Personal finance is made up of multiple intersecting disciplines, from budgeting to debt management and realistic goal-setting. Many individuals in the modern age come into adulthood bearing some level of student loan debt, which can have a dramatic impact on their ability to achieve their other goals. The good news is that a financial advisor can help you understand your options for managing student loan repayment while working toward other aspirations. A financial advisor cannot make decisions for you, but here’s what they can help you to do.
1. Approach Repayment Holistically
Student loans are just one part of your entire financial picture. By seeking out the guidance of a financial advisor instead of the tailored student loan-specific companies, you acquire a sounding board for approaching your repayment holistically. Many parties with vested interests will either tell you to pay off your student loans as fast as possible-regardless of the impact this may have on your life-or pay as little as possible.
In reality, neither of these options may be right for you. An advisor can help you understand how student loans fit into your bigger financial aims without compromising your ability to work toward other goals or fulfill necessary obligations like paying other bills.
2. Balance Debt with Goals
If you are carrying a student loan balance, you may feel overwhelmed or desperate to get rid of the burden. However, a financial advisor can help you understand how your debt fits in-and when it may not be the right choice to aggressively pay it down.
For example, if you are still struggling to build your credit score, it could be wise to strategically pay your loans to boost your score. Similarly, if you anticipate a significant purchase in the near future, an advisor can help you work toward that goal without letting your student loans go into default. The right strategy for paying off your loans is just as unique as you are-which means that sometimes it’s a marathon, and sometimes it’s a sprint.
3. Learn About Debt Opportunities
Debt can present unique opportunities if leveraged in the right way. As mentioned previously, debt is a powerful way to build your credit-so long as you are responsible about paying the proper amounts on time. Debt is not necessarily a bad thing, and a financial advisor can help you to understand how to shape your repayment so that the debt works for you as much as possible.
For example, if your student loans carry a low interest rate, you may find that investing your earnings and paying only your minimum monthly payment serves your long-term financial goals better. Alternatively, some types of student loans open you up to easier continued funding if you choose to transition from undergraduate to graduate studies. Debt can be an opportunity if it is utilized strategically, and an advisor can help you keep your debt from getting out of hand.
4. Leverage Advisor Knowledge for Better Repayment
One significant advantage that financial advisors can bring to bear on your student loan situation is their years of experience and knowledge. They may be able to point you toward repayment options and programs that you might not have heard of before. Advisors who specifically focus on student loan borrowers can often walk you through the basics of a variety of repayment strategies, from income-based repayment to Public Service Loan Forgiveness.
Depending on the option you choose, you may be able to pay off your student loans in just a few years. In other circumstances, they may be eligible for forgiveness. And if they do get forgiven, an advisor can help you figure out how to prepare for any eventual tax liability as a result of that forgiveness, depending on what type of repayment plan you select. This knowledge is rarely shared while you are in school or talking with your financial aid office, so a financial advisor can keep you informed about current options so that you can choose the right plan for your goals.
Trust the Professionals to Help You Figure Out Student Loan Repayment
Whether you are considering the affordability of a college education or you are already out of school and facing repayment, it is wise to leverage the knowledge that financial advisors can offer for student loan repayment. The professionals at Inflection Advisors would be happy to learn about your goals and aspirations so that they can offer recommendations about how to approach your repayment. Reach out to learn more or to schedule an appointment to get started.