Written By Travis Hornsby, CFA®, CFP®
Alex Barnette is a Licensed Marriage and Family Therapist (LMFT) who graduated from St. Edward’s University in Austin, Texas. She currently has about $115,000 in student loan debt that she’s paying off. She’s also launched her own practice — Alex Barnette Counseling, also located in Austin.
In today’s episode, you'll find out:
- What schooling looks like for someone wanting to be an LMFT
- The breakdown of various license abbreviations in the therapy world
- The tuition to expect in a master’s program to become an LMFT
- How private schools tend to raise their tuition cost every semester
- How Alex handled her student loan debt while working after graduation
- Why agency fees can make it difficult for LMFTs to focus on their student loans
- How Alex took the leap to start her own practice
- The difference between qualifying for Public Service Loan Forgiveness and income-driven repayment loan forgiveness
- How getting married can drastically affect your student loan repayment
- Why student loan servicers can be so difficult to deal with
- Alex’s advice on when to seek therapy — and how clients choose what to get out of it
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Episode 21 Transcript
Travis Hornsby [00:00:04] Hello, and welcome to another episode of the Student Loan Planner® Podcast. Today I've got Alex joining me. Alex is a licensed marriage therapist in Texas, and I'm really excited to learn more about this field because honestly, I really don't know that much about it. So Alex, welcome to the show.
Alex Barnette [00:00:19] Hi. Yes, thank you for having me.
What schooling looks like for an LMFT
Travis [00:00:21] So my first question for you is, I'm assuming that you have to have some sort of graduate degree to do what you do. But I've got no idea what that career path looks like. So maybe you could give us a little bit of detail on how one becomes a licensed marriage therapist.
Alex [00:00:35] Yes. So it's a master's degree at minimum. So what I have is a Master of Arts and Counseling, and I got that at St. Edward's University here in Austin. That took me about three years to get.
Travis [00:00:47] OK. Now, is that a typical length of the program — three years?
Alex [00:00:51] It's a little bit different for everybody. And it just depends truthfully on your finances. If you have someone that can kind of support you while you're going to school, then you can take maybe four classes a semester or potentially more. But for most people, they're working full time while they're getting their masters. And so it's about three years.
Travis [00:01:13] That's interesting. So you can actually work full time after a bachelor's degree and make money while you're going to school?
Alex [00:01:19] Yeah. I mean, it's pretty rough. I think everybody has a different way of doing it. I worked as a receptionist for three years, so I would go to work 6:45 (a.m.) to 3:45 (p.m.) every day. And then kind of sit in traffic. Go to class from 6:30 (p.m.) to 9:30 p.m.
Travis [00:01:37] Wow. And you had to do that for three years.
Alex [00:01:39] I did. Yeah. And so the last year you do what's called a practicum, which is basically an internship. And what they don't really tell you is that it's really difficult to work full time at that point because you're seeing a lot of clients, and there just — there just aren't enough hours in the day to go to class, have a part-time job basically as your internship and then work full time. So at that point, I dropped down to part time, but for the majority of it, I was working full time.
Travis [00:02:10] So say that I want to be a therapist of some sort. What's a good bachelor's degree program for that?
Alex [00:02:15] I had my bachelors at UT in human development. Honestly, you could have a bachelor's degree in pretty much anything. Some of the therapists that I see actually doing pretty well have a bachelor's in marketing or a bachelor's in business. Or you could do psychology. It really doesn't matter leading up to it.
Travis [00:02:36] That's good. I mean, some these things are kind of flexible, right?
Alex [00:02:39] Right. Yeah. I think [for] a lot of my peers, it was kind of their second career. So yeah, it doesn't really matter for your bachelor's.
Therapist licensure abbreviations — and what they mean
Travis [00:02:47] That's cool. So you've got your bachelor's degree. You probably have the average, you know, $30,000 of student loan debt. You probably didn't. But you know, say somebody, you know, is your typical person in America trying to become an LNT. Is that the right abbreviation?
Alex [00:03:01] It's actually LMFT. So just your traditional talk therapist is usually either LPC, LMFT or LCSW.
Travis [00:03:10] Tell me what those stand for.
Alex [00:03:11] Oh, so it would be a Licensed Marriage [and] Family Therapist. And until you get all of your clinical hours, you're technically Licensed Marriage [and] Family Therapist Associate. You have an ‘A' at the end. For LPC, it's Licensed Professional Counselor. And until they get all of their clinical hours, they have the initial ‘I' — so Intern. And then I think for social workers, it's LMSW — Licensed Master Social Worker. And then once they get all of their hours, it's LCSW (Licensed Clinical Social Worker).
Travis [00:03:46] That makes sense. I've had a lot of people email us with MSW behind their name. So I've at least kind of recognized that abbreviation. They're the ones I'm not as familiar with. What is the breakdown of what those different credentials do? So like, what kind of work would you see, you know, an LMFT doing versus one of the professional counselors versus a Master's of Social Work?
Alex [00:04:08] So social work I'm not as familiar with. Just because it wasn't — LPC and LMFT, it's basically a difference of a few courses. It was the same program. Took a lot of the same classes. And it was pretty much the difference of taking one class in couples counseling versus one class in learning kind of the DSM. Once you graduate, everyone can see couples, but technically LMFTs would have the most experience, which is what I am. I have the most experience working with couples because we have such a high requirement of how many couples hours that we have to get to be licensed.
Travis [00:04:50] How many hours is that?
Alex [00:04:52] So I think it's 1,500 direct hours total, and of those 1,500, 750 of those have to be with couples or with families.
Travis [00:05:03] Okay. And that's where you meet those hours requirements? That's when you can take off the Intern or the Associate off the end of your title, right?
Alex [00:05:09] Yes, and it's different for each licensure. I think for social workers, they have — and I feel really bad if I'm messing this up for social workers, I'm sorry. I think they have just to be full-time employed for two years. And then they take their exam, and they're done. For LPCs, it's just a total of 1,500 hours, I think. So it can be with couples. It can be with individuals. It doesn't really matter. So for LMFT's, a lot of us it takes longer to get our licensure because it's just harder to get all of your couples hours.
Travis [00:05:43] Now I don't know if this would be true. Maybe this is probably state by state. But is there anything from preventing someone who, let's say that, you know, she's like a, you know, an elder at her church or something, and she decides, “Hey, I'm great at talking to, you know, married couples about their problems. I'm going to start my own business.” Is there licensure things that prohibit that person from doing something like that?
Alex [00:06:06] Yes. So to be a therapist, you would have to have your master's degree, get all of your hours, be licensed. But technically, anyone could be — oh gosh. And now I I'm going to feel bad saying this, but I think anyone could be a life coach or a pastor or see couples if they wanted to, but they couldn't advertise themselves as a licensed marriage and family therapist.
Travis [00:06:29] Yeah, that makes sense. Well yeah, I mean, you'd obviously, would have, like, religious leaders that would be giving a lot of this advice, either paid or unpaid, right? As part of their duties.
Alex [00:06:39] Right. Yeah, and I think it's funny you say that because we do get — A lot of the requests from couples I get are, you know, wanting to vet and make sure that I'm not approaching it from a spiritual perspective. And wanting to make sure that I, you know, have a background in education and experience versus, like, what just my beliefs are.
Travis [00:06:59] Sure. I wonder is that, like, a big differentiator between different people in the profession? Like, do some people kind of hold themselves out as saying, “Hey, we're, you know, specialize in couples who are, you know, Evangelical Christians or Catholics or Jews or Muslims or something.” Like, is that a common thing?
Alex [00:07:17] I don't see a lot of it here in Austin. I think maybe because we're a little more liberal. I think most of us kind of lead with just our trainings and our clinical background and try to stay out of that kind of spiritual realm.
What tuition looks like for a would-be LMFT
Travis [00:07:31] That makes sense. So what kind of expenses can you expect for a master's program to become a Licensed Marriage Family Therapist? What kind of, you know, tuition? And I assume that, you know, you working while you were in that program reduced the amount of debt that you ended up having.
Alex [00:07:49] I wish it did. No. I worked full time, but that was pretty much just supporting myself. You know, paying for rent and food and that kind of stuff. And it's partly because St. Ed's is maybe a private university, but I still ended up with — Right now, I have $109,000 in debt. Well, plus one private loan of $6,000, so about $115,000.
Travis [00:08:15] Yeah. And I'm going to guess everything but that one private loan is a Stafford loan. Is that right?
Alex [00:08:21] Yes. And I even actually did pay some towards tuition on my own. Maybe the first and second year. And by the end, I just couldn't afford to. But I was just taking out what I needed to do for tuition.
Travis [00:08:34] That makes sense. What was tuition at your program?
Alex [00:08:37] Well, it had to have been maybe $20,000 a semester. And I think it went up every semester, which I also wish I would have known. Because you know, then by the time — Like, if I waited to take a class until the next semester, then it was that much more expensive to take it the next semester. But I think it would have been $20,000, maybe $22,000.
Schools raising tuition every semester
Travis [00:08:59] I just want to go on a real quick rant, Alex, because what you just expressed is one of my biggest pet peeves about graduate schools everywhere. And every single graduate school pretty much does this. Like, they'll give you a cost of attendance estimate, right? And they'll show you $40,000 per year or $20,000 per semester or whatever it is, right? And what they do is they show you the cost, but like, everybody in the entire world knows, you know, that's not what they're actually going to charge, that they're going to have increases in the price. They just aren't stated yet, right?
Alex [00:09:31] Right.
Travis [00:09:32] So I'm just going to use kind of a random example. I went to University of Florida around, like, the Tim Tebow days. So you know, we used to joke, like, everybody in the whole stadium knew that he was going to run it in, like, third down, you know? Because that's just that's what you did. That's just what he did. So it's kind of like, grad schools everywhere, you know, for sure that they're going to raise tuition pretty much every year. Like, it's very, very rare for a grad school not to try to raise tuition, especially, you know, a private school, or a, you know, a program like that. Even most public schools, honestly, every single semester, they're going to raise tuition.
Travis [00:10:05] So just one little, like, tip is with your borrowing, if you kind of have that cost-of-attendance estimate. Like, whatever amount you're planning on financing it by, if you multiply that by 1.25 — 125% — that's approximately what you will leave a program with in a lot of cases because of tuition increases, origination fees and other expenses like program costs going up. That's a range. Like, 1.25 is just kind of a rule thumb, probably for a program that's on the shorter end where you're taking mostly Stafford loans. It's probably mostly like — probably more like 1.15 Is the multiple that you'd use because the origination fees for Stafford loans are a little bit less.
Travis [00:10:42] Here's something that you might not know. Like, you kind of dodged a bullet a little bit with your expenses because Stafford loans have interest rates right now of about 6.6%, and they charge an upfront origination fee of 1%. But Grad PLUS, which you would have taken out if you had to borrow a lot for living expenses, you would have had to take those out at — The interest rate right now is 7.6%, and the origination fee's over 4%, which is an upfront fee. Isn't that crazy?
Alex [00:11:09] Yeah. Yeah, I know my average interest rate right now is 5.75% on what I'm paying back.
Graduating and then working with student loan debt
Travis [00:11:15] Yes, that's good. You took out the Stafford loans at a good time when the rates were lower. So that's — At least that happened. At least that's a good thing. So you've got your hundred thousand or so of debt, and you know, you started off working for another organization. So maybe you can talk about that first period when you were working with this debt, trying to figure out what to do with it.
Alex [00:11:35] You mean right after graduation?
Travis [00:11:37] Yeah, sure. Like, what was that process like? Like, when did you get the dreaded, you know, letter from your loan servicer being like, “Hey, congrats about your degree. Here's what you owe.”
Alex [00:11:45] Yeah, yeah. So this is the part that I really was not prepared for. And I don't think that I was told maybe until the last year of graduate school. But as an LMFT, you still have to pay for supervision after you graduate. So basically, you're paying to be a therapist, even after you've paid for all of these classes and tuition. So I had a one-year grace period where I could have been paying back my loans, but honestly, I couldn't afford to because I was paying $300 a month in supervision. And I started out at an agency, and I also kind of thought — You know, I would see on the website that clients are paying $65 to $100 per session to the therapist. So I thought, oh, that's pretty good money. But I was not aware that the agency keeps a very good portion of that money. So I just really wasn't making enough to pay off any loans in the first year.
Travis [00:12:46] Yeah, that's intense. So like, approximate what percentage is typical for an agency to take of your fees.
Alex [00:12:53] It varies. I think it's around maybe 50% to 70% of that fee they'll keep.
Travis [00:13:00] Wow. And so that's, like after you're paying — does that include your supervision fee or no?
Alex [00:13:05] It does not.
Travis [00:13:07] Whoa.
Alex [00:13:07] So it's kind of the double whammy of ok, no, that's actually not your money, and you're going to need to go get a supervisor. In the agency that I'm at, they just pay you a flat fee. I think I started at $30 per session.
Travis [00:13:22] That makes sense. Did you ever consider working for a not-for-profit organization? Is that even a career field or a path that's open to people that are LMFT?
Alex [00:13:31] Yeah, I did. And actually, most of them are looking for licensed — LMSWs. Most of them were looking for social workers. So I applied to a good amount of jobs at, like, Austin State Hospital or some of the other places like that, but I actually just didn't even hear back.
Travis [00:13:50] Mm hmm. That's interesting. Now tell me if this is like totally wrong. Because you know, you're the expert, I'm not. But my impression of, like, an LMFT would be that — you know, obviously getting a divorce is very expensive economically in most cases. And if you can work through your issues and prevent that, then that's massive cost saving. There's somewhat of just a pure, you know, ROI (return on investment), despite all of the emotional things that go into that kind of a decision of ‘Can this be a good marriage? Can it be salvaged?' That's probably a positive return on investment for money you spend. So like, I'm guessing that marriage counseling is primarily, like, a middle class and upper middle-class type of client. Is that accurate? And I'm assuming, you know, social work would be more like a lower-income client.
Alex [00:14:37] Yeah, I think — actually, I think you're right about that. That has been kind of my experience so far. Definitely with clients.
How Alex started her own practice
Travis [00:14:44] That's interesting. So maybe you can talk a little bit about your plan of switching from working for this agency that's taking so much of your compensation and, you know, the idea of starting your own business. You know, what did you kind of think about in preparation for launching your own business?
Alex [00:15:00] Yes. So I started about nine months ago, and it's really just a slow process. I think from what I'm told that's kind of what most therapists experience. And it's — I think the first thing I did was just get a website. Get a Psychology Today profile going, and that's relatively inexpensive. And then you have to pay for your rent. So you need an office to operate in. So my overhead is still pretty low. And fortunately, the agency that I'm at does allow me to start a private practice. A lot of places won't. A lot of places will only allow you to see clients with them. So some therapists just kind of have to take the leap and leave where they're working and try to start from scratch. But I'm fortunately able to start building. So I'm about half and half right now — half in private practice and half at an agency.
Travis [00:15:52] That's cool. Now what do the economics look like for doing a private practice? Do you rent a space for a particular portion of the day? Do you have to pay, like, a monthly rent? Like, what does the overhead look like for running a private practice as a therapist?
Alex [00:16:04] It varies for everyone. It's, you know, maybe in Austin because there's — I don't know, maybe because it's so populated, but there are just a lot of different arrangements. I've seen places that have kind of coworking spaces that rent by the hour. Or you can own your own office and just pay it like you would an apartment. Or you can also sublease, which is what I'm doing. So as a subleaser, I'm paying, I think, $300 per month right now in rent. And that's the bulk of my overhead really. The only — If you include supervision, that would be another $300. So my overhead is about $600.
Travis [00:16:43] That's not bad at all, actually.
Alex [00:16:46] No, it's really not. There are — I mean the Psychology Today is a popular one that everybody pays like $30 a month. And some months, it really doesn't seem worth it. But at the same time, it's only $30. So there are little expenses like that. And the other one is just trainings and keeping up with your licensure. You know, that's all out of pocket.
Travis [00:17:07] That's interesting. But now your plan, I'm assuming, is to eventually make more money doing private practice than the agency, which takes a lot of your revenue.
Alex [00:17:16] Right. Yes. And that's been very tricky as well because I think, like you were saying, it kind of — There are almost seasons when people meet therapists. So that's one of the things that I'm realizing, is there are only about, like, nine profitable months. And maybe that's different for other therapists. But that's kind of just been my experience over the past few years, is it's almost like a teacher where they have the summers off and, like, a winter break. That's kind of what we experience, except, you know, obviously we don't have a salary. So you just kind of have to have your expenses high enough that you're accounting for those months when people aren't going to be coming in.
Travis [00:17:57] Ooh, talk about that. So are you saying that people do not have marital discord in the summer months?
Alex [00:18:02] They do. But I think it seems to go along with their kids' school year almost. Or just vacations. People aren't as stressed out when work starts to slow down, which is a great thing. But yeah, they're not as consistent with therapy during the summer, or — I would say we all experience kind of the craziness of the holidays. So maybe like, September through Thanksgiving, things really get kind of hectic. And then about, maybe after Christmas, things are kind of dead for a while.
Travis [00:18:35] Mm hmm. So any of the fights of people were going to have were over the holidays. And once the holidays are done, they're — you know, they're through.
Alex [00:18:42] Yes. People kind of experience this freak out moment of, ‘oh my gosh, I have to go spend the holidays with your family and you're going to be with mine and this is awful.' And then they just kind of get through it, and they're like, ‘oh never mind, we're okay. And we're going to take a break.'
Travis [00:19:01] That's really funny. So in terms of your debt, like, your plan to get rid of it. So what is a realistic income for somebody in private practice as an LMFT?
Alex [00:19:10] Oh gosh, it's so variable. And part of it is it's a female-dominated field. So just for whatever reason, a lot of the therapists that I've seen go into private practice, then kind of slow down to have a family. So you know, a full-time caseload looks very different for everybody. It can be anywhere from 10 clients to as high as 30 clients a week. But I don't know, it's really different for everybody.
Travis [00:19:36] Would, say, $60,000 be a reasonable estimate? Or is that too high?
Alex [00:19:40] I think the first year in private practice, it's probably closer to $30,000. And then once you get a consistent caseload, I think $60,000, maybe $75,000.
Travis [00:19:53] So that's really interesting because what you're describing is a debt-to-income ratio that is above 1.5-to-1. So what that kind of means is — So say you have, like, $110,000 of debt, right? $110,000 of debt, like, how would you know if you're a good refinancing case? So what I would typically say — and this is just to somebody that's, like, randomly sending me an email, or that I, like, am hanging out with at some, you know, reunion event or something that asks me if they should refinance. It's not a detailed look at it, but if you want kind of the quick-and-dirty math, it's like, $110,000 divided by 1.5 at $73,000 a year. So if you're making more than $73,000 a year right now — You're working in the private sector, and you can get a good rate to cut your interest rate from, you know, 5.6% something to 4 point, you know, something [percent], then that might be ok to go ahead and refinance. That's at your taxable income.
Travis [00:20:44] So say that you have a $70,000 income, and you're a pretty successful therapist. And you're wondering, do I try to tackle my debt? Or do I try to do a different path? And this is where things get kind of complicated because what you can do is you can say, “Well, I'm going to open a retirement account and put all my money in my retirement account that I can.” And then that could knock down your income from $70,000 something to $50,000 something in terms of what the government sees, right?
Travis [00:21:11] So what happens is if you're utilizing a plan like a, you know, Pay As You Earn, for example, just to use one of the plans, then your payments — If you're showing income of, like, say, like $51,000 because you're doing the max $19,000. If you're doing that, then your income — your payments could be as little as, like, $200, $250 a month.
Alex [00:21:33] Oh, wow.
Travis [00:21:34] Yeah. So if you're going to pay this back in full, that's like, $1,100 a month over 10 years. Now the big question is, will you still have something left to forgive at the end of the period? So that's where you kind of guess what the forgiven balance is going to be — if it makes sense to go for forgiveness and pay taxes on the forgiven balance or not. And that's just kind of an interesting thing, you know, that a lot of folks don't know about. And then when you get married, legally, then you have to take your spouse into consideration because the government's going to ask for a percentage of your spouse's income too if, you know — And if they don't have any student loan debt, then that payment is going purely towards your loans. So that might influence whether or not you refinance or go for forgiveness.
Debt forgiveness strategy for an LMFT
Travis [00:22:12] Now did that ever cross your mind in terms of when — thinking about getting married, you know. The fact that — did you always view it as you would have to pay back the debt, never considered a forgiveness strategy? Or did you think about that at all?
Alex [00:22:25] I pretty much knew I was going to have to pay it back. I had thought about forgiveness strategy as a nonprofit or something. But all of those would be 10 years. And like I said, none of them really got back to me. So right now I'm on a Standard plan, so I'm paying about $1,400 a month.
Travis [00:22:43] So that's actually a common misconception. You say you said that you knew you wouldn't be able to do forgiveness. So private practice LMFTs can actually qualify for forgiveness in private practice. Yeah. But it's not the 10-year version that everybody knows about. The 10-year version everybody knows about is Public Service Loan Forgiveness. So that's the program that you have to work full time. You know, you have to work at least 30 hours a week or your employer's definition of full time, whichever is greater. And then you have to do that for 10 years cumulatively. You can take breaks, but cumulatively, you have to hit 10 years of service, and then the balance is forgiven tax-free. The alternative to that that's open to everybody no matter if you're, you know, a part-time dog walker or you're a CEO of a company or anything in between, the thing that's open to everyone is something called IDR (income-driven repayment) loan forgiveness. So IDR loan forgiveness is a kind of forgiveness where you pay on one of these income-based plans for 20 to 25 years, and then at the end of those 20 to 25 years, you have to pay income taxes on that debt that is forgiven, which is the entire amount that you have left at that time. Does that make sense?
Travis [00:23:49] So the reason why that could be helpful is let's say you're a single LMFT, and you stay single. And you're making $50,000 in your own private practice because you just like that more. And you have things like overhead and business expenses that you're writing off too. So that's what keeps you at that $50k level, even though your revenue is greater than that. And what you realize is, oh wow, I can pay, you know, $200 a month. And then in 20 years, I can pay $50,000 of income taxes, for example. So if you sum up all those payments over 20 years, you might be looking at $40,000 of payments with a tax bomb of $50,000 at the very end. That could be less in absolute dollars than you actually owe.
Alex [00:24:33] Oh wow. Well, so how does that work, since I am married, and, you know, my husband's income is higher than mine, would that still work the same?
Marriage can drastically affect student loan repayment
Travis [00:24:43] So this gets even more complicated. And this is, I guess why — This is why we have a business. It's like, if there was worldwide harmony and no divorce, I guess, you know, maybe you could pivot into, like, other kinds of counseling, right? But luckily, it's probably not going to happen. Unfortunately, I guess, in the case of student loans, it probably should be a lot simpler. So in Texas — Texas is a community property state. So nine of the 50 states in the country are community property states. What that means is if you're eligible for Pay As You Earn or IBR (Income-Based Repayment), you can file separately for income taxes. But when you do that, you have to equally distribute your income on your tax return. So let's say your husband's making $150,000 and you're making $50,000, right. And your income combined is $200,000, and you file separately. Well, in a community property state like Texas, you're going to have to pay based on a $100,000 income instead of the $50,000 income.
Travis [00:25:40] If you file separately, there's a way around that. It's called alternative documentation of income where you basically claim that your tax return doesn't accurately depict your income. But it's pretty complicated, and the loan servicer doesn't have to accept your statement. So if you think about that, that can be a strategy if you decide that, you know, you want to go ahead and do married filing separately, you want to use all these community property rules. What we find in states that are not community property states — like, let's say you're an LMFT in New York or Illinois. Those are not community property states. In that case, yes, you could file separately, and you could get a low payment. But the problem is you'd probably generate $100,00 a year of income tax penalties by doing that.
Alex [00:26:23] Oh, wow. Ok.
Travis [00:26:24] So one thing that folks don't realize is a lot of times getting married can actually drastically increase the cost of paying back your loans. And so we have an epidemic. I'll call it an epidemic. It depends on your point of view. But an epidemic of folks that are deciding to get spiritually married rather than legally married.
Alex [00:26:42] Oh wow. I've not heard of this.
Travis [00:26:44] Yeah. And just to let you know, I've only had one client in the history of Student Loan Planner® out of more than 1,700 clients actually who I showed them the cost of being married, and they decided to both get a divorce.
Alex [00:26:58] Oh, wow.
Travis [00:26:58] And I tried to talk them out of it because I was just like, I want to triple check this math if you're going to go down to a divorce attorney and get a divorce. But they weren't actually getting a divorce for, like, because they didn't like each other anymore. They were getting a divorce because, like, rationally they were going to pay $20,000 more a year being married than if they were single.
Alex [00:27:14] Oh wow, how sad.
Travis [00:27:16] Yeah, I know, right? It's kind of ridiculous that that's even an issue. You know, that that would impact your payments, you know, as a married couple. It feels like they really should just not even consider your spouse in the U.S., but they do. So what we find for people who are not yet married — where they don't have a lot of things to actively do and untangle — is you're allowed to have a ceremony, whether that's, you know, a non-religious or religious ceremony, and be married publicly without submitting a license and saying you're married, right. So there might be some exceptions to this, like if there are some states that require you to be married if — A common law marriage if you've lived together for a certain number of years, right. I don't know. I'm not an expert on every single state's law code, but — And I'm not even an attorney. Right. But I know that that's not committing fraud to be like, yeah, you know, we're married. And then you don't have the certificate turned in. Like, I don't think there's anything wrong with that. In that case you'd be filing, you know, just a single individuals to the IRS.
Travis [00:28:12] So if you did that, you know, you could go to an attorney, have them draft up power of attorney, medical power of attorney, all these different things. You know, guardianship things like that for kids if kids are in the picture. And that's one way to avoid having these massive payments or massive tax penalties if it's very, very obvious that you need to go for a forgiveness strategy. And so when you have a $100,000 of debt and you're on a Standard 10-year plan, that's not that big of an issue because the Standard 10-year plan — I mean, the payment is not great, but it's not the worst in the world. If you had — Let's say you took out debt for all those years, and you included the debt that you needed to borrow for, you know, living expenses because you didn't work, right. If you did that — And let's say you had $200,000 of debt instead, and let's say your private practice was, you know, on the bottom half of successful practices on the income spectrum. So you're making, you know, $30,000 to $50,000 after expenses, which is a good income. And if you're passionate about what you do, that's a good income. That's a very legitimate thing to do, right. But to get married to, you know, a lot higher-income earner, that would totally throw off your strategy because it could create a situation where you have to pay back all your loans when you could have just gone for forgiveness and had them not really be that big of a burden.
Alex [00:29:26] Oh wow. Yeah.
Travis [00:29:27] So it's like usually when we go through this with people, like, in a lot of detail on — Like, people book us at StudentLoanPlanner.com forward slash help, right. And we're going through all these details that you're kind of blown away. It's like drinking from a firehose, you know, because we just have a lot of things that folks have just not thought about before because of the different loopholes that exist in these loan programs.
Alex [00:29:48] Well, that's just interesting that you're talking to a marriage therapist, and now I'm thinking, oh, well, maybe we shouldn't have legally gotten married.
Travis [00:29:57] Yeah, I don't know. But would that have caused problems for you professionally? Right? Like, you know, it's like going to a vegan butcher.
Alex [00:30:05] Oh true. Yeah. Yeah. Well, I guess my question is, if you're going through all of that to file separately, how long do you have to stay that way? Does that mean for 20 to 25 years? Or are you saying for 10 years?
Travis [00:30:20] Oh no, it's — I mean, if you're going to go for the IDR forgiveness, that's 20 to 25 years. That's a long time. Right. And if you're going to do that, golly, there better be some really good savings. If you're going to go through all that pain and all that suffering and all this stuff to do that, you know, then you really want the savings to be tremendous. And this is for any loan forgiveness program. Like when I was looking at loan forgiveness for my wife and I as to whether or not we thought she should go for loan forgiveness, you know, I wasn't nearly as sophisticated with it as I am now. But I ran some models and found — this is three years ago or so, three or four years ago — and I found that, you know, she at best could get maybe $20,000 forgiven. And we thought about it, and we're like, restrictions on our life, all this paperwork, all this mess for a projected $20,000 benefit? You know, I think I'd rather just go ahead, and we could just work together and just pay it off and be done. And so that's what we ended up doing. But if that had been a lot more debt and the savings could have been, you know in the six figures, you know, I think we would have had to consider it. You know, like, you kind of take the hours that you spend figuring this stuff out, and you look at the potential cost value that you could benefit from and doing that, and then figure out what your hourly rate is. It might be like a $500 an hour kind of rate or $1,000 an hour rate for every hour you spend on navigating these kind of strategies that take a little bit of extra time.
Alex [00:31:40] Well yeah, that's very true. And the other thing is just how frustrating it is to try to call and have these conversations with any of your loan officers. You're on hold for 30 minutes, and it's just really kind of maddening. I think that's how we landed on ‘let's just pay as much as we can and be done with it.'
Why dealing with student loan servicers can be so difficult
Travis [00:31:58] Yeah. Can I tell you how that how that happened, like, why that incentive structure is the way it is?
Alex [00:32:03] Yes.
Travis [00:32:04] So the bidding process for these student loan servicing contracts are very focused on what is the cost per borrower. So Congress cares most about cost per borrower for these contracts. So that's why you see firms like, you know, Navient and others that don't have great customer service reputations — FedLoan, Nelnet, Great Lakes. I mean, to be honest, none of them have great customer service scores, and yet they get all this money from the federal government. And the reason is because these big firms bid a very low cost per borrower for the contract. So how do you get a low cost per borrower? You put very low-cost employees in front of those people. Right. So that's not to knock those people. But if you're going to have a job that pays $15 an hour on average, you're going to get talent that is available for $15 an hour, right? And that kind of talent is going to be more customer service-oriented than givers of great advice that's very personalized. And when you call someone like that, at the end of the day, what are their incentives?
Travis [00:33:13] So for example, if we give someone bad advice, then we could get a bad review. People could tell all their friends ‘don't use Student Loan Planner®.' I'd be really upset with myself because I always want to do the best, you know? I always want to do the best job I possibly can. And there's kind of some big implications for us for messing up. For a student loan servicer, they can tell you that, you know, the moon's purple, and you know, that's fine. You know, they're not going to get fired. And if you believe it, then you know, you act on it. You're not going to be able to call back in five years and be like, “What was the ID of, you know, Sally who told me that I could do this?” You know, oh well, you know, Sally left, you know, a week after that conversation. And now she's working in, you know, in retail at an Apple Store. You know what I mean?
Travis [00:33:59] So I mean, again, I don't want to be at all insulting of those people because there are certainly some people that are doing a fantastic job that are worth every penny. And I wish we had more of those kind of folks. But all in all, if you're trusting people for advice on what to do with your loans from the loan servicers, you cannot trust what they say. And I feel very comfortable saying that if you are asking them ‘what is the lowest payment that I can be on?', they may or may not give you the right information. If you're telling them, “Here's my income-driven paperwork. Can you process that?” Yeah, they can do that. And a lot of the student loan scams out there are kind of — are centered around filling out a lot of paperwork for you that doesn't actually mean having a plan.
Travis [00:34:39] So that's kind of why I started this company was because I thought the big piece missing was not ‘hey, can you fill out paperwork for me.' It's — The big piece missing is, like, ‘what should I do? And what's the smartest way to get out of debt?.'
Alex [00:34:49] Yeah. Oh absolutely. I mean, I — If I call back, like, if the phone cuts out, and I've been on the phone for an hour with this loan officer, just waiting most of that hour, I can't even get reconnected with them. And then there's the 20-page application and resubmitting that. So — And nowhere along the way are they at all giving me guidance on what plan is best for me.
Travis [00:35:12] Yeah. And you know, another frustration that I have with our industry is that — Have you ever been on financial websites, and they'll tell you, like, refinance your loans?
Alex [00:35:22] The only one that I looked into is, I think it was SoFi.
Travis [00:35:25] Yeah.
Alex [00:35:25] And I didn't qualify at that time because this was before I started my private practice.
Travis [00:35:30] Yeah. So I mean, what happened at a lot of places is there's — So you know, and this is people's business model. It's a legitimate business model. But it's just one that I prefer to do differently. So if you are a blog, you write a lot of articles about student loan debt, right? And talking to human beings one on one is not scalable. It's not something that I can go to a V.C. firm and get $10 million for, right? And it's not a way that you're even going to be probably a multi-millionaire. So. Oh gosh, that's not scalable. We only want to do things that are scalable. So what is scalable is getting a lot of clicks on refinancing links. So you can get a lot of affiliate money, which means that you can earn a lot of money from people who refinance their loans if they go through your site. Right? So there are organizations, there are websites that their number one source of income is telling people to sell their loans to private lenders and eliminate all of those government forgiveness and repayment options. What we've done differently is have cashback bonuses on our site so that our conflict of interest is mitigated, for one. But two, we pair that with the consulting piece so that I feel like I have the right incentives always to provide somebody the right advice, no matter what it is.
Travis [00:36:45] You know, it's interesting that you mentioned that — being frustrated with the help that you've received out there. Is there — How many LMFTs are there in the country that are graduating per year? Like, how big is this field?
Alex [00:36:56] Oh gosh, I don't know. I know that it's very competitive. Just here in Austin, we have Texas State, we have UT and we have St. Ed's. I couldn't tell you though because everybody graduates at different times. I'm not really sure how many of us there are.
Travis [00:37:10] How many people were in your class?
Alex [00:37:12] I'm really not sure. I think if you look on Yelp — because I've been scammed a lot by Yelp with them trying to get me to pay for advertising — I think there's like 5,000 if you just search Austin couples counseling or something like that.
Travis [00:37:27] You said 5,000? Holy cow.
Alex [00:37:30] It's a lot. There are a lot of therapists for sure.
Travis [00:37:33] I guess that's just all of those techies just working until 2 a.m. in the morning, not paying attention to their marriages, I guess.
Alex [00:37:40] Maybe so. I'm not really sure. But yeah.
Travis [00:37:44] I'm just kidding. So in terms of some of the things that you see come up in your professional life. I'm sure, you know, you probably get asked these kind of questions at cocktail parties or things like that all the time. Is that true?
Alex [00:37:58] What kind of question?
Alex's advice for seeking therapy
Travis [00:37:59] Well, just like, tips that you've seen for a healthy marriage or that, you know, just tips that you've had for your professional life. Like, is it different for every client in terms of what the right thing to do is? You know, when does somebody need an LMFT? Or when should someone seek one out? Let me start with those questions.
Alex [00:38:17] Oh, when someone should seek therapy?
Travis [00:38:18] Sure.
Alex [00:38:19] Well the majority of the couples that do come into therapy — and what I offer is discernment therapy. So, for couples thinking about divorce that potentially want to work on the relationship, but they're not sure if they want to. Because unfortunately, by the time people start thinking about couples counseling, a lot of times, there's been years of being stuck in the same kind of conflict or at an impasse.
Alex [00:38:42] So you know, ideally it would be a good idea to come in if you're just growing more distant, or if you're having the same conversation over and over and not getting anywhere. You know, I think it really does affect everything when your marriage is not working, and you're unhappy in it. But I guess that looks a little bit different for everybody. Usually what people come in with is, we're not having enough sex. We're not spending enough time together. We're only focused on the kids. Or I want to have kids, and my partner doesn't. There's kind of a lot of different reasons that they initially come in.
Travis [00:39:17] Maybe I can ask another question. Say, you know, are there different reasons with men and women that ask for therapy? And, you know, are there differences in what you see on average with genders? Like who is the person who typically initiates the request for therapy? And what kind of pain points are you seeing?
Alex [00:39:34] You know, on my new client forums I'll have ‘what is your reason for coming into therapy?.' And this is just a generalization, but a lot of times, the female will have, you know, kind of a paragraph. And the males will be, “Because my wife asked me to come in.” So a lot of times, it's the female initiating. And sometimes that can be just that there's more of the emotional labor or the mental load that they're carrying for the couple and for the family. And it's maybe a little bit easier for the male to not be as engaged or to not struggle with it as much.
Travis [00:40:11] Sure. Do you have same-sex couples as well? Or do people tend to specialize? Or do they do kind of any type of relationship?
Alex [00:40:17] Yeah, I have some same-sex couples, and yes, there are people that specialize in it. So yeah, I mean, it really — Gender not being binary is a pretty big thing here in Austin. And there are also people that are in poly relationships and open relationships. But just the majority of what I work with tends to be heterosexual couples. But I do also see same-sex couples.
Travis [00:40:43] So what would you say in your discernment therapy? Like how — Do people meet with you a lot? Like, marriage always has conflict, or at least, a lot of marriages do. So do they maybe stick with you after that discernment of ‘hey, we do want to stay together, but we want to keep working on things.' Or how does that look?
Alex [00:41:03] So it really depends on how close to the forest the couple is when they're coming in. Some of them are coming into therapy to break up, unfortunately. Or maybe fortunately, I guess it depends on how you look at it. So it just kind of depends. Discernment is technically successions of just figuring out ‘Where are we at in the relationship. What have we tried so far, and how did we get to this point?' And, in that phase, if a couple decides it's not even worth it, I don't even want to try to work on the relationship, then they may decide that they want to get divorce. If they decide, actually, things are fine, then maybe they're done with counseling. And things will just go back to the way that they were. Or they can decide they want to work on the relationship, and they'll go into couples therapy. But so far, a lot of what I see is — or a lot of what I've experienced is — one individual deciding that they want to stay in therapy. And you know, that's usually after they've decided to divorce.
Travis [00:42:00] Interesting. Now would you say that you have a lot of couples or a percentage of couples that, you know, are seeking you out really early in a conflict cycle? Like say, you know, premarital couples, or those that are not even thinking divorce? But they're just like, “Hey, we really want to have ongoing therapy to work on our marriage and make it the best it can be.”
Alex [00:42:19] There are some of those. And there are a lot of premarital workshops and that kind of thing here in Austin. I don't tend to get as many of those. I think what I see are couples that maybe are already living together. Or they've been together four to five years, and they're deciding it's kind of make or break. Either we're going to get married, or we're going to break up. So that kind of work is actually pretty similar to, you know, thinking about divorce. But there are couples that will come in just wanting to prepare for their relationship and their lives together. And for those, I can usually offer just more of the kind of educational pieces of relationship work and talking about values and assessment kind of things.
Travis [00:43:02] Yeah. I think that — I mean, just from a looking at, like, you know, Bezos's divorce? I have to admit, like, kind of sadly, like, I've been really interested in that just because of the dynamics of the business aspects of things, and how much that could potentially cost, right? And so you think about, how divorce can cost so much money? It's such a fantastic investment to invest in counseling, you know, a professional counselor like yourself. Like, more people should do that. I mean, my wife and I — we go to like regular counseling just because we find it so helpful. You know, just every once a month, we just go, and we get to talk to somebody about, like, you know, me, like, messing up with the dishes and forgetting to, like, put things away. And you know, conversations about, you know, having kids, and just all these like things that are tough to talk about sometimes. It's just so — I don't know, I just find it really useful. Can you give some suggestions to people that are like, “Hey, I'd love to go to therapy, but like, society makes me feel like if I'm doing that, like I'm a failure”? Or like, “I'm imminently going to get divorced”? Or it's like, some dirty secret?
Alex [00:44:04] Yeah, absolutely. I mean, for one, I completely agree with you. I think it's really helpful for any couple. And divorce is not easy. It's very complicated figuring out finances, and, you know, custody situations. And when I've talked with financial planners, I sometimes do you have that thought of like, wow, it would be a lot more cost effective for these couples just to come to counseling first. But if anybody is considering counseling, and they're thinking, you know, maybe that it's a bad sign or there's a stigma against it, I would say you really do get to choose what you get out of it.
Alex [00:44:42] So if you are wanting to get divorced, that can be the outcome, but that's not anything that the therapist is going to push on you. And you know, the major thing is just wanting to feel safe in your relationship. You know, the more that you're able to connect with your partner, the easier everything else gets in your relationship. And relationships really don't have to be as hard as they are when we're not getting any kind of help when we need it.
Travis [00:45:08] Do you have some just generics — because obviously I know you can't share specifics — but you know, any sort of general success stories that you've had and you've seen from clients that relationships, you know, got way better? Or that they had, like, the, you know, correct decision to separate?
Alex [00:45:24] Yeah, I think that's one that I kind of struggle with is that sometimes success in therapy does mean breaking up, or it does mean leaving a relationship. And I see individuals too. So I guess, without giving a specific example, I do see a lot of individuals that they just know that they've kind of lost touch with who they are, or they've accommodated too much. And if the other person is willing to work on the relationship, then that's one thing. But when one person's really not giving anything back, it can be really powerful for somebody to be able to walk away and rebuild their identity and reconnect with themselves and other relationships that they've lost sight of because they've just been putting too much into this one relationship where the other person really doesn't give anything back or care about them.
Therapists have the option to pursue loan forgiveness
Travis [00:46:12] Mm hmm, yeah. So I think the one thing that I hope that, if therapists are listening to this, that they can take away from, is, you know, you have the option to go for forgiveness and not have to do public service. And so you can start your private practice and have your payment be proportional to your income. So maybe you can tell me if this is some, like, some of your friends, Alex. But if, say you have a friend who's single, just started a private practice, and she does plan to pay off her debt eventually. Let's say she only has $50,000 of debt. So did you know that you can sign up for the Revised Pay As You Earn plan? Call your servicer and update your income to the truthful zero dollars a month that it is because you're starting a business. Your payment goes to zero a month, but instead of the interest compounding, your interest — while it's at that zero a month — is cut in half.
Alex [00:47:05] Yeah, I did not know that I could do that.
Travis [00:47:07] Yeah. So this is if you're single — because if you're married, you have to count your spouse's income if they don't have debt to do this strategy. So for this Revised Pay As You Earn program, you pay your payment, and if you still have interest that's growing, then the government covers half of that interest that's left over that's growing. So if your payment is zero because your income is zero, then your interest that's subsidized is half of all of your interest now. And furthermore, that interest grows at an additive rate rather than an exponential rate because of extra subsidies on these loan programs that exist on top of that. So a lot of people, if they are struggling financially, they're like — And they're in your shoes making a standard type of payment plan. And they're like, “Oh my gosh, I can't pay this anymore.” Right? Or let's say you have a, you know, a divorce, and the person's like, “Well, I can't afford to make this payment on my own and cover all my bills.” So they go into forbearance, and their interest is compounding instead.
Travis [00:48:00] If their eventual goal is to pay off the debt, then that Revised Pay As You Earn program can be better than the best refinancing deal. And that's something that a lot of people don't know. And like I said with that Pay As You Earn plan, that's one of the plans that you can use for forgiveness in the private sector. So I hope more therapists are listening to this and listen to our Student Loan Planner® Podcast because I think that a lot more people could be taking their own careers into their own hands instead of working for agencies. Because what you described with that overhead, I mean, that's doable overhead for, I think, a lot of people. And if you have $10,000 of savings, correct me if I'm wrong, but I imagine you could probably get enough income from starting your private practice and maybe like, I don't know, doing something on the side just for, like, a little extra money. Like, you know, driving for one of the, you know, ride sharing. Or you know, all these different things you can do these days. You know, you could do that if your payment on your loans is $100 a month.
Alex [00:48:55] Oh yeah, absolutely. And I think you really don't have to have that many clients to be profitable in private practice. So I definitely agree, and I appreciate you sharing that because I think that's definitely a misconception out there — that you kind of have to stay with an agency or, you know, something that's more stable. And if your loan payment is lowered, that definitely opens up options for you.
Travis [00:49:17] Sure. So I mean, getting the strategies that was kind of talking about implemented, that's kind of what we do. So that's, you know, StudentLoanPlanner.com forward slash help. That'll give you the details for most people in your setup, Alex, that you're going to owe less than $200,000 typically is our experience. You know, any kind of MSW, LMFT or any kind of therapist is typically going to come in somewhere between like $100,000 to $150,000 for a high-debt therapist. And so that person will be working with Lauryn or Justin and coming up with some of these strategies. But the end goal is just to try to help you achieve whatever it is you're trying to do in life. And the student loans don't have to hold you back. And if you're having to pay, you know, $1,000, $1,500 a month, then that's like, triple your overhead, right?
Alex [00:49:58] Yeah. Yeah, it's a lot.
Where can someone find an LMFT if they need one?
Travis [00:50:00] That's our goal is to make people live the lives that they want to live. So Alex, you know, last question. Where can people find out more about seeking out an LMFT if they need one? Or if you want to share a service, you know, your services, or whatever you want to share for our listeners so they can get more help in their own lives and marriages.
Alex [00:50:17] Yes. So my personal website is AlexBarnetteCounseling.com. So, a-l-e-x-b-a-r-n-e-t-t-e. And I think one of the most popular websites to look for other therapists might be Psychology Today. Those are probably the main places. But yeah, if anybody's listening and they're interested in couples counseling, I'm happy to also provide another referral if I might not be a good fit. But that would be the main place to reach me. Or I'm also on Instagram at @ABarnetteCounseling.
Travis [00:50:48] Ok, well, thank you so much for being on the show, Alex.
Alex [00:50:51] Yeah. Thank you so much for your help.
Travis [00:50:52] Thanks for listening to today's show. You can email us your comments at Podcast@StudentLoanPlanner.com. You can also find show notes at StudentLoanPlanner. com forward slash the number of today's episode.
Travis [00:51:03] If you know that you need a custom student loan plan, schedule one today with one of our team members at StudentLoanPlanner.com forward slash book. Or if you want to learn more, visit forward slash help. If you like the podcast, please share it with someone who owes more student loan debt than you do. Keep calm and build wealth and have a great week.
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