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With mass student loan forgiveness blocked by the Supreme Court, you may be curious about what other relief options are available, especially if you work (or plan to work) in a field that requires graduate school — and significant student debt — but may not pay a high salary.

The good news is that there are multiple programs that offer student loan forgiveness or relief for mental health professionals, including counselors and therapists. Forgiveness programs for mental health professionals are designed to encourage individuals to enter and stay in the profession.

Read on to learn about programs and strategies that can help you repay any student loans you have taken out (or plan to take out) to become a mental health professional.

How to Plan for the Future With Student Loan Debt as a Mental Health Professional

Whether you take out private student loans or federal student loans to pay for your education in the mental health field, you’ll need to consider how you will eventually repay those loans. It can also be challenging to navigate career opportunities when you know that you have student loans to repay. The good news: You’re not alone. And there is no one right path to pay back student loan debt.

It can be helpful to talk to graduates and see how they paid off student loans. One big crossroads can be whether to take a higher paying job in the private sector or work in a nonprofit role that could give you an avenue toward loan forgiveness through a program like the Public Service Loan Forgiveness Program (PSLF). Another option to manage repayment is to use an income-driven repayment plan, like the new Saving on a Valuable Education, or SAVE, Plan (which will replace the existing Revised Pay As You Earn, or REPAYE, Plan).

There may also be programs unique to your career. For example, the Health Resources and Services Administration (HRSA), a government branch, offers loan repayment programs for mental health professionals who meet certain criteria, such as serving in a health professional shortage area. Speaking with your supervisor, your colleagues, and keeping abreast of news within professional organizations can help alert you to unique repayment opportunities.

Recommended: REPAYE vs PAYE: What’s the Difference?

What is a Student Loan Forgiveness Program?

A student loan forgiveness program operates the way it sounds: Student loans can be forgiven if certain criteria within the program are met. But each student loan forgiveness program has different criteria. It’s important to completely understand the scope of the forgiveness program. Reading this student loan forgiveness guide can help you understand where the national conversation is regarding loan forgiveness in the future as well as options available for forgiveness now.

When student loans are forgiven, usually after a set amount of payments, the balance is forgiven. But that balance may be taxed, depending on the program. For example, forgiveness received under PSLF is not considered taxable, according to the IRS. But under PAYE and REPAYE programs, any canceled student loan debt is considered taxable.

There may also be loan repayment assistance programs (LRAPs) for your profession or field, as well as state-sponsored loan forgiveness programs.

Recommended: Supreme Court Blocks Student Loan Forgiveness

Will Student Loans be Forgiven After Ten Years?

Loans are not automatically forgiven after ten years. But one potential avenue for mental health student loan forgiveness is the federal Public Service and Loan Forgiveness (PSLF) program. This program requires eligible candidates to work with a qualifying organization and make 120 qualifying monthly payments. It also requires that the loans you hold be federal Direct Loans (or that the federal loans you currently have are consolidated into a Direct Loan).

Qualifying for PSLF can be challenging and requires borrowers to certify their employment to be sure their payments count toward the program. In addition to making 120 payments while working at a qualifying employer, you have to be working for a qualifying employer when you submit the forgiveness application and when the loan is forgiven.

Consult with your loan servicer if you have any questions and be sure to read all of the details about the program.

Typical Requirements for Student Loan Forgiveness

In general, forgiveness programs have criteria. These may include:

•  A history of payments, with no payments skipped

•  Working at a qualifying organization, in a qualifying capacity (ie, full-time instead of part-time)

•  Correctly filling out paperwork for forgiveness

•  Potentially paying taxes on the amount forgiven

Understanding the criteria, reading the fine print, and researching any points of confusion can be helpful in ensuring that your application is processed successfully. The eligibility and forgiveness requirements may vary depending on the forgiveness program, so be sure to fully understand the criteria for the loan forgiveness option you are pursuing.

Difference Between Loan Forgiveness, Loan Cancellation, and Loan Discharge

These three terms are sometimes used interchangeably. Quite simply, all three terms mean you’re no longer required to pay some or all of your loan. But there are no “easy” ways to get out of paying student loans.

Usually, forgiveness and cancellation mean that, due to either a forgiveness application or your current job, you no longer have to pay loans. Discharge refers to a situation beyond your control, such as total and permanent disability or the closure of your school. In very rare cases, student loans are discharged due to bankruptcy. You will likely have to apply for cancellation, forgiveness, or discharge and will likely need to continue making payments while the application is processed.

Recommended: Bankruptcy and Student Loans, Explained

Student Loan Forgiveness Options For Mental Health Workers

Depending on your place of employment, you may have other options for forgiveness through specific mental health worker programs. There also may be scholarships and grants available in your field of study. Also something to consider: Some private employers offer student loan repayment as part of their packages. This can be worth asking potential employers as you look for jobs. There are also other federal programs to know about:

PPACA and HERA Student Loan Programs for Counselors

As part of the Patient Protection and Affordable Care Act, legislation expanded opportunities for student loan forgiveness for healthcare professionals, including mental health counselors. While many of these forgiveness programs are state-run, this act did ensure that any forgiven funds would not be considered taxable income for people seeking forgiveness through programs supporting health care professionals working in underserved areas.

Under the Higher Education Reconciliation Act (HERA) certain federal loans, including Stafford Loans, and Direct Loans (both Subsidized and Unsubsidized Direct Loans) are eligible for a graduated repayment plan. Under this plan, your federal loan repayments start low and gradually increase every two years. This can be an option if you expect your income to increase over the years.

National Health Services Corps Loan Repayment Program

The National Health Services Corps offers loan repayment programs through your state. Each state has different eligibility requirements, including eligible disciplines. These state-run programs also may differ in terms of service commitments but usually, the commitments start at two years for an eligible position. These will generally be at centers funded by the Health Resources and Services Administration.

Mental Health Loan Forgiveness Alternatives

The criteria and requirements for some forgiveness programs can be challenging to fit. But that doesn’t mean there’s no way to pay down loans. Understanding all your options can help you navigate the best potential avenue for you.

Refinance Your Mental Health Student Loan

Refinancing your student loans could potentially help save you money in the long term, and might give you more flexibility in your budget.

When you refinance, you take all your loans and consolidate them into one loan. For qualifying borrowers, this loan may have a lower interest rate, which could reduce the amount of money you owe in interest over the life of the loan. It also may have a different payment term, so that you are paying the loan off over a longer (or shorter) period of time. Keep in mind that, while a longer loan term may result in lower monthly payments, it might also mean paying more in interest over the life of the loan.

You can often check your loan refinance rate without affecting your credit score and choose terms that work for you.

Scholarships and Grants

There may be scholarships and grants, either from your institution or your place of work. This can help pay down student loan debt. It’s also worth remembering that some private-sector employers may offer student loan repayment as a perk. Talking with colleagues, supervisors, and the financial aid office at your school may help you find programs that may be specific to your field or your school.

Pay Off Student loan Debt

In some cases, it may make sense to prioritize paying down student loan debt. This may include taking on part-time work, decreasing living expenses, and trying to carve out opportunities to pay more than the monthly student loan payment. These strategies can help you pay off your student loans faster and, in turn, could lower the total cost of the loans.

The Takeaway

Working as a mental health professional can be rewarding, but might require you to borrow money to pay for your education. There are numerous options both for taking out and paying back student loans for mental health counselors and therapists. Depending on your profession and employer, you might qualify for certain types of loan forgiveness, such as Public Service Loan Forgiveness Program (PSLF), if you have federal student loans.

It can be helpful to talk to colleagues about their student loan pathway, join professional organizations, and keep an ear to the ground regarding grants, scholarships, and employer-sponsored loan repayment programs.

Also keep in mind that you can use a private student loan to help pay for your undergraduate or graduate education in the mental health field (or to refinance loans you already have). While private loans don’t come with government-sponsored protections like PSLF, some private lenders offer hardship and deferment programs of their own.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ on Mental Health Forgiveness

How do counselors and mental health professionals plan for the future with student loan debt?

Understanding options for paying back loans can be helpful for mental health professionals. Depending on what type of loan you have and what type of mental health work you do, your loan repayment options might include Public Service Student Loan Forgiveness (PSLF), income-based repayment plans, and refinancing your student loans. You might also consider taking a job in the private sector, which may pay more and allow you to comfortably cover loan payments.

Do healthcare workers qualify for loan forgiveness?

In some cases, healthcare workers qualify for eligible forgiveness programs. This depends on the state the healthcare worker resides, as well as their place of employment.

What are some student loan forgiveness options for mental health workers?

Mental health workers who work in underserved areas may be able to apply for forgiveness programs run at their state level for healthcare professionals. Eligibility depends on criteria including place of employment. Student loan forgiveness options may also include the federal Public Service Loan Forgiveness program (PSLF), as well as some income-based repayment options.

Photo credit: iStock/Vertigo3d

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SOIS0823017

No matter what kind of investment an individual makes–active, passive, automated– they’ll face some kind of investing fees that takes away from their returns.

When investing, individuals may get excited about an opportunity or a long-term plan, making it easy to overlook the fine print. But over time, fees can make a profound impact on the returns an investor takes out of financial markets. Here’s a closer look at the types of investment fees investors may come across.

What Are Investment Fees?

Investment fees are charges investors pay when using financial products, whether they have short vs. long-term investments. Investing fees include broker fees, trading fees, management fees, and advisory fees.

Broadly speaking, investing fees are structured in two ways: recurring or one-time transaction charges. Recurring is when the charge is a portion of the assets you’ve invested, usually expressed as an annual percentage rate. One-time transaction charges work more like a flat fee, such as a certain number of dollars per-trade.

💡 Quick Tip: Investment fees are assessed in different ways, including trading costs, account management fees, and possibly broker commissions. When you open an investment account, be sure to get the exact breakdown of your “all-in costs” so you know what you’re paying.

Why Are Investment Fees Charged?

Like any purchase you make, there are fees for investment products and services. For instance, a broker will typically charge a fee for buying and selling stocks or managing your portfolio.

While some investing fees and expenses may seem small, over time they can make an impact on your investment and can affect the value of your portfolio. As an investor, it’s important to be aware of these fees and understand exactly what you’re being charged to help make sure you’re getting a good return on investment.

Who Charges Investment Fees?

Financial professionals such as brokers, financial advisors and financial planners usually charge investing fees and expenses. Brokerage firms typically charge fees and commissions. And there are investment fund fees for various financial products, such as mutual fund management fees and fees for operating and administering a 401(k).

Learn more about the different types of investment fees and who charges them below.

6 Common Types of Investment Fees

1. Management Fees

When it comes to types of investment costs for mutual funds, every mutual fund charges a management fee. And other investment vehicles, such as hedge funds, do as well. This pays the fund’s manager and support staff to select investments and trade them according to the fund’s mandate. In addition to the manager, it also covers the administrative expenses of managing the fund.

This fee is typically assessed as a portion of an investor’s assets, whether the investments do well or not. Some investments, such as hedge funds, charge a performance fee based on the success of the fund, but these are not widely used in most mutual funds.

Management fees vary widely. Some index funds charge as little as 0.10%, while other highly specialized mutual funds may charge more than 2%.

Management fees are expressed as an annual percentage. If you invest $100 in a fund with a 1% management fee, and the fund neither goes up or down, then you will pay $1 per year in management fees.

2. Hedge-fund Fees: Two and Twenty

The classic hedge-fund fee structure is known as “two and twenty” or “2 and 20.” This means that there’s a 2% management fee, so the hedge fund takes 2% of the investor’s assets that are invested. And then there’s a 20% performance fee, so with any profits that are made, the hedge fund takes an additional 20% of those returns.

So let’s say an investor puts $1 million into a hedge fund, and the firm makes a profit of $500,000 in a year. That means the hedge fund would take a management fee of $20,000 plus a performance fee of $100,000 for a total compensation of $120,000.

Bear in mind, investors who are clients at hedge funds are typically institutional investors or accredited investors, those typically with a net worth of at least $1 million, excluding their primary residence. Hedge funds also tend to have higher minimum initial investment amounts, ranging from $100,000 to $2 million, although it varies from firm to firm.

Due to lackluster performance and competition however in recent years, the classic “two and twenty” hedge-fund fee model has become challenged in many years. Many hedge funds now offer rates like “1 and 10” or “1.5 and 15”–a trend dubbed as “fee compression” in the industry.”

3. Expense Ratio

The expense ratio is the percentage of assets subtracted for costs associated with managing the investment. So if the expense ratio is 0.035%, that means investors will pay $3.50 for every $10,000 invested.

The expense ratio includes the management fee, and tells the whole story as to how much of the fund’s assets go toward the people running and selling the fund.

In addition to management fees, a mutual fund may charge other annualized fees. Those can include the fund’s advertising and promotion expense, known as the 12b-1 fee. Those 12b-1 fees are legally capped at 1%. But when added to the management fee, it can make a fund more costly than at first glance. That’s one reason to double check the expense ratio.

Another reason is that the expense ratio may actually be lower than the management fee. That’s because some mutual funds will waive a portion of their fees. They may implement a fee waiver to compete for the dollars of fee-wary investors. Or they may do so as a way to hold onto investors after the fund has underperformed.

In the 2010s, some money market funds waived or reimbursed some of their fees after historically low bond yields wiped out any return they offered to investors. While mutual fund companies can reimburse part or all of a fund’s 12b-1 fee, it happens very rarely.

Recommended: Is There Such a Thing as a Safe Investment?

4. Sales Charges

In addition to the annual management and possibly also 12b-1 fees, mutual fund investors may pay sales charges.

Typically, these charges only apply to mutual fund purchases that an investor makes through a financial planner, or an investment advisor. This fee, also called a sales load, is how the advisor gets paid for their service. It isn’t a transaction fee however. Rather it’s a percentage of the assets being invested.

While the maximum legal sales charge for a mutual fund is 8.5%, the common range is between 3% and 6%.

These sales charges can come in different forms. Front-end sales charges come out of an investor’s assets at the time of the sale. Back-end sales charges, on the other hand, are deducted from the investment when the investor chooses to sell. Lastly, contingent deferred sales charges may not come out at all, if the investor stays in the fund for a specified period of time.

5. Advisory Fees

When an investing professional–a financial planner, advisor, or broker–offers advice, this is how they’re paid. Some advisors have a business model where they charge a percentage of invested assets per year. Other advisors, though, charge a transaction fee, in the form of a brokerage commission. Lastly, some simply charge an hourly fee.

Asset-based money management fees are usually expressed as a percentage of the assets invested through them. Typically, a hands-on professional will charge 1% or more per year for their services. That fee is most often deducted from an account on a quarterly basis. And it comes on top of the fees charged by any professionally managed vehicles, such as mutual funds.

But that fee can be much lower for automated investing platforms, also known as “robo-advisors.” Some of these robo-advisors charge annual advisory fees as low as 0.25%. But it’s worth noting that these platforms often rely heavily on mutual funds, which charge their own fees in addition to the platform fees.

Robo-advisors are famous for having rock-bottom fees. However, when investors are comparing robo-advisor fees, they’ll see that there’s a wide range. The minimum balances can also determine what sort of fees investors pay, and there may be additional fees like a potential set-up payment.

Recommended: Are Robo-Advisors Worth It?

6. Brokerage Fees and Commissions

When an investor wants to buy or sell a stock, bond or an exchange traded fund (ETF), they typically use a brokerage firm. Fees and commissions vary widely depending on the type of transaction and the type of broker. Those fees can be based on a percentage of the transaction’s value, or it can be a flat fee, or a combination of the two.

And when investing, that fee depends on whether an investor uses a full-service broker or a discount broker. While a full-service broker can offer a wide range of advice and services, their commissions per trade are far higher than a discount or online brokerage might charge.

Because discount brokers offer less in the way of advice and services, they can charge a lower flat fee per trade. In recent years, the biggest online brokerage firms have offered free trading, partly due to competition and partly because they instead get paid through a practice known as payment for order flow.

Payment for order flow, or PFOF, is the practice of retail brokerage firms sending customer orders to firms known as market makers. In exchange, the brokerage firms receive fees for that order flow.

While widespread and legal, payment for order flow has been controversial because critics say it misaligns the incentives of brokerage firms and their customers. They argue that customers may actually be “paying” for their trades by getting worse prices on their orders. Defenders argue customers get better prices than they would on public exchanges and benefit from zero commissions.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

Cost of Investment Fees

The cost of investment fees can vary depending on the type of fee, who is charging it, and the type of account an investor has. For instance, a standard management fee is about 1%.

A broker or brokerage might charge an annual fee of $50 to $75 a year. Not all brokers have an annual fee, so try to find one that doesn’t.

A broker might also charge anywhere from a few dollars to $30 for research. Again, not all brokers levy this charge, so choose a broker that doesn’t charge for research.

In addition, trading platform fees may range from $50 to $200 or more a month. You might also have to pay transfer or closing fees of $50 to $75 to have the brokerage transfer your account elsewhere or close it out.

Pros and Cons of Investment Fees

There are obvious drawbacks of investment fees. The biggest: Investment fees can diminish the returns on your investments. For instance, if your return was 8%, but you paid 1% in fees, your return is actually 7%. Over the years, that difference can be significant.

When it comes to benefits, there may be some advantages to using a fee-only financial advisor over one who charges commissions. For one thing, the costs may be more predictable. A financial advisor may charge a flat fee or charge by the hour. In contrast, a financial advisor who works on commission may suggest financial products that they earn commission from. In addition, many fee-only advisors are fiduciaries, which means they are obligated to act in the client’s best interests at all times.

Each investor should find out the specific fees involved relating to their investment. And don’t be afraid to ask questions. It’s critical to know exactly what you’ll be paying and what those costs cover.

How Much Is Too High a Price To Invest?

The cost of investment fees varies widely, depending on the type of fee. Advisory fees of more than 1% may be considered too high a price for many investors. Sales charges typically range between 3% and 6%, so anything higher than that might be something to avoid.

Of funds that charge fees, broad-index ETFs and mutual funds often charge the lowest fees.

Investing in Your Future With SoFi

No matter how an investor gets into the market, they will pay some kind of fee. It may be the quarterly deduction made by a financial advisor, or the trading costs and account fees of an online brokerage account, or the regularly deducted management fees of a mutual fund.

Those fees and commissions add up to the “cost of investment.” That cost is deducted from assets and represents a drag on any return an investor may earn over time. As such, investing fees require close attention, regardless of an investor’s strategy or long-term goals.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

FAQ

What are typical investment fees?

Typical investment fees include broker fees, trading fees, sales charges, management fees, and advisory fees.

Investment fees tend to be structured either as recurring fees, in which the charges are a percentage of the assets you’ve invested, or as one-time transaction charges that are similar to a flat fee, such as a certain amount of money per-trade.

Is a 1% management fee high?

A 1% management fee is a fairly typical fee. However, even though it is standard, you can try negotiating for a smaller fee than 1%. Some financial advisors may be willing to lower the percentage.

How much should you pay for investment management fees?

Generally, you can expect to pay about 1% for an investment management fee. Overall, percentage fees like this tend to be best for investors with smaller investments, while a flat fee tends to be more advantageous to investors with a very large investment (meaning more than $1 million).

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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