Hey guys. This is Dr. Mike Ang. Welcome to another edition of Bootstrap md. This is the podcast for healthcare and physician entrepreneurs. Today we’re gonna be covering a subject that’s surprisingly we haven’t. Talked a lot about in depth, but it seems to be a topic that we all talk about regularly, and that’s student loans.
And as it costs a pretty penny to get into medical school. And just because there’s been so many changes of late with this current administration about student loans, we hear stories about people getting canceled, others not getting their student loans canceled. I wanted to bring in an expert.
To help us kind of unravel this and kind of figure, help us figure this all out. So happy to bring to the program from student loan planner.com. Dan Rucker, or Dan, how are you doing, Mike? Doing quite well today. Looking forward to the weekend as we’re recording this. Awesome. Awesome. Same here. Where are you located, by the way?
I’m based outta Chicago. I’m one of just a couple of us in Chicago. The rest of the team is spread out across the United States headquarters is in, in North Carolina. Okay, great. I’m in San Diego, but although we’re known for pretty cool weather we’re, it’s pretty hot and boiling just like rest of the rest of the country right now.
So let’s talk. The student loans. Like, let’s talk about what’s going on. Just, I know that your company works with physicians dentists, a lot of high net worth earners. But that student loans often, is something that they always have to deal with. I work with entrepreneurs all the time.
They wanna start up, building their own practice or starting up a business. But student loans is something that holds them back. So maybe you can kind of explain, recently all of these changes that currently the administration is bringing on and may maybe help us make some sense of it.
Sure. Yeah. So the. Administration. A lot of the hype recently has been around the Biden plan and prior to the Biden plan coming out, and that’s, now we know it’s called the save plan. Prior to that coming out there was a little bit of hype about Biden debt relief, that $10,000 or $20,000 reduction in your loan balance, and I say reduction because most of our listeners here are not seeing 10,000 or 20,000 as a number that’s gonna.
Make a huge difference to their loan balance. It’s a drop in the bucket. In fact, I think our average for physicians, a across many that we’ve done since 2016 as a team is 322,000. And that’s from a lot of folks who have graduated years ago. Think about folks who graduated more recently. They have much higher loan balances in the dentist space.
It’s higher, it’s about 410,000 higher as you go with specialties. From there, the student loan landscape for. Borrowers with that level of debt is relatively unchanged with 10 or $20,000 of the Biden debt relief announcement that got shut down. The safe plan is different though, that is a replacement of the revised PayYou Earn plan.
Our 2014 plan that President Obama created through negotiated rulemaking took about 18 months to do, and the Biden plan, the save plan is. Similar just more generous in its payment, and I’m happy to unpack that and go through it too. Yeah, that, that would be great. First off we hear about like the 10,000 and 20,000, but oftentimes it doesn’t usually apply to doctors.
Where we’re blessed to have a pretty, pretty decent income. Are these available to most physicians? The income driven plans mostly are available to physicians. There are some, there are a couple plans that are, that have a partial financial hardship provision, but that partial financial hardship provision is tied to not only income, but also the amount that the physician owes.
So if you are a, if you’re well into your attending years and you finished medical school in the early two thousands, you might have a loan balance that is far less than what you make in a year. In that case, the income-based repayment plans, that is two of the income driven plans of the five that are out there.
There’s the old income based and the new income-based repayment plan, as well as the pays you rent plan. Those three plans have a partial financial hardship provision, which means you’re not allowed into the plan if the payment calculated based off of your recent income is greater than what it would take to pay the loans off in 10 years.
So you can imagine somebody with a 30 or $40,000 balance today with 10 times that in income, they would apply for the one of these plans that are popular out there. If you search Reddit threads, come to find out they get rejected from those plans. Now, the safe plan is not like that. It’ll take you, it’ll just calculate the payment and tell you the payment based off your income.
They won’t bar you from entry. Great. Great. So from my understanding and obviously you’re the expert they’ve decided that there’s a cap, right? There’s a cap by how many years that you’ve actually paid. Is that how they de determine who should get on the safe plan and who shouldn’t depending on when they started paying their loans?
Yeah. So maybe I should back up a little bit with the income driven plans. So all of these, there’s five plans out there, starting with the 1993 income contingent repayment plan that does not have a partial financial hardship. After that July of 2009, we had our old income-based repayment plan.
It’s called Income-Based. We call it old because there’s a new one after that. December of 2012, the pay as you Earn plan was created. The revised pay as you earn in 2014 and the revised pay as you earn plan. As well as the new income based repayment plan, same calendar year. And then you’ve got the Biden plan, the save plan that replaced the 2014 revised pay and rent plan.
So you’ve got a total of five income driven choices and they are 25 years for the income contingent repayment plan, 25 years for the old income pace repayment plan, 20 years for the pay as you end plan. 25 years for all of our listeners who went to grad school on the revised pay you rent plan, and 25 years the same for the save plan.
So you have this timeline, and at the end of that timeline, as long as you’ve been making payments on one of these plans, recalculated every 12 months, you get to the end. If there’s a balance, the balance is forgiven and taxable. Taxable is ordinary income. Treatment of that forgiven balance is different until December 31st, 2025.
Between now and then, if you have a balance that’s forgiven, then the balance is not taxable at the federal level and it might be taxable at the state level. Mike, in San Diego and California, it’s not taxable at that state level. There are just a couple of states that have said we’re gonna tax it. So how have they determined like.
Who, I see these things on the internet and on, on social media. Hey, I got all my loans canceled. And then others go I’m looking in my email and I can’t find any. How are they determining who’s getting it and who’s not with the safe plan? So the save plan is one of the announcements.
There’s been several announcements during the pandemic freeze. So our pandemic freeze for student loans started March 13th, 2020, and from that date forward, if you had direct loans, then your interest was turned off. And if you had F E L loans that were not commercially backed, if they were backed by the Department of Ed, then those interest rates were turned off.
The vast majority of folks who borrowed prior to October 1st, 2010 had commercially backed F E L loans federal Family Education loans, sometimes F E L P is. They’re also synonymous terms loans prior to October 1st, 2010. And I like to say that, those loans were, they’re commercially owned or backed.
That means that there’s a bank behind it, not the Department of Ed and our former president could not say, Hey, Such and such, bank name, large bank, turn off your interest rates, stop getting, stop paying back your investors. So that’s why a lot of people had loans, myself included, that were issued prior to 2010 that continued to have to make payments during the pandemic.
Now, if you had direct loans, then you had no interest rate, a 0% interest rate until the end of August of this year. And you haven’t had to make a payment, you haven’t had to recertify for your income driven plan. A lot of good things if you’re, oh, and then on top of that, these months will count towards an income driven plan.
So counting these months towards an income driven plan during this pandemic is something that is tied to a separate announcement. So you have the Biden debt Relief program. You have somewhere in the past you had an announcement around disability discharge borrow defense to repayment. The save plan and then the P S L F waiver and separate from the PS waiver, F waiver.
The thing that’s in effect right now is the payment count adjustment to income-driven plans, and that expires at the end of this year. At the end of 2023. That’s a crucial announcement with respect to what you just referenced and a long answer to get to people saying, I got my loans forgiven. I got this email.
Well, the email has been coming from. The payment count adjustment to income driven plans and how that works. In short, it’s a much longer description here, but if you go to student aid.gov and you Google payment count to payment account adjustment to income driven repayment plans, it’s going to throw a page up there that tells you how to qualify for that payment count adjustment.
And people who have gotten that email, they’ve gotten that email because. They already have direct loans and they’re on an income driven plan. If you haven’t gotten that email and you graduated with a colleague who got that email and you’ve followed a similar path, there’s a good chance that you could get that same email, but you have to position your loans to be direct loans.
If you have F E L loans, the action is consolidate your F E L loans. Choose an income driven plan. The result would be you have a consolidated direct loan, you’re on an income driven plan. And the Department of Ed through your loan servicer. Your loan servicer could be Nelnet Advantage. Ed Financial, Mila names we’ve heard of your loan servicer will count up your past, even if you weren’t on an income driven plan, and count up all the repayment status months that you had on say, the extended plan or the graduated plan or the standard 30 year plan, and they will.
Append that to your timeline towards a 25 year, 300 month plan. And if you’re greater than 300 months in your past, then you’d get a letter, an email like that. Now, a number of well actually most physicians go to residency after they graduate from medical school. Many of my colleagues went on forbearance.
They paused their payments because, We weren’t making a lot of money and still many, our colleagues, my colleagues in Rezi, we don’t make a lot of money. That doesn’t count, I guess within the 25 years, is that correct? It might count. So, normally you’d say it definitely won’t count medically mandated forbearance or economic hardship, deferment, or just general forbearances.
Would not generally count, but in this payment count adjustment, the way that it’s written is it’s, they say, we will count all repayment status months regardless of the payment plan you’ve been on, regardless of the payment being received or not. Whether it was late or for less than the amount due late is greater than 15 days past the due date.
We’ll count it as long as your loans report to be were reported by your loan servicer to be an in repayment status. We’ll also count economic hardship deferment prior to 2013, and we’ll count most kinds of deferment, just not in school deferment. We’ll also count forbearance months according to what we’ve been calling the 1236 rule.
So if you had more than 12 months of forbearance in a row, or you had more than 36 months, 36 or more months in aggregate, Then the loan servicer is authorized by the Department of Ed to change that repayment status from forbearance to end repayment, thereby counting it for an income driven plan. So if you have a pocket of forbearance months here and there, like two at a time it could count if the sum aggregate of those is 36 or more.
Great. Now, early in my medical career I was able to work on a native American reservation and got a couple of my years forgiven my, my loans forgiven. But there’s still a lot of questions about the public health the forgiveness. Can you enlighten us and give us some education about that?
Sure thing, max. So the public service loan forgiveness program is one of the most generous forgiveness programs out there. There are so many I. I like, I call them loan repayment programs, LRPs at the state level, and it re wherever you are, I think it’d be a good idea just to Google, see if there’s something that applies to the state that you’re in that offers some type of repayment or forgiveness.
Oftentimes these state driven repayment per programs are short term in nature and they run out of money really quickly. But it could apply to you if you’re on the lookout for it. Public service loan forgiveness is a federal program. Similar to the Education Debt reduction program at the va in that it shortens the timeline.
The timeline from 25 years down to 120 months. And the baseline requirements are that you are working for a qualified employer. So similar to your, the employer you just mentioned, Indian Health Services, federally Qualified Health Center, a nonprofit 5 0 1 C three. More recently, if you’re working on the premises of a nonprofit in a state that prevents the employer from hiring the physician directly, so Kaiser Permanente or some groups in Texas as well, where you’re working for, you’re employed by the contractor entity, the group, the physician group, and the physician group is contracted with the nonprofit like Kaiser Foundation.
Those qualified too. And that’s a more recent thing. That’s as of July 1st, 2023. So there is working for a qualified employer, 5 0 1 C three state federal employer. There is working full-time, and that definition has been amended and reduced down to 30 hours a week. It used to be 32 hours a week or full-time as defined by your employer, whichever is the greater of the two.
And so 30 hours a week. And then on an income driven plan. So on one of those income driven plans, we’ve discussed already the save plan. If you’re know you’re going for public service loan forgiveness is most of the time gonna be the best plan. If you have a really small balance compared to what you owe, I would check out the income contingent repayment plan, the oldest plan, the Clinton plan.
And if you’re not sure how that works, Start with student aid.gov. You could go to student loan planner.com. We’ve got tons of free content on our site. We’ve got our podcast as well at Student Loan Planner. I think Mike, that’s how we got connected and on an income driven plan. And then the last thing is making the payment.
Make the payment on time. Make the required payment based off of income. If you’re married and your spouse has loans, or if you’re married and you live in a community property state, California, one of our 11 community property states. There are some things that you can do on the tax side to make it look like your income doesn’t look as high as it actually is.
So that on an income driven plan, your payment is less as you pursue public service loan forgiveness. So if you are following these rules and you’re making payments and you get to 120 months residency counts for the most part, fellowship counts for the most part, whenever you get to 120 months within this 25 year plan.
Your balance is forgiven, it’s forgiven, tax free at the federal level and the state level. And this is some great information. Let’s just talk about student loan planner. How did it get started? Who started it? How did it get, how did it get started? And how do you help other doctors and other people who have student loans out there of sending student loans?
So, Travis Hornsby started student loan planner.com in 2016. He’s married to a physician and he started it because he was trying to solve. His wife’s student loans issue and he did create a solve by his own admission later than it was to help her. But he used his Excel spreadsheet and just sent it out there for free to Business Insider.
And there was a lot of downloads after he sent it and he started doing one-on-one consults. Since then, the team has grown. We’re now at. Somewhere between 30 and 40 behind the scenes in total as a team. And we worked together as contractors. So this is our locums tenants and a lot of us are from all over.
We came from all different walks, mostly financial planning based and found Travis and the student loan planner team through various avenues. I happened to find student loan planner through another podcast called Choose Fi. I heard Travis on there and thought, and I was on my, long commute from my place to the office here in Chicago and thought this is a great place where they’re making a difference and helping people figure out their loans, and it’s a really niche space.
Yeah, that’s a Tuesday five. That’s a great podcast as well. So what goes into these consultations that, that you offer? I think I can speak for many of us, we’ve all kind of been frustrated with some of the customer support we get to some of these companies that service our loans. Did that help kind of bridge the gap and you kind of found your niche and what you can do to better help help professionals out there?
I think so, Mike, I think that. So, so to enter the industry I started with my, my past in financial planning as a certified financial planner made it easier to go and get the certified Student Loan professional designation, and if you Google certified student Loan professional, You’ll find there’s roughly 300 to 350 C SLPs in the us So that puts us into this really small group.
Yeah. Of people currently and hopefully growing long-term because it’s a really underserved space. There’s 46 plus million borrowers out there and growing every year. So, in that space, student loan planner is currently, and we’d like to stay at the top. We, and I think we’re at the top because. The focus has always been from the start, how do we impact a lot of people?
And the best way to do that is through blogs and a podcast. So, what do we do in a consult though? When people decide, okay, I’d rather outsource this to a professional set of eyes to look at it. It’s a one hour call. We ask for your N S L D SS data download from student aid.gov. My, my wife is a healthcare practitioner and she likes to say that to me.
From her lens, it looks like I’m looking at patient labs, so, I’m looking at someone’s student loan file. I can see the full history of it. Much, much in much greater detail than you could see from your loan servicer, from like a screenshot or A P D F. And through that can help determine based on projected income and whether or not spouse has loans and what the student loan payment would be based on filing jointly or filing married, filing separately.
At the end of the call, what we write up is a bullet point format, email. Here’s what to do, next steps based off of what you found to be compelling. And here’s the near term results, long-term projection. And then they get 12 months of email support from their consultant to help make sure that they implement what they s what was advised.
You can give the best advice in the world, but if you’re the person who hired you, who doesn’t take action what good is it? That’s great. And as you mentioned, you work with a lot of doctors, correct? I do. We do. Physicians and dentists are the majority of our consults. Last year we did about 4,000 calls as a group, and the last couple of weeks have been pretty amazing from the inside, just watching the number of bookings because payments are starting to resume again.
People are realizing we need to make a plan. Yeah. And it’s not like student loans have been in the news or anything. People, haven’t been talking about. It doesn’t seem to be a subject that a lot of people have a lot of opinions on. Correct. Right, right. So, Dan thank this has been great from a student loan planner.
Go to student loan planner.com. Go out and check them out. The price is pretty affordable for what you get. I was pretty surprised at the cost of it. But you know, when you’re dealing with hundreds of thousands of dollars, it actually kind of pays to maybe have a third party independent expert kinda look it over ’cause they don’t teach any of that.
That’s what I remember with my loans. It’s just like, here it is and you guys gotta figure it out. So Dan, this has been great. Any last minute thoughts before we end the call today? Yeah, I would say Mike, just to touch on something you just mentioned loan exit counseling is, has a ways to go before it.
It gets recent graduates in a position to take action and hopefully one day it gets there. In the meantime, the student loan space is complicated enough that we still have a job. And so, one thing I would say is if you are talking to your loan servicer just. From frame of reference the person on the other end of the line is not a student loan professional, and I would be just listen to what they’re saying.
If they’re trying to help you get something that you are asking for them to do, have patience with them. If they’re trying to give you advice for something you’re not sure about what to do, think carefully about what they’re saying. This has been great. Again Dan Ricker from a student loan planner.
Thank you for your time and your wisdom. And guys, if you are dealing, like many of us with student loans and you don’t have, not surely where you want to turn to, there are go for companies, not necessarily just Dan’s company, but go out there and find to find experts. You, maybe you can possibly help you.
You don’t have to do this alone. And as always, keep moving forward. All.