Paying Off Student Loans

financial planning for attorneys financial planning for entrepreneurs financial planning for young professionals Jan 31, 2020

by  Jonathan G. Cameron, CFP®

Student loans are often top of mind for many people in the early stages of a professional career. You’ve made an investment in yourself by getting a great education, and now you’ve got to make enough money to build a life, but also to repay those loans.  The main piece of advice we give most of our clients with student loans is not about numbers. It’s about overcoming the feeling that this debt is very heavy burden. So if you’re in that camp, we have some thought to share:

Own it – These Student Loans are Your Responsibility!

Taking out these loans was ultimately your choice, so own it. You DID in fact have other options – you could have gone to a cheaper school, or stretched your education out as you worked your way through. Whatever the case, ultimately it is your signature on the loan form. Take responsibility.

Don’t Let Student Loans Tyrannize You – Make a Plan and Enjoy Life

Student loan payoff is possible, with a plan. Make the plan, implement it, and review it periodically. Then leave it alone! Be patient. Don’t let student loans tyrannize you or prevent you from enjoying life. Most importantly, stick with the plan. If you know that paying $600 per month for 15 years will pay off your loans, then simply stay the course. Here is a helpful student loan payoff calculator.

The question of how to tackle your student loans depend on your career route – either public or private sector.

Public or Private Sector Employment

Student Loans – Public Sector Career

A recent study released by Junior Achievement and PricewaterhouseCoopers US found that 24% of millennials believe their student loans will be forgiven at some point (1). Scary, yes. However, before you write millennials off as pathetically naive, this statistic is actually not too far from reality. In fact, this is close to the percentage of the U.S. labor force that works in the public sector. In public sector jobs, employees are generally eligible for loan forgiveness in as little as 10 years. For instance, if you work for a public employer, and you consistently pay the required amount every month over 10 years, the balance of your loan is wiped out. For more on this, and which loans qualify, visit the Department of Education.

Private Sector Careers

For most of us, we’ll establish our careers in the private sector where there is generally higher earnings potential. Refinancing is often a good idea if the loan outstanding is big enough, you have good credit, and some employment history. In some cases, you just need proof of future employment. If you currently have a high interest rate, there are good companies out there such as Sofi* that help you reduce the amount of interest you pay on the life of your loan. Finally, make sure you understand the refinancing terms on the student loans. On principle consolidating large loans at a lower rate is just common sense.

Watch my YouTube on how how to get the student loan monkey off your back!

Student Loan Income Based Repayment Plans

If you have a relatively low income now, and expect it to rise steadily in the ensuing years, this may be for you. Each year you report your earnings via your tax return and a new payment is calculated for you. Please don’t be fooled by the promise of loan forgiveness after 25 years! You’re likely to have a miserable tax surprise when the balance is forgiven. That's right - the amount of the remaining loan becomes a taxable event to you when forgiven.  So instead of owing the loan issuer, you now owe the IRS.  Be careful!  I’ve written a separate blog entry on Student Loan Forgiveness.

Make a Student Loan Payoff Plan

Come work with us to figure out how to begin paying down your student loans in earnest. We’ll create a cash flow statement together – your budget – and work with you from there to establish your personal plan to fulfill the promise to pay that you made when you took out the loans. The idea is to take control of your money so it is not in control of you.

Get in touch! 

Questions? Feel free to get in touch with us at [email protected] Also follow us LinkedInFacebookInstagram, and YouTube for more personal financial information relevant to you! 



1. CNBC – 24% of Millennials expect student debt forgiveness

*While not a recommendation of Sofi, I mention them as a leading provider for refinancing student loans.


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