven. However, the forgiven amount of student loan debt is taxable as income.

1. Public Service Loan Forgiveness (PSLF)

What it is: Public Service Loan Forgiveness (PSLF) forgives a borrowers remaining loan balance after 120 payments were made under a qualifying repayment plan while working full-time for an eligible employer.

Eligible Loans: Direct Loans, including Direct Consolidation Loans are the only student loans that are eligible.

Eligibility Criteria: 

Forgiveness Amount: There is no cap on the amount of student loans forgiven.

Are you considering student loan forgiveness under one of these three options? Let me know in the comments below or on the Repayable Facebook Page if you’re planning on getting Teacher Loan Forgiveness, Income-Driven Loan Forgiveness, or Public Service Loan Forgiveness.

Ask Jeni: Are my loans eligible for income-driven repayment?

Ask Jeni: Are my loans eligible for income-driven repayment?

Ask Jeni is brought to you in partnership with tuition.io, a company dedicated to helping the best companies free their employees from student loan debt.

 

My loan was sold from (Sallie Mae) to a third-party (Navient) that doesn’t seem to have income-based repayment. Are there other options that will allow me to lower my minimum monthly payments?

 
 
When your Federal student loans are sold from one servicer (Sallie Mae) to another (Navient), they remain Federal student loans and eligible for all federal student loan benefits including income-driven repayment, unless they’re in default. Navient is another federal student loan servicer.
 
 
That’s good news because you have the option to access income-driven repayment plans including the Income Based Repayment plan if your income is low relative to your eligible federal student loan debt.
 
 
To get on an income-driven repayment plan you’ll need to complete an application on the Federal Student Aid website. The application is completed through the Dept of Ed not through your specific loan servicer. Here’s the link to the income-driven repayment plan application.
 
 
 
The process is really short and takes 10 minutes or less. It does require you to submit income information but the website is equipped to pull through information from your most recent tax return and it will automatically pull through your federal student loan information.