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Category: Loyalty · 4 min read

4 Ways to Think About Student Loan Debt

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on January 24, 2019

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on January 24, 2019

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Student debt is more than a millennial problem, and it’s causing people of all ages to stop saving for retirement.  

A new study from the Association of Young Americans and AARP revealed that 4-in-10 people said that student loan debt is the reason for hitting pause on their retirement savings.1 And the people that responded were 41 percent of millennials, 38 percent of Generation Xers, and 31 percent of baby boomers. 

This presents a complicated problem for financial professionals. If people aren’t saving for retirement because of their student loans, how can we still help them in the meantime? To help provide an answer, here’s a blueprint for working with clients with substantial student loans.   


Think of it as a Way to Assess Their Overall Financial Situation 

First, take a step back with your clients. View their student loans from the 30,000 foot level and look at the rest of their finances. This lets you take the time and assess your clients’ overall financial situation, and determine what kind of shape they’re in with their loans and with the rest of their income and expenses.  

When you do this, it can help you figure out how to deal with their debt. If they’re in good standing and are making enough money to cover the payments each month and still have the finances to contribute to a retirement account, then they’re set. But, if they’re living paycheck-to-paycheck or in-between, and are dangerously close to missing loan payments or defaulting, then it’s time to help them prioritize and look at it in a new light as one piece of the overall puzzle.  


Think of it as an Extra Budget Item 

Once the loans have been framed with the right perspective, it’s time to work it into their monthly budget. It’s really important that your clients don’t ignore the payments, so they stay in good standing and continue to chip away at the debt. Most likely, they’ll need assistance budgeting for it on a monthly basis, and figuring out where to cut back in other places.  


Think of it as an Opportunity to Prioritize 

Now it’s time to prioritize. Boil your client’s budget down to the necessities and then go from there. Write the budget together with them, and help them arrange it. What do they want to focus on financially? After all the necessities are covered, what do they want to do with the extra cash flow? If it’s possible, show them how they could pay the minimum student loan payment and still have enough for building their retirement savings each month. Many times, people think they can only focus on one thing at a time. First they’ll pay off their student loans, and then they’ll save for retirement. But it doesn’t have to be that way. Help them figure out a way to accomplish both, without breaking their budget. 

Show them how they could pay the minimum student loan payment and still have enough for building their retirement savings each month.

Think of it as a Learning Opportunity 

When it comes to their student loans, your clients may not know all of the options they have. Most of the time, people pay the monthly amount and leave it at that. So, treat this as a learning opportunity to talk to your clients about how they can customize their loan payment plan. 

Here are three opportunities to let them know about: 

  • They can reach out to their loan servicers. Many times, loan servicers can customize the payment arrangements. All it takes is your client explaining their situation to the servicer, and they may grant them a different payment plan.  
  • Let them know about deferment, forbearance, and loan forgiveness. With deferment, clients can potentially delay payments for a certain period of time. Forbearance lets clients not have to make payments for up to a year, but they still have to pay interest. And obviously, there’s loan forgiveness, which is available to people in certain professions.  
  • Tell them that having debt isn’t the end of the world. They can still enjoy themselves and have a life. It doesn’t have to control them and put the rest of their life on pause. They can still save and travel, but keeping up with the payments is key.  

Ultimately, prospects and clients with substantial student loans most likely want to know that it’s going to be okay, and that they can manage their finances effectively. They’re looking to you to help them create a budget and come up with a strategy that lets them still accomplish their goals, even with the burden of debt. Reassure them that saving for retirement and paying off their loans are both possible; it’s a matter of budgeting and saving in the right places.  



1. AARP. Three Generations Survey. 2018.  


For Financial Professional use only, not for use with the general public. #19-0029-012220

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Written By

Mark Williams

President and CEO

Mark Williams is the President/CEO of Brokers International. Over his more than 25 years of financial services experience, Mark has been both a producing independent agent in the field and a home office leader consulting to agencies and field marketing organizations. Currently, Mark is focused on the future of the insurance industry, from the disruptions of InsurTech and robo-advisors to the changing demographics and needs of customers. He also is an avid mentor, helping financial professionals navigate the industry.

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