As a wave of next-generation clients starts to seek out help managing their finances, one of the most common challenges that they face is a high level of student loan debt. Unfortunately, advisors are generally ill-equipped to provide student loan analysis and planning, because, unlike traditional debt, student loans – and federal loans in particular – are subject to a dizzying array of repayment options (each of which can result in significantly different outcomes for borrowers) and forgiveness programs, which in and of themselves, are stunningly difficult to navigate. And, in a world where interest rates are rising quickly, the “easy” solution of refinancing older loans at a lower rate isn’t providing the same bang for the buck it once did, not to mention the fact that refinancing won’t make any sense for borrowers that recently took out loans while rates were at historic lows. Which means that a strong working knowledge of the various options for repaying federal student loans will increasingly be an important tool for advisors in coming years.
Fortunately, there is a growing number of tools to help advisors analyze their clients’ student loans, and in this guest post from Ryan Frailich, founder of Deliberate Finances, (a fee-only financial planning practice that specializes in working with couples in their 30’s, as well as educators and nonprofit workers) provides comprehensive reviews and ratings for 8 student loan planning tools, including offerings from CSLA, RightCapital, the VIN Foundation, Loan Buddy, and Pay For ED (among others), and shares his thoughts on everything from features and flexibility, to their ease of use and usefulness of output.
Because the fact is that, often, those clients who come in with the highest level of debt, including doctors and lawyers who are just starting out, also happen to be ideal long-term clients, and having the knowledge and ability to potentially help them save a significant amount of money over the life of their loans is a great way to build long-term loyalty. And even for advisors who work primarily with Baby Boomers, the ability to help their children navigate the student loan landscape can assist in introducing you to your next generation of clients.
While not all the solutions that Ryan examines are targeted specifically at advisors and there’s still plenty of room for improvement with all of them, the good news is that FinTech developers are recognizing the importance of putting tools in advisors’ hands that will help clients with student debt navigate what is often the first (and most challenging!) aspect of their young financial lives. So, whether you have clients with questions about how best to manage and repay their student loans, are looking for ways to gain and develop expertise in this important area, or are simply interested in staying up-to-date on this rapidly evolving area of financial planning and FinTech, then we hope you find this amazingly comprehensive guest post from Ryan to be helpful!