We are excited to announce the availability of our Student Loan Repayment Software. It is the first student loan repayment tool that helps recent graduates, married couples and engaged couples navigate their various student loan repayment and forgiveness options. Most people do not realize that there are over a 126 combinations of options for a single person to plan for and a married couple faces. We have simplified these different options in a single view.
Our unique approach brings together all the different components that are often separated in the student loan repayment process. To properly plan and analyze your repayment options, the borrower must consider their loan type, federal or private, their adjusted gross income, Income taxes, and employment situation to make the best decision.
Until now, borrowers were seeking this advice, but the suppliers were fragmented in their approach. This has caused a great deal of confusion and costly mistakes.
The 126 Student Loan Repayment Combinations
Most people have a traditional view of student loan repayment. They focus on traditional items such as loan amount, interest rate and time. Student loan repayment is different, especially for those who have selected an Income Drive Repayment (IDR) method. There are actually 9 different federal loan repayment methods. These repayments options include four traditional methods and five Income Driven Methods. These various options are just the starting point of confusion.
For a single borrower in repayment, the complexities are minimized initially, but if that person wants to plan for their financial future, it can become more difficult. Many single borrowers are just starting their lives. Marriage, children, home purchases and other major financial decisions will be occurring in the upcoming years. A simple student loan private refinancing could limit a person’s options in the future.
For the married couple, recently married couple or engaged couple, the 126 options are front and center. Once your marital status changes then the tax filing decision becomes an essential issue that needs to be considered. Properly managing Adjusted Gross Income (AGI) and knowing the loan type by spouse needs to be analyzed to make the best decision.
Student Loan Repayment Advice Problem
Part of the problem in making the correct student loan repayment decision is getting the right advice. The current information comes from the loan servicers, tax advisors, and lenders. The issue is none of them talk to each other and have different objectives.
The Student Loan Repayment Servicer’s job is to help you avoid default. In most cases, they are going to direct you to the lowest payment or the one you can afford. They may also lead you to a method that will qualify for loan forgiveness. Their shortcoming is they cannot give you any personal financial planning or tax advice. This necessary information is critical to finding the best options for your situation.
The tax advisor’s focus is lowering your tax burden. For a couple’s taxes, filing as married and joint is the preferred option. In most cases, it will result in the lowest tax burden, however for student loan repayment; it could be the worst decision. What the tax advisor does not see is the impact to the monthly student loan repayment when a couple is using an IDR student loan repayment method. The student debt structure of each spouse along with the AGI will determine their monthly repayment amount. The wrong decision could cost a couple of thousands of dollars a year.
The private lenders’ goal is to have you refinance your federal loan to their private bank. This approach is the traditional mindset that many believe with regards to student loan repayment. An important note; if you decide to do a private refinancing, then the borrower will be unable to return to the federal repayment option with those loans. This is a significant decision for a single person trying to plan forward or a person who is considering additional education. You also need to do your homework since many of the lenders promote the dollar savings in large numbers. These advertised dollars are over the life of the loan.
Our Student Loan Repayment solution brings all of these factors together and generates a custom analysis based on your specific situation.
Who Can It Help
The student debt crisis affects over 44 million people. The current solutions focus on only the individual borrower and provide little to couples or people trying to plan for their future. Here is a list of users:
- Single borrower
- Married Couples (Have filed their tax at least once as married)
- Married Couples (Have a recent financial change, e.g., new child/ graduated)
- Recently Married Couple (First time filing as a couple)
- Engaged Couple (single or head of household planning to get married)
- An employee who has a Loan Repayment Benefit
The system has an easy to follow 7 step process that will generates your customized options. The Student Loan Repayer is dynamic and based on your initial input will personalize your experience and results.
In a recent Michael Kitces Nerd’s Eye article titled “Student Loan Planning Software Solutions: Comparing the 8 Leading Tools for Financial Advisors”, Ryan Frailich described six major features that should be considered when looking for a student loan repayment solution. All six features are available in the Pay For ED Student Loan Repayer software. In addition to the preferred features, our Student Loan Repayer tool includes additional functionality to enhance your experience and decisions.
Student Loan Repayment Preferred Features
Ability to Import Federal Loan Data From NSLDS Yes
Ability to Analyze Loans at a Household Level Yes
Assumptions to Address Long Term Planning Yes
Side By Side Comparison of Repayment Methods Yes
Input of Private Student Loan Data Yes
Filter Unavailable Repayment Plans Yes
Additional Student Loan Repayer Functionality
Easy to Use Single View of the 126 possible options Yes
Simple Tax Filing Comparison Estimator Yes
Repayment decisions flow to a cash flow analyzer Yes
Impact of Private Refinancing vs Federal Repayment Yes
Identifies target AGI amount to manage IDR method Yes
Negative Amortization Warning Yes
Student Loan Repayment Conclusion
We are very excited to launch our Student Loan Repayer Software. Pay For ED’s mission is to solve the student debt crisis. With this new additional software, we now have a complete suite of tools that both prevents and solves the student debt problem. It is our belief that to stop the crisis we need to start avoiding the borrowing. Our College Cost Analyzer and In College Payer help students and parents avoid excessive student debt by providing transparency both before and during college. It helps them make better informed decisions.