Business Innovators Radio - Episode #67 – Student Loan Interest Rates – The 15 Minute Financial Feast Podcast – With Mark Triplett & Troy Westendorf

Episode Date: July 12, 2024

We believe that every dollar has a purpose and a timeline. When and how your retirement assets will be used should be understood before making important financial decisions.The Triplett-Westendorf Purpose and Timeline 5 Step Planning Process (PT5) begins with Discovery.Understanding where you are now, and then defining where you want to go (Your Purpose) and when you want to get there (Your Timeline), programs your financial GPS. Our Purpose and Timeline 5-step process (PT5) programs your financial GPS.Learn more: http://triplett-westendorf.com/ | https://mypt5.com/The 15 Minute Financial Feast Podcasthttps://businessinnovatorsradio.com/the-15-minute-financial-feast-podcast/Source: https://businessinnovatorsradio.com/episode-67-student-loan-interest-rates-the-15-minute-financial-feast-podcast-with-mark-triplett-troy-westendorf

Welcome to the 15-minute financial feast podcast, bringing you 15-minute segments to help you retire with purpose on time. We're serving up food for thought and bread for the head. Are you hungry to learn? Here are your hosts, Mark Triplett and Troy Westendorf. Welcome to another episode of the 15-minute financial feast. Today, you are listening to the audio from a live television interview where one of our favorite local news station anchors asked us questions about a financial feast. topic on the minds of many hardworking folks in our community who are trying to make good decisions and get ahead. A federal appeals court will allow the federal education department to

lower the monthly payments for millions of people with student loans. The plan was scheduled to take effect yesterday, but federal judges in two states blocked most of it last week. This means the department can roll out those lower payments while it's appealed. The plan would lower the amount some borrowers need to pay from 10% of their discretionary income down to 5%. And if college isn't already expensive enough, interest rates on federal student loans just increased on July 1st. Mark Triplett from Triplett-Westendorf Financial Group, our resident financial expert, is here to share what this means for borrowers

and what else you need tomorrow to know. Mark, thank you so much for joining us. Tell us how much will it cost to take out student loans this year? So we know the cost of college keeps going up, but now interest rates and financing college is going up. Undergraduate federal loans taken out on or after July 1st will now have an interest rate of 6.53%. That's up from 5.5% previously. And then graduate students pay even more upwards of 8.08%. Now, federal student loans are fixed, so those that already have federal student loans on the books won't see that increase. It's really applying to new loans taken out going forward.

But just the cost of financing college is going up dramatically. An undergraduate in 2024 with student loan debt of $31,000, for example, is going to pay a roughly $11,000 worth of finance charges over a 10-year repayment period where somebody would have taken out that same loan in 2020, may have only paid about $4,000 worth of interest charges. So that 1 to 2% increase is a pretty significant deal. Yeah, all great information to know there. And Mark, how long on average does it take a student or a borrower to pay off those loans?

So even though the repayment period is planned to be 10 years, it's on average taking folks upwards of 20 years to repay their student loan debt. And millions of Americans are struggling to pay down their debt. The average borrower has almost $40,000 of student loan debt. I'll tell you, we see it all of the time in our line of work where we're helping people transit. from their working years or their post-working years. And many of them are still carrying student loan debt, either their own or student loan debt they took out for their children, for example. And that's a crushing weight to try to carry into transitioning from the years

where you're working and earning a paycheck to now having your income come from the assets that you've accumulated. And we hate to see that, but it happens all too often. Wow. Very, very tough to hear with that. And Mark, what do you recommend for either somebody who's in-classes? college or who might be starting to navigate that process in order to maybe avoid taking out all this debt, how do you recommend they navigate financing college? A couple of things. First of all,

consider alternative options. A four-year degree is important for some folks, but for a lot of careers, it doesn't require a four-year degree. An associate degree or even a technical school might be a good way to repair for a really high-earning career with less student debt. But if you are going to take that career path of going to a four-year degree, evaluate what the return on investment is. What kind of career path are you looking at? What's that career path, likely to or the average income for that career path? And evaluate that against what you're actually laying out in terms of tuition and the interest charges. Is the juice worth the squeeze? You really got to evaluate that before you sign on the dotted line. All super important information to know, especially for those maybe

getting ready to navigate college, but not only the students, but parents as well. Mark, thanks, as always for joining us. We really appreciate your expertise. Thank you for having me, Megan. You've been listening to the 15-minute financial feast podcast. Remember, every dollar has a purpose and every dollar has a timeline. If you have questions about today's topic, schedule a call with a team member. Visit www.mip5.com. Until next time, be sure you're taking steps. to retire with purpose on time. Mark Triplett is an investment advisor representative of and advisory services offered through Royal Fund Management LLC,

an SEC registered investment advisor. Nothing contained in this program should be considered an offer to buy or sell securities. Different investments have different risks associated with them and not all investments are appropriate for all investors.