I've stayed in touch with Alex Bottom, founder and CEO of student loan repayment planning technology provider Finology Software, since met him at the WealthStack conference, part of Wealth Management EDGE, a year ago.
He and his team of 16 have continued to develop the platform, which provides advisors with a variety of tools to help guide recent graduates and current students to long-term financial wellness.
Student debt has grown and remains a colossal problem; THE New York Times reported on Tuesday that student loan borrowers have a staggering $1.3 trillion in debt and that almost half of them are currently in default. As the story notes, problems with repayment are myriad, from confusion over the federal government's three-year repayment freeze ending to forbearance programs and outright defaults.
Of course, while many advisors have avoided working with this demographic, some, especially younger ones, understand the potential of engaging with the high-earning-yet-not-wealthy, or HENRY, group. They know that once they have paid off their debt, they will likely begin to accumulate significant assets.
“We're basically replacing Excel spreadsheets,” said Bottom, who has worked with many advisers who have relied on their own loan repayment calculators that they've built in Excel or a bunch of different calculators available online that can help with specifics, only. calculations but which are not suitable for performing comparisons and presenting multiple scenarios at the same time.
Advisors who have their CFPs and have worked with recent graduates or those with additional specializations such as have earned the certified student loan designations (CLSP) or certified college financial consultant (CCFC), will have the greatest use of the portal with the Finology platform.
Tools on the Finology platform allow advisors to easily transfer and work with National Student Loan Database System text file data and create and visualize new scenarios for income-based repayment planning. This can help customers lower their student loan payments and illustrate what the loan repayment life cycle will look like over time. It also helps those who qualify track progress toward completing specialized programs such as Public Service Loan Forgiveness (PSLF).
“The IDR benchmark can compare up to three scenarios to show the differences, and while those differences may seem subtle, they can end up having significant long-term effects,” Bottom said.
These potential effects can be complex to sort out and include how much your payments might be comfortably vs. the length of time you repay vs. the long-term tax consequences, not to mention how much you can safely save for retirement , while at the same time maximizing any potential forgiveness amount. .
Liability Planner's Federal Loan Simulator shows the estimated loan repayment date, the total amount expected to be paid, the amount that can be forgiven and more.
Another tool, the Federal Loan Simulator, allows counselors to adjust scenarios based on factors such as file status, family size, PSLF (for those considering or already working in the public sector) and many others.
Liability Planner, another tool on the Finology platform, is intended to help advisors create and optimize debt management plans for all types of debt, including auto loans, credit cards, mortgages, medical debt, personal loans and private student debt.
A credit card optimizer, a more in-depth and credit card-specific tool than the one available in the Liability Planner, is currently in development and on the roadmap for release in the coming months.
of Phinology Software, Website AND blog are updated with the latest developments around student loan debt, including the restructured federal repayment plan, Saving on Valuable Education, or SAVE, which went into effect on July 1.
The price for Finology is straightforward: $1,000 per year per advisor who can work with an unlimited number of clients and generate an unlimited number of scripts for them.