In 2015, I decided to quit my job as a bond trader and travel the world. It was a risky decision at the time, but taking that sabbatical led me to turn my passion for helping people with student loan debt into this business you know as Student Loan Planner.
One of the first consults I did was with a physician in New York. She had gone through a challenging personal situation and was struggling to make ends meet. Between high student loan payments, child care and rent, she was desperate for help.
I felt genuinely called to help her and thousands of others in similar situations with their student loans, though I didn’t know if this business would be successful when it began three years ago.
The current state of the education and student loan industries
Three years ago, the student loan industry was like the Wild West. Filled with scammers and changing repayment plans, here’s where the field has ended up.
Some schools are downright profit-hungry
You can ask for a school to be upfront and honest, but schools are like people: Some are very aggressive, and others are pretty transparent. Every school has a different culture with a diverse group of people running the organization, and each has its own way of doing things.
But for almost every school, you’ll figure out the “why” behind what it’s doing if you follow the money.
For example, I was at a chiropractic conference recently and a fellow attendee said his chiropractic school paid for him to fly out to the campus for a tour. The school paid for everything, the flight, hotel and meals, and it made such an impression that he chose to get his degree there.
What this person didn’t realize is that his paid-for visit to the college was a business scheme designed to drum up business. It was strategic. The college knew that paying for 100 people to fly in usually resulted in 10 new admissions, and that’s a 10% return.
Even if the cost was $10,000 per person, each person who signs up might be worth $100,000 or $200,000 in tuition and fees. This business decision is predatory, in my opinion, but these unethical recruiting tactics are becoming more and more common.
The future of student loans is uncertain
No one knows what will happen to the future of student loans. Will they be wiped out tomorrow? Maybe. But I feel very deeply about my calling to help people with student loans and I want to be here to help people through the uncertainty. The work Student Loan Planner does is crucial because of the stress and anxiety that comes with the burden of student loan debt.
My goal for this business has always been to remain a mission-driven business that has an enormous, positive impact on people’s lives. I want to fight the battle with you, and my hope is to continue that purpose as long as student loans are around.
If student loans go away, perhaps our purpose will be fulfilled. I don’t think that’s going to happen, though I could see more generous repayment programs in the future or limits on the amount borrowers can take out. Student Loan Planner would probably take a hit if that happened, but that’s okay. I’m not in this to just make money; I want the business to be useful in helping people like you make a better life.
Personal finance 101
I’ve done thousands of student loan plans in the past three years, and the same things keep coming up, time after time.
Maintain your ability to save
The success of your finances doesn’t depend on how many lattes you buy; how much you spend on your next mattress; or what the ideal mix of stocks, bonds, real estate, or other investments is for your portfolio.
Instead, your financial success really depends on doing these three things:
- Focus on your savings rate.
- Make sure you are investing your savings (instead of leaving that money sitting in a savings account).
- Earn more money and maximize your income potential.
Banks often pay a measly 1% or 2% interest on savings, and you’ll never grow your money that way. Figure out how much of your income you can save and take long-term risks by investing to build wealth.
If you want to have a high savings rate, there’s a secret I’ve learned from three years of talking about student loans all the time: Spend less on cars and houses. In many cases, 40% to 50% of your spending goes to cars and houses, which uses up your potential to grow your savings.
For example, I tell people all the time to only drive paid-off cars that are at least two to three years old and never spend more than two times your income on a house.
It really is that simple.
Don’t miss out on investing
Some people see investing as the 500-pound elephant in the room but it isn’t as complicated as you think. It’s not about trying to get the best return, picking the next “hot” stock, or paying less on commissions at your discount brokerage account.
The reason you need to invest is because it buys you time, but people don’t usually put those two things together.
So I encourage you to save and invest and grow your assets in order to get control and capitalize on time. You might not know today what your future brings, but 20 years from now you’ll be thankful to have the flexibility to do what you want with your time.
Building and maintaining an honest business
As I reflect on the last three years of working full time in the student loan industry, I’ve learned some lessons that can benefit all business owners no matter what field they’re in.
Focus on value rather than cost
When something is cheap, you think it’s a great deal; however, running a business has taught me to think in terms of value rather than focusing on cost. I’ve hired people in the past and spent $1,000 only to have them not follow through. I paid someone $7,000 to do the same thing and they knocked the job out of the park. Their work paid for itself and more when factoring in the higher revenue earned for the business.
It’s fascinating. The $1,000 I paid the first person was essentially wasted money. Even though it costs more, the $7,000 I paid later was money well spent because of higher skills and better value of work.
When you’re a business owner, you must think in terms of value. While something cheap can have a ton of value, don’t spend money on things that aren’t that helpful.
View your spending in business terms and weigh the value you get for your investment of cash.
Take more risks!
The only reason I have this company is because I made a choice that some would see as stupid. I quit a perfectly good job that had excellent career prospects and traveled the world without any plan whatsoever. Good things can happen if you take a risk. I’ve seen so many people who don’t go after their dreams because they’re afraid of what might happen. But if you have a dream, why not go for it?
The biggest risk is not taking the risk. If you want to start a business, a practice, a family, buy a house — whatever it is — do it. Taking that risk could make life worth living.
Don’t talk yourself out of it, even if you have student loans. The team at Student Loan Planner can show you how to minimize or optimize your student loans in a way that helps you do anything you want to do.
Resist financial temptations
Financial temptations exist now that weren’t around a few years ago. Student Loan Planner is asked to promote things all the time. The business has made some lucrative partnerships and has its own products, too. Being in the student loan refinancing industry means there is a huge incentive to get people to refinance their student loans or take out a private student loan.
One thing I worry about is someone getting hurt by refinancing when it isn’t the right decision for them. I never want to be tempted by money to do something wrong because, if what I’m doing isn’t right, then I’d be disappointed in myself and I’d be disappointing you. And that’s what I’m really worried about.
I hope that you can hold me accountable to meeting that standard. If you ever think I’m doing something wrong or I made a bad decision or I let a conflict of interest cloud my judgment in how we’re helping you, please let me know because that feedback is so valuable. I appreciate you, and I appreciate you trusting me to the extent that you’re willing to listen to Student Loan Planner for help with your finances.
Thank you for the opportunity, and I hope you’ll continue to give me opportunities to help people achieve financial success for at least another three years.