Written By Sim Terwilliger, CFP®, CSLP®
Good help is hard to find these days. At least, it can feel that way when it comes to figuring out how to tackle your student loans. With an abundance of alphabet soup designations, how do you know who to trust?
Naturally, many people turn to their financial advisors for assistance. Is your financial advisor equipped to help you? It depends.
What is a financial advisor vs. a financial planner?
“Financial advisor” is an unregulated term. It can refer to a financial planner, broker, money manager or insurance salesperson.
A financial planner, on the other hand, is a professional who assists individuals with achieving their long-term financial goals by providing tailored advice and guidance. Working closely with their clients, financial planners assess their current financial position and help identify their goals to develop strategies for reaching desired outcomes such as wealth accumulation, debt reduction, retirement savings or buying a house.
In addition to providing advice, personal financial planners can help their clients monitor their progress in reaching their financial goals and make adjustments as financial circumstances change. Ultimately, personal financial advisors play a critical role in helping individuals create and maintain a sound financial plan to reach their financial objectives.
Are financial planners equipped to handle student loan repayment?
When working with a financial planner, you typically want to hire someone with their CFP® designation, considered the gold standard.
A CERTIFIED FINANCIAL PLANNER has undergone a robust curriculum to learn basic and advanced financial planning concepts, must sit through a rigorous exam, meet ongoing CE and ethics requirements and have a certain amount of experience before they can use those letters after their name.
However, at the time that I sat for and passed the exam (March 2020), the topic of student loans was notably absent from the curriculum.
While it is possible that this has been remedied for recent cohorts, a large number of CFP® holders do not have student loan expertise from this designation alone. This can result in a well-meaning planner directing someone to focus on debt payoff for their student loans when other options like Public Service Loan Forgiveness (PSLF), Income Driven Repayment (IDR), filing taxes separately, consolidation, Borrower’s Defense or disability discharge may be better in some instances.
Certified Student Loan Professionals
Financial planners who want to gain expertise and provide good student loan advice will usually get the CSLP® designation. A Certified Student Loan Professional is knowledgeable about the different types of student loan repayment plans, forgiveness programs and other options borrowers have when managing their student loan debt.
They can identify potential loan consolidation, double consolidation or refinance opportunities and provide guidance on managing a borrower’s existing student loan debt.
Additionally, they can help borrowers understand their rights and responsibilities if they are in default or delinquent.
How to know if your financial planner understands student loan repayment
Some financial planners have put in the work to learn about student loan options and may not have the CSLP® yet. If you’re not sure if your financial planner is knowledgeable, consider asking them these questions:
- What is the difference between PAYE, REPAYE, IBR and ICR?
- What is the difference between consolidation and refinancing?
- If you are a Parent Plus borrower, what is double consolidation?
- How does the PSLF program work?
- Why do you recommend debt payoff instead of Income Driven Repayment forgiveness? (Ask for some math in addition to whatever answer they give you.)
- How can I lower my Income Driven Repayment monthly payment? (They should mention pre-tax deductions and possibly filing your taxes separately.)
This is not an exhaustive list of questions, but these are basic questions that they should be able to answer. If they can’t, you don’t need to necessarily fire them if you are happy with the other services they provide, but you may want to find a CSLP® to help manage your student loans.
The Student Loan Planner® team is made up of financial planners, financial coaches and financial analysts, all of whom are student loan experts. If you aren’t sure who to trust, reach out to us for your custom student loan plan today!
Not sure what to do with your student loans?
Take our 11 question quiz to get a personalized recommendation for 2024 on whether you should pursue PSLF, Biden’s New IDR plan, or refinancing (including the one lender we think could give you the best rate).
