As an advisor who recently completed the CSLP course, I can assure you that what I thought I knew about student loans was just the tip of the iceberg. Many advisors I speak with (I used to be one of them) seem to have one of two answers when they encounter a client with significant student loan debt.
Option 1: Put as much of your income as possible towards paying down your debt. In other words, get rid of the debt as fast as possible and sacrifice your social life along the way.
Option 2: Refinance your student loans with a private lender to get the best possible interest rate and then pay down your loans as quickly as possible to reduce your overall interest paid.
While this advice usually comes from a genuine desire to “help” their clients, advisors don’t realize all of the options available to their clients, as well as the risks that are involved when giving generic advice to a very complicated situation.
So, what are the other options and risks, and what did I learn during the course? Let’s dive in and focus on some key takeaways:
Student Loan Are Complicated
Before taking the CSLP course, I always knew there were intricacies involved with student loans. Still, I had NO IDEA about the level of regulatory scrutiny and ever-changing landscape of repayment programs available to borrowers. Even if a borrower manages to navigate this landscape and get on the right repayment program for themselves, there are significant administrative duties they have to continue to execute to ensure they legally remain on their repayment program.
If that isn’t complicated enough, deciding how to repay their loans, all depends on factors such as:
- income earnings today
- income-earning potential
- whether they are married or single
- tax filing status
- how many kids they have (or plan to have)
- what state they live in
- when they went to school
- whether they have undergraduate or graduate loans
The CSLP course did a great job of breaking down these complexities into various chapters and providing examples along the way that were immediately applicable to my current practice.
Typical Advice Misses So Many Opportunities and Introduces Risks to the Client
As I continued my way through the CSLP course, it became more and more apparent that the “typical” advice that I used to give for student loan borrowers missed so many opportunities for my existing (and future) clients. Additionally, the course highlighted the risks involved when providing this limited, surface level, and generic advice for my clients.
There are many risks involved with the decisions surrounding student loan debt, such as the increased costs of paying down debt, vs. pursuing forgiveness, refinancing student loan debt, and losing critical financial protections, among others.
Understanding these risks are just some of the things that the CSLP course was able to highlight and ultimately change the way I provided advice to my clients.
CSLP Knowledge will become More Valuable
From speaking with my current client base, as well as prospective clients, I knew that the student loan issue in America was a big deal. However, after taking the CSLP course, I realize just how endemic the situation is.
In my experience with the CSLP course, the following statistics stood out to me and brought to light the importance and urgency around providing proper financial advice for borrowers.
- Over 45 Million Americans have student loan debt
- There is over $1.6 Trillion in Student Loan Debt (and growing!)
- Nearly 20% of borrowers are either delinquent or in default on their loans
- Median student loan debt for professional’s ranges between $42,000 and $160,000
- 81% of Americans with student loans have made personal or financial sacrifices as a result of their loans
- 50% have delayed contributing to a retirement account due to their loans
The growth of this issue has been astronomical and having a more informed and accurate way to advise current, and future clients on their student loans will only become more valuable in the years ahead.
The CSLP is a positive step towards being the best advisor possible
The CSLP course opened my eyes to the various strategies available to my clients and has enabled me to provide more holistic financial services. I can say that the CSLP course is unequivocally a solid return on your investment.