November 2021 Volume LVI Number 6


Treloar & Heisel

November 2021 Volume LVI Number 6

Seven Tips As You Re-start Student Loan Payments
Patrick Cortazzo Jr. CSLP®, ChFC®
Associate Wealth Advisor 
Phone: (800)300-2451
If you’ve taken out loans to pay for dental school, you likely ex- perienced a brief pause in your payments during the pandemic. But everything must come to an end, and this momentary relief will, too. Here are some tips to ease your transition.
#1 Remember what kind of repayment plan you committed to. If the administrative forbearance for your loan ends at the close of September 2021, you can anticipate your loan pay- ments to resume in October 2021. It may be a while since you paid attention to your school loans. Now would be a good time to check with your provider to find out exactly when you need to start paying, and how much. Remember a ‘standard’ repay- ment plan is 10 years, though there are several alternate plans. Make sure your repayment plan is still appropriate for your current situation and consider alternatives if there have been changes.
#2 Knowledge is power. Knowing what type of loans you have, whether it’s a direct loan or an FFEL loan, and whether it’s subsidized or unsubsidized can help shed light on whether you have additional options with regard to student loan repay- ment. The more you know about how your loan works, the bet- ter informed you’ll be on what next steps make sense for you.
#3 Pay attention to changes in income. Especially if you have really low monthly payments, it is important to note if your income has changed (decreased or increased), because you will have to recertify that income at some point, and that could dramatically change how much you’re paying on a month-to- month basis.
# 4 IDR versus refinancing? Crunch the numbers. Many of the questions that we get are around "should I stay on an income-driven repayment plan or refinance?" Valid question, especially with interest rates as low as they are now (2021). You need to consider several factors. Let’s say you refinance your loan, the cost is going to be the interest that you pay on it, and the length of loan repayment is typically fixed. However, with income-driven repayment, calculating cost becomes more complex, because the cost is dependent on your income and its growth over the course of your career. You’ll need to make some assumptions (which may or may not hold over time).Also, certain IDR plans will cap your monthly loan payments at your Standard 10-year amount, one of the exceptions being Re- vised Pay As You Earn (REPAYE). There is no maximum monthly payment for REPAYE. If your income increases to this level, you may pay your loans off at a much higher interest rate compared to refinancing.
#5 Don’t assume forgiveness. Income-Driven Repayment plans will forgive any outstanding loan balance remaining after 20-25 years depending on the plan. There’s no guarantee that will happen. Your income may increase enough that your loans will be repaid in full prior to receiving any forgiveness, often at a higher interest rate (more costly) compared to if you refi- nanced. If the balance of your loan is forgiven, it’s important to know the forgiven amount may be treated as ordinary income and be taxable in addition to your existing income. To that end, you may be stuck with a large tax bill that will need to be paid out of your existing assets.
#6 Understand the difference between consolidation and refinancing. Consolidation combines your outstanding loans and allow you to make a single payment based on a weighted average interest rate rounded up by .125 percent. It typically does not reduce how much interest you pay. Consolidation may make sense in certain situations. Beware of companies offering to consolidate your loans for a fee. These are often a scam. You should always work directly with your loan servicer and trusted advisor to make changes to your repayment plan.
Refinancing on the other hand, entails finding a lender that will pay off your federal loans, and then issuing you a new loan with a certain interest rate, whether fixed or variable, for a cer- tain duration of time, known as the term of the loan.
#7 Work with an advisor who is educated on student loan repayment plans and who knows your field of study. Not all financial advisors understand the complexities of student loan repayment in the field of dentistry. Find one who does, it’s worth it to work with someone who has experience in this area.
About Treloar & Heisel
Treloar & Heisel offers dental and medical professionals a comprehensive suite of financial products and services ranging from business and personal insurance to wealth management. We are proud to assist thou- sands of clients from residency to practice and through retirement. Our experienced teams deliver custom-tailored advice through an active local presence, while our strong national network ensures that clients experience the same high level of service throughout the country. For more information, visit us at

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Investment Advice offered through WCG Wealth Advisors, LLC, a Registered Investment Advisor doing business as Treloar & Heisel Wealth Management. Treloar & Heisel Wealth Management is a separate entity from The Wealth Consulting Group and WCG Wealth Advisors, LLC.
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