Student Loans Part 2: Federal Law Updates and Repayment Strategies and Tips
Are you a law firm owner still wrestling with student loan debt? You're not alone, and you're definitely not stuck. With fresh federal policy changes on the horizon, now is the time to revisit your repayment strategy to not only stay compliant but to get ahead.
On this episode, we’ll break down the newest federal law updates, walk step-by-step through smart repayment methods, and share practical, business-friendly tips—specifically for attorneys building their practices.
Federal Student Loan Law Updates: What Law Firm Owners Need to Know
The world of federal student loans changed dramatically with the one big beautiful bill signed into law on July 4, 2025. Here’s what matters most for your planning:
Repayment Plan Overhaul: Most old income-driven repayment plans are being phased out. Starting soon, federal borrowers will have only two options:
Standard Repayment Plan (10–25 years)
New 30-Year Repayment Assistance Plan (RAP)
If you're currently on the SAVE Plan, PAYE, or ICR, these will sunset by 2028.
Interest Is Back: Interest resumes on millions of federal loans beginning August 1, 2025.
Updated Borrowing Caps: Graduate loan borrowing is now capped at $20,500/year ($100,000 lifetime), while law school loans have a higher ceiling—$50,000/year ($200,000 lifetime).
Collections Restart: If you fall behind, expect active collections—wage garnishments and tax refund intercepts are back in the federal toolkit.
Actionable Repayment Strategies for Attorneys
Start With a Business-Aware Budget
The foundation of any solid repayment plan is a smart, business-friendly budget. Treat your student loan payment as a fixed expense—just like rent or payroll.
Track your cash flow with apps like Monarch.
Separate your business and personal finances to simplify planning.
Try “banking-based budgeting”—use different bank accounts for bills, spending, and even extra loan payments. This makes it easier to manage and stick with your financial goals.
Automate Your Payments
Consistency is your greatest ally. Set up autopay with your loan servicer so payments are never missed—which may even earn you a small interest rate deduction. Take it a step further by automating extra payments, helping you chip away at the balance without extra effort.
Choose the Repayment Tactic That Fits You
There are two proven methods:
Debt Snowball: Pay off your smallest loans first for early wins and a motivational boost.
Debt Avalanche: Tackle loans with the highest interest rate first, saving money over time.
Case in Point: Choosing the avalanche method could save you months of payments and several thousand dollars, especially on larger balances with higher rates.
Should You Refinance or Consolidate?
Refinancing makes sense if you can lock in a lower average interest rate, your income is stable, and your credit is strong. But be careful—you could lose valuable federal protections.
Consolidation simplifies loan management but eliminates your ability to target higher-interest loans individually, potentially costing you in the long run.
Creative Tips and Hacks for Paying Off Loans Faster
Law firm owners can think outside the box:
Match Extra Loan Payments With Business Windfalls: Set aside a slice of any major bonus, big case, or revenue surge for your student loans.
Create a “Student Loan Sinking Fund”: Regularly funnel savings into a high-yield account, then make lump sum payments each quarter.
Try Round-Up Apps: Use fintech tools that round up daily purchases and put the spare change toward your loan balance.
Use Credit Card Rewards: Apply cash-back rewards directly to your loans (if your servicer allows).
Gamify Your Payoff: Link extra payments to business milestones—every time you hit a new revenue goal, celebrate with an additional payment.
Biweekly Payments: Make half-payments every two weeks, resulting in one extra full payment per year—a simple way to reduce interest costs.
Employ a Section 127 Plan: Your firm may be able to pay up to $5,250 per year (tax-free) towards your loans. Check with your CPA for details.
Share Your Journey: Incorporate your payoff story into your firm’s brand marketing, connecting with both peers and potential clients.
Adapt for Irregular Income
If your law firm’s revenue ebbs and flows, tie your loan payments to your income. Use a percentage-of-income approach—when revenue grows, your student loan payments grow with it.
Taking Control: Your Next Steps
Don’t let student loans be background noise in your financial life. Take one strategy from today’s list—whether it’s automating payments or using business windfalls—and put it into action this week.
Resources:
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Transcript:
Darren Wurz [00:00:00]:
Are you still making those student loan payments and wondering if you're doing it right? The rules just changed and so should your strategy. Welcome to the Lawyer Millionaire helping law firm owners build their businesses and their wealth. I'm your host, Darren Wertz. Okay, so you've built a law firm, but those student loans are still hanging over your head. With new federal policies rolling out and interest resuming soon, now is the time to get serious about your repayment plan or risk falling behind. Before we dive in today, are you in our book club yet? Each quarter we read a powerful book that helps you grow your wealth and your firm. And right now we're reading Buy Back your Time by Dan Martel. Join us for insights, accountability and connection with other law firm owners this visit lawyermillionaire.com to get started.
Darren Wurz [00:00:54]:
Okay, welcome back. And this is episode two of our student loan series. I'm so excited that you're here today because, you know, this may not be a fun and exciting topic, but I'm actually really pumped because I've got some great things I want to share with you today. And this is something that so many law firm owners need to hear. A clear, actionable plan for paying off your student loans. You know, I have lawful motor clients in their 40s and some in their 50s who still have student loans out there. In fact, I know someone who is in her 80s who has a student loan that she is refusing to pay off. But anyway, in our last episode we talked about understanding your loans and you know, how millionaires think about debt, trying to reframe the debt picture and think about it more strategically.
Darren Wurz [00:01:46]:
And today we're getting strategic. We're going to walk through the latest federal policies, smart repayment methods, and some creative tips and tricks that most financial advisors may not tell you. Okay, so whether you're just getting your law firm off the ground or managing a thriving practice, we're going to give you some great tools. Let's start with what's new. Okay, so the one big beautiful bill was signed into law on July 4, 2024. That's interesting coincidence there. Anyway, it's changed a lot of things. So one of the biggest things you need to be aware of is that most of your old income driven repayment plans are being phased out and now federal borrowers only have two options.
Darren Wurz [00:02:31]:
That's right, only two left. The standard repayment plan, which spans from 10 to 25 years or there is a new 30 year repayment assistance plan or RAP. We're getting creative with the acronyms here. So there were a lot of acronyms before. If you were on the save plan or others like the payee or the ICR, those will sunset in 2028. And another big thing we need to be aware of is that interest is resuming on, on millions of federal loans starting August 1, 2025. Yes, that's right. Interest is back.
Darren Wurz [00:03:12]:
Okay. New borrowing caps have also been introduced. So for graduate loans, you're limited up to 20,500 a year and $100,000 for your lifetime. For law and medical school loans, it's 50,000 a year and 200,000 total. Also, collections have restarted, which means if you're falling behind, the government can now garnish your wages or intercept your tax refund. So that's a big wake up call. Okay. Big things have changed.
Darren Wurz [00:03:45]:
All right, so before we get into tactics, let's talk about today. We're talking about repaying your student loans. Okay, so how do we do that? Well, step one, you may not love it, but step one is very simply build a budget. Build a business aware budget. The foundation of having a really good strategy for paying down your loans is to build a budget. Okay? Now it doesn't have to be fancy, you don't have to, you don't have to plan out every single dollar of spending, but you want to be aware of your basic needs, your basic spending needs and how much you should have leftover in discretionary funds to, to pay your student loans. If you're not tracking your cash flow, you're flying blind. Okay, so that's step one is just being aware, tracking your cash flow.
Darren Wurz [00:04:33]:
Use a great tool like Monarch or some of the other budgeting apps to help you track your expenses. Student loans are, payments are not going to be optional, right? There's a, there's a minimum payment that's a fixed expense, just like rent or payroll. And so build that into your monthly budget as a non discretionary cost. But then think about and try to figure out how much extra you have and where that extra should be going. Think of your budget as a cash control system for your entire business and life. And if your personal and business finances are separate, that's even better. That's step one, right? We've got to get the personal finances and the business finances separate. It's amazing how many times I find that these are intermingled and that makes it very, very difficult, you know, and another way you could think about, you could make the budgeting process easier.
Darren Wurz [00:05:23]:
One way to make the budgeting process easier is to use a what I call a banking based budgeting. Okay, so banking based budgeting is where you basically have separate accounts for separate purposes. And I do this, I have an income account. It's basically profit first applied to your personal bank accounts. Okay, so I have an income account. All the money comes in there and then it gets divvied up in percentages. A percentage goes to bills. These are the things I've got to pay, I don't have a choice.
Darren Wurz [00:05:52]:
Mortgage, utilities, et cetera. And then there's an amount that goes to spending and spending I can spend on whatever because nothing's coming out of that account. You could create similar, set up similar funds accounts for different purposes. You could have a special account for extra loan payments. We'll talk about that in a second. The next step, step two is to automate your payments. Automation is the key. And this should be a no brainer, right? Everybody's on autopay, but maybe it should be said, enroll in autopay with your loan servicer so that you'll never miss a payment.
Darren Wurz [00:06:30]:
And you know, if you're like some people, maybe me, I, okay, I admit I have a few student loans still sitting out there and you know, it's been nice the last few years not to have to think about those. But maybe it's time to dust, you know, dust them off, find where they are, you know, they've moved around maybe a couple times, different servicers. Dig through your emails, make sure you're signed up for those auto payments. And you know, most lenders will actually knock off maybe a quarter percent or so from your interest rate just for having automatic payments enabled. Even better, you could automate extra payments, set it and forget it. Don't rely on motivation. Build consistency into your system. Okay, so you've automated, got your budget, you know how much to pay, you've got it on autopilot.
Darren Wurz [00:07:19]:
Step three, choose your repayment plan. Now, we're not talking about, you know, the wrap or the other one. Let's talk tactics. Okay, so you may have heard of the snowball, right? The debt snowball method. Dave Ramsey made this famous. Well, the debt snowball is great for motivation. You start by paying off your smallest loan first and that quick win is going to feel great, right? Ooh, I knocked one out. Okay, let's knock the next one out.
Darren Wurz [00:07:46]:
It's going to keep you going. That's great. It's great for motivating and a lot of us need that. You know our psychology. What's fun about paying off loans? Some people are motivated by that, but not everybody. The second idea is the avalanche method. Hmm? We're sticking with the snow here, folks. Sticking with the snow.
Darren Wurz [00:08:03]:
Okay? So the avalanche method is the most mathematically efficient, but maybe not the most motivating. And with the avalanche method, what you do is you're going to pay all. You're going to pay minimums on all your loans. You're going to throw any extra funds towards the one that has the highest interest rate, and you're going to attack that one first. Okay? So avalanche. Okay. I won't explain why we. Why we have those different names, but let's look at a case study.
Darren Wurz [00:08:32]:
Okay? You've got one loan. I'll give you an example. Got One loan has $15,000 at a 4% rate. You have a second loan at 30,000. So it's bigger and it has a higher interest rate, 10%. You have $1,000 a month to put towards your loan. If you snowball. And you.
Darren Wurz [00:08:52]:
We've made some assumptions. We just got rid of minimum payments. But if you snowball and you pay just the small one first and then attack the bigger one, which has a higher interest rate, you're going to get that first one knocked out pretty quick. It's going to feel great, but you're going to have more work to do on the second one. It's going to take you 56 months total. 56 months? What is that, five years? Almost. Okay. But if you avalanche, if you prioritize paying the highest interest loan first, you'll finish in 53 months.
Darren Wurz [00:09:28]:
So three months sooner and you'll save $2,600. Now, that may not seem like a lot, but that can be very helpful to some people. And if you're capable of it, if you're capable of putting things on autopilot and it's not a challenge for you, I do recommend the avalanche method. But. But if you need an extra kick of motivation, snowball might work for you. All right, so you've got it. You've got your strategy. You're ready to go.
Darren Wurz [00:09:53]:
Everything's on autopilot. Great. Let's talk about a couple other quick questions. Should you refinance refinancing? And we'll talk more about refinancing later on. But refinancing can save you money under the right conditions, and it can make sense when you're moving from a generally higher, high average interest rate to a lower average interest rate. You know, interest rates have come up over the last few years, since 2020, when a lot of student loan payments Went on pause. So it may not make sense in today's interest rate environment, but that's the key. You want to make sure that your average interest rate is being lowered.
Darren Wurz [00:10:28]:
It can make sense when your income is stable. Because if you're going to, you know, go from federal loans to private loans, you may lose some of those federal loan advantages like deferment and forbearance and things like that. And it can also make sense when your credit score is strong. So those are three things to look for right when you're refinancing. Are you going to lower your average interest rate? Is your income stable, and is your credit score strong? Refinancing can be a mistake, though, for a couple of reasons. So some cons to think about, you could lose your federal protections. And if you're just doing it to lower your payments, that might be a mistake because you might be pushing things out further. And you may not want to do that.
Darren Wurz [00:11:08]:
That. But some lenders do offer bonuses to refinancing. So take a look around for some special offers. You know, if they're offering you some extra cash, you could throw that into your loans. Another thing people think about is consolidation. Does consolidation make sense for my student loans? And it can simplify things for sure. But here's the thing. If you consolidate multiple loans into one, you're going to lose your ability to be strategic.
Darren Wurz [00:11:39]:
So no more snowball, no more avalanche. Now, you know, maybe it gives you some peace of mind. But here's the thing again, the key with consolidation, just like refinancing, only consolidate if it's going to lower your average interest rate and help you pay off your student loans sooner with the same or a lower payment. Otherwise, you're just making the bankers more wealthy. And who wants to do that? Right? Okay, so that's some helpful things for you. Okay, I want to get to the fun part. And here's the fun part. Creative tips and hacks for paying your loans down faster.
Darren Wurz [00:12:14]:
Ooh, what's this all about? Now for the good stuff. All right, so step tip number one. Match extra payments with business windfalls. You get an extra big case, big bonus. You hit a revenue surge. Set aside a portion of that for your extra loan payments. Don't go and blow it all on Amazon. It doesn't have to be huge.
Darren Wurz [00:12:37]:
And no, you don't take all of your surplus and put it in your loans. But even 10% of a big win can help you make a serious dent. Create a student loan sinking fund. Remember, we're talking about banking Based budgeting, having different bank accounts for different purposes, that's a mouthful. Instead of paying extra monthly, stash a surplus in a high yield savings account once per quarter, apply it as a lump sum to your principal. Hmm, that might help. Tip 3 Use roundup apps. Okay? There are certain apps like Coins or Changeed that can round up your daily purchases to apply the and then apply the difference towards your loans.
Darren Wurz [00:13:21]:
Every time you make a payment, you buy something, it's, it's $10.50. They're going to round up to 11, take 50 cents and plug it into your loans. It's kind of a sneaky way of getting yourself to pay more towards your student loans. It's passive, you're not thinking about it and it actually can add up pretty quickly. I know people who've done that for like just extra savings and it adds up to hundreds of dollars, maybe thousands. Tip 4 use credit card rewards. Use found money, right? Extra money. Use found money.
Darren Wurz [00:13:56]:
Credit card rewards are a great one. You know, usually we take our cred credit card rewards and we just, you know, plop it into our bank accounts or we splurge it, right? But you might be able to use that for your loans. Maybe that's a better option if your servicer allows it. You could redeem your cash back rewards towards your loans or take the cash cash out and then pay that onto your loans. You know, just make sure you're not getting into trouble with credit card balances, right? Tip 5 Gamify. Yes, gamify. Gamify your payoff. Tie extra payments to key performance indicators.
Darren Wurz [00:14:32]:
Ooh, this is fun for those business savvy folks out there. For example, every time you hit a new monthly revenue goal, celebrate by paying an extra 250 bucks towards your loans. Make it a game, right? You're going to make it fun. Tip 6 Buy weekly payments instead of monthly payments. Split your payment in half and send it every two weeks. You'll end up making an extra payment 13 payments instead of 12. It's a sneaky way of tricking yourself into making an extra loan payment once per year. Then that can shave years off your student loans.
Darren Wurz [00:15:12]:
Tip 7 Set up a repayment assistance benefit for yourself. Talk to your CPA about this. But you could use a Section 127 plan. Your firm could pay up to $5,250 per year tax free towards your loans. Now you want to check with your CPA on that one. But for those law firm owners out there looking for some tax benefits, there's one for you. Tip 8. Share your journey publicly, right? Make it a.
Darren Wurz [00:15:45]:
Get the. Get your LinkedIn followers involved. If you're building your brand, incorporate your student loan payoff story into your marketing. Make it a thing, right? It humanizes you and it creates connection with your audience. All right, before we go, just a couple things, you know, another thing to think about. If you're a business owner, you have a law firm owner or a lawyer who has a different kind of compensation structure. You may have this thing we call irregular income. And you know, your income may not be great now.
Darren Wurz [00:16:18]:
It may grow, it may fluctuate. So you can tie your repayment strategy to your growth and to your income fluctuations simply by using a percentage strategy. If cash is tight right now, focus on staying current. You know, just make your minimum payments and use some of those tricky little methods like apps and automations and roundups to help you. And if your income is rising, then you can start paying off more, right? It's okay. It's okay to not be able to put a lot yet on your student loans. Just, you know, focus on growing your practice, growing your income, and then make sure that your income, make sure that your payment towards your loans is growing with your income, right? Instead of expanding your lifestyle as we so often do as our incomes grow, expand your payment towards your student loans. Okay.
Darren Wurz [00:17:16]:
Well, I hope I've given you some great things to think about today. You know, it doesn't have to be overwhelming. With the right approach, you can do it. You can pay off those student loans that have been hanging over your head. So here's my challenge to you today. Don't let these loans just be background noise in your financial life. Pick a strategy from today's episode. Automating your payments, refinancing smartly, or gamifying your payoff and put it into action this week.
Darren Wurz [00:17:44]:
And you know, at the Lawyer Millionaire, we believe that long term wealth begins with strategic, intentional decisions just like this. Paying down your student loans isn't just about getting out of debt. It's about getting you to freedom, right? Getting you to financial freedom. And that's where we're all trying to get. And that's what we help law firm owners with every day. And we'd love to help you as well. To learn more about us, visit lawyermillionaire.com where, where by the way, you can download the first chapter of my book for free, which is titled the Lawyer Millionaire, of course. And don't forget to join the book club.
Darren Wurz [00:18:19]:
It's free, it's fun, and it's full of ambitious attorneys just like you. Well, don't forget to join us next time as well, because we're going to be diving into part three of our Student loan series and continuing on in this discussion. Give you some more ideas. I think next time we're talking about should you invest or pay off your student loans? That's a great question that I get so often. So. Well, friend, we're down to the end of our episode. I just have one last question for you, and that is, who is the lawyer millionaire? That's right. It's you, my friend.
Darren Wurz [00:18:55]:
Own it and live it. I'm your host, Darren Wurz. Thanks for joining me. I'll see you next time.