Some debt is corrosive and should be paid off quickly. For other debt, it can actually be a winning proposition to pay it off slowly and invest the rest of your money. With student loans, it can sometimes feel daunting to determine with which liability you are dealing.
There are a few types of Federal student loans, each with different interest rates. To add to the complexity, any given student likely has a combination of subsidized and unsubsidized loans spanning four different disbursement years.
If you have graduated with student loans you are probably anxious to leave those loans behind you and get on with your life, but often the best way to accomplish this is to pay the minimum and start saving and investing toward your future financial security. In the investing world, we call this principle the ‘time-value’ of money.
We are happy to analyze the particular student loans of our clients and help determine the best repayment plan for them.
Student Loan Forgiveness
In 2007, Congress created the Public Service Loan Forgiveness (PSLF) program. The program is intended to remove the student loan debt of low-salaried public service employees after 10 years. (There is also a similar program for teachers of low-income students, called Teacher Loan Forgiveness.)
Meeting the employment requirement for loan forgiveness is as simple as submitting an Employment Certification Form to Federal Student Aid. They will likely ask for documentation of your employment along with the form, such as a W2, or may contact your employer to confirm your employment.
To qualify for PSLF’s partial financial hardship requirement, you must qualify for and use an income-driven repayment plan for your student loans. You might think that you can’t qualify for financial hardship, but many well-paid families are eligible.
We help our clients figure out if they can qualify for student loan forgiveness and if it is the right strategy for them.
Helping Children or Grandchildren
We offer investment advice for the whole family, managing assets for grandparents, children, and grandchildren. We are happy to provide investment advice for client family members who otherwise may not meet our client minimums, including in the area of student loans.
It is hard to see children or grandchildren struggling under the debt of student loans. We help our clients both develop a college savings plan before schooling and figure out how best to help with loan repayment for family members that have already incurred student loans.