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Speaker 1: Welcome to How to Money. I'm Joel and today we're

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Speaker 1: talking student loan chaos. We're explaining it with Stanley Tait. Okay,

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Speaker 1: So the whiplash that student loan borrowers have experienced over

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Speaker 1: the past few years has been staggering payments paused forgiveness,

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Speaker 1: promised forgiveness blocked, then repayment systems completely rewritten, and now

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Speaker 1: for some is wage carnis back on the table. Well

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Speaker 1: maybe we'll get to that today with Stanley. It's just

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Speaker 1: no wonder though, that navigating student loans has become this

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Speaker 1: specialized skill, and few people know the landscape better than

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Speaker 1: Attorney Stanley Tate. He has helped hundreds of borrowers get

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Speaker 1: out of default, qualify for forgiveness programs, secure affordable payments,

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Speaker 1: and to go shape settlements. He's even helped people discharge

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Speaker 1: student loans in bankruptcy. And he's helping people through his blog,

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Speaker 1: his newsletter, his videos, just offering really helpful guidance to

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Speaker 1: a bunch of folks out there. So with all the

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Speaker 1: recent changes and confusion, knew we needed his insight on

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Speaker 1: how to Money. So Stanley Tate, thank you for joining

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Speaker 1: me on the show today.

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Speaker 2: Thanks for having me.

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Speaker 1: All right, first question out of the gate, what do

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Speaker 1: you like to suplore John? What's your craft bear equivalent?

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Speaker 1: I know you're doing smart stuff with your money, Stanley,

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Speaker 1: for your future, but you got to have some spurts

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Speaker 1: in the here and now. Right.

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Speaker 2: The splurge more recently has been on cigars. I joined

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Speaker 2: a cigar lounge a few months ago and I'm really

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Speaker 2: enjoying kind of like that pastime and being able to

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Speaker 2: bond and fellowship with other people in shaer bourbers while

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Speaker 2: smoking a stick. It's very relaxing there you go.

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Speaker 1: That sounds like a nice way to wind down after

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Speaker 1: a tough day of helping helping people out with their

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Speaker 1: student loan questions.

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Speaker 2: Oh man, absolutely, Just just being able to zone out

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Speaker 2: and not have to think deeply about other people and

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Speaker 2: what's happening in the world and what's going on. That's perfect, Yeah,

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Speaker 2: mechanism for me.

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Speaker 1: Sometimes we got to check out. That sounds like a

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Speaker 1: lovely way to spend your time and money. Let's talk

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Speaker 1: student loans though. Can you lay the framework of what's

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Speaker 1: happening right now for the average student loan borrower? Like

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Speaker 1: I know this is kind of a big question. But

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Speaker 1: where do things stand right now on the in the

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Speaker 1: student loan space from a macro perspective?

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Speaker 2: All right, So you know that that's a really good question,

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Speaker 2: and I'm never quite sure how to enter it because

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Speaker 2: what's happening really depends or what you perceive is happening,

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Speaker 2: depends on kind of your station in life. So if

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Speaker 2: you're a new borrower, like someone just graduating, entering the

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Speaker 2: payment market, like nothing really feels like it's happened, because

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Speaker 2: none of this stuff is applied to you, or at

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Speaker 2: least it doesn't feel that way. And if you're someone

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Speaker 2: who's had your loans for two plus decades and you

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Speaker 2: watch rounds and rounds of people get loan forgiveness and

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Speaker 2: get somehow you excluded, it feels like everything is happening,

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Speaker 2: yet nothing has happened to you. And the way I

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Speaker 2: look at it today is that we've had a lot

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Speaker 2: of change since COVID March twenty twenty through today, and

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Speaker 2: it's been very tumultuous. Where As you kind of kicked

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Speaker 2: us off that things have been one way forgiveness promise

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Speaker 2: forgiveness taken away, repayment plan promise repayment plan taken away,

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Speaker 2: and it just feels very dynamic environment, and I think

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Speaker 2: we're in a very static environment right now where the

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Speaker 2: Education Department under the Trump administration has made their major

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Speaker 2: policy change by effectively killing the saved plan and leaving

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Speaker 2: us with income based repayment option, and this new plan

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Speaker 2: coming down the pipeline is like your two primary options

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Speaker 2: moving forward, and forgiveness programs day still exists, Public service

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Speaker 2: loan forgiveness is still there, Twenty to twenty five year

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Speaker 2: forgiveness is still there, and so nothing's really changed along

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Speaker 2: those lines. Now there's some big changes happening with borrowing

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Speaker 2: for future people, future generations, but that doesn't really have

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Speaker 2: anything to do with your repayment if forgiveness options for

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Speaker 2: federals to loans, those of all stayed the same. And

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Speaker 2: so if I were looking at it, say, I'll just

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Speaker 2: say there's been a lot of dynamic things, but actually

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Speaker 2: much is the same for you moving forward, broadly speaking.

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Speaker 1: And one of the things I feel like in the

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Speaker 1: past couple of weeks that we've talked about on the

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Speaker 1: show that seems like it's a big deal was the

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Speaker 1: threat of wage garnishment notice is being sent out right

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Speaker 1: and so this month people were supposed to receive letters

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Speaker 1: in the mail saying, hey, guess what you are. You've

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Speaker 1: been in default, like you haven't paid your loan two

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Speaker 1: hundred and seventy plus days, and so we're going to

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Speaker 1: start taking money from your paycheck, maybe even from probably

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Speaker 1: from your tax refund as well. Why do you think

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Speaker 1: the Education Department pulled back on that? And how nervous

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Speaker 1: should borrowers who haven't paid their balance in paid on

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Speaker 1: their loan in a long time, how nervous should they be?

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Speaker 2: Well, a few questions insider are but one thing I

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Speaker 2: want to make clear kind from the beginning is that

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Speaker 2: Barrows and Default have had three plush years of opportunity

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Speaker 2: to get out of default without consequence. And so if

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Speaker 2: you're someone who's still worrying about this today, I think

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Speaker 2: we have a larger problem about Okay, what does that

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Speaker 2: mean for you to like, what will it take for

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Speaker 2: you to get out of default? Finally, that's one part.

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Speaker 2: Now there's a consequence part of it decide, But I

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Speaker 2: think there's a core question of like what does that

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Speaker 2: even mean? Which I think goes beyond the scope put

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Speaker 2: its call. But it's just something that troubles me because

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Speaker 2: We've had these different programs. Fresh Start program, we had

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Speaker 2: the on ramp opportunity, they still gave Barros opportunity to

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Speaker 2: get out of fault. Then we had another year after

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Speaker 2: that for Bars to get out of the fault. And

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Speaker 2: now finally, when wage garnishment notices go out, people start

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Speaker 2: to freak out, like, oh my god, my wage's gonna

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Speaker 2: be garnished. And yet the Department of Education pulled back.

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Speaker 2: In your first question there is why did they do that?

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Speaker 2: And I think this goes back to affordability. This administration

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Speaker 2: is struggling with affordability kind of concerns, and so now

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Speaker 2: you're going to take out the one kind of resource

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Speaker 2: that people rely on to either catch themselves up on

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Speaker 2: bills or to get ahead a little bit, or stock

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Speaker 2: something away for a vacation or something else like that.

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Speaker 2: And so I think that could be really poor, a

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Speaker 2: really bad look, especially ahead of the midterms. The Department

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Speaker 2: of Education collects something like sixty percent of its revenue

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Speaker 2: for default and lungs through wage through tax refund offset.

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Speaker 2: So I just don't think that would be a good look.

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Speaker 2: But I don't think it has anything more with timing,

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Speaker 2: because Bars have been given enough time notice ahead of time.

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Speaker 1: So political calculation.

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Speaker 2: I mean, I don't know what other explanation there would be, right,

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Speaker 2: I don't have any insight into this, but you would

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Speaker 2: say stopping it would be, oh, we need opportunity to

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Speaker 2: get our systems up and running. But the Treasury offset

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Speaker 2: program was always up and running unless Doge or some

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Speaker 2: other actor went in there and cut it and kind

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Speaker 2: of dismantled it and they found out later. That's also

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Speaker 2: a possibility, but I think the more likely thing is

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Speaker 2: this is not a good look for us from an

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Speaker 2: affordability standpoint.

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Speaker 1: So I'm going to read you a line that I

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Speaker 1: found interesting in the press release when they said they

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Speaker 1: were going to pause wage carsmen. They said that it

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Speaker 1: will function more efficiently and fairly after the Trump administration

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Speaker 1: implements significant improvements to our broken student loan system. What

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Speaker 1: do you think they mean by that?

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Speaker 2: No clue, what does that even mean? Because like the

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Speaker 2: collections for offset are done by the Department of Treasury,

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Speaker 2: it just flagged through there. So it literally is just

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Speaker 2: clicking a button and taking a flag on or off

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Speaker 2: to keep that money or to do this. So fixing

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Speaker 2: a broken student losses when you're saying that did we

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Speaker 2: miss like identify borros for default. I haven't seen that either,

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Speaker 2: so I'm not sure what that means other than another

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Speaker 2: dig at past administrations. And to be fair to this administration,

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Speaker 2: the system is broken. It has been broken for years,

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Speaker 2: and we built a very complex product that is needed

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Speaker 2: tweaks in kind of revision and is cracked under its

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Speaker 2: own weight.

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Speaker 1: I mean, I think that's so true. And then every

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Speaker 1: time we try to get it back on track, like,

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Speaker 1: we do it in half measures.

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Speaker 2: I don't even know what the right full measure is,

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Speaker 2: right like, and sorry to go aside here, but I

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Speaker 2: always tell people, like, the reality is an educated population

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Speaker 2: is good for the entire economy of the United States

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Speaker 2: and global economy, and so it is equivalent to a

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Speaker 2: public utility. And yet we don't treat it like a

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Speaker 2: public utility where we subsidize the cost directly. Instead, we

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Speaker 2: pass it onto the backs of bars and taxpayers. And

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Speaker 2: then we create these different programs that shield the Department

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Speaker 2: of Educations books from these offsets for kind of like

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Speaker 2: the subsidies for years until the bill becomes due down

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Speaker 2: the line, and will deal with it there. And is

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Speaker 2: it possible that we actually just need to consider that

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Speaker 2: higher education, at least at certain institutions, should be free,

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Speaker 2: and we may have to pay a higher tax rate

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Speaker 2: to get that done.

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Speaker 1: But that aside, No, no, I appreciate that. What would

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Speaker 1: you say to somebody who is in default. They've seen

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Speaker 1: those headlines and maybe they haven't even recognized or realized that,

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Speaker 1: oh wait, they're not going to start garnishing my wages.

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Speaker 1: Should how should they start preparing?

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Speaker 2: I think the very first thing I would do is

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Speaker 2: actually confront a head on. But I am a confronted

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Speaker 2: head on person by nature, but I can understand kind

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Speaker 2: of emotional psychologically, it could be a lot to think

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Speaker 2: about this debt and like the impossibility of it all

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Speaker 2: because oftentimes the people I meet they defaulted because they

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Speaker 2: felt like there weren't any other payment options. But they

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Speaker 2: defaulted so long ago. The rules have changed so much

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Speaker 2: that to just stay stuck and believe that there are

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Speaker 2: no options today, I think it is a wrong approach.

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Speaker 2: So I would say, if I were doing this, the

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Speaker 2: very first thing I'll do is contact Default Resolution Group

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Speaker 2: or student a dot Gov and look at your loans

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Speaker 2: and then identify what will my payment options be? If

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Speaker 2: I were to get out of default using one of

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Speaker 2: the programs that the Education Department offers, and then the

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Speaker 2: next question is can I afford that payment? And the

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Speaker 2: answer is yes, cool, I think that's a very strong

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Speaker 2: vote in favor in getting out of the fault. If

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Speaker 2: you say no, I can't, then you need to run

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Speaker 2: a math on what is it going to cost you

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Speaker 2: if you were being garnished in offset to say can

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Speaker 2: I afford that? If I can't afford that, then even

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Speaker 2: if I really can't afford to get out of default,

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Speaker 2: that's probably the better mathematical option for me, even if

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Speaker 2: it sucks for several months while I kind of dig

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Speaker 2: myself out this thing. And then kind of the last

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Speaker 2: thing from there is like, if you run all the

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Speaker 2: analysis and you can't get out of default, you can't

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Speaker 2: afford the garnishment, then it's a tougher conversation about, well,

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Speaker 2: how does bankruptcy work here to help me with this thing?

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Speaker 2: Is that actually a workable solution?

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Speaker 1: I want to talk about that, And maybe now is

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Speaker 1: the best time to talk about that, because it does

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Speaker 1: seem like for the longest time, discharging your student loans

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Speaker 1: and bankruptcy was almost impossible, and the Biden administration did

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Speaker 1: make some changes that might be one of the most

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Speaker 1: the longest lasting or or biggest changes that could help

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Speaker 1: people who really really can't afford to pay their student loans.

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Speaker 1: What's happening on the bankruptcy front and discharging loans via

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Speaker 1: bankruptcy in twenty twenty six.

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Speaker 2: Well, the law itself hasn't changed all that much. So

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Speaker 2: the law basically says that you can file bankruptcy and

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Speaker 2: get rid of all your other debts for the most part,

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Speaker 2: except for student loans, and only way to get rid

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Speaker 2: of those is if you can show that repaying them

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Speaker 2: are undue hardship. And that's been the law going back

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Speaker 2: to like two thousand and four nineteen ninety seven as well,

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Speaker 2: but kind of evolved. The last time it really changed

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Speaker 2: to two thousand and five, the bid administration implemented a

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Speaker 2: law that was actually kind of brought up by Republicans

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Speaker 2: through George Bush administration. Second that says, Okay, we're not

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Speaker 2: going to set aside the law here, but we're going

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Speaker 2: to create a different policy. Ultimately, Department of Education, we

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Speaker 2: own our loans. Maybe we could work out a policy

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Speaker 2: about how we will analyze these and do a recommendation

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Speaker 2: to the bankruptcy court about how this case should be handled.

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Speaker 2: Changing the law, We're just changing how we view this

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Speaker 2: particular situation. And so they created this process called the

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Speaker 2: attestation process, which is basically just a sworn statement that

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Speaker 2: you work out. After you file the bankruptcy to discharge

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Speaker 2: of student loans, you fill out this attestation form that

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Speaker 2: discloses your assets, your living expenses, the history of your loans, education, etc.

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Speaker 2: And you give that over to the Department of Justice

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Speaker 2: who represents the Department of Education. That DOJ attorney reviews

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Speaker 2: your file and makes a recommendation to the Department of

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Speaker 2: Education that yeah, we should get rid of all of it,

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Speaker 2: we should get rid of some of it, or we

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Speaker 2: shouldn't get rid of any of it, and then based

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Speaker 2: on the recommendation, your case moves forward. Now there's a

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Speaker 2: big kind of a report in the New York Times

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Speaker 2: recently where they said, like eighty seven percent of ours

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Speaker 2: who went through this process were able to get some relief,

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Speaker 2: either partial discharge or full of discharge. And so, yeah,

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Speaker 2: it has become theoretically easier, at least with federal student

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Speaker 2: loans owned by the Department of Education to file bankruptcy

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Speaker 2: on them. Now, does that mean everyone needs to rush

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Speaker 2: out and go file bankruptcy. Absolutely not. And does that

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Speaker 2: mean that if you file bankerancy you have an eighty

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Speaker 2: seven percent chance of success. No, it's just saying that

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Speaker 2: based off of this category, bars will file. They had

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Speaker 2: a really high success rate. Now, there are some things

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Speaker 2: that make people, you know, more ideal candidate for those

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Speaker 2: than others. But that's really what happened. There's not a

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Speaker 2: change in law, just a change in policy, and it

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Speaker 2: has worked out really well for those bars who fit

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Speaker 2: kind of some qualifications.

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Speaker 1: And you say not forevery like if someone out there

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Speaker 1: listening has a solid job and can afford their student

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Speaker 1: loan payment reasonably, well, they're probably not going to be

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Speaker 1: a candidate for getting their student loans discharge and bankas well. Yeah.

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Speaker 2: I don't know. That's hard because there are some of

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Speaker 2: your listeners who are quote unquote high earners, but they're

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Speaker 2: single and they live in a high cost of living

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Speaker 2: city and it feels very impossible to make their rental

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Speaker 2: payment or a mortgage payment and pay their student loans

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Speaker 2: and pay or other bills. So I wouldn't define it

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Speaker 2: like in terms of Okay, categorically, you don't make it

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Speaker 2: because you have a quote unquote good job. The way

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Speaker 2: I think about it is a little bit more nuanced.

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Speaker 2: But let me give you an extreme example. There's this

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Speaker 2: case out of Ohio where this young man graduates college

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Speaker 2: and then files bankruptcy a year later. And this just

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Speaker 2: happened like a few months ago. He files bankrucy and

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Speaker 2: tries to discharge his stude loans and the Department of

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Speaker 2: Education departments just like, get out of here. You haven't

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Speaker 2: made a good faith to repay your loans. So no

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Speaker 2: matter what his hardship was, it was only short lasting.

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Speaker 2: He just graduated. That's not a good candidate. Someone who

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Speaker 2: is a good candidate. Maybe at the other extreme, you

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Speaker 2: are in your late sixties and you've had your loans

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Speaker 2: for twenty years and your income is fixed and there's

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Speaker 2: no possible way you could ever pay these loans off.

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Speaker 2: That's a good example. And then there's a middle ground.

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Speaker 2: There's someone who may be earning ninety thousand dollars a year,

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Speaker 2: but they're divorced, they're paying child support to their ex,

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Speaker 2: and their monthly bill is still fifteen hundred dollars a month.

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Speaker 2: Hundred student loans and they're like, I cannot do this

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Speaker 2: while upholding all my other obligations. That may be someone

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Speaker 2: who is worth having a conversation about. Even though they

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Speaker 2: have a good job and they're not really broke, they

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Speaker 2: just can't keep up and if something does happen, life happens,

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Speaker 2: everything falls apart. That's someone to have a good conversation with.

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Speaker 1: Is and is that a dili process? Lets someone let's

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Speaker 1: say someone's identifies themselves in a position like you're describing,

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Speaker 1: and they're like, yeah, no, like it's it's become almost

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Speaker 1: impossible for me to pay and I don't see a

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Speaker 1: way that I'll ever be able to do. They need

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Speaker 1: to hire a professional, a lawyer who specializes in this,

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Speaker 1: or is this something that they can like they can

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Speaker 1: take on the system themselves.

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Speaker 2: All right, so let me ask this by way of example.

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Speaker 2: I don't think anyone should ever perform surgery on it.

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Speaker 2: It makes no sense. But could you theoretically represent yourself

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Speaker 2: in this thing? Yeah? And I remember, I've got quotes

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Speaker 2: to build a fence in my backyard, a nice modern verticence,

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Speaker 2: and the quotes I thought were outrageous. They wanted like

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Speaker 2: twelve thousand dollars doing I was like, you know what,

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Speaker 2: this is like three thousand dollars worth of kind of

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Speaker 2: materials and maybe two days of labor, and I'll handle

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Speaker 2: it myself. And I'm doing this in Saint Louis. It's

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Speaker 2: one hundred and five degrees outside, and I'm mixing twenty

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Speaker 2: five bags of fifty pound bags of concrete by hand

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Speaker 2: because my dumb self didn't realize to get rent a mixer.

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Speaker 2: And I was like, this was a terrible idea. But

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Speaker 2: along the way, I get the fence in and the

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Speaker 2: fence looks great, and I'm so proud of myself. Two

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Speaker 2: weeks later when came by and knocked that thing the

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Speaker 2: hell over it because I didn't dig the post love enough.

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Speaker 2: So did I need a professional that standpoint to get

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Speaker 2: a fence up? No? Is it beneficial to kind of

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Speaker 2: plan for things that you don't consider things like that? Absolutely?

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Speaker 1: Yeah, Okay, I appreciate that. I want to talk about

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Speaker 1: income driven repayment plans. Take a quick break and we'll

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Speaker 1: talk about the changing system there. In just a second,

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Speaker 1: we're back still talking with Stanley Tate, talking about the

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Speaker 1: student loans and kind of what's happening right now in

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Speaker 1: the space, and one of the big changes Stanley is

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Speaker 1: two income driven repayment plans. They keep changing. The SAFE

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Speaker 1: plan gets rolled out and people are like, ooh, thrilled.

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Speaker 1: You know, for a lot of people, it's going to

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Speaker 1: mean their their payment is non existent or close to it.

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Speaker 1: And now that's that's not gonna be around much longer.

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Speaker 1: I CA it's in the process of being dismantled. What

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Speaker 1: how should borrowers decide which plan is best for them now?

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Speaker 1: Especially with RAP coming down the pike.

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Speaker 2: Yeah, so the RAP plan is not yet available, but

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Speaker 2: that's the newer payment Assistance plan now is created by

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Speaker 2: the Trump administration that also ties payments based off of

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Speaker 2: your income and family size. That'll likely be available sometime

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Speaker 2: this summer. But if you're someone who's in saved and

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Speaker 2: you've been stuck in for bands and you're trying to

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Speaker 2: figure out where to go next, I think everything starts

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Speaker 2: with the numbers. So you start by just running the

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Speaker 2: number saying what will my payment be under? The remaining

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Speaker 2: plans for the vast majority of people is going to

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Speaker 2: be income based repayment or pay as you earn are

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Speaker 2: going to be their two primary options there, at least

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Speaker 2: for income based options. And if you look at those

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Speaker 2: numbers and you're like, cool, I can swing this, then

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Speaker 2: you'd likely want to enroll in one of those plans.

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Speaker 2: The only I say likely because the only kind of

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Speaker 2: factor that changes is if safe, what's cheap enough for

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Speaker 2: you where you could realize the benefit of loan forgiveness

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Speaker 2: over time, then it makes sense for you to stay

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Speaker 2: in that plan that working towards loan forgiveness. But it

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Speaker 2: is possible that you flip over the pay as you

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Speaker 2: learn or IBr that you may not realize the benefit

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Speaker 2: of forgiveness or may not have as great as value

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Speaker 2: to you, and you may need to switch over to

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Speaker 2: a repayment plan not based on your income but actually

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Speaker 2: based on paying it off. And so that's where it

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Speaker 2: gets a little tricky. I think the direct answer for

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Speaker 2: most people is are is that you go look at

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Speaker 2: income based repayment or pay as you earn if you're eligible,

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Speaker 2: and just say can I afford the payments? And if

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Speaker 2: you can today, then you probably make that switch. And

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Speaker 2: if you look at it and say, well, I'm probably

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Speaker 2: not going to get a lot of forgiveness over here,

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Speaker 2: I'd rather just pay it off. Then you need to

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Speaker 2: look at other plans like extend the graduated your standard

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Speaker 2: that amthortize a debt that paid the loan off over time,

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Speaker 2: rather than relying on forgiveness that you may no longer

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Speaker 2: believe in because of what's happened with strough loans.

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Speaker 1: If you're in forbearance on the safe plan and you

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Speaker 1: know at some point you're going to need to move,

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Speaker 1: you're gonna be forced essentially to get onto another plan.

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Speaker 1: Does it make sense to stay put for the time

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Speaker 1: being or does it make sense to start assessing your

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Speaker 1: options and particilarly moving beforehand.

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Speaker 2: For the vast majority of people, it just comes down

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Speaker 2: to affordability. Like, once they lock in on what are

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Speaker 2: my plan options, the next question is should I move

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Speaker 2: today or not? And that just is an affordability question.

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Speaker 2: And so if you're someone who can afford it easily today,

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Speaker 2: then I'm not sure what you're waiting around for. But

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Speaker 2: if you're someone who needs to kind of cut things,

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Speaker 2: pay other things off, et cetera, or it's going to

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Speaker 2: be really really tight for you when to move happens,

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Speaker 2: you'd rather delay that pain, then it makes sense to delay,

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Speaker 2: So there's no wrong or right answer. You should do

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Speaker 2: this or it shouldn't do that. It's really kind of

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Speaker 2: like just starting with can I afford this new payment

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Speaker 2: that's had it my way? Yes? Can I do it easily? Cool?

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Speaker 2: I think you should move today. But if you're someone's

402
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Speaker 2: like this really sucks, it's gonna be hard for I

403
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Speaker 2: need to do other things? Can you hold off as

404
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Speaker 2: long as you can? Okay?

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Speaker 1: What about tell me more about the rap plan that's

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Speaker 1: coming around in July?

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Speaker 2: Is that right? Yeah? So, well, we we think July.

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Speaker 2: We're not sure legally it's supposed to be by July,

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Speaker 2: but who knows. But this rap plan is like IBr.

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Speaker 2: Like SAVE, it offers payments based off of your income

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Speaker 2: and your family size. It also promises loan forgiveness after

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Speaker 2: X number of years of pain on it Now. Like SAVE,

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Speaker 2: it also offers an interest waiver, so any unpaid interest

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Speaker 2: is waived on a monthly basis. But unlike any other

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Speaker 2: program that's ever existed, it does one other thing. It

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Speaker 2: makes a payment of up to fifty dollars towards your

417
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Speaker 2: principal balance, So not only is your balance not growing,

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Speaker 2: but could also decrease over time. Just by application of

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Speaker 2: the program not as great, but there's a trade off.

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Speaker 2: The trade off is unlike any other program, it is

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Speaker 2: much longer in terms of loan forgiveness. So we're save

422
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Speaker 2: offered long forgiveness as early as ten years, pay as

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Speaker 2: you earned, offered long forgiveness after twenty years, and IBr

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Speaker 2: after twenty to twenty five years. RAP offers it at

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Speaker 2: thirty years. So now you have to wait five extra

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Speaker 2: years for this thing, and that five extra years could

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Speaker 2: be really costly to you. It could also not just financially,

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Speaker 2: but also emotionally and kind of mentally just the load

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Speaker 2: of carrying it. So that is the trade off, but

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Speaker 2: it does have a lot of ups to it, upsides

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Speaker 2: to it.

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Speaker 1: Yeah, it's kind of insane to think about people having

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Speaker 1: their student loans as long as they have a mortgage.

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Speaker 2: But why is that insane? Sure, I understand because like globally,

435
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Speaker 2: this isn't like out of control like in the UK.

436
00:22:05,920 --> 00:22:07,720
Speaker 2: That's what they do. You pay on it for up

437
00:22:07,800 --> 00:22:11,120
Speaker 2: to thirty years and then it retires at a certain point.

438
00:22:11,160 --> 00:22:13,720
Speaker 2: The same thing with Australia, so we're not out of

439
00:22:13,800 --> 00:22:16,359
Speaker 2: step like and I can criticize this administration on a

440
00:22:16,400 --> 00:22:18,200
Speaker 2: lot of things, but this plan isn't out of step

441
00:22:18,240 --> 00:22:22,000
Speaker 2: with that. But I do agree that, wow, this education

442
00:22:22,200 --> 00:22:24,720
Speaker 2: that I got, I'm caring it for as long as

443
00:22:24,760 --> 00:22:29,159
Speaker 2: a mortgage. But also, you don't have to choose these programs, right,

444
00:22:29,320 --> 00:22:31,000
Speaker 2: You could choose to do something else.

445
00:22:31,080 --> 00:22:32,840
Speaker 1: Well, And I think that's one of the things we

446
00:22:32,920 --> 00:22:35,879
Speaker 1: talk about regularly on the show is what degree are

447
00:22:35,880 --> 00:22:38,359
Speaker 1: you getting, how much are you paying to get the degree?

448
00:22:38,520 --> 00:22:42,280
Speaker 1: What is the value in return for going to school?

449
00:22:42,400 --> 00:22:45,080
Speaker 1: And clearly the a lot of American people have lost

450
00:22:45,119 --> 00:22:47,880
Speaker 1: faith in the value of a college education. They don't

451
00:22:48,000 --> 00:22:49,960
Speaker 1: see it as valuable as it used to be. And

452
00:22:50,040 --> 00:22:52,960
Speaker 1: I think a large part of that isn't because the

453
00:22:53,160 --> 00:22:55,600
Speaker 1: education has degraded so much. That might be a little

454
00:22:55,640 --> 00:22:57,399
Speaker 1: bit of it. I think it's because the costs have

455
00:22:57,520 --> 00:23:00,520
Speaker 1: risen so much, and so that degree that I could

456
00:23:00,560 --> 00:23:04,040
Speaker 1: have gotten for thirty grand, well that seems reasonable. If

457
00:23:04,080 --> 00:23:06,960
Speaker 1: that same degree costs one hundred and twenty, then it

458
00:23:07,080 --> 00:23:09,280
Speaker 1: feels far less enticing. And you have to really run

459
00:23:09,320 --> 00:23:11,720
Speaker 1: the numbers as a high school student and parent of

460
00:23:11,760 --> 00:23:15,119
Speaker 1: a high school student before you decide to lack yourself

461
00:23:15,200 --> 00:23:16,919
Speaker 1: to student loans of that magnitude.

462
00:23:17,280 --> 00:23:20,679
Speaker 2: Yeah, I really wish people actually did that more, because

463
00:23:21,200 --> 00:23:24,959
Speaker 2: I talk with a lot of bars and they are

464
00:23:25,040 --> 00:23:29,600
Speaker 2: aware of the financial cost of things, but the emotions

465
00:23:29,680 --> 00:23:33,320
Speaker 2: went out, especially if they have like an older child

466
00:23:33,440 --> 00:23:36,239
Speaker 2: that they already paid and made a mistake with, they

467
00:23:36,320 --> 00:23:38,880
Speaker 2: feel like now somehow they're depriving the second and third

468
00:23:39,040 --> 00:23:41,600
Speaker 2: kid of the similar opportunity. So they're making an emotion

469
00:23:41,720 --> 00:23:44,280
Speaker 2: decision no matter what the math says. And then there

470
00:23:44,320 --> 00:23:48,200
Speaker 2: also there's other times when the thing they're solving for

471
00:23:49,200 --> 00:23:51,680
Speaker 2: is not what makes the most financial sense. It's the

472
00:23:51,920 --> 00:23:55,240
Speaker 2: thing that makes me feel good about myself. Well, my

473
00:23:55,359 --> 00:23:57,200
Speaker 2: kid got into this school, so I'm gonna find every

474
00:23:57,200 --> 00:23:59,320
Speaker 2: way I can to pay for it, even though it's

475
00:23:59,359 --> 00:24:02,960
Speaker 2: going to wrecking financial or make things really difficult for me.

476
00:24:03,480 --> 00:24:05,160
Speaker 2: And so that's always the hard part is I find

477
00:24:05,200 --> 00:24:10,200
Speaker 2: that people aren't really making dollars and cents decisions, They're

478
00:24:10,280 --> 00:24:14,439
Speaker 2: really making emotional decisions that are guiding the way there.

479
00:24:14,359 --> 00:24:16,200
Speaker 1: One hundred percent, I think you're right. I think there's

480
00:24:16,200 --> 00:24:19,000
Speaker 1: a lot of that and uh, and yet you pay

481
00:24:19,040 --> 00:24:21,440
Speaker 1: the price for it, if that's if that's if you

482
00:24:21,560 --> 00:24:22,600
Speaker 1: let the motions be there, you.

483
00:24:22,680 --> 00:24:24,919
Speaker 2: Pay the price. Tax Payers pray the price at August

484
00:24:25,040 --> 00:24:27,159
Speaker 2: kind of who price is paid to cost for? Do you?

485
00:24:27,320 --> 00:24:30,080
Speaker 1: So when somebody listeners are out there thinking about which

486
00:24:30,440 --> 00:24:33,000
Speaker 1: repayment plan makes the most sense for them, is the

487
00:24:33,119 --> 00:24:36,360
Speaker 1: lowest payment typically the best thing to prioritize, or who

488
00:24:36,720 --> 00:24:40,439
Speaker 1: out there should be focused on paying off their loans faster?

489
00:24:41,280 --> 00:24:43,680
Speaker 2: Yeah, So the rough kind of back of the envelope

490
00:24:43,680 --> 00:24:47,000
Speaker 2: math I do is if you're you're someone who has

491
00:24:47,080 --> 00:24:49,640
Speaker 2: a reasonable shot of paying off your loans if your

492
00:24:49,880 --> 00:24:52,480
Speaker 2: income to st loan debt ratio is like one point

493
00:24:52,560 --> 00:24:55,399
Speaker 2: twenty five to one. So for example, if you all

494
00:24:55,400 --> 00:24:58,639
Speaker 2: one hundred and twenty five thousand dollars in still loans

495
00:24:58,720 --> 00:25:02,320
Speaker 2: and you ma one hundred thousand dollars student loans, I'm

496
00:25:02,320 --> 00:25:05,240
Speaker 2: sorry an income, you have a reasonable shot at paying

497
00:25:05,359 --> 00:25:07,880
Speaker 2: back the debt. And if you're one to one, that's

498
00:25:07,920 --> 00:25:10,480
Speaker 2: a greater shot. And if you're like, you know, zero

499
00:25:10,520 --> 00:25:13,000
Speaker 2: point five to one, even greater shot. You're not really

500
00:25:13,040 --> 00:25:15,439
Speaker 2: on a forgiveness path. But anytime you start creeping up

501
00:25:15,440 --> 00:25:18,800
Speaker 2: past at one point twenty five to one, then forgiveness

502
00:25:18,920 --> 00:25:22,240
Speaker 2: becomes more the laying you have to operate on just

503
00:25:22,280 --> 00:25:25,720
Speaker 2: by way of math, unless you have other people subsidizing

504
00:25:25,800 --> 00:25:28,040
Speaker 2: your cost of living for an extended period of time,

505
00:25:28,400 --> 00:25:30,000
Speaker 2: because there's just no other way to make it work.

506
00:25:30,080 --> 00:25:32,280
Speaker 2: The amortization schedule is going to eat you alive.

507
00:25:33,400 --> 00:25:37,440
Speaker 1: How so I read about the new student loan lifetime

508
00:25:37,560 --> 00:25:40,639
Speaker 1: borrowing cap. How impactful is that going to be for

509
00:25:40,760 --> 00:25:45,520
Speaker 1: people moving forward? Because before and in some ways like

510
00:25:45,800 --> 00:25:47,920
Speaker 1: it was pretty bad because you could borrow as much

511
00:25:48,000 --> 00:25:51,280
Speaker 1: as you wanted and that created a problem too. It

512
00:25:51,359 --> 00:25:54,000
Speaker 1: seems like, so is this going to be helpful in

513
00:25:54,040 --> 00:25:56,240
Speaker 1: preventing people from borrowing more than they would otherwise be

514
00:25:56,280 --> 00:25:56,880
Speaker 1: able to pay back?

515
00:25:57,640 --> 00:26:00,240
Speaker 2: Well, I don't know if it's going to prevent come

516
00:26:00,280 --> 00:26:02,399
Speaker 2: from borrowing more than it otherwise would be able to

517
00:26:02,440 --> 00:26:07,040
Speaker 2: pay back, but it's going to mitigate how much taxpayers

518
00:26:07,080 --> 00:26:10,760
Speaker 2: are kind of carrying this burden of individual borrows. And like,

519
00:26:11,359 --> 00:26:13,639
Speaker 2: this was a time when it was uncapped limit on

520
00:26:13,760 --> 00:26:15,840
Speaker 2: borrowing and now there's a cap, and so it just

521
00:26:16,119 --> 00:26:19,280
Speaker 2: mitigates how much you can borrow, but it doesn't guarantee

522
00:26:19,800 --> 00:26:24,359
Speaker 2: a return on investment for that person. And so I

523
00:26:24,520 --> 00:26:27,840
Speaker 2: think there's going to be a very messy middle of

524
00:26:27,960 --> 00:26:29,840
Speaker 2: borrows who were caught in between because there was no

525
00:26:30,480 --> 00:26:34,000
Speaker 2: real off ramp for people that are have already started

526
00:26:34,000 --> 00:26:37,119
Speaker 2: a process of borrowing, there is some. But if you

527
00:26:37,440 --> 00:26:40,320
Speaker 2: are someone who has, for example, parent plus loans today

528
00:26:40,400 --> 00:26:45,240
Speaker 2: for a kid in year one, your repayment options go away.

529
00:26:45,520 --> 00:26:48,720
Speaker 2: If you borrow alone after June thirtieth this year, you

530
00:26:48,920 --> 00:26:51,920
Speaker 2: can only there's no longer income based options. It's you

531
00:26:52,119 --> 00:26:54,160
Speaker 2: have to pay it back. Well, how does that work

532
00:26:54,160 --> 00:26:56,879
Speaker 2: out for someone who was already planning on income based

533
00:26:57,440 --> 00:26:59,760
Speaker 2: and that was their game plan for it. There's no

534
00:26:59,800 --> 00:27:04,480
Speaker 2: longer option, So does it will there's work long term?

535
00:27:05,600 --> 00:27:07,879
Speaker 2: Likely yes, until some other problem presents itself and then

536
00:27:07,920 --> 00:27:10,440
Speaker 2: it no longer works and we need to adjust. Will

537
00:27:10,480 --> 00:27:12,640
Speaker 2: there be people that are absolutely crushed along the way

538
00:27:13,160 --> 00:27:16,680
Speaker 2: one thousand, because that's just the nature of changes. Will

539
00:27:16,720 --> 00:27:20,280
Speaker 2: this be better for us overall? I hope because right

540
00:27:20,359 --> 00:27:22,359
Speaker 2: now we have to admit it's kind of ridiculous that

541
00:27:22,520 --> 00:27:25,159
Speaker 2: you will spend one hundred thousand dollars a year on

542
00:27:25,200 --> 00:27:29,280
Speaker 2: an undergraduate education. That makes no sense. Yeah, there's no

543
00:27:29,520 --> 00:27:33,000
Speaker 2: degree that's going to pay that back over four years.

544
00:27:33,200 --> 00:27:34,880
Speaker 2: There's no job where that works out.

545
00:27:35,480 --> 00:27:38,600
Speaker 1: Do you think there's going to be more potential need

546
00:27:38,880 --> 00:27:41,159
Speaker 1: for private student loans? Like, for a minute, there it

547
00:27:41,200 --> 00:27:43,639
Speaker 1: seemed like private student loans where nobody needed them, Like

548
00:27:43,680 --> 00:27:46,320
Speaker 1: the rates were incredibly low at the federal.

549
00:27:46,240 --> 00:27:49,440
Speaker 2: Private student loan lobbyists got their money over the last

550
00:27:50,000 --> 00:27:50,800
Speaker 2: couple of years.

551
00:27:51,080 --> 00:27:52,600
Speaker 1: What do parents need to know about private study?

552
00:27:52,680 --> 00:27:55,320
Speaker 2: Yeah, private school loans, they're going to have a resurgence

553
00:27:55,960 --> 00:28:01,320
Speaker 2: just because by nature of barrows, the visions aren't going

554
00:28:01,480 --> 00:28:05,120
Speaker 2: to change in terms of the schools that they want

555
00:28:05,200 --> 00:28:08,359
Speaker 2: to go, but they're going to leverage themselves even further

556
00:28:08,880 --> 00:28:11,320
Speaker 2: by taking out these private stodol loans. And there's gonna

557
00:28:11,320 --> 00:28:13,719
Speaker 2: be a rush over years one and two by these

558
00:28:13,800 --> 00:28:17,240
Speaker 2: lenders to snatch up all the prime borrows they can.

559
00:28:18,080 --> 00:28:20,320
Speaker 2: And then in years three, four or five, we're gonna

560
00:28:20,359 --> 00:28:22,119
Speaker 2: move on to subprimes and the rates are gonna be

561
00:28:22,520 --> 00:28:26,000
Speaker 2: upward to fifteen, sixteen, seventeen percent, and then we're gonna

562
00:28:26,000 --> 00:28:28,480
Speaker 2: have a cliff in year six, seven eight, where like

563
00:28:28,800 --> 00:28:30,600
Speaker 2: there's nothing left in people aren't able to afford it,

564
00:28:30,720 --> 00:28:32,000
Speaker 2: and they thought they were gonna be able to pay

565
00:28:32,000 --> 00:28:34,800
Speaker 2: it back and they weren't. And the economy's gonna change

566
00:28:34,840 --> 00:28:38,000
Speaker 2: on us. But for right now twenty twenty six, twenty seven,

567
00:28:38,040 --> 00:28:40,360
Speaker 2: twenty twenty eight, Yeah, I think private lending is going

568
00:28:40,440 --> 00:28:41,280
Speaker 2: to be awesome.

569
00:28:42,320 --> 00:28:43,800
Speaker 1: Wouldn't you say awesome? What do you mean?

570
00:28:44,160 --> 00:28:46,600
Speaker 2: That means there's gonna be a lot of transactions being

571
00:28:46,720 --> 00:28:50,640
Speaker 2: made to people borrowing private student loans, because that's just

572
00:28:50,720 --> 00:28:52,520
Speaker 2: the nature of But I don't think it's the I

573
00:28:52,520 --> 00:28:55,040
Speaker 2: don't know if it's necessarily the right decision for people,

574
00:28:55,160 --> 00:28:59,240
Speaker 2: because by awesome for the lender, maybe not awesome for

575
00:28:59,320 --> 00:29:01,640
Speaker 2: the borrow but they're getting what they want and what

576
00:29:01,720 --> 00:29:04,800
Speaker 2: they contracted for, which is this money to pay for school,

577
00:29:05,400 --> 00:29:07,480
Speaker 2: and then they're going to have this opportunity to kick

578
00:29:07,520 --> 00:29:09,800
Speaker 2: the can down the road while their kid is in school,

579
00:29:10,200 --> 00:29:12,480
Speaker 2: and then when they exit, the problem is going to

580
00:29:12,640 --> 00:29:14,600
Speaker 2: hit and they're not going to know what to do.

581
00:29:14,680 --> 00:29:17,920
Speaker 2: And we saw this during COVID, where people had private

582
00:29:17,960 --> 00:29:22,240
Speaker 2: student loans and they graduated, job market was trashed. Kid

583
00:29:22,360 --> 00:29:24,840
Speaker 2: owns two hundred thousand dollars. Parents co signed on it,

584
00:29:24,920 --> 00:29:28,240
Speaker 2: grandparents co signed on it, and there's no opportunity to

585
00:29:28,360 --> 00:29:29,920
Speaker 2: ever pay us loans off. And now we have to

586
00:29:29,960 --> 00:29:33,920
Speaker 2: have difficult conversations about settlement and bankruptcy moving forward. But

587
00:29:34,040 --> 00:29:35,360
Speaker 2: the lenders made out well.

588
00:29:36,000 --> 00:29:40,640
Speaker 1: And that's because right there are no regulations in place

589
00:29:40,800 --> 00:29:43,840
Speaker 1: on private student loans the way there are on federal

590
00:29:43,960 --> 00:29:44,520
Speaker 1: or very few.

591
00:29:44,640 --> 00:29:44,760
Speaker 2: Right.

592
00:29:44,880 --> 00:29:49,280
Speaker 1: So there is no income based repayment with private student loans, right.

593
00:29:49,760 --> 00:29:51,840
Speaker 2: Nor why would there be. They don't have the same

594
00:29:51,960 --> 00:29:55,640
Speaker 2: societal interest in having an educated population population the same

595
00:29:55,680 --> 00:29:58,560
Speaker 2: way as the government does, so why would they subsidize it.

596
00:29:58,720 --> 00:30:01,960
Speaker 2: You're borrowing something that we recognize you can't afford to

597
00:30:02,000 --> 00:30:04,040
Speaker 2: pay back, or you're not a good bet to pay back.

598
00:30:04,280 --> 00:30:06,400
Speaker 2: That's why your co signer is there to backstop it.

599
00:30:06,760 --> 00:30:08,760
Speaker 2: But that's not the nature of how things. People have

600
00:30:08,880 --> 00:30:12,000
Speaker 2: these conversations. They say, I'm gonna take out these loans

601
00:30:12,040 --> 00:30:13,840
Speaker 2: for you as a kid, but you're gonna pay it back,

602
00:30:13,840 --> 00:30:15,120
Speaker 2: and the kid it's like, yeah, I'm gonna pay it

603
00:30:15,240 --> 00:30:17,840
Speaker 2: back and into a job market where oh my god,

604
00:30:17,920 --> 00:30:19,960
Speaker 2: this is trash. But it's been this way for years,

605
00:30:19,960 --> 00:30:22,240
Speaker 2: where like, I don't know about you, but it took

606
00:30:22,360 --> 00:30:26,960
Speaker 2: me six to eight years to get my kind of

607
00:30:27,080 --> 00:30:30,000
Speaker 2: like adult bridges on where I actually could feel like

608
00:30:30,240 --> 00:30:32,520
Speaker 2: I can handle in. My income kind of stabilized out

609
00:30:32,600 --> 00:30:35,640
Speaker 2: and I was able to start like really planning for it.

610
00:30:35,960 --> 00:30:37,880
Speaker 2: But that didn't happen in year one. I know very

611
00:30:37,920 --> 00:30:40,160
Speaker 2: few people that's the case for so the parent ends

612
00:30:40,200 --> 00:30:41,960
Speaker 2: up on a hook anyways, but they don't think about

613
00:30:41,960 --> 00:30:44,440
Speaker 2: it that way, and so they just end up over

614
00:30:44,560 --> 00:30:46,520
Speaker 2: committing to a thing and it becomes a problem down

615
00:30:46,560 --> 00:30:46,880
Speaker 2: the road.

616
00:30:47,680 --> 00:30:52,680
Speaker 1: So would you say private student loans are the worst

617
00:30:52,800 --> 00:30:56,320
Speaker 1: kinds of borrowing the individuals can do? Should those be

618
00:30:56,400 --> 00:30:58,040
Speaker 1: off the table? Does that mean if you have to

619
00:30:58,080 --> 00:30:59,680
Speaker 1: resort to private student loans you should be looking for

620
00:30:59,720 --> 00:31:02,239
Speaker 1: a cheap option for school. You should be finding other

621
00:31:02,280 --> 00:31:03,640
Speaker 1: ways to help you pay for it. You should be

622
00:31:03,640 --> 00:31:04,600
Speaker 1: getting a part time job.

623
00:31:04,760 --> 00:31:05,320
Speaker 2: Is it just?

624
00:31:05,520 --> 00:31:07,400
Speaker 1: Is it that cut and dry?

625
00:31:07,760 --> 00:31:09,560
Speaker 2: I don't think so. And this is where I made

626
00:31:09,560 --> 00:31:13,080
Speaker 2: a terrible interview because I can just say it do

627
00:31:13,280 --> 00:31:17,200
Speaker 2: this or that? Because what problem are you solving for? Right? So,

628
00:31:17,520 --> 00:31:19,720
Speaker 2: once you run out of federal student loans, you need

629
00:31:19,800 --> 00:31:21,440
Speaker 2: to be able to pay for it. What are your options?

630
00:31:21,520 --> 00:31:23,760
Speaker 2: You may have equity that you could borrow against your home.

631
00:31:23,920 --> 00:31:26,640
Speaker 2: Do you do that? Do you borrow from family or friends?

632
00:31:26,720 --> 00:31:28,680
Speaker 2: Do you take against your retirement? Or do you take

633
00:31:28,720 --> 00:31:31,080
Speaker 2: out a private stoodl loan that has an interest rate

634
00:31:31,160 --> 00:31:33,600
Speaker 2: that you may not be able to pay back, But

635
00:31:34,560 --> 00:31:36,080
Speaker 2: it doesn't put your It may not put your house

636
00:31:36,120 --> 00:31:37,680
Speaker 2: in jeopardy the same way. It may not do this

637
00:31:37,840 --> 00:31:41,280
Speaker 2: or that or retirement. So could you do that? Like? Yeah,

638
00:31:41,440 --> 00:31:43,160
Speaker 2: I think they serve a purpose as long as you

639
00:31:43,280 --> 00:31:46,120
Speaker 2: understand what are the pros and cons of them. Then

640
00:31:46,160 --> 00:31:47,760
Speaker 2: if the problem you're trying to solve is I need

641
00:31:47,840 --> 00:31:49,920
Speaker 2: to get my child into this school, and I will

642
00:31:49,960 --> 00:31:52,760
Speaker 2: do that by any means necessary. Who am I to

643
00:31:52,840 --> 00:31:54,760
Speaker 2: stand in your way and just say don't do that.

644
00:31:54,840 --> 00:31:56,880
Speaker 2: That's a terrible idea. Yeah, we could all agree it's

645
00:31:56,880 --> 00:32:00,360
Speaker 2: a terrible idea. We're gonna do it anyways, because solving

646
00:32:00,400 --> 00:32:01,400
Speaker 2: a different problem. Yeah.

647
00:32:02,280 --> 00:32:04,960
Speaker 1: I got more questions to get to with Stanley, including

648
00:32:05,440 --> 00:32:10,200
Speaker 1: what about getting your advice student loan advice from the internet?

649
00:32:10,720 --> 00:32:14,160
Speaker 1: How does he feel about that? And also what's going

650
00:32:14,160 --> 00:32:16,520
Speaker 1: on with the education department that's supposed to be defunct.

651
00:32:16,600 --> 00:32:26,640
Speaker 1: We'll talk about that and more. Right after this, I'm

652
00:32:26,680 --> 00:32:29,120
Speaker 1: talking with Stanley Tap. We're talking about the student loan

653
00:32:29,240 --> 00:32:32,800
Speaker 1: chaos and trying to make some sense of of the changes.

654
00:32:33,040 --> 00:32:37,240
Speaker 1: And Stanley, appreciate your level heads as student loan policy

655
00:32:37,280 --> 00:32:41,400
Speaker 1: has shifted. What are the most common misunderstandings that borrowers

656
00:32:41,520 --> 00:32:43,960
Speaker 1: are having right now? And maybe what are your clients

657
00:32:44,080 --> 00:32:44,880
Speaker 1: most worried about.

658
00:32:45,480 --> 00:32:49,840
Speaker 2: I think the common misunderstanding is just like how I

659
00:32:49,960 --> 00:32:54,680
Speaker 2: have people who want an affordable payment, but they also

660
00:32:55,120 --> 00:32:58,840
Speaker 2: are worried about the interests accruing, and then they also

661
00:32:59,200 --> 00:33:02,400
Speaker 2: want to work towards loan forgiveness, but then they don't

662
00:33:02,400 --> 00:33:04,240
Speaker 2: trust the loan forgiveness is going to happen, and so

663
00:33:04,360 --> 00:33:07,800
Speaker 2: they play this like messy middle playground of Okay, I

664
00:33:07,880 --> 00:33:10,200
Speaker 2: mean take the income base for payment option pay less,

665
00:33:10,440 --> 00:33:13,280
Speaker 2: and then when I get a large chunk of cash cash,

666
00:33:13,560 --> 00:33:15,280
Speaker 2: I'm gonna just make a contribution towards one of the

667
00:33:15,360 --> 00:33:17,880
Speaker 2: loans to try to pay it off. And that seems

668
00:33:17,920 --> 00:33:20,160
Speaker 2: good on paper, but it actually doesn't. That doesn't how

669
00:33:20,480 --> 00:33:24,240
Speaker 2: not really how life works out, because you can't really

670
00:33:24,400 --> 00:33:26,880
Speaker 2: ride two horses at one time the way people would

671
00:33:26,880 --> 00:33:29,160
Speaker 2: try to do. There. If you need the lower payment,

672
00:33:29,640 --> 00:33:32,000
Speaker 2: then you're not really aromatizing the debt and the interest

673
00:33:32,120 --> 00:33:34,600
Speaker 2: is going to grow. But the game you're playing is

674
00:33:34,640 --> 00:33:36,960
Speaker 2: a forgiveness game at that point. The strategy you're on

675
00:33:37,120 --> 00:33:40,240
Speaker 2: is working toward long forgiveness after twenty to twenty five years,

676
00:33:40,520 --> 00:33:42,200
Speaker 2: So it really doesn't make any sense for you to

677
00:33:42,280 --> 00:33:44,880
Speaker 2: try to pay extra on the interest, but you're psychologically

678
00:33:44,960 --> 00:33:46,600
Speaker 2: worried about it, and so you want to do something

679
00:33:46,640 --> 00:33:49,240
Speaker 2: about that because it freaks you out. But again, stud

680
00:33:49,280 --> 00:33:51,240
Speaker 2: loans are operating by a totally different set of rules

681
00:33:51,320 --> 00:33:53,440
Speaker 2: unlike your other debt. No other debt comes with loan

682
00:33:53,520 --> 00:33:56,320
Speaker 2: forgiveness the same way, So you have to lock into

683
00:33:56,400 --> 00:33:59,120
Speaker 2: that strategy. Now, if you're someone who doesn't really trust

684
00:33:59,200 --> 00:34:00,680
Speaker 2: it and you don't think it's going to be there,

685
00:34:00,720 --> 00:34:04,320
Speaker 2: then maybe you should instead of making periodic lump sum payments,

686
00:34:04,720 --> 00:34:06,400
Speaker 2: perhaps you take that lump sum of cash that you

687
00:34:06,480 --> 00:34:08,760
Speaker 2: have available and put in the high yield savings account

688
00:34:09,239 --> 00:34:11,959
Speaker 2: and until keep stocking that away, socking away, socking away,

689
00:34:12,200 --> 00:34:13,640
Speaker 2: and then when you can afford to pay off the

690
00:34:13,719 --> 00:34:16,080
Speaker 2: whole thing, now you make a decision, do I keep

691
00:34:16,120 --> 00:34:17,880
Speaker 2: working towards loan forgiveness or do I take out this

692
00:34:17,960 --> 00:34:19,719
Speaker 2: money I saved and just pay it off and be done.

693
00:34:20,280 --> 00:34:22,439
Speaker 2: But trying to ride two horses at the same time

694
00:34:22,600 --> 00:34:24,400
Speaker 2: doesn't really work out. And that's like one of the

695
00:34:24,400 --> 00:34:27,760
Speaker 2: biggest misconceptions I see all the time, that it actually

696
00:34:27,840 --> 00:34:28,600
Speaker 2: hurts borrowers.

697
00:34:29,560 --> 00:34:32,960
Speaker 1: What so for people who truly are worried about loan forgiveness,

698
00:34:33,000 --> 00:34:34,600
Speaker 1: options going away. What would you say to that.

699
00:34:34,600 --> 00:34:38,320
Speaker 2: Person, I say, I understand your concern, but we haven't

700
00:34:38,360 --> 00:34:40,839
Speaker 2: seen that yet in thirty years. And this has been

701
00:34:40,880 --> 00:34:45,239
Speaker 2: the most aggressive administration in overhauling STOO loan programs moving forward,

702
00:34:45,280 --> 00:34:48,799
Speaker 2: and they didn't get rid of any forgiveness programs. They

703
00:34:48,960 --> 00:34:52,080
Speaker 2: cut SAVE, but they're still a path forward to get

704
00:34:52,239 --> 00:34:56,879
Speaker 2: income driven repayment forgiveness. And be technical here, Income driven

705
00:34:56,960 --> 00:35:00,720
Speaker 2: repayment ID ideas and DOG describes a CA gegory repayment

706
00:35:00,760 --> 00:35:03,319
Speaker 2: plans based on your income. Inside of that category, they're

707
00:35:03,400 --> 00:35:10,080
Speaker 2: saved IBr ICR and then paigeorn your credit under save

708
00:35:10,200 --> 00:35:13,040
Speaker 2: your credit under page EARN is fully transferable to any

709
00:35:13,239 --> 00:35:16,680
Speaker 2: other plan in that category. So the government under this

710
00:35:16,800 --> 00:35:20,879
Speaker 2: administration has left forward that type of forgiveness. I don't

711
00:35:20,960 --> 00:35:26,759
Speaker 2: see that going away for existing borrowers moving forward, but

712
00:35:26,880 --> 00:35:29,080
Speaker 2: I can see the government stop offering it in the

713
00:35:29,280 --> 00:35:31,440
Speaker 2: future for new bars. But if you're someone with a loan,

714
00:35:31,480 --> 00:35:33,640
Speaker 2: I don't see that going away. I understand people with

715
00:35:33,680 --> 00:35:36,520
Speaker 2: concerns about public service loan forgiveness and kind of changes

716
00:35:36,920 --> 00:35:38,960
Speaker 2: that we're being talked about there that may be coming

717
00:35:39,000 --> 00:35:41,840
Speaker 2: down the pipeline in the future, but PSLF still exists.

718
00:35:41,840 --> 00:35:44,319
Speaker 2: People are still getting forgiven today, So I don't think

719
00:35:44,360 --> 00:35:46,160
Speaker 2: you need to worry about that today. But if you

720
00:35:46,239 --> 00:35:49,360
Speaker 2: are worried, set that money aside, hold on to it,

721
00:35:49,400 --> 00:35:51,320
Speaker 2: and when you have to make that decision the future,

722
00:35:51,360 --> 00:35:53,640
Speaker 2: then make it. Then I don't see that there's any

723
00:35:53,719 --> 00:35:55,000
Speaker 2: need to get ahead of it today.

724
00:35:55,920 --> 00:35:58,000
Speaker 1: What sort of bad information are you seeing out there

725
00:35:58,040 --> 00:36:03,440
Speaker 1: in the student loan pay pretty much everything on I

726
00:36:03,480 --> 00:36:05,960
Speaker 1: was gonna say, TikTok and Instagram reels have to be

727
00:36:06,360 --> 00:36:07,040
Speaker 1: big culprits.

728
00:36:07,239 --> 00:36:10,360
Speaker 2: No, No, I think the biggest thing really is related

729
00:36:10,440 --> 00:36:15,160
Speaker 2: towards loopholes for forgiveness. There aren't any loopholes for forgiveness.

730
00:36:16,040 --> 00:36:19,960
Speaker 2: There are literally like four main paths towards relief. There's

731
00:36:20,320 --> 00:36:22,359
Speaker 2: public service loan forgiveness because you work for the governor

732
00:36:22,440 --> 00:36:25,320
Speaker 2: or nonprofit. There is twenty to twenty five years forgiveness

733
00:36:25,360 --> 00:36:26,880
Speaker 2: because you pay based on your income on on one

734
00:36:26,880 --> 00:36:30,040
Speaker 2: of those plans. There's totally permanent disability because you become

735
00:36:30,160 --> 00:36:33,000
Speaker 2: totally're permanently disabled according to your doctor the VA of

736
00:36:33,040 --> 00:36:35,759
Speaker 2: Social Security. And then there's borrow defense to repayment for

737
00:36:35,840 --> 00:36:38,800
Speaker 2: people who went to these kind of schools and advertise

738
00:36:38,880 --> 00:36:41,360
Speaker 2: in the middle of the day on Jerry Springer and

739
00:36:41,440 --> 00:36:46,319
Speaker 2: things like that, and that's the full kind of like nature.

740
00:36:46,360 --> 00:36:48,319
Speaker 2: There's these small other programs, but for the most part,

741
00:36:48,360 --> 00:36:53,040
Speaker 2: there are no loopholes here. And so I think the

742
00:36:53,160 --> 00:36:55,520
Speaker 2: most important thing to remember is that there's really not

743
00:36:55,560 --> 00:36:58,320
Speaker 2: an easy way out of this. We have to figure

744
00:36:58,320 --> 00:37:01,200
Speaker 2: out am I on a pay it off strategy? Or

745
00:37:01,239 --> 00:37:04,399
Speaker 2: am I on a forgiveness strategy? And once you lock

746
00:37:04,480 --> 00:37:07,960
Speaker 2: that in, the question it becomes when do my facts

747
00:37:08,120 --> 00:37:11,440
Speaker 2: change enough where I move from say forgiveness to all

748
00:37:11,440 --> 00:37:13,200
Speaker 2: pay it off or pay it off to a forgiveness.

749
00:37:13,840 --> 00:37:15,839
Speaker 2: And because it's not a decision that you make one time,

750
00:37:15,920 --> 00:37:17,920
Speaker 2: it's a decision I think you analyze at least on

751
00:37:18,000 --> 00:37:21,120
Speaker 2: an annual basis where you're saying, am I still on

752
00:37:21,200 --> 00:37:23,520
Speaker 2: the right path forgiveness or pay it off?

753
00:37:24,640 --> 00:37:27,560
Speaker 1: What's the current status of the Education Department in the

754
00:37:27,680 --> 00:37:32,640
Speaker 1: aftermath of the twenty twenty five executive order, Like, it's

755
00:37:32,640 --> 00:37:34,560
Speaker 1: not supposed to be around much longer.

756
00:37:34,400 --> 00:37:37,600
Speaker 2: Right, I don't, So the current status is they still exist,

757
00:37:37,640 --> 00:37:40,640
Speaker 2: they're still processing things, and there's talk about offloading the

758
00:37:40,719 --> 00:37:44,400
Speaker 2: loans to different departments, maybe Department of Treasury, maybe SBA,

759
00:37:44,760 --> 00:37:46,640
Speaker 2: but none of that has happened as if yet, and

760
00:37:46,719 --> 00:37:48,800
Speaker 2: even if it does happen, it doesn't change, kind of

761
00:37:48,880 --> 00:37:51,560
Speaker 2: like your obligations on the Daniel or payment plans moving forward,

762
00:37:51,680 --> 00:37:55,120
Speaker 2: that will still be there. But right now the Department

763
00:37:55,120 --> 00:37:58,799
Speaker 2: of Education exists. It is crippled, undoubtedly if this word

764
00:37:58,920 --> 00:38:01,439
Speaker 2: table with four eggs, it will be on its last

765
00:38:01,560 --> 00:38:05,880
Speaker 2: leg right now, and yet it's still trudging along and

766
00:38:06,040 --> 00:38:10,560
Speaker 2: working so well. May there be some changes before this

767
00:38:10,680 --> 00:38:15,760
Speaker 2: administration leaves office? Possibly? Do I think that's likely given

768
00:38:16,000 --> 00:38:20,960
Speaker 2: everything else that's going on. No, but could Linda McMahon

769
00:38:21,120 --> 00:38:25,000
Speaker 2: as acting Secretary find a way to really close down

770
00:38:25,120 --> 00:38:29,879
Speaker 2: this Department of Education for good? Maybe? But I don't

771
00:38:29,920 --> 00:38:32,000
Speaker 2: know how that changes anything to do with your repayment

772
00:38:32,000 --> 00:38:35,880
Speaker 2: and forgiveness options except for possibly more likely delivering you

773
00:38:36,160 --> 00:38:40,560
Speaker 2: an even less effective customer service solutions moving forward.

774
00:38:41,120 --> 00:38:45,759
Speaker 1: All right, last question, what parting words of wisdom do

775
00:38:45,880 --> 00:38:48,960
Speaker 1: you have for people who feel like their student loans

776
00:38:49,000 --> 00:38:52,000
Speaker 1: are burden some and they want I don't know, it

777
00:38:52,040 --> 00:38:54,120
Speaker 1: doesn't even have to be specific advice like get on

778
00:38:54,200 --> 00:38:57,640
Speaker 1: this plan right and obviously every situation is unique, But

779
00:38:57,880 --> 00:38:59,279
Speaker 1: what would you say to those folks who feel like

780
00:38:59,280 --> 00:39:01,799
Speaker 1: they're struggling in nervous about repaying their loans.

781
00:39:02,440 --> 00:39:04,200
Speaker 2: Is this a podcast where I get to cuss?

782
00:39:05,120 --> 00:39:08,080
Speaker 1: No, we try to reframe, Okay, So the.

783
00:39:08,120 --> 00:39:10,759
Speaker 2: Way I would say it would be more direct than

784
00:39:10,800 --> 00:39:13,319
Speaker 2: how I'm gonna say it here, which is like, live

785
00:39:13,400 --> 00:39:19,200
Speaker 2: your best freaking life possible despite the student loans. Don't

786
00:39:19,280 --> 00:39:22,400
Speaker 2: pass up love, don't pass up jobs, don't pass up

787
00:39:22,840 --> 00:39:25,600
Speaker 2: other things because you're worried about the student loan debt.

788
00:39:26,320 --> 00:39:29,360
Speaker 2: We will find a way to tackle the student loans

789
00:39:29,880 --> 00:39:32,239
Speaker 2: and to make them fit around your life, but it

790
00:39:32,360 --> 00:39:34,400
Speaker 2: does come at cost. We may not get rid of

791
00:39:34,480 --> 00:39:38,239
Speaker 2: them as aggressively as you would like, and yet you

792
00:39:38,320 --> 00:39:40,440
Speaker 2: will have that love that you were holding out for.

793
00:39:40,960 --> 00:39:44,160
Speaker 2: I see far too many people that stop living life

794
00:39:44,719 --> 00:39:47,960
Speaker 2: because the thought of this debt hanging around forever freaks

795
00:39:47,960 --> 00:39:49,920
Speaker 2: them out. But it's not even just the thought. It's

796
00:39:49,960 --> 00:39:54,320
Speaker 2: the thought that is uncoupled from actual kind of consequences

797
00:39:54,320 --> 00:39:57,920
Speaker 2: of understanding what are the real consequences here, and then

798
00:39:58,000 --> 00:40:01,880
Speaker 2: what are my real options available. I'm not promising anyone

799
00:40:01,920 --> 00:40:05,160
Speaker 2: that she'll have a perfect solution that works. It doesn't exist. Yeah,

800
00:40:05,200 --> 00:40:07,279
Speaker 2: but can we mitigate the damage that allows you to

801
00:40:07,400 --> 00:40:10,799
Speaker 2: kind of balance everything. Absolutely so I always want people

802
00:40:10,880 --> 00:40:14,680
Speaker 2: to live their best freaking life possible despite their student loans.

803
00:40:14,719 --> 00:40:15,640
Speaker 2: And we'll find a way.

804
00:40:15,520 --> 00:40:18,239
Speaker 1: Forward, dude. Great way to end it, Stanley Tate, thank

805
00:40:18,280 --> 00:40:19,759
Speaker 1: you so much for joining me. Where can how the

806
00:40:19,800 --> 00:40:22,959
Speaker 1: money listeners find out more about you and your content.

807
00:40:23,640 --> 00:40:25,040
Speaker 2: You use this place of though is just check us

808
00:40:25,040 --> 00:40:27,000
Speaker 2: out at t DSQ dot com or if you pop

809
00:40:27,080 --> 00:40:29,520
Speaker 2: in Stanley Tate Lawyer, it is gonna pop right up.

810
00:40:29,719 --> 00:40:31,319
Speaker 1: Awesome. We'll link to you in the show notes too.

811
00:40:31,400 --> 00:40:36,280
Speaker 1: Thanks Stanley, Thank you. Oh man, what a great combo

812
00:40:36,760 --> 00:40:40,719
Speaker 1: with Stanley Tate. And I just appreciate too. In an

813
00:40:40,800 --> 00:40:46,120
Speaker 1: area of incredible headlines and a lot of change, there's

814
00:40:46,360 --> 00:40:48,160
Speaker 1: there's just a lot of freak out in the student

815
00:40:48,200 --> 00:40:50,719
Speaker 1: loan space, and I feel like Stanley is such a

816
00:40:50,920 --> 00:40:57,480
Speaker 1: solid presence with good advice without being over overly reactionary.

817
00:40:57,920 --> 00:41:00,560
Speaker 1: And I just think we're in a time where and

818
00:41:00,680 --> 00:41:03,719
Speaker 1: I get it, I totally get it where there are

819
00:41:04,520 --> 00:41:08,160
Speaker 1: abundant reactions and a lot of fear and I think

820
00:41:08,239 --> 00:41:11,560
Speaker 1: Stanley cuts through that really well by offering his thoughts

821
00:41:11,719 --> 00:41:16,239
Speaker 1: and advice and insight without just being like hair on

822
00:41:16,360 --> 00:41:19,800
Speaker 1: fire and so what he said too. I love this.

823
00:41:19,960 --> 00:41:22,000
Speaker 1: I think it makes total sense that a lot of people.

824
00:41:22,160 --> 00:41:23,880
Speaker 1: My big takeaway is that he said, pick a strategy

825
00:41:23,920 --> 00:41:26,000
Speaker 1: and stick to it. You can't ride two horses at

826
00:41:26,000 --> 00:41:31,359
Speaker 1: the same time, and it's understandable why someone would say, well,

827
00:41:32,560 --> 00:41:34,560
Speaker 1: I just I don't know that I trust you, know,

828
00:41:34,719 --> 00:41:36,600
Speaker 1: forgiveness to stay around, and so I feel like I

829
00:41:36,680 --> 00:41:39,759
Speaker 1: have to do both of these strategies at the same

830
00:41:39,800 --> 00:41:42,200
Speaker 1: time in order to feel comfortable. And then even at

831
00:41:42,239 --> 00:41:45,120
Speaker 1: the end right what he was saying was like, live

832
00:41:45,160 --> 00:41:47,680
Speaker 1: your life, and it's really it's really hard. I think

833
00:41:47,680 --> 00:41:49,920
Speaker 1: it's really for a lot of folks. It's become easy.

834
00:41:50,000 --> 00:41:54,719
Speaker 1: It's become normal to let student loans influence a lot

835
00:41:54,800 --> 00:41:59,160
Speaker 1: of life decisions. And I just appreciate his way of thinking, saying, well,

836
00:41:59,640 --> 00:42:04,200
Speaker 1: they can't change every future decision you make, and they

837
00:42:04,239 --> 00:42:07,239
Speaker 1: might be with you for a while. Whether you are

838
00:42:07,960 --> 00:42:12,360
Speaker 1: on the income driven repayment plan and you're saying, listen,

839
00:42:12,440 --> 00:42:16,200
Speaker 1: I'm gonna try to pay these loans off in quicker

840
00:42:16,280 --> 00:42:19,279
Speaker 1: than before, you know, trying to get some sort of forgiveness,

841
00:42:19,760 --> 00:42:23,600
Speaker 1: or whether you're on the long term forgiveness route, there

842
00:42:23,760 --> 00:42:27,680
Speaker 1: are there are ways I think to despite the impact

843
00:42:27,719 --> 00:42:30,320
Speaker 1: of student loans in your life, live your life, and

844
00:42:30,440 --> 00:42:34,040
Speaker 1: to not allow those to dictate most of the choices

845
00:42:34,080 --> 00:42:35,719
Speaker 1: you make are many of the choices you make, whether

846
00:42:35,760 --> 00:42:40,040
Speaker 1: it's about love, starting a family, all that kind of stuff.

847
00:42:40,160 --> 00:42:43,560
Speaker 1: So I thought, yeah, Stanley had a lot of good insight.

848
00:42:43,640 --> 00:42:47,040
Speaker 1: If you are interested to hear more from him, I

849
00:42:47,080 --> 00:42:49,680
Speaker 1: will put links to his YouTube channel, his newsletter, his

850
00:42:49,760 --> 00:42:52,200
Speaker 1: newsletters spot on every time it comes out, and just

851
00:42:52,640 --> 00:42:54,960
Speaker 1: if you are in the uh hey, I need to

852
00:42:54,960 --> 00:42:57,120
Speaker 1: help in hand in the student loans space. Stanley's definitely

853
00:42:57,160 --> 00:42:59,480
Speaker 1: a great place to turn. But that's going to do

854
00:42:59,480 --> 00:43:01,600
Speaker 1: it for this episodisode. I hope you enjoyed it. We'll

855
00:43:01,600 --> 00:43:03,880
Speaker 1: see you back here on Friday for a fresh Friday

856
00:43:03,960 --> 00:43:06,600
Speaker 1: Friday flight. Until next time, best Friend Out.