Financial planning software lets advisers tackle student loan repayment

Graduation mortar board cap on one hundred dollar bills concept for the cost of a college and university education

After a client uploads their loan, RightCapital provides an interactive flowchart with available repayment options based on loan timing, career choice and consolidation.

The market for financial planning software is already loaded with heavyweights like eMoney Adviser, MoneyGuidePro and Advicent’s NaviPlan, but a newcomer is hoping to get a piece of the pie by building new features that can’t be found among the incumbents.

RightCapital claims to be the first financial planning tool to include capabilities that let advisers help clients with student loan repayment.

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After a client uploads their loan, either through account aggregation or by manually inputting the information, RightCapital provides an interactive flowchart with available repayment options based on loan timing, career choice and consolidation. The tool supports new income-driven repayment options for public student loans, such as IBR, PAYE, REPAY and Public Service Loan Forgiveness.

Clients can then review how their current repayment plan compares with any of the proposed options, and see how much they would save over the life of their plan. The choice will integrate into the rest of their financial plan and show how the new monthly payments or decreased interest impacts progress toward retirement and other goals.

It’s a feature not yet available on MoneyGuidePro, eMoney or Advicent’s NaviPlan. MoneyGuidePro declined to comment. eMoney spokeswoman Joanna Armandi said advisers can use its tool to model the outcome of a student loan paid off or forgiven in advanced planning scenarios, but cannot show clients the impact of repayment plan options. Tom Burmeister, director of financial planning at Advicent, said that while its software includes planning for student loan repayments and the implications/benefits of paying down debts early, it doesn’t have support for student loan-specific repayment plans.

While loan repayment wouldn’t directly lead to new accounts or assets under management, RightCapital CEO and co-founder Shuan Chen believes it’s a chance for advisers to be essential in solving a problem affecting clients or a client’s children.

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“With more than 44 million Americans owing close to $1.5 trillion in student loan debt, those dealing with student loan repayment are currently an underserved market,” Mr. Chen said in a statement.

RightCapital vice president and head of sales, Ted Denbow, said there’s a false perception that student loan debt only afflicts the middle class, but people of all income levels are struggling with surging costs of higher education. It also can help advisers who charge a retainer fee for financial planning.

“There is a revenue opportunity for the adviser,” he said. “If you can show off how you can save money on [a client’s] student loans, you can also help them buy their first house.”

Mr. Denbow said advisers can use RightCapital to build a simple plan in 10 minutes, or take more time for a complex plan that accounts for insurance, taxes, Social Security, real estate and now student loan repayment. RightCapital also supports both goals-based and cash-flow planning.

“For advisers new to planning, it would allow them to ramp up faster relative to eMoney and NaviPlan,” he said. “We focus on the ease of use and time savings. More planning and less time is something that all advisers want to achieve.”