Managing Medical Student Loans
Updated: Dec 23, 2022
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Christopher H. Loo, MD-PhD: So today, we have a special guest, Travis Hornsby. He's the founder and CEO of Student Loan Planner. And we'll introduce him and we'll go from there. So hey, Travis, welcome. How are you doing today?
Travis Hornsby, CFA: Doing great, Chris is excited to be here.
Christopher H. Loo, MD-PhD: I'm so glad that your team reached out to me. And like I said, I'm trying to introduce novel services, products, and guest’s ideas to my followers, which are mostly physicians. And so let's get started with talking a little bit about yourself, what Student Loan Planner is and how you got started?
Travis Hornsby, CFA: Well, I'm kind of a weird nerd, like I was a bond trader back at my former life, then I met my wife who's a physician, and she got really screwed over with a Public Service Loan Forgiveness program, like she got really bad advice, lost about $200,000 getting the wrong advice on her student loans. And with my bond trading skills, Chris, I said I struggle to get an extra 0.1% of return for our bond funds. But it's really easy to save hundreds of 100,000s of dollars with people like my wife who have a lot of student loan debt that are getting bad advice. So I saw a bigger opportunity there. And the tools that I built with the Excel skills that I learned doing bond trading, it went viral, and that's what kind of caused a ton of peace to reach out and ask for help managing their student loans. And when I say managing their student loans, I'm talking about like 100k and up student loans, right? It's pretty straightforward. If you have 30,000, you need to pay it back. But physicians have all kinds of opportunities available to them, a lot of which they're not even aware of. And that's what we've done with student loan planner, so it started out just for me. And now we've got six consultants, CFP, CFA type consultants, and we're adding three more for 2022. So we've advised about 1.7 billion of student loans, which makes us the largest provider of student loan advice in the country.
Christopher H. Loo, MD-PhD: Awesome. Looks like you went from a more career driven to more mission driven purpose. And it looks like your experience with trading and finance really helped you. So we all know, student loans are a really big problem in today's society. It costs so much to go to undergraduate and professional school. And so, tell us, what types of clients does your firm service?
Travis Hornsby, CFA: I would say maybe about 15%, or 20% of the clients are physicians, maybe another 15-20% each are dentists, veterinarians, lawyers, nurse practitioners, chiropractors, basically any professional degree required occupation, is someone that we've made hundreds of plans for physicians, I think we made about 1000 plans for. So there's all kinds of opportunities for physicians. Chris, I think you are a big time real estate investor, correct?
Christopher H. Loo, MD-PhD: Yes. I invest in real estate. Yes.
Travis Hornsby, CFA: So you're familiar, obviously, with the professional real estate investor status, right? So here's like, just one kind of idea, right for your listeners. So say your listener is going for public service loan forgiveness, and they're interested in real estate investing. So if you are fixing up and flipping houses, if you have a spouse who's a professional real estate investor status, who’s got that status, then you can write off those paper losses against active income, right?
And Public Service Loan Forgiveness is 10% of your income, right. So if you can get that taxable income down lower, you could be heavily involved in investing in real estate, your spouse is the one that maintains that professional real estate investor status, and you've saved yourself 10s of 1000s of dollars, maybe even per year, on your student loan payments that will eventually be forgiven because the Public Service Loan Forgiveness Program. So that's just like, one more niche specific loophole. And there's a gazillion loopholes. And my experience is physicians have some of the most complicated options when it comes to student loans right. I think some people think it's as easy as just putting it on the revised page and program, which is this program where you pay 10% of your income and get a little bit of an interest subsidy. And then that's all you have to do. But there's so many options for people to save so much money and accelerate their path to financial independence rapidly.
Christopher H. Loo, MD-PhD: Yeah, that's a really good tip. What's interesting is that I graduated from medical school in 2007, they didn't have any of this income base program, they didn't have public student loan forgiveness, none of that. And what was interesting was, we got no financial advice until the final month of medical school before graduating. We had an individual talk about the number one thing that all medical students were doing at the time was consolidating their student loans, so they can lock in a low interest rate. So it looks like the field has greatly expanded. So, I know for a lot of listeners, can you explain all the differences. I know, there's income based, there's public student loan forgiveness, and they understand that the options are expanding. So give us a brief background and where the field is going?
Travis Hornsby, CFA: Well, let me start out with people like you that went to medical school, or when you went to medical school, so there's this Public Service Loan Forgiveness program, right. Public Service Loan Forgiveness, you have to pay for 10 years while working full time at a nonprofit or government employer on an income driven repayment plan. So those income driven repayment plans for things like income based repayment pay as you earn, revised pay, as you earn are three examples of that. The opportunity that exists for peers of yours, Chris, that you went to medical school at this, there's a lot of 40 something year old physicians that had those loans from before 2010 that are not qualifying for Public Service Loan Forgiveness, right.
Well, President Biden passed a limited time waiver called the PSLF waiver due to the endemic, he did this October 2021. It's good until October of 2022. And what it does is allow old loans to qualify if you are employed at a qualifying employer. So what we're seeing for some 40 year old clients of ours right now is they have loans like 2.8% that consolidated them in 2006. Right? They've been working at an academic medical center and making payments on like a 30 year extended type of plan. A lot of those clients right now, we're able to tell them that they can consolidate their loans into a direct consolidation loan and get all of it forgiven tax free. That's it, that's, that's crazy, where we had, we had like a Harvard MD, who had 200,000 that was like, at a 2-something percent that was FFL federal debt she took it out, like 2005. The day, literally, with a one line consolidation application at studentaid.gov after getting a plan from us, she was able to consolidate the whole thing, and it's all gone, tax free. And that's, that's, that's, that's kind of like life changing stuff, right? Like, everybody wants to find the next Tesla, or the next, like crypto that's gonna hit or the next like, Austin, Texas, right. Like, that's what everybody's like, focused on.
And that stuff is, is really hard even for people that are like deep experts, like to struggle with that, right? Whereas with student loans, like we're, I think it's fair to say, I think we're either one of the most the most like knowledgeable about student loans in the country, because the number of plans that we've done, so there's like opportunities like this, not for everybody, but there's opportunities like this, where like a random person that has 200,000 of debt could have given tax free. And they literally have to do one thing. I mean, that's like, the most exciting thing in personal finance. It's why I love doing it is because you can transform somebody's life in a way that you can't in so many other fields of personal finance. So I know that you asked specifically what is the lay of the land, so I apologize for kind of diving in, it was one specific example.
So like, quick lay of the land there's Public Service Loan Forgiveness, which is a good option for a lot of people that are academic medicine, VA type people, right, there's refinancing, which is a great option for people that join a private practice, like Orthopedic Group, right, that know that they need to pay the debt back and 6% with the government's ridiculously high interest, so you can refinance it to like 2.8, or 2.5, or something with a private lender. And that's something we help a ton of people do. And then the third path is a family medicine doctor who's in private practice who owes at least twice her income and student debt, that person might qualify for forgiveness with a longer period of time than public service programs to public service programs, 10 years, there's programs for forgiveness that are like 20, or 25. So what we do for a physician client is we do a one time plan for a few 100 bucks.
And we figure out which of those three plans makes the most sense and how to optimize it and how to save the most money. And, and that's, that's kind of our typical savings for like a physician client is maybe like, I'm not a car guy I have to admit, Chris, but like a Mercedes. What is what is like the mid level five series $60,000, I don't know, that's like, our typical projected savings is around like, 60-70,000. Some people, we don't save anything, maybe 10% of people, we look at their situation, we just confirm that, hey, you're on the best path possible. And then some of the people like that client that we had were in their 40s. We saved 200,000 like that, they wouldn't identify it without talking to us. So that's the lay of the land, right? There's like three big paths: paying it off, forgiveness in the private sector, forgiveness in the public sector.
Christopher H. Loo, MD-PhD: Wow, that's really exciting. Because you've dropped two gems, one is tax savings. And the second is just the lay of the land and how you can save, you may not be able to say write off $200,000 in student loan, but at least you can save 10 or 20, 10s of 1000s we know, which is significant and adds up. So I know a lot of physicians will be interested in this. And what are some of the common mistakes that you see with clients that come to you?
Travis Hornsby, CFA: Not filing their taxes the right way. So there's a lot of ways to reduce your payments. So if you file jointly, you're basically going to be paying 10% of your household income. Some cases you can file separately and exclude your spouse from the payment. There's a lot of loopholes surrounding that in terms of what state you live in. There might be specific rules. Sometimes we're able to get people significantly lower payments. They live in Texas or California, because of nuances in the tax code there. So there's, there's situations like that where they're filing taxes the wrong way.
I guess another mistake is that they reply to the mailer in the mail from the refinancing company. So that's going to happen a lot with the end of the payment pause after two years of no payments. People are going to just go to the postcard they got in the mail and apply to refinance their loans. Our sites got $1,000 in cash bonuses with all the national lenders. So, StudentLoanPlanner.com got the best bonuses for anywhere, really. And that doesn't affect the interest rate. So I guess that's a mistake, I guess, people miss out on $1,000, when they're refinancing. And then other other mistakes would just be, let's see, maybe not realizing that they're actually a forgiveness candidate instead of a payoff candidate. I see that a lot. Because there's this attitude in the medical community that, hey you got to do PSLF, or you got to pay it back. And that's the only two paths and that's actually not true.
Christopher H. Loo, MD-PhD: So the other thing is for the physician cohort that before 2010, what are some of the steps that they can start to take besides obviously contacting you, and inquiring, and all that, but what are some of the mistakes that you'll see before the 2010 cohort that they make?
Travis Hornsby, CFA: They haven't bothered to certify their employment. So studentaid.gov/pslf is this website, you can go to and add all of the employment you've ever had that's in a public sector employer. So nonprofit hospitals, VA, anywhere basically, besides like, HCA or tenant, or the private practice group qualify for Public Service Loan Forgiveness, so they need to go there, and they need to certify their income, I mean, their employment. Because if you don't qualify for PSLF, or weren't expecting to, you might have never told the government about your employment, that might count. And then maybe you could qualify for forgiveness right now, you don't even realize it. So that’s a place to start. And then since it's October 2022, is the deadline for this. Even if you don't know what kind of loans you have, you could probably still submit your employment, and at least they would be aware of your employment. And if you need to do something like consolidate your loans or something like that, to become eligible, at least they would know about it. So that would be, I would say, an easy step to take that anybody could just do.
Christopher H. Loo, MD-PhD: That's awesome. All right. What are some resources that will help them? As well as I know, a lot of my followers would be interested in getting in touch with you.
Travis Hornsby, CFA: So I made resources to use. The student aid website has got a good payment simulator. I'm biased, I think ours is better. So you could use both of them to figure out what your payments are gonna be. So student StudentLoanPlanner.com if you look at the menu, we have a calculators section. And you can see all the different kinds of calculators we have on our site that really get into some granular level detail and what your payments might be. Other other things like we give away our Excel based calculator to people who join our email list, we've got the Student Loan Planner podcast where I talk about different kinds of updates with PSLF. And with loan repayment starting, all the stuff that's going on we cover that in the Student Loan Planner Podcast that's easily searchable. If you just search for Student Loan Planner, on the platform you're listening to this on.
And I guess the final two things are just resources are the refinance page, so that studentloanplanner.com/refi. That’s the $1,000 cash bonus, as I was talking about the final thing, just getting the plan. So that's StudentLoanPlanner.com/help. So if you don't know, if you're like, I don't know what to do, studentloanplanner.com/help. And the important thing there is to book a plan, even though it's a little ways out, we're kind of getting a little overwhelmed by the demand. So like during the pandemic payments and interest were paused. So the demand for student loan planning was there, but not as much. So we would maybe do like 100 220 plans a month during the pandemic, I'd say pandemics so going, but during the past two years, and then now we're doing like 300 a month. And that's why we're having to hire three additional people, because it's just getting kind of a little overwhelming, which means that like, if you're thinking about booking a plan, we don't collect a credit card or anything like that up front, so you would like reserve one and then cancel it if you change your mind. So that's why I would go to the StudentLoanPlanner.com/help and schedule a time to talk to one of our team members to get that custom plan so you know what you're doing with your loans and not missing out on anything.
Christopher H. Loo, MD-PhD: You've given so much advice. And so much experience and dropped so many gems and for all the listeners, Travis' resources will be included in the show notes, be sure to click on the links there's tons of stuff navigating the student loan. And at the end of the year a lot of medical students will be graduating soon. So, thanks so much. Do you have any last parting words of wisdom advice, before we call it a day?
Travis Hornsby, CFA: I would just say, at least think about your loans. I know it's kind of scary, the last thing you want to do is think about your debt, because it's just got so much else on your mind, like you've got all the stress of the pandemic, and you're helping the patients and just some of the people that are in training are dealing with like the terrible hours residency and fellowship, right. So like, thinking about the loan seems like it's like the last priority, when in fact, once you realize what you're doing, then it becomes something that's not a burden anymore, and allows you to be a little bit more relaxed in confronting all those other things you're confronting. So I would encourage listeners to just get a plan. It doesn't have to be with us, you could use the free resources and make up your own mind. or you could get a plant with an expert like us. So I just would ask people to at least think about it a little bit. And it's gonna be okay, if you do.
Christopher H. Loo, MD-PhD: You said so wisely. One of my friends and colleagues, he was saying just at least look at the numbers. That way, at least you're familiar with it. And then from there, make a plan. So as long as you're sticking to the plan, and it's a good plan. Sounds like you have a lot of resources. And you'll do fine. So, thanks so much. We'll make sure all of our listeners get in contact with you. And we hope to have you on future episodes as a future guest.
Travis Hornsby, CFA: Thank you so much. Appreciate it, Chris.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.