Making Sense of Student Loans Post the Pause - Episode 47 (Classic Episode)
We are joined by Lauryn Williams of Student Loan Planner to address the often overwhelming topic of student loans. As many are confused about the ever-changing landscape of student loans, Lauryn offers clarity, walking us through various loan repayment plans. We also touch upon the intricate dance between loan payments, taxable incomes, and retirement savings. With Lauryn's wealth of knowledge, we discuss actionable steps and encourage everyone to tap into available resources, like Student Loan Planner, to navigate their unique financial situations and potentially save thousands in the process.
About our guest:
Lauryn Williams, CFP® is a 4-time Olympian and the first American woman to medal in both the Summer and Winter Games. Currently, Lauryn is a consultant for Student Loan Planner and the founder of the financial planning firm Worth Winning and the “Worth Listening” podcast.
Links:
Studio Loan Planner
More about Lauryn Williams
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TRANSCRIPT:
Naseema McElroy: [00:00:00] People, it has been a minute, but I am back with Lauryn Williams of student loan planner. She is going to break down all of the confusion. That is student loans right now, because let me tell you, I don't even know what's going on. I thank God every day that I don't have student loans and I used to really follow.
Like all the student loan policies and what's going on in the changes, but in all honesty, I am confusion. I am so confused. And if this is something that I really look into and I'm confused, I'm sure that you're confused too. So, first of all, Hey, Lauryn, what's up girl?
Lauryn Williams: Hey, so happy to be on and you're all right. The only thing that has consistent about student loans is change. So you right to be confused. We are keeping up as best we can over a student loan planner, keeping the people updated. We're going to help everybody be less confused today.
Naseema McElroy: Yes, and that is our goal to kind of just put you back on track to this crazy with this craziness that's been going [00:01:00] on because there has been constant change and we are recording this on the 4th day of student loan payments being resumed on October 4th. And so I just thought it was important for Lauryn to come on because.
Yeah, we need help. We need clarification. So let's, I don't know how far back you want to go. I'm gonna let you take that Lauryn, but you know, catch us up.
Lauryn Williams: Okay, let's go. So as of March 13th of 2020 student loans went on pause. There was no more reason to pay your loans unless you had privately held FFEL loan. So everybody who didn't get the pause and you're like, wait, why is everybody else not to pay their loans, but I have to pay mine?
You have privately held FFEL loan. And the key thing there is that this is A great time for you to be able to consolidate your loans. Why? Because there's this thing called the income driven account adjustment that is happening right now. So this is applicable to a lot of people, but I wanted to start way back in the 2020s because that's when everybody's yes, I don't have to pay these loans no more.
But also some [00:02:00] people were like, Oh my goodness, why am I still paying my loans? And you missed out all of these last three years while nobody else was paying, but there is something right now that's going to help you a good bit. So maybe we should just start by talking about the income driven adjustment waiver.
And then we can go, you know, A few different other places that that work.
Naseema McElroy: That sounds good.
Lauryn Williams: Okay. So income driven adjustment repayment plan is that everybody is going to get an adjustment on their account as if they've been on an income driven plan. So that is IBR income based repayment. ICR income contingent pay as you earn.
Everybody's all up in the arms about the new save plan. Repay as a plan has gone away completely. So if you've ever provided your income to the government and said, calculate my payment based on what I make. You are on an income driven repayment plan, but there's a lot of people that didn't choose that.
So there's extended graduated and standard that are not at all tied to your income. What they're doing though with this account adjustment is saying, Hey, doesn't matter what payment plan you on. We're going to count it toward you being on an income driven plan because we realized that we didn't explain to people [00:03:00] how good income driven plans were from the very beginning.
So we're going to get everybody updated, give you all a fresh payment count. And then we're going to say, Hey, you know, the rules going forward, here's where you are and you can decide how you want to move accordingly. So that is a really big deal.
Naseema McElroy: Look at that accountability.
Lauryn Williams: Yeah, they're doing better. We got to give them a little you know, we don't want to give our government too many props, but they did something right when they tried to fix this.
Naseema McElroy: Right,
Lauryn Williams: The other piece of this puzzle is that a lot of people love to bury their head in the sand and say, I don't care about these student loans.
I'm not going to deal with them. They'll just die with me, whatever. So you've been in forbearance or deferment quite a bit since you've been out of school. Well, they're also going to give you credit for forbearance. Forbearance is not paying your loans. So, yes, they are, they were rewarding that bad behavior.
So, here it is. If you had 12 months consecutively of forbearance, or you had at least 36 months in aggregate, so that's I was in forbearance, then I paid for a couple months, then I was like, nah, I'm not doing this again. Stop and back and forth, back and [00:04:00] forth. If in aggregate you have 36 months of forbearance, they are also going to give you credit as if you've been paying all along.
So this is a huge deal toward these IDR plans because they're either 20 or 25 years. So imagine you spent five years in forbearance. That's five years of credit that you didn't pay a dollar on your loans. Count it towards your 25 years on the income driven plan. So this is the time to pull your head out of the sand because there's a lot of things that can really, really help you get where you need to go, get affordable payment plan because it is based on income and get headed on the right track.
Naseema McElroy: right. So this is like a crucial point as far as repayments because this is okay, we did all these things in the back and you had these years to not pay or pay. But, right now we're kind of leveling the playing field. We're starting over now you have better information and you can move accordingly.
But I know a lot of the payment plans kind of we're changing up during this time. And I know that there's some specific to nurses as well that have kind of changed. Can [00:05:00] you speak on that?
Lauryn Williams: Absolutely. So let's start with the save plan. The save is the new plan that I said, everybody's up in arms about. They're pretending like this is going to be end all be all save everybody plan and it is going to help a lot of people, but like I said, it depends sort of situation.
So let me tell you what the same plan does. It is a 25 or a 20 year plan, depending on if you just have graduate school loans or undergraduate loans. So if you're only undergrad. Then you can pay on this plan for 20 years instead of 25 years. If you consolidate your graduate and your undergraduate together, they're going to move you to that 25 years.
So be mindful that consolidations have various different effects. But the cool thing about the SAVE plan is that They are calculating your payment by taking out 225 percent of the federal poverty line. So let me give you an example.
Let's say that you are a nurse you're earning, let's say 80, 000 a year and you have two children.
Well they use the federal poverty line to be able to take out the amount of income. And then they do the [00:06:00] calculation based on what's left over. So you want to go for public service loan forgiveness as an example. So you do Mary filing separately. You get your spouse out of the scenario. Your family size is three.
This gives you a 55, 000 reduction in your income. So you remember my example, you're making 80, 000. So we took 55 out. What does that leave? 25, right? Is my math good? So you're paying your student loans based on 10 percent or 5%, depending on your situation, of your income based on 25, 000. So that's like a 100 payment.
Naseema McElroy: Whoa, that's major and just for context, let me just tell you the difference. So, when I was on public service loan forgiveness, my payments were 1900 dollars a month.
Lauryn Williams: Right. Exactly. Y'all don't you don't want to be in that boat. You want to be in a 100 boat.
Naseema McElroy: Yes. 100. 1, 200. I'll take 100. Thank you.
Lauryn Williams: But also, you know, you probably have some good income as well. So,
Naseema McElroy: Right.
Right.
Lauryn Williams: don't want to encourage anyone to not earn money. So like you got to do what you got to do to feed your family, save for retirement, you know, be [00:07:00] financially responsible. But like you said, this example, I'm choosing someone who had 80, 000 of income.
That's not too bad.
Naseema McElroy: That's not shabby.
Lauryn Williams: and you can probably afford more than 100 a month when you make 80 grand, but why are we going to give the government more than we need to? Absolutely not. Let's do,
let's not do that.
Naseema McElroy: you said something really important in there. And I don't want to forget to ask you about. So if you want to qualify for this in your Mary, do you have to file Mary filing separately?
Lauryn Williams: It is a high likelihood that you are going to need to do marry filing separately. If your spouse does not have loans all you're doing is keeping your spouse's income in the mix. And that is going to be just you paying a higher amount on your loans based on two incomes versus one. So you absolutely want to do Mary filing separately.
If you have a spouse that does not have any student loan debt, if they do have student loan debt, it's still a "it depends" situation. In general, though, you probably are going to be able to do Mary filing jointly.
Naseema McElroy: Okay. And then so the thing I know from personal experience is Mary file and separately when you do that, you lose other exemptions. So [00:08:00] it's kind of 1 of those things I would say, if that's something that's your question, if you're married and you're paying back your loans, it's probably a good time to sit down with a CPA and see, if you're trading off one thing for another, and if it's really worth it, because you will, like I said, like I have lost a lot of exemptions from filing that way. So yeah, I just wanted to point that out because people would just, you know, be like, okay, I could do this and just think that it's just separating their spouse's income, but also you give up something.
So there's some trade offs there that may or may not apply and things have changed. That was, I did that probably about. I don't know, 5, no 8 years ago. So I'm sure things have changed, but that's a reason to tap in with the CPA. So they can really go over your personal finances and your tax
Lauryn Williams: And you brought up the best point is that your financial picture is a whole picture. It is not one thing in a silo. All of these things work together. So you're like, I don't talk to my spouse about money [00:09:00] or this, my student loans and they don't want to be bothered with it. Okay. Everything is married together regardless of how you want to handle it.
If you've got two different bank accounts, et cetera. And also, like you said, now we brought taxes into the scenario that is related to your student loans. Some people think Oh, my student loans over here, my taxes over here, my earnings. Nope. All of these things work together. So this is a time to sit down and look at your full financial picture.
Get on the same page because guess what else can happen with student loans? You can put money into your 401k or your 403b assuming your PSLF qualify. And what does that do? That gets you ready for retirement. That drops your adjusted gross income, which is the number that they're going to use to calculate your student loan payment, but also a lower adjusted gross income means a lower tax liability.
So that's three for one hack right there. So we're talking about, like you said, Mary filing separately is like something that could be a little bit disadvantageous, but if you're taking advantage of something that I just mentioned to you, that has three different advantages and That might be one of the things that makes the, the cost outweigh the benefit.
The other thing is a lot of people don't know that you can amend your tax returns. So [00:10:00] you can go with your CPA, do merit filing separately, turn it in for student loan purposes, and then come back two years later and say, nope, we want to be merit filing jointly and pick up whatever you missed out on from a.
A tax perspective and not to make it a little bit more complicated, but one of the other things you can't do when you do marry filing separately is the Roth contributions. So people are like, Oh man, I can't do that anymore. And it's no, you can't do it the normal way. You need to do the backdoor Roth strategy.
Exactly. So you see how all of these things are like mixed in the puddle together. You got to get your whole picture to work in, not just your student loan pieces.
Naseema McElroy: Yeah, I love that. First of all, I did not know that you couldn't do a a regular Roth, if you were married filing separately, like that's game. Thank you so much. Put that boom. But now I know that, but just I can't technically do a Roth IRA because I make too much money backdoor.
There it is. And it's done, I do it every year. But another thing that's super important is, you know, how I talked about my payment being 1900 a month. [00:11:00] Well, that was because yes, I was making so much money, but what I wasn't doing during that time is decreasing my taxable income now, where I work specifically is a unique unicorn kind of place where we're government employees.
So we have a 403B, a 457 we don't have an HSA, which it would make it even the best, but, but those 2 things in itself is about 40, 000 dollars in tax savings. And then you do the poverty level reductions that they have my student loan payments, according to these new rules would have been way, way, way, way, way, way less.
It might not have been a 100 dollars, but it wouldn't have been anywhere close to 1900 dollars.
Lauryn Williams: That is so true. Like I said, it's a really good point. And it's the thing that should motivate people. Like a lot of people come to us and they're like, Oh my goodness, I can't save for retirement. Because my student loans are weighing me down. It's actually, if you redirect the money over here, the student loan payment will go down, and it'll help you out even more.
But to that point, one of the things I was talking about was the nurses, and how things are going to be a little bit different for [00:12:00] them. A lot of nurses only have undergraduate debt, so it's a really small student loan debt. And traditionally, you've not been able to get public service loan forgiveness because you make much more than what that debt is.
But to go back to that Save plan, if it's only undergraduate debt, it's also going to be a 5 percent of your income payment. So we were just talking about 10 percent of income as a payment. 5 percent of income is going to start July of 2024. So this is a whole real deal Holyfield hack that like a lot of people who only have this 20 or 30 grand of undergraduate debt are going to be able to take advantage of because you got that 100 payment in my example, you'd pay that for 10 years.
What is that? 12, 000? Of your 30 grand that you had, you borrowed even though you're making 80 grand of income in my example, that is Oh my goodness. So you want to be aware of these things that are coming up. Like you said, you can't take advantage of that 5 percent until July of 2024, but you're going to need to opt in.
And while I'm thinking about July of 2024, there's actually one other thing I wanted to say. This is related to the pay as you earn plan. So that's a plan that's [00:13:00] been around for a while. You might already be on it. It is going away as of July of 2024. So if you're already on it, don't panic. But you might be one of the people that's eligible for pay as you earn.
That means you borrowed exclusively after October 1st of 2007. And this might be a plan you need to opt into before it goes away. Because if it's available to you, you can still get on it. But once July passes, you're not going to be able to get on it. You're only going to be able to choose save.
Which, like I said, save's not the worst thing in the world. But for some people, pay is going to be better than save. And that's where us doing the math comes into play.
Naseema McElroy: Right so Break this down for me. Okay, so you we talked about save we're talking we've talked about pay We've talked about just public service loan forgiveness in itself like Are these things the same thing? Are these things different things? Because I think people are just so overwhelmed by all these terms.
They don't even know an income driven repayment. They, it's like all these I just kind of want to break it down back to basic. So, [00:14:00] we can make sure that everybody's on the same page, so they can actually take action immediately.
Lauryn Williams: Amen. Hallelujah to that. You are right because it is a little bit confusing. So IDR income driven is the name of the program underneath the umbrella of IDR. There's going to be four different payment plans that are going to be tied to your income. So you're going to need to choose based on the way that those four different programs work.
We've only talked about two of them today. The other two are pretty much obsolete, so we're not gonna spend a lot of time on them, but there are four different payment plans that you can opt into that are tied to your income. And on those plans, you pay for either 20 or 25 years, depending on how that particular plan is set up.
And then after that you get forgiveness of whatever's left over. And so that forgiveness is what it's going to be called taxable forgiveness. You don't work at a public service place when you are pursuing taxable forgiveness. So you work at Starbucks, any for profit place, normal job that you have that doesn't have public service available.
You can pursue 20 or 25 year forgiveness. And then you pay taxes on that forgiven amount. So [00:15:00] that's a key piece of the puzzle as well, because you want to be saving up for that tax liability. In contrast, the public service loan forgiveness program, it one of the four requirements is that you be on an income driven plan.
So what I just talked about IDR, one of those four plans, you pick one of them, but you're not doing it for 20 or 25 years. You're only doing it for 10 because you're under the public service umbrella. Every year at your employer, you're going to turn in a form that says, you know, I want to certify my employment.
They're going to say, yep, you still work here and they're going to keep counting your payments until you get to 10 years of payments. And then you get your loans forgiven and that is tax free. So if you're out looking for jobs right now and you're like, Oh, should I go to this place or that place?
You might want to consider the nonprofit route versus the for profit route because it's 15 years sooner that your loans could be forgiven and without taxes. So that's a hack right there.
Naseema McElroy: Yes, that's a big hack. That's a big hack, but I just Want to break down and like an example Of like we were talking about like with the nurses and how much [00:16:00] they can pay back, right? So you've been a nurse for 10 years. You've kind of like had your loans on and off of You know deferment or forbearance and so now You were recommending that people sign up for the save plan
Lauryn Williams: It is highly likely that the save plan is going to be good for you. So, yeah, so to that point, we talked about kind of a newer nurse that, only has undergraduate and public service being available to them. Yeah, like I said, if you've been in the game for a bit, you're like, what is, how do all these things affect me?
Well, they're going to count your payments. So that's the IDR adjustment. And let's say like you, to your point that you have about 10 years of credit, that means you have 15 years to go. Or you could have 10 years to go depending on when you borrow. So let's say you've been saying we're 10 years. That would be, yeah, we're in 2022, 2023 right now.
So 10 years ago would have been 2013. So you're well after you said you borrowed in, you know, four years before that was that 2009 something you borrowed after 2007 is what we're going to say. And you've already been paying on your loans for 10 years. So what that means [00:17:00] is that you've got. Only 10 years to go because you're pay as you earn eligible.
So they're going to count all the credit. Like I said, no matter what you did for that 10 years Hither, thither, all over here, there, you know, pay for a week, pay for a day. All of it's going to count if you're on extended plan. You got 10 years of credit 10 years to go. And now you need to pay 10 percent of your income.
And then... at the end of that 10 years. So now we're in 2033, you're going to get your forgiveness and whatever is left over is going to be taxable. So that's the next thing we're waiting for the government to come down the pipeline and say, Hey y'all, you don't have to pay this taxes, but they haven't said that yet.
So I highly recommend that you say for the tax liability, wait for them. We believe that it's going to happen, that people are not going to have to pay the tax liability, but we have to wait until they actually tell us like, this is not a thing anymore. The reason we believe it is because from now until the end of 2025.
Anyone who gets forgiveness as a result of all these different rules is not having to pay the tax liability. So they've already set precedent, but that's the key piece of the puzzle. So what you're going to want to do is this nurse that's 10 years in the [00:18:00] game Is make sure that you're maxing out your 401k your 403b whatever it is that you have available getting your payment as low as possible Considering marry filing separately if you have a spouse and then just paying as little as humanly possible toward these loans while you take care of your other financial needs And also putting some money aside for the tax liability over the next 10 years, that account adjustment is going to come automatically.
They're going to notify us at some point in 2024. So they're working on that behind the scenes. You should see a little tracker in your portal. When you log in, no matter what service are you have that says, Hey, you have 120 of 240 payments or whatever the case may be. So that's coming down the pipeline as well, because that's one of the things that's been very confusing for people is like.
I don't know. I just been paying. I don't know how long I have to go, how long I've been doing this. But they're going to be counting that for you as well.
Naseema McElroy: so, what if that same nurse is 10 years in the game, but they are eligible for public service loan forgiveness, but they just never applied for it?
Lauryn Williams: Ooh. Yes. This is the thing because this [00:19:00] is so many cases that we are dealing with right now. So those FFEL loans I talked about at the beginning, they didn't qualify for public service loan for kids. They have four requirements. You have direct loans. You work at a qualified employer. You're on an income driven plan.
And you make 120 payments. So you might've had those FFEL loans that are not direct and you didn't qualify. You might've had extended or graduated plan that didn't qualify. Right now, all of that qualifies for public service loan forgiveness. So what you need to do is consolidate your loans and sign up for public service loan forgiveness based on all that stuff that you've done in the past.
And your loans can be immediately forgiven assuming you've been working at a place for 10 years. So this is a huge deal like we are wiping people's loans out tax free and you just didn't know so 501c3 any government agency you were in and out You didn't know this was a thing you thought that you couldn't because you had the privately held FFEL loans and somebody told you're gonna have to start all over again Those were the rules once upon a time.
But right [00:20:00] now you've got till 1231 to correct those wrongs and really, like you said, either wipe your loans out completely or get credit for things that probably would not have counted previously. So this is a time to tune in for sure.
Naseema McElroy: yes, definitely. So I'm just like, listen, a lot of people and a lot of people I know is Oh my God, I just logged in all my loans
Lauryn Williams: Right.
Naseema McElroy: Gone, like I don't owe anything but there was some work that they did initially I think like last was it last october or october before
Lauryn Williams: Yeah. They, they 31st to figure this out and then they extended it and didn't tell anybody that they extended it. So like you said, this is like an undercover. It still exists, but you have to know that it still exists.
Naseema McElroy: Got it. Okay. Yeah, I know. Like, when they first expanded it for example, Kaiser is a big organization that a lot of nurses work for, but it's technically it's a, it's a not for profit, but it under their umbrella. It's like a for profit organization. So a lot of nurses weren't qualified for it. And so I know that Travis was [00:21:00] saying that the Kaiser nurses now were eligible to pay to sign up for.
Lauryn Williams: Yeah, so in Texas and California, there's a state law that says health care professionals can't be directly employed the for the non for profit. And so they're employed by a for profit, even though they go and do their job every day at the not for profit. And so they put special instructions in specifically for people who have situations like this that say, hey, if your state is not allowing you to do this, we're going to allow you anyway.
So find out the EIN number of that not for profit part that you go to work at every day. Fill out the public service paperwork and you too can qualify for public service loan forgiveness. So yeah, that is absolutely right. He said there's so many changes that are happening right now.
Naseema McElroy: Yes, and I just think that still it's it can be overwhelming. It can be confusing, but this is definitely a call to action that right now. You need to make sure if you have loans, student loans, outstanding in any capacity, you need to make [00:22:00] sure that you're taking action as soon as possible before this month is over at the very least.
And if this is all confusing and you don't know what to do, there's a solution because as a loan planner, you guys can help them. So can you walk through how somebody can work with you? What that looks like, what it costs and the successes that you guys have had.
Lauryn Williams: Absolutely. So as student loan planner, we are now well over, I think 16, 000 consults that we've done. So we're out here fighting the good fight. Helping people figure out their student loan situations and what we do is a 60 minute call where we work on creating a customized plan based on your particular situation.
Ahead of that call, you will give us your NSLDS file, which you can find at studentaid. gov and you'll fill out a form so that we have the information we need to prepare. you show up at a Zoom call for 60 minutes and like I said, we work some magic and tell you, hey, with clarity, this is what you need to do next.
Here's what you qualify for. Here's how many of those income driven repayments that you have. Up to this point, here's when you can expect forgiveness based on your situation. [00:23:00] Yes, you need to do Mary filing separately or no, I don't recommend that, I recommend the pay plan versus the save plan.
And here's why we walk through all of that information with a borrower to help them make sure that they're super duper clear on makes the most sense. Because like you said. We've covered a lot today, but it's not one size fits all. Everybody's got their own financial situation, their own set of things coming up.
You know, life is happening and life is over here. Lifing for sure.
Naseema McElroy: For sure.
Lauryn Williams: So payment, income is changing all kinds of stuff. So that's what we help you with that student loan planner. And you can find us at studentloanplanner. com. We've got blogs. We've got a podcast. If you want to get educated and get information.
But like you said, the key takeaway is that, like you said, now is the time for action. I know that a lot of people struggle with mental health related to these student loans. They're just like, oh my goodness, like I, like you said, I just can't. But if ever you wanted to really look at your situation, figure out how you can change the trajectory of your overall finances and pull your head out of the sand related to the student loans, the time is now.
Because I don't want you to miss out on the opportunities that can help you get ahead.
Naseema McElroy: So the first time [00:24:00] I had Travis on this podcast he broke down like how much I could have been saving. If I had stayed on my PSLF and I had been contributing to my retirement and all this kind of stuff, instead of aggressively paying down my debt. And it was somewhere in the 80, 000 range. So these aren't small numbers we're playing with.
But I think it's lovely that you guys. Just charge a flat fee up front. It's very transparent and you guys are saving people like thousands and thousands of dollars. I know you guys keep a record, like a total, like how much you've saved people, right? Like it has to be in the trillions.
Yeah.
Lauryn Williams: we were at 2. 6. Oh, no. Yes. 2. 6 billion advised on and then 630 million in savings right now is where we at our last count.
Naseema McElroy: That
Lauryn Williams: been working overtime because of the pause ending. So I'm sure that number is already drastically different.
Naseema McElroy: Yes, that is [00:25:00] smooth. Listen, that ain't small numbers. And so I highly advise you talk to student loan planner, reach out directly to them. I'll have a link in the podcast for you guys to schedule a consultation. But are there people that you typically wouldn't work with, like people that probably couldn't use your services.
Lauryn Williams: I would say if you are fresh out of school and you already earn at least two or three times what you that's usually when it's like you make gargantuanly more than you owe and you can pay your loans back, get on a budget. And, you know, take care of things. But like I said, with these new rules that they've lowered the number so much.
And like you said, they're giving people credit for this IDR waiver. It's kind of like the wild, wild West right now. We've seen earners that are high earners to your point, the Kaiser doctors, you know, they come to us with six, 700, 000 of income and maybe 70, 000 of debt that they've had left over that they were slowly paying off.
And because of this new rule, their PSLF qualified right now. They're going to get full forgiveness of that last 70 grand that they got left hanging out there. Or they they're two years away, so they can pay on a [00:26:00] standard plan for two years and they still, are not going to pay the full 70 grand over that course of time.
So, you know, there used to be a rule. And like I said, if it's Gart, it's generally, if you owe way more than if you earn way more than you owe. But right now peace of mind is worth paying for and it's something where you might want to make sure that you didn't even have to pay that 70 grand.
What if you could pay only 20 of that 70 and be better off? To your point, that's 50 grand of savings that you didn't even know was available to you. So
Naseema McElroy: Exactly, exactly. It's well worth the fee. But what about people that have strictly private student loans?
Lauryn Williams: yeah, that, that's a good point. So if your loans are already private, so that's like a Discover, SoFi, Earnest, Common Bond. All of those places, your only option is to pay your loans you're looking for the opportunity for, to get the best interest rate. You can refinance at any time, when interest rates go down.
So one thing that people don't know about private loans is that it's not like a mortgage. So there's no origination fees. There's no closing costs and all these extra things related to, it's Oh, I have a 6 percent interest rate. I'm going to get a 5 percent interest I want that. You can hop [00:27:00] around the companies as much as you need to in order to be able to take advantage taking those smaller interest rates.
So that's what you should be thinking about. But yeah, that's a person that probably would not need to book a call with student loan planner.
Naseema McElroy: But don't you guys help people with private student loans find better rates as
well?
Lauryn Williams: Absolutely. So on our website, we have a link you can click and, you know, we have a nice table laid out. It is completely updated on a, on the daily. And you can also get cash back for refinancing your loan. So if you're in that refinancing bucket, you already have private debt, or like I said, you earn gargantuanly more than you owe than taking a look at that link.
If you want, like I said, that peace of mind and just being talked through those things, we, we have people that do have private debt only, and they will book the 60 minute call just for the peace of mind, just to understand how things work. Like I said, it's all up to you and what, what are you going to value?
You know, if you value the expertise of another person and making sure that you're on the right path, then this is absolutely the place for you because that's what we're about is getting people clarity.
Naseema McElroy: And what about those people that, you know, a couple of years back student loan, like private student loan rates were [00:28:00] crazy low. And so a lot of people refinanced out of federal student loans into private student loans. What's your general rule of thumb around
that?
Lauryn Williams: Yeah, so there's no going back. If you already have private loans, you actually the worst call that I ever had to do was a nurse who went to a brunch with her girls and her friend was bragging about how she had just got a new low interest rate and she like gave her her little referral link and said like you should do it too and she came to us like three months later and was like, yeah, I heard about this public service thing and I wanted sign up for it and I don't understand it.
And she had completely private loans and there was nothing, it was the worst call I've ever had to sit through because, I mean, and she was struggling already paying the private loan payment, even though she had this great low interest rate, and she could have been on PSLF with an affordable payment and done in 10 years, so,
Naseema McElroy: And not have to pay all these years.
Lauryn Williams: yeah, so,
Naseema McElroy: Oh, so this is why, first of all, we don't bury our [00:29:00] heads in the sand when it comes to debt. And if we have questions, we go to an expert and I know it's sometimes easier to avoid these things, but avoiding them does not make them go away. Oftentimes it just makes the situation worse.
So there are experts out here and I'm telling you they know the rules. You see how Lauryn can just off the top of her head, like spit these new rules, even though they're changing all the time they know this stuff, but they, they are going to be able to hone it in specific to your situation.
Personal finance. Is personal, like you have your own unique situation. Everybody does. And so you can't just take 1 person's advice and apply it to yours and think it's going to work the same. You're often going to end up having not so great results. And so I highly recommend student loan planner. I've been working with them for a long time.
Y'all the homies over there. So I always send people your way. Yes. Thank you guys. So, again, just run down how people can [00:30:00] get in contact with you guys, what resources you have and, you know, all that good
Lauryn Williams: Yeah, so as a result of listening to this podcast today, if you click the link that is going to be down in the show notes, but yes, you can find us at student loan planner. We have a student loan planner podcast. We have tons of blogs and we also have tons of other information that is going to be available if you want to educate yourself and we will help you take care of your student loan situation.
In a 60 minute consultation.
Naseema McElroy: Anyway, we'll wrap it up, but thank you so much, for coming on the podcast. Like you're dropping so many gems, but like really the thing that I really want people to take away from is don't do nothing. Like not to do that's a double negative do something.
Lauryn Williams: Doing nothing is going to cost you a lot of money. So do something and save yourself some money. This is a great way to create wealth. Just immediately invest in yourself today. Come on. All
Naseema McElroy: Yes, all right. All right. Well, thank you so much Laura for being here and I'll make sure we have that link in the show [00:31:00] notes so people can save that hundred dollars for that
console.
All
Lauryn Williams: right. Enjoy the rest of your day.
Naseema McElroy: Thank you.
of the people that's eligible for pay as you earn.
That means you borrowed exclusively after October 1st of 2007. And this might be a plan you need to opt into before it goes away. Because if it's available to you, you can still get on it. But once July passes, you're not going to be able to get on it. You're only going to be able to choose save.
Which, like I said, save's not the worst thing in the world. But for some people, pay is going to be better than save. And that's where us doing the math comes into play.
Naseema McElroy: Right so Break this down for me. Okay, so you we talked about save we're talking we've talked about pay We've talked about just public service loan forgiveness in itself like Are these things the same thing? Are these things different things? Because I think people are just so overwhelmed by all these terms.
They don't even know an income driven repayment. They, it's like all these I just kind of want to break it down back to basic. So, [00:14:00] we can make sure that everybody's on the same page, so they can actually take action immediately.
Lauryn Williams: Amen. Hallelujah to that. You are right because it is a little bit confusing. So IDR income driven is the name of the program underneath the umbrella of IDR. There's going to be four different payment plans that are going to be tied to your income. So you're going to need to choose based on the way that those four different programs work.
We've only talked about two of them today. The other two are pretty much obsolete, so we're not gonna spend a lot of time on them, but there are four different payment plans that you can opt into that are tied to your income. And on those plans, you pay for either 20 or 25 years, depending on how that particular plan is set up.
And then after that you get forgiveness of whatever's left over. And so that forgiveness is what it's going to be called taxable forgiveness. You don't work at a public service place when you are pursuing taxable forgiveness. So you work at Starbucks, any for profit place, normal job that you have that doesn't have public service available.
You can pursue 20 or 25 year forgiveness. And then you pay taxes on that forgiven amount. So [00:15:00] that's a key piece of the puzzle as well, because you want to be saving up for that tax liability. In contrast, the public service loan forgiveness program, it one of the four requirements is that you be on an income driven plan.
So what I just talked about IDR, one of those four plans, you pick one of them, but you're not doing it for 20 or 25 years. You're only doing it for 10 because you're under the public service umbrella. Every year at your employer, you're going to turn in a form that says, you know, I want to certify my employment.
They're going to say, yep, you still work here and they're going to keep counting your payments until you get to 10 years of payments. And then you get your loans forgiven and that is tax free. So if you're out looking for jobs right now and you're like, Oh, should I go to this place or that place?
You might want to consider the nonprofit route versus the for profit route because it's 15 years sooner that your loans could be forgiven and without taxes. So that's a hack right there.
Naseema McElroy: Yes, that's a big hack. That's a big hack, but I just Want to break down and like an example Of like we were talking about like with the nurses and how much [00:16:00] they can pay back, right? So you've been a nurse for 10 years. You've kind of like had your loans on and off of You know deferment or forbearance and so now You were recommending that people sign up for the save plan
Lauryn Williams: It is highly likely that the save plan is going to be good for you. So, yeah, so to that point, we talked about kind of a newer nurse that, only has undergraduate and public service being available to them. Yeah, like I said, if you've been in the game for a bit, you're like, what is, how do all these things affect me?
Well, they're going to count your payments. So that's the IDR adjustment. And let's say like you, to your point that you have about 10 years of credit, that means you have 15 years to go. Or you could have 10 years to go depending on when you borrow. So let's say you've been saying we're 10 years. That would be, yeah, we're in 2022, 2023 right now.
So 10 years ago would have been 2013. So you're well after you said you borrowed in, you know, four years before that was that 2009 something you borrowed after 2007 is what we're going to say. And you've already been paying on your loans for 10 years. So what that means [00:17:00] is that you've got. Only 10 years to go because you're pay as you earn eligible.
So they're going to count all the credit. Like I said, no matter what you did for that 10 years Hither, thither, all over here, there, you know, pay for a week, pay for a day. All of it's going to count if you're on extended plan. You got 10 years of credit 10 years to go. And now you need to pay 10 percent of your income.
And then... at the end of that 10 years. So now we're in 2033, you're going to get your forgiveness and whatever is left over is going to be taxable. So that's the next thing we're waiting for the government to come down the pipeline and say, Hey y'all, you don't have to pay this taxes, but they haven't said that yet.
So I highly recommend that you say for the tax liability, wait for them. We believe that it's going to happen, that people are not going to have to pay the tax liability, but we have to wait until they actually tell us like, this is not a thing anymore. The reason we believe it is because from now until the end of 2025.
Anyone who gets forgiveness as a result of all these different rules is not having to pay the tax liability. So they've already set precedent, but that's the key piece of the puzzle. So what you're going to want to do is this nurse that's 10 years in the [00:18:00] game Is make sure that you're maxing out your 401k your 403b whatever it is that you have available getting your payment as low as possible Considering marry filing separately if you have a spouse and then just paying as little as humanly possible toward these loans while you take care of your other financial needs And also putting some money aside for the tax liability over the next 10 years, that account adjustment is going to come automatically.
They're going to notify us at some point in 2024. So they're working on that behind the scenes. You should see a little tracker in your portal. When you log in, no matter what service are you have that says, Hey, you have 120 of 240 payments or whatever the case may be. So that's coming down the pipeline as well, because that's one of the things that's been very confusing for people is like.
I don't know. I just been paying. I don't know how long I have to go, how long I've been doing this. But they're going to be counting that for you as well.
Naseema McElroy: so, what if that same nurse is 10 years in the game, but they are eligible for public service loan forgiveness, but they just never applied for it?
Lauryn Williams: Ooh. Yes. This is the thing because this [00:19:00] is so many cases that we are dealing with right now. So those FFEL loans I talked about at the beginning, they didn't qualify for public service loan for kids. They have four requirements. You have direct loans. You work at a qualified employer. You're on an income driven plan.
And you make 120 payments. So you might've had those FFEL loans that are not direct and you didn't qualify. You might've had extended or graduated plan that didn't qualify. Right now, all of that qualifies for public service loan forgiveness. So what you need to do is consolidate your loans and sign up for public service loan forgiveness based on all that stuff that you've done in the past.
And your loans can be immediately forgiven assuming you've been working at a place for 10 years. So this is a huge deal like we are wiping people's loans out tax free and you just didn't know so 501c3 any government agency you were in and out You didn't know this was a thing you thought that you couldn't because you had the privately held FFEL loans and somebody told you're gonna have to start all over again Those were the rules once upon a time.
But right [00:20:00] now you've got till 1231 to correct those wrongs and really, like you said, either wipe your loans out completely or get credit for things that probably would not have counted previously. So this is a time to tune in for sure.
Naseema McElroy: yes, definitely. So I'm just like, listen, a lot of people and a lot of people I know is Oh my God, I just logged in all my loans
Lauryn Williams: Right.
Naseema McElroy: Gone, like I don't owe anything but there was some work that they did initially I think like last was it last october or october before
Lauryn Williams: Yeah. They, they 31st to figure this out and then they extended it and didn't tell anybody that they extended it. So like you said, this is like an undercover. It still exists, but you have to know that it still exists.
Naseema McElroy: Got it. Okay. Yeah, I know. Like, when they first expanded it for example, Kaiser is a big organization that a lot of nurses work for, but it's technically it's a, it's a not for profit, but it under their umbrella. It's like a for profit organization. So a lot of nurses weren't qualified for it. And so I know that Travis was [00:21:00] saying that the Kaiser nurses now were eligible to pay to sign up for.
Lauryn Williams: Yeah, so in Texas and California, there's a state law that says health care professionals can't be directly employed the for the non for profit. And so they're employed by a for profit, even though they go and do their job every day at the not for profit. And so they put special instructions in specifically for people who have situations like this that say, hey, if your state is not allowing you to do this, we're going to allow you anyway.
So find out the EIN number of that not for profit part that you go to work at every day. Fill out the public service paperwork and you too can qualify for public service loan forgiveness. So yeah, that is absolutely right. He said there's so many changes that are happening right now.
Naseema McElroy: Yes, and I just think that still it's it can be overwhelming. It can be confusing, but this is definitely a call to action that right now. You need to make sure if you have loans, student loans, outstanding in any capacity, you need to make [00:22:00] sure that you're taking action as soon as possible before this month is over at the very least.
And if this is all confusing and you don't know what to do, there's a solution because as a loan planner, you guys can help them. So can you walk through how somebody can work with you? What that looks like, what it costs and the successes that you guys have had.
Lauryn Williams: Absolutely. So as student loan planner, we are now well over, I think 16, 000 consults that we've done. So we're out here fighting the good fight. Helping people figure out their student loan situations and what we do is a 60 minute call where we work on creating a customized plan based on your particular situation.
Ahead of that call, you will give us your NSLDS file, which you can find at studentaid. gov and you'll fill out a form so that we have the information we need to prepare. you show up at a Zoom call for 60 minutes and like I said, we work some magic and tell you, hey, with clarity, this is what you need to do next.
Here's what you qualify for. Here's how many of those income driven repayments that you have. Up to this point, here's when you can expect forgiveness based on your situation. [00:23:00] Yes, you need to do Mary filing separately or no, I don't recommend that, I recommend the pay plan versus the save plan.
And here's why we walk through all of that information with a borrower to help them make sure that they're super duper clear on makes the most sense. Because like you said. We've covered a lot today, but it's not one size fits all. Everybody's got their own financial situation, their own set of things coming up.
You know, life is happening and life is over here. Lifing for sure.
Naseema McElroy: For sure.
Lauryn Williams: So payment, income is changing all kinds of stuff. So that's what we help you with that student loan planner. And you can find us at studentloanplanner. com. We've got blogs. We've got a podcast. If you want to get educated and get information.
But like you said, the key takeaway is that, like you said, now is the time for action. I know that a lot of people struggle with mental health related to these student loans. They're just like, oh my goodness, like I, like you said, I just can't. But if ever you wanted to really look at your situation, figure out how you can change the trajectory of your overall finances and pull your head out of the sand related to the student loans, the time is now.
Because I don't want you to miss out on the opportunities that can help you get ahead.
Naseema McElroy: So the first time [00:24:00] I had Travis on this podcast he broke down like how much I could have been saving. If I had stayed on my PSLF and I had been contributing to my retirement and all this kind of stuff, instead of aggressively paying down my debt. And it was somewhere in the 80, 000 range. So these aren't small numbers we're playing with.
But I think it's lovely that you guys. Just charge a flat fee up front. It's very transparent and you guys are saving people like thousands and thousands of dollars. I know you guys keep a record, like a total, like how much you've saved people, right? Like it has to be in the trillions.
Yeah.
Lauryn Williams: we were at 2. 6. Oh, no. Yes. 2. 6 billion advised on and then 630 million in savings right now is where we at our last count.
Naseema McElroy: That
Lauryn Williams: been working overtime because of the pause ending. So I'm sure that number is already drastically different.
Naseema McElroy: Yes, that is [00:25:00] smooth. Listen, that ain't small numbers. And so I highly advise you talk to student loan planner, reach out directly to them. I'll have a link in the podcast for you guys to schedule a consultation. But are there people that you typically wouldn't work with, like people that probably couldn't use your services.
Lauryn Williams: I would say if you are fresh out of school and you already earn at least two or three times what you that's usually when it's like you make gargantuanly more than you owe and you can pay your loans back, get on a budget. And, you know, take care of things. But like I said, with these new rules that they've lowered the number so much.
And like you said, they're giving people credit for this IDR waiver. It's kind of like the wild, wild West right now. We've seen earners that are high earners to your point, the Kaiser doctors, you know, they come to us with six, 700, 000 of income and maybe 70, 000 of debt that they've had left over that they were slowly paying off.
And because of this new rule, their PSLF qualified right now. They're going to get full forgiveness of that last 70 grand that they got left hanging out there. Or they they're two years away, so they can pay on a [00:26:00] standard plan for two years and they still, are not going to pay the full 70 grand over that course of time.
So, you know, there used to be a rule. And like I said, if it's Gart, it's generally, if you owe way more than if you earn way more than you owe. But right now peace of mind is worth paying for and it's something where you might want to make sure that you didn't even have to pay that 70 grand.
What if you could pay only 20 of that 70 and be better off? To your point, that's 50 grand of savings that you didn't even know was available to you. So
Naseema McElroy: Exactly, exactly. It's well worth the fee. But what about people that have strictly private student loans?
Lauryn Williams: yeah, that, that's a good point. So if your loans are already private, so that's like a Discover, SoFi, Earnest, Common Bond. All of those places, your only option is to pay your loans you're looking for the opportunity for, to get the best interest rate. You can refinance at any time, when interest rates go down.
So one thing that people don't know about private loans is that it's not like a mortgage. So there's no origination fees. There's no closing costs and all these extra things related to, it's Oh, I have a 6 percent interest rate. I'm going to get a 5 percent interest I want that. You can hop [00:27:00] around the companies as much as you need to in order to be able to take advantage taking those smaller interest rates.
So that's what you should be thinking about. But yeah, that's a person that probably would not need to book a call with student loan planner.
Naseema McElroy: But don't you guys help people with private student loans find better rates as
well?
Lauryn Williams: Absolutely. So on our website, we have a link you can click and, you know, we have a nice table laid out. It is completely updated on a, on the daily. And you can also get cash back for refinancing your loan. So if you're in that refinancing bucket, you already have private debt, or like I said, you earn gargantuanly more than you owe than taking a look at that link.
If you want, like I said, that peace of mind and just being talked through those things, we, we have people that do have private debt only, and they will book the 60 minute call just for the peace of mind, just to understand how things work. Like I said, it's all up to you and what, what are you going to value?
You know, if you value the expertise of another person and making sure that you're on the right path, then this is absolutely the place for you because that's what we're about is getting people clarity.
Naseema McElroy: And what about those people that, you know, a couple of years back student loan, like private student loan rates were [00:28:00] crazy low. And so a lot of people refinanced out of federal student loans into private student loans. What's your general rule of thumb around
that?
Lauryn Williams: Yeah, so there's no going back. If you already have private loans, you actually the worst call that I ever had to do was a nurse who went to a brunch with her girls and her friend was bragging about how she had just got a new low interest rate and she like gave her her little referral link and said like you should do it too and she came to us like three months later and was like, yeah, I heard about this public service thing and I wanted sign up for it and I don't understand it.
And she had completely private loans and there was nothing, it was the worst call I've ever had to sit through because, I mean, and she was struggling already paying the private loan payment, even though she had this great low interest rate, and she could have been on PSLF with an affordable payment and done in 10 years, so,
Naseema McElroy: And not have to pay all these years.
Lauryn Williams: yeah, so,
Naseema McElroy: Oh, so this is why, first of all, we don't bury our [00:29:00] heads in the sand when it comes to debt. And if we have questions, we go to an expert and I know it's sometimes easier to avoid these things, but avoiding them does not make them go away. Oftentimes it just makes the situation worse.
So there are experts out here and I'm telling you they know the rules. You see how Lauryn can just off the top of her head, like spit these new rules, even though they're changing all the time they know this stuff, but they, they are going to be able to hone it in specific to your situation.
Personal finance. Is personal, like you have your own unique situation. Everybody does. And so you can't just take 1 person's advice and apply it to yours and think it's going to work the same. You're often going to end up having not so great results. And so I highly recommend student loan planner. I've been working with them for a long time.
Y'all the homies over there. So I always send people your way. Yes. Thank you guys. So, again, just run down how people can [00:30:00] get in contact with you guys, what resources you have and, you know, all that good
Lauryn Williams: Yeah, so as a result of listening to this podcast today, if you click the link that is going to be down in the show notes, but yes, you can find us at student loan planner. We have a student loan planner podcast. We have tons of blogs and we also have tons of other information that is going to be available if you want to educate yourself and we will help you take care of your student loan situation.
In a 60 minute consultation.
Naseema McElroy: Anyway, we'll wrap it up, but thank you so much, for coming on the podcast. Like you're dropping so many gems, but like really the thing that I really want people to take away from is don't do nothing. Like not to do that's a double negative do something.
Lauryn Williams: Doing nothing is going to cost you a lot of money. So do something and save yourself some money. This is a great way to create wealth. Just immediately invest in yourself today. Come on. All
Naseema McElroy: Yes, all right. All right. Well, thank you so much Laura for being here and I'll make sure we have that link in the show [00:31:00] notes so people can save that hundred dollars for that
console.
All
Lauryn Williams: right. Enjoy the rest of your day.
Naseema McElroy: Thank you.
Hey there I’m Naseema
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