Ep 22: How to Pay Off Student Loan Debt w Travis Hornsby

18 Replies

Student loan debt is a HUGE problem facing millions of people – and it continues to grow every year. Today we are joined by Travis Hornsby from Student Loan Planner who shares several options for paying back your student loans, including loan forgiveness.

Travis shares his rule of thumb for deciding whether to pay off your loans or take the forgiveness route, and tips for refinancing your student loan debt. He also gives future college attendees a few things to consider BEFORE choosing a major.

This episode is for anyone with student loan debt – or anyone with kids facing this choice. Travis also shares how you can still pursue Financial Independence while paying down your student loans.

Listen here or on your favorite podcast app.

I immediately shared this podcast with a co-worker who's sister just graduated from medical school. The tidbit about lowering your income level for income-based repayment plans by contributing to pre-tax retirement vehicles was awesome! My husband just graduated law school, so I am sure I will also be sharing it with many of his colleagues in the near future.

I wish I would've known about this when I first graduated and my loans were 2x what I was making!  It would've helped me out two fold - I would've been paying less while paying them off faster AND I would've actually been contributing to retirement out of the gate.  Instead I said "I can't afford any savings because my student loan payment is the price of a mortgage!"

Great episode as usual!

We have some student loan debt and I keep having 2 imaginary conversations in my head.  On one side is Dave Ramsey saying "pay it off" and on the other side is Grant Cardone saying "you don't have a debt problem, you have an income problem" and purchasing more cashflow rental properties to help pay it.

Very informative episode!  Kudos to Travis for recognizing a need in the market and starting such an awesome business!

I would have loved to hear more about ways to avoid going into all that student loan debt in the first place.

My $.02 to minimize acquiring the debt: 1) College choice. Stay in-state and go to a community college that transfers to your public 4 yr U. In some states comm college is free.

2) Take and re-take the SAT and/or ACT to get your scores up to qualify for more scholarships then apply for hundreds of them. Even little $250 scholarships help and are worth your time to apply.

3) Work. It will bring in some $ and make you organize your time. I worked and went to an in-state school, had few school loans and graduated with honors in 3.5 yrs because I worked.  Working will not kill you.  Cheers!

I am wondering what happens to older folks like me. Is there an age limit after which forgiveness works better or is automatic?
I heard there were plans to stop student loan obligations when reaching social security payout eligibility, but that is probably wrong.
Could you please expand on this aspect of people still settled with loan well in their 50’s?
Thx

@Dr_Axel_Meierhoefer as an SL holder I have done a lot of research about forgiveness and payoffs (for Federally funded loans)

I have never seen anything about your age allowing for forgiveness; however, if you are on disability then you may apply for SL forgiveness and receive it.

The only other ways to receive forgiveness are if you have been a teacher or worked for the government for a certain period of time, while not missing a single payment.

I know it’s tricky, but the best way to find out all of the details is to call your particular provider.
This should also help: https://studentaid.ed.gov/sa/repay-loans/forgiveness-cancellation

Originally posted by @Storm S. :

Get a bunch of credit cards or loans use that money to pay off your student loans and then file for bankruptcy

 Ow. I would not recommend this plan of action. Aside from the ethical obligation of repaying your loans, unless you got some distance from the payoff there's a reasonably good chance the bankruptcy judge would figure out what you were doing and refuse to grant relief from the (now) unsecured debt. I personally know someone who tried something similar (not on a student loan) and the court used a clawback to force the formerly paid-off creditor to return the funds to the court, which were then redistributed as the court saw fit, and added the creditor back to the guy's list of creditors that became part of his payment plan. 

Thank you to bigger pockets money!!!

I am a professional that graduated (2012) with 6% on $200,000 debt (grad school alone since I worked my way through undergrad).  Thank you for having this guest! 

I have taken a slightly different route than forgiveness- since I do expect my real estate and other side hustles to affect my income drastically in the future. Starting salary is around $65,000 for my field, so a couple years ago- while under intense stress- I actually came to the realization that my government loans (FAFSA type) would die with me- and I didn't want to waste money trying to pay then down (as I had been trying to with payments over $2500/month). (I wasn't contemplating suicide-but I agree that is is a major issue in my field and have worked with Dr's who have used it as a means to an end- I am glad this issue was also addressed and passionate about prevention!) 

I currently make minimum payments (1200/month) and was just accepted to the Army Reserve -which is an option for veterinarians that offers loan repayment bonuses. 

Fortunately we are a 2 income, no kids (except fur-babies) household (right now) and my husband's military service pays the bills and has health care. 

Looking forward- I am passionate about FI (having just discovered that it is an actual thing because of your podcast!). I love my "job" and will always be in the field- but strive for financial independence so that I can do more humanitarian work and education/legislation within my field. The Army Reserve will allow me to do some of that with the bonus of debt repayment -although at my level the debt pay down isn't a direct goal- I have simply factored in that payment as a monthly expense- and am moving forward with investments! 

Thank you again for introducing me to the FI community! Enjoying the Choose FI and MadFIentist podcasts as well as the book "the Simple Path to Wealth". Wish Mr. Money Mustache had podcasts so I could listen rather than read, but enjoying his stuff too! 

Regarding "Loan Forgiveness"...

While there is variation state-to-state and school-to-school, the choice of what major to pursue, how much it will cost to get a degree in that field and the likely income to be earned as a recent graduate are not all mysteries. There is plenty of data out there to make rationale, conscious decisions on these things. If one does a poor job of considering these factors when choosing to pursue a higher, potentially expensive education, then that is their responsibility and they should own it, not declare the financial aid equivalent of bankruptcy.

And the discussion in the episode about students that knowingly go in racking up incredible debt with the full intent of not paying for it is just ridiculous. I could never respect someone that does this, even if they are playing within “the rules”. Don’t forget that someone is still ultimately paying for their “forgiven debt” – the rest of us are.

Sorry for the long post, I get pretty fired up when it comes to talks about student loans because of some bad advice I received when I graduated and some ignorant/stupid decisions I made early on. I graduated from Vet School in 2011 with about $120000 of debt. We had a professional student loan advisor group come talk to us and it sounded really good to me. Before this, no one had actually talked with me about how to payoff the loans I had accumulated. Also, I had never even thought about looking into it myself. I had been focused on learning my craft. This “Advisor” group (GL Advisors, now out of business after the FBI raised and arrested several of the top people in the company) told me income based repayment (IBR) is the best way because it will lower my payment and will be forgiven after 20 years. I believed them and was trusting because my school had them come talk to us. I did not research it myself which I wish I had now. They never said anything about the taxes when it was forgiven or walking through other options. It wasn’t until 4 years later when the company was no more that I had ended up looking into it myself. I have since seen several other “loan advisors” recommend IBR without talking about the tax implications.

At this point, because of my IBR payments, I owe about $30,000 more than when I started out. I have a plan and should have them paid off in 5-6 years, but if I had just done the regular payment at the beginning, I would only have 3 years left and overall would have paid thousand less in interest.

My main reason for commenting is, this advisor y’all brought on is the most knowledgeable one I have ever heard on loan payments. He genuinely seems to care about what is going to be best for his clients, not just the easiest/cheapest at the beginning. He did not bring anything new to my situation. I have personally worked with several new veterinary graduates and current students trying to help them not make my mistakes. I wish this was the person that came and talked with my class before graduating.

Thanks Derek glad you enjoyed it! Also very glad you "only" graduated with just 120k. Tuition is rising at a totally unsustainable rate. Hope they get it under control soon or it's gonna be hard to find a veterinarian to care for pets in a few decades.

Just came across this and thought I’d share.

Complete List of Student Loan Forgiveness Programs and Options
https://studentloanhero.com/featured/the-complete-list-of-student-loan-forgiveness-programs/

All the best!

@Travis Hornsby , just wanted to say thank you again for all of your great advice! I was a pre-dental student a couple of years ago and I messaged with you a few times on Student Doctor Network/DentalTown. Without your info on SDN, I would probably be starting my second year of dental school en route to 400k+ in debt! While I'm sure I would've loved the career, it was just way too much debt for somebody who wants to become FI sooner rather than later.

Out of curiosity, do you still post at either of them? I remember you having much more of a backing at DentalTown than at SDN. I think the dentists on DT who had been practicing for a number of years were able to grasp your message a little better than high school/college students who have been grinding for a career that may not be as glamorous as they had hoped.

Info for other posters: Travis used to be pretty active in the pre-dental and dentistry forums of the internet. He released a few different debt calculators for free that took interest, salary, residency, etc into account and computed things like time to payoff, average salary if paying off in x years, and more. These were incredible resources, and helped me make an informed decision about my future. 

The price of dental school is a bit out of hand, to say the least. Most in-state, public schools will leave you $300k+ in debt after 4 years while most private schools would put you north of $400k. A few were even over $500k!! Truly astounding numbers, without even mentioning that those loans are accruing interest at 7% per year. An average grad can expect to make about ~130k for the first few years after graduating. A high number, for sure, but you also have to take into account you could be paying 30k on interest alone in your first few payments. He details a few different strategies to pay off the loans, but they also rely on government programs which may or may not be around in the future.

Nobody seems to mention the insane price of d-school (and oversaturation of dentists, but that's a topic for another day) when searching for a career as a young adult. There are so many people out there (a dentist who graduated in the 70s with no loans, somebody who knows a rich dentist, every top 10 career list ever, etc) who like to tout how lucrative of a career it can be. Unfortunately, when somebody like Travis comes along and tries to spread the truth about the cost issue in this field and higher education in general, it tends to fall on deaf ears. I totally understand it, as nobody wants to believe that their countless hours of studying will net them "living like a resident" for the next 15-20 years. For whatever reason, the pre-health community in general seems to generally have an awful grasp on personal finances. As an anecdote, all of my college friends in a number of different fields (engineering, finance, accounting, etc) all had a better grasp on personal finance than any friends within the health spectrum. I think Travis' message is exactly what pre-health students need to hear, even if they don't want to hear it.

TL;DR: Travis has been very helpful to the pre-health community.

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