Student loans can make our financial life a little more complicated. Especially when you have over $100,000 in student debt. Sooner or later you’re going to find that you need help with student loan repayment strategies.
Most likely, your balance isn’t dropping as fast as you’d like —or worse, it’s going up. We go through major life transitions like getting married and starting a family.
How do all these events affect our student loan repayment? Who do you turn to with questions about your student loans? There are so many so called “student loan experts” online.
While I am a financial planner that specializes in professionals, I’m not everyone’s cup of tea. And I don’t try to be. If I’m going to invest my time into creating a plan for a client, I want them to stick with me for the long-term.
To help you identify a planner or advisor that’s right for you, I put together some questions for you to ask.
Here are 8 Questions for Hiring Student Loan Repayment Help:
1. Do you provide financial advice?
I learned that many student loan planners don’t actually provide financial advice with student loan repayment.
Surprising, right? They only serve in an “educational capacity.”
How it’s possible to deliver valuable advice on student loans in an educational capacity?
That means the advice isn’t tailored to your unique financial circumstances. That defeats the whole purpose of paying for student loan repayment help.
In my financial practice, we run many financial calculations. We’re trying to identify the best student loan repayment strategy for our clients.
In my firm, Clear Path Financial Planning, we create and evaluate multiple scenarios based on each of our client’s unique situations. If forgiveness is likely, we’ll attempt to maximize that benefit. We calculate the projected tax bill and provide a savings strategy to pay it.
Isn’t the reason why you hire a student loan repayment professional is for financial advice? Make your planner work for their money. Ask for financial comparisons of all your repayment options.
After mystery shopping a few student loan planners, I’m starting to see a trend. Many have conflict of interests. And this leads us to Question No. 2.
2. How do you get paid? Are you compensated through third party advertisers?
As direct as the question may be, it’s very important to know the answer. Conflict of interests are present in any business relationship. You want to be aware of them if they do exist.
If you feel the question is too confrontational, it’s possible to avoid the question. You can always dig through their website for a “Disclosure” statement. If the planner accepts affiliate money from advertisers, it will mention it there.
Why is this a problem? Money influences people, even those with good intentions. There’s no way of knowing why a recommendation is being made.
Student loan blogs are very helpful but just educational. The ultimate goal of the blog is to get you to refinance through an affiliate that will pay them for the traffic. Be cautious of anyone that quotes interest rates….
This isn’t to say that affiliate marketing planners don’t offer good advice. It’s just draining having to question their motive.
3. What deliverable can I expect?
Nothing ruins a relationship more than unmet expectations. Before you hire your planner, make sure that you share your expectations with them. And know exactly what you are paying for.
If you’re expecting a detailed financial plan with graphs and charts that compare all your repayment options, make sure that your planner will deliver that. I have mystery shopped a number of these planners. Many don’t have access to sophisticated financial software. Instead they use spreadsheets that they’ve created.
Spreadsheets can be problematic. Especially if the planner created it or worst —someone else. It can be difficult to illustrate and compare future scenarios in a spreadsheet.
Also, student loan legislation and tax laws are constantly changing. Have you ever tried creating or updating complex formulas in Microsoft Excel? Not all errors result in a ERROR: @#$%^^. Small errors can result in undetectable changes in projections. That means the math is wrong.
I like spreadsheets. They’re great tools but don’t make for a great financial plans. Not everybody wants to see tables upon table of numbers projecting out over 25 years. Give me a financial plan with colorful illustrations. I want to see the financial impact of one student loan repayment strategy over another.
4. How Long Will It Take to Complete This Project?
It’s also important to establish expectations around the process and communication.
If you’re waiting on this student loan repayment analysis to determine how to file your taxes, share that. The planner will have to run all repayment options as filing jointly and separately. That can take some time.
Also, not everybody communicates the same way. I find that some people don’t respond to phone calls and voice messages. But they’ll respond to a text message or email faster.
It’s important that if you or your planner expect a speedy response, that it’s clearly communicated.
5. What other services do you provide?
While your student loans might be top of mind, it’s only one area of your financial life. Start thinking about your student loans as part of your overall financial strategy.
Thinking beyond today is the only way to create a tomorrow you love.
It’s important that your planner can add value beyond this student loan analysis.
A financial planner will not only prepare a financial plan for your student loans. They’ll also create a savings plan strategy. They’ll help you build your emergency and vacation funds. If you take a financial hit, you’ll have the comfort of knowing you have a cash cushion to break your fall.
If you’re going to invest the time and money into a student loan plan, why not ensure you can keep the it going if you want.
6. What kind of clients do you specialize in?
Good financial planners or advisors like to work within a specific niche. This allows them to become the experts in that field.
Many planners that focus on retirement planning and investment management are generalists. They try to work with anyone with money and usually underwhelm their clients. I happen to like working with both public- and private-interest lawyers. They have varied career paths and wide ranges of income. It’s fun to work and socialize with them.
While retirement is important, you’re most likely not planning to retire anytime soon. Find a financial planner that can relate to your stage in life and takes the time to understand you.
7. Do they ask hard questions?
What makes a good financial planner… well, good? Outside of technical knowledge, they ask really good questions.
They ask questions like:
Why is money important to you?
Why do you spend the way you do?
If money wasn’t an issue, what would you do differently?
This shows that the financial planner really wants to know what makes you tick.
These are just a few of my favorite questions. The answers don’t even matter. I’ll throw them away and ask deeper and more meaningful ones.
Questions like these help uncover your financial values —or more accurately, your life values. The best way for you to pay down your student loans, save and invest should be based on your own goals and values. Not your friend’s or anyone else’s goals or values.
A good financial planner will use those answers as a starting point to discover how you really want to spend both your time and money (and spend your time in pursuit of more money, as the case may be).
Learn to judge the advisors in your life by the questions they ask.
8. Are they committed to my success?
“What would have to happen next year or three years from now for you to look back to today and say this was absolutely worthwhile?”
This is my favorite question to ask potential new clients. It may even be my secret sauce. The question is designed to have someone look at their life and identify what needs to change to be happy.
I’m going to take that answer and reverse engineer it into first year agenda for this client. I’m committed to their success.
Find a financial planner that looks ahead to the future. These are the planners that will be more proactive in your life. They’ll help give you direction and that’s what’s going to keep you happy long-term.
The ones that don’t have an agenda only reach out but once a year.
9. What’s your refund policy?
Sometimes life happens. It’s best to know what the terms and conditions for working with this planner.
You might pay for a service only to discover that you need to postpone or cancel the project. A family member could fall ill and you might need to be there for them.
If this happens, it’s likely that your planner may have to refund you. Would you get a full or partial refund?
I want to hear from you
Do you have any student loan questions? If so you can drop it in the comments below or ask me privately. If it’s good enough, I’ll answer it and mention you on my next Q&A Tuesday on TommyTV.