Adding Student Loans to a Client's Profile

RightCapital enables you to capture every element of a client's financial landscape — including student loans and the various repayment options.

Add information about a client's student loan debt in the Profile > Net Worth screen. Student loans can be linked through account aggregation or entered manually.

Adding student loans overview (video)

Increasingly, clients are carrying heavy student debt. Modeling these debts accurately, and providing clear visuals to efficient pay off these debts has been elusive until RightCapital produced this ground-breaking tool.To better understand how to complete the loan parameters, refer to the video between 1:00-2:07.

Adding student loans overview

To begin modeling efficient pay-off strategies, first add the student loan to the client's Profile.

To do so, navigate to Profile > Net Worth and select Add Account > Loans.

Next, select Student Loan from the drop-down menu of "Loan Type".

Complete the financial parameters of the student loan and select Save. As long as Included in Plan is checked, the student loan will now appear in the client's financial projections in RightCapital.

Loan types

The student loan type dropdown menu offers a variety of private and federal student loan options. The loan type will determine eligibility for Public Service Loan Forgiveness (PSLF) and different income driven repayment plans.

See the chart below for a breakdown of loan types and their impact on income-driven repayment options and Public Service Loan Forgiveness (PSLF) eligibility.

Payment plans

The payment plan dropdown menu offers four choices for clients repaying student loan debt:

  1. Standard
  2. Income Based Repayment (IBR)
  3. Pay As You Earn (PAYE)
  4. Revised Pay As You Earn (REPAYE)

The standard payment reflects the standard repayment plan that will pay off loans in 10 years. While IBR, PAYE & REPAYE set the monthly student loan payment at an amount that is affordable based on client's income and family size. RightCapital will calculate payments under income-driven payment plans using the client's projected Adjusted Gross Income (AGI), which is based on the information input under the Profile.

The chart below demonstrates how payments are calculated with in each income-driven repayment plan (IBR, PAYE, REPAYE). To arrive at a client's discretionary income,150% of the state poverty guideline amount is subtracted from the client's AGI.

Income Driven Repayment Plan Payment Amount
REPAYE Generally 10% of discretionary income
PAYE Generally 10% of discretionary income
IBR Generally 10% of discretionary income if you're a new borrower on or after 7/1/2014, but never more than the 10-year Standard repayment plan amount

Generally 10% of discretionary income if you're a new borrower on or after 7/1/2014, but never more than the 10-year Standard repayment plan amount

Standard 10-year repayment amount

The standard ten year payment field is the amount used to pay the student loan back within 10 years. Entering a value in this field is essential when modeling IBR or PAYE, as the current or proposed payment plan.

IBR & PAYE  plans will use the standard 10 year payment amount as the maximum annual payment. Therefore if $0 is listed in the standard ten year payment field, IBR & PAYE annual payments will be capped at $0 even if a larger monthly payment is entered.

Payment Start 

The payment start year is an important variable within the student loan card that allows RightCapital to determine payments for IBR repayment plans. This field also controls the "new borrower status" of the client's loan.

Accrued Interest

Accrued Interest is the total interest accrued through that year. This amount would be capitalized and added to the loan balance were the client to leave the income-driven payment plan.

Early Payoff

If early payoff is selected, enter the calendar year when the client is expecting to payoff the remaining loan balance. This can be tracked through the Retirement > Cash Flow > Summary > Expense area in the year selected.

Analyzing student loan data

Once the financial parameters of the student loan has been completed, select "save" to enter the loan into the client's net worth. The loan balance and payments can then be tracked through the Retirement > Cash Flow > Summary area within the client's plan.

Advisors can also analyze the loan information within the Dashboard > Student Loan tab. This area will display the amortization schedule and list options for refinancing, income-driven repayment plans and Public Service Loan Forgiveness (PSLF) eligibility. Click this link to access the student loan analysis article.