Student loans: Your 5-step action plan to stop the stress

If you’re like many doctors of chiropractic, you’re still dealing with your student loans even though you’ve been practicing for years. Chiropractic Economics hears from lots of DCs, and a lot of them tell us their loans are a significant source of stress; in fact, in our recent Education Survey, loan issues were a big reason some DCs had second thoughts about their career choice.

So when we hear from companies like Student Loan Tutor and they make handling student loans sound so simple, we have questions. Questions like, “Now, how does that work, exactly?”

Zack Geist, the founder of Student Loan Tutor, sat down with the editors of Chiropractic Economics via Zoom in February and gave us the inside track on how student loans actually work, and some of it was pretty surprising ― in a good way. My big takeaway from our interview was that many of our readers were going to feel a whole lot better about their student loan situation after reading the insights in this article.

Here are five action steps you can take, starting right now, to get your student loans off your mind and under control.

1. Know you’re not alone.

Geist launched his company, Student Loan Tutor, in 2013 because he perceived that student loan debt was a huge problem no one was actively trying to solve. There are 44 million federal student loan borrowers out there, and most of them, like you, are trying to navigate repayment plans and other details and getting confused and frustrated.

“As I went into this, I realized that even the loan servicers themselves, who are contracted with the Department of Education, didn’t seem to give a consistent answer across the board,” Geist told Chiropractic Economics. “Each servicer was giving different answers, and there was no accountability.”

As a DC, you’re in a unique financial situation, he noted. Doctors of chiropractic “are put in a position where they have the student loan debt of traditional allopathic medical doctors, but without a lot of the support and without public service student loan forgiveness, and without beginning high salaries,” he said. “They just have a really big challenge.”

But check this out: “Virtually all chiropractors, all the chiropractors I’ve worked with, and I’ve worked with thousands, are going to qualify for loan forgiveness over the life of the loan,” Geist told us.

“This is because a chiropractic business entity that earns a lot of income and a chiropractor, the person who is working with the entity, are not the same thing.”

2. Understand that student loan forgiveness does exist.

On Feb. 21, a fact sheet was posted on whitehouse.gov indicating President Biden had approved student loan forgiveness for almost 3.9 billion borrowers. There are multiple requirements you must meet in order to have your loan canceled.

These complex and often-confusing parameters for student loan forgiveness can be problematic, said Geist, when it comes to borrowers understanding the rules well enough to make an informed decision about which repayment plan to choose and how it will affect them financially, especially at tax time. Is part of the loan taxed as income? Are you still taxed if it’s forgiven? How about the interest?

With multiple different repayment plans and loan types, Geist said, many opportunities for error exist on the part of both you the borrower and the loan servicer. He noted it’s common for borrowers to be enrolled in a different plan than the one they submit their documents for.

“We’re starting to see in 2024 that these servicers were just making errors,” he said, referencing an independent report by the National Consumer Law Center. “The loan servicers, as of 2019, had a 61% error rate. That means if, as a borrower, you submitted all of the documentation correctly, you had a 61% chance that the servicer was going to do something different than what you actually requested. It’d be like if you ordered a hamburger and you got a pizza.”

3. Remember that student loans are not like other loans.

“Student loans don’t operate like any other form of debt,” Geist said. “Don’t even call it a student loan. Call it an educational plan.” Some other (good) things to know:

• Your stated interest rate is probably not the interest rate you’ll actually pay.
• You, the borrower, are different from your business, and payment amounts are based on you.
• There’s flexibility in how your discretionary income, which determines your payment amount, is calculated.
• Interest rates could drop to zero, meaning any interest you’re not paying disappears at the end of the month.

Most financial advisors, even really good ones, don’t completely understand student loans, said Geist, and will advise paying them off before starting to save and plan for retirement.

“Based on how student loans actually function, this is the wrong answer,” said Geist. “Student loans [say] what the ‘stated interest rate’ is. That is very different from what I have coined the ‘effective interest rate.’ To come up with that, it’s a complex calculation. You’ve got to figure out a forecast of what they’re going to pay over the life of their loan. It’s not going to be 7%.

In many cases, that interest rate could actually be zero, or even become a negative interest rate if, based on your income and other factors, you qualify for a $0 monthly payment and have monthly interest forgiven. For example, say you borrow $100,000 at 7% stated interest. You qualify for $0 monthly payment and accrue no interest. At the end of 25 years, that loan is forgiven, and when you pay taxes on the forgiven amount, even if you’re in the highest tax bracket, you’d pay $37,000 for that 25-year $100,000 loan.

“No interest would have accrued, and so they would have essentially a negative 63% interest rate,” Geist pointed out. “Now, if you have a negative 63% interest rate, would you refinance to save a point or two on your payment? Of course not.

4. Get help. It is out there, and it’s worth it.

“Our tagline is ‘the smarter way to repay,’ because if you do it intelligently, you’re going to pay a lot less,” Geist said. “It actually is way cheaper to have professionals managing this element and a lot less stressful than it is to go at this yourself.

Geist’s company starts with an initial consultation, where a staff member gets the answers to vital questions like loan amounts and statuses, and explains to the borrower how to access all of their loan information online. This is followed by a 90-minute call where a student loan “forecast” is put together and the effective interest rate is determined. His team will also communicate with the borrower’s existing financial advisor so a comprehensive financial plan can be built. Once the plan is in place, his company handles all the paperwork and follow-up, and reconfigures your loan situation if regulations and program options change.

5. Take a deep breath. It’s going to be OK.

“When you see that big loan amount, just realize that’s a suggestion,” Geist said. “It says $250,000 at 7%. It’s like a choose-your-own-adventure story. If you want to try to pay it like that, you can. Or you could say, hey, is there some other way to pay this?”

GLORIA HALL is the editor-in-chief of Chiropractic Economics magazine.

About Student Loan Tutor

As one of the leading experts in federal student loan repayment, Zack Geist and his team at Student Loan Tutor, headquartered in Salt Lake City, Utah, have taught thousands of student loan borrowers all over the U.S. how to save enormous amounts of money and hassle. Schedule a free evaluation (a 90-minute call) with Student Loan Tutor here.