The founder and CEO of Student Loan Planner, Travis Hornsby, shares his thoughts on the current and future state of higher education borrowing, and what students should know before taking out loans and after receiving their degree.
Founder and CEO, Student Loan Planner
“For bachelor’s programs, we deeply care about affordability, and for graduate and professional programs, we couldn’t care less about affordability as a society.”
What inspired you to start helping people with student loans?
I wanted to start helping people with student loans because I ran into it with my wife and her situation. She was totally confused about what to do. She was busy, not interested in thinking about student loans, and traditional financial planners had no clue how to help her. I think it was just a deep passion to help people with modeling and careful analysis to maximize the benefits of programs they qualify for.
And it just felt a lot more fun than what I was doing, which was bond trading.
How has your experience as a bond trader helped you and your business?
I could not have started Student Loan Planner if it was not for the Excel programming skills I learned as a bond trader. The reality is that modeling the repayment plans someone can sign up for, as well as the different income-driven repayment account adjustments or PSLF waivers, requires a lot of in-depth analysis. Spreadsheets have been absolutely critical for our company to be able to do that.
The level of precision that you need in trading bonds, you have to be precise. That’s something that’s been very helpful in assisting people with their student loans.
Are there any major changes you anticipate happening in our student loan system?
Long term, I would suspect at some point, there will be a big compromise from both parties about the situation around student loans specifically. I think Democrats will agree to cap borrowing for students at some point because the current system is frankly out of control, allowing a school to set the price of attendance instead of having some sort of cap or limit as to what the Department of Education is willing to allow someone to borrow for higher education. I think Republicans will give up on codifying and make permanent, more generous income-driven repayment plans, as well as ways that borrowers in distress can get rid of their loans in bankruptcy.
The problem though, of course, is that there’s very little incentive to compromise, because every party thinks they can push it to the limit and not have to compromise, and they’ll get more if they don’t compromise. That lack of agreement across the partisan spectrum is why we haven’t seen any big changes on student loans really, besides those done by executive action.
What is the most common mistake students make when taking out loans?
The most common mistake students make when taking out student loans is not realizing if they’re going to eventually go for forgiveness or if they will need to pay it all back. A lot of students will borrow, for example, private loans because the interest rate might be slightly lower when private loans do not qualify for income-driven repayment and forgiveness programs. Sometimes, students will borrow less than they could borrow when they’re gonna be going for forgiveness anyway, and they live on a more strict budget than they really need to in school because they think they have to keep their debt limits down when the current student loan system does not incentivize that.
If you could give one piece of advice to students planning on taking out loans, what would it be?
My suggestion would be to do whatever it takes to get your bachelor’s degree. Once you are secure in having a bachelor’s degree, you can then borrow for graduate or professional school, an unlimited amount of loans with no cap for as many programs as you want. Once you get a four-year degree, then your current setup will allow you to borrow unlimited loans for any graduate or professional program that you want.
For bachelor’s degree programs, there are very strict limits for the Stafford loan program, and the parent plus loan program is the only way students can attend more expensive schools. It’s a very strange and perverse system.
For bachelor’s programs, we deeply care about affordability, and for graduate and professional programs, we couldn’t care less about affordability as a society.