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  • Brent D Dickerson CFP® EA

Do Your Student Loans Prevent You From Saving?

In America, there is currently about $1.2 Trillion in outstanding student loan debt. For Gen Xers over the age of 40, they currently hold about 35% of this total amount, which is equivalent to about $420 Billion! If you find yourself as part of this statistic, then you are more likely to have much less savings for your own children’s education than others without student loan debt. For people with this debt burden, they have typically saved around $4,000 for their children’s higher education needs. This is about enough to put a student through a semester of state school education. The amount saved by Gen X parents without student loan debt is a little more impressive, but not by much. They could send a child to a private university for maybe a year, or pay for most of the college tuition expense of a 4 year degree at a state supported university (in today’s dollars). More and more, households are finding that paying off student loan debt is surpassing the household expense of groceries as the number one monthly expense. I can attest to this, as my wife and I are paying hefty amounts of student loan debt. We are like many others who at one point found ourselves out of work and in an extremely competitive job market searching for work. In the end, my wife went back to school to change careers and earn a graduate degree, as did I. Because of this, we have a great deal of loans that we took out to not only pay for our education, but to also cover certain living expenses. I often joke with people that the reason we don’t have children is because our student loans are our children. I have even named them, and Bill Cosby’s stand-up routine will tell you those names. You can see it here.


Photo by Thought Catalog on Unsplash

For those of you in this group, there are things that can be done to lessen the burden, or at the very least help you to pay less in interest. If you are of a certain profession, like teachers or working for a non-profit organization, you can have some of your debt completely forgiven. There are even companies out there that can consolidate your loans into a single lump sum with interest rates much lower than that of government consolidation programs. If you consolidated through the government, you are probably paying somewhere between 6 and 8 percent interest. For the typical $20,000 loan at 7% interest, this means that you could be paying nearly $40,000 over a 20 year period to pay this loan back. That is $20,000 for the principle amount, and nearly $20,000 in interest. If you were able to reduce the interest rate to 4 percent, you could reduce the interest payments to just over $9,000 over the same period. In addition, each month, you could divert the monthly payments savings to your retirement fund or your child’s education. Each month, this could be only about $30 dollars, which doesn’t seem like a lot in the grand scheme of things, but in a well-diversified portfolio returning 5 percent, that $30 a month could equal more than $12,000! That could be enough for at least some education expense that your children won’t have to borrow for in the future.

Trinity Wealth Management has partnered with a company that works with individuals to refinance their student loans into lower interest rate loans that save on monthly payments and overall interest charges. This company uses the power of social financing, much like crowd funding or other group micro-loans, to secure low interest rate loans. In addition, clients who use this service can be eligible for an upfront bonus paid back to the client. Because I am a fee-only advisor, I cannot take commissions or kickbacks from companies like this, so they have agreed to give the money that they typically give to other commissioned advisors, back to the clients!


So what are you waiting for? If you’re ready to see if I can help you to lower your student loan payments and help you to save more for your children’s education or your own retirement, then give me a call today so we can have a conversation about you becoming a valued client of Trinity Wealth Management. Remember, you don’t have to live in Lubbock or even West Texas to be a client. I have established my firm to help clients throughout the state of Texas, and even in some other states where local jurisdictions allow. So call (806) 584-8418 or email brent@trinitywm.com today to get the ball rolling on this amazing opportunity!