WEBVTT - Lab 007: Show Me the Money 0:00:00.080 --> 0:00:01.960 The craziest thing that has been happening to me this 0:00:02.000 --> 0:00:04.720 week that is really making me feel like Demi Moore 0:00:04.760 --> 0:00:06.920 and Ghosts is that my phone keeps ringing, but the 0:00:06.920 --> 0:00:09.400 calls are coming from me. I get calls like that 0:00:09.680 --> 0:00:12.799 at least three times a day. Listen. I was waiting 0:00:12.800 --> 0:00:15.920 to get something delivered at my house and I missed 0:00:15.920 --> 0:00:19.439 my delivery when I missed everything because I'm always getting 0:00:19.560 --> 0:00:23.040 spam fixed, you know, And so I said, Okay, we'll 0:00:23.079 --> 0:00:25.360 try to be better. I'll answer and see who it is. 0:00:25.400 --> 0:00:27.520 And I can because people would say, oh, I tried 0:00:27.560 --> 0:00:28.880 calling you, but I didn't get an answer. If I 0:00:28.880 --> 0:00:30.920 don't have your number, say, I don't know who it is, 0:00:30.960 --> 0:00:32.760 and I'm not going to answer because last week I 0:00:32.800 --> 0:00:35.199 answered and I said hello, and the person was like, 0:00:35.200 --> 0:00:39.559 do you have diabetes? I'm selling something strips or monitors. 0:00:39.560 --> 0:00:42.000 I don't know what they were saying, but lately it's 0:00:42.040 --> 0:00:44.159 been me. So it makes my contact pop up and 0:00:44.159 --> 0:00:47.120 it's like, you have a call from Zakia and I'm like, no, no, 0:00:47.159 --> 0:00:48.800 So what you're not gonna do is bring this bad 0:00:48.880 --> 0:00:52.680 juju through my phone. Maybe it's future. It's a kid 0:00:52.800 --> 0:00:55.520 calling to tell you like don't eat all that kale. 0:00:55.880 --> 0:00:59.160 No future me would definitely send something that I could 0:00:59.200 --> 0:01:01.920 verify future me, but not call future in me. Send 0:01:02.080 --> 0:01:05.600 like a letter or an email, something that I could 0:01:05.680 --> 0:01:08.600 show like, look it happened, tuchus, A kid I trust 0:01:08.600 --> 0:01:12.680 would send like some type of code word to let 0:01:12.680 --> 0:01:15.360 me know it really is Yes. Currents Akida would do 0:01:15.400 --> 0:01:17.960 that too. Current a Kia does do that. I'm like, hey, 0:01:18.160 --> 0:01:20.039 this is how you know it's really me and I'm 0:01:20.040 --> 0:01:22.320 my girl, I know it's you. I'm looking at you. 0:01:25.640 --> 0:01:28.720 I'm TT and I'm Zakiyah and from Spotify Studios. This 0:01:28.760 --> 0:01:46.360 is dope laps. So whether it's spam or robo calling 0:01:46.480 --> 0:01:48.360 or calls from your future self, there's a lot of 0:01:48.400 --> 0:01:50.360 calls you don't want to answer these days. And I 0:01:50.360 --> 0:01:51.840 think one of the things that I always see on 0:01:51.840 --> 0:01:54.440 the internet people saying they don't answer calls because of 0:01:54.720 --> 0:01:58.080 Sally May. Right, Sally may have been knocking on everybody's 0:01:58.080 --> 0:02:01.320 door since what feels like the beginning of time, and 0:02:01.720 --> 0:02:05.320 everybody is bobbing and weave in to duck those phone 0:02:05.320 --> 0:02:08.959 calls because you'll get your money. When you get your money, Sally, 0:02:09.000 --> 0:02:12.600 you can't even stay in touch with your family. You 0:02:12.720 --> 0:02:15.240 got long lost relatives trying to reach you. You like, 0:02:15.280 --> 0:02:17.399 can't risk it. I don't have a minial. This could 0:02:17.440 --> 0:02:21.440 be Sally. I can't make the payment this month. So 0:02:21.480 --> 0:02:25.520 today we're talking about debt, specifically college debts. That's right, 0:02:25.560 --> 0:02:27.200 it's been the elephant in the room and it's time 0:02:27.240 --> 0:02:29.320 to address it. Let's talk to that elephant. And I 0:02:29.360 --> 0:02:31.360 know y'all might be saying the hell a TT is 0:02:31.360 --> 0:02:33.720 the key at talking about this is not science, But 0:02:33.800 --> 0:02:36.040 let me tell you, yes it is. Yes it is. 0:02:36.320 --> 0:02:38.680 You thought that you could put dope labs into a box, 0:02:38.919 --> 0:02:42.440 No you can't. You're not just talking about physics, chemistry, biology, 0:02:42.520 --> 0:02:45.239 We're talking about everything because all these things are science, 0:02:45.240 --> 0:02:47.400 and there's a scientific method that can be applied to 0:02:47.680 --> 0:02:50.799 all these things. Economics is a social science, right, It's 0:02:50.840 --> 0:02:53.760 the science of money, the flow of money, and it 0:02:53.840 --> 0:02:57.360 has great effects on society as a whole, on each 0:02:57.400 --> 0:03:00.200 and every one of us. No one is excluded from 0:03:00.240 --> 0:03:04.200 the economy. Yep. So this science is actually something that 0:03:04.560 --> 0:03:07.520 all of you all can benefit from. The fact that 0:03:07.560 --> 0:03:10.919 so many people are identifying with this and there's memes 0:03:11.040 --> 0:03:13.960 everywhere I turn about it. It feels like a major problem. 0:03:14.040 --> 0:03:16.040 I mean, cause it's like, you go to school and 0:03:16.080 --> 0:03:18.360 you're just trying to make your life better, right, because 0:03:18.360 --> 0:03:19.760 that's what they tell us is that you got to 0:03:19.800 --> 0:03:21.600 go to school, you got to get these degrees in 0:03:21.720 --> 0:03:23.520 order to have a better life. And then as soon 0:03:23.560 --> 0:03:26.000 as you're done, they're like, Okay, now start paying me back. 0:03:26.000 --> 0:03:29.000 It's like, whoa, whoa, whoa. I got to establish myself first. 0:03:29.040 --> 0:03:31.240 How am I supposed to establish myself if you keep 0:03:31.440 --> 0:03:33.080 if you taking the money out of my pocket as 0:03:33.120 --> 0:03:35.600 soon as I put it in there, It's like somebody 0:03:35.600 --> 0:03:38.080 training you to walk, and then they're like, I'm about 0:03:38.080 --> 0:03:39.960 to chase you. They don't even give you. They don't 0:03:39.960 --> 0:03:42.800 even give you a head start, right, at least give 0:03:42.800 --> 0:03:45.440 me a head start, right. Oh, these entry positions not 0:03:45.520 --> 0:03:47.880 paying like that for real? It's like, can I get 0:03:47.880 --> 0:03:50.360 a savings and then we could talk about me paying 0:03:50.400 --> 0:03:54.000 you back? It's crazy, and I know it's really real 0:03:54.240 --> 0:03:57.400 because it came up from one of our three two 0:03:57.480 --> 0:04:02.120 hundred and thirty seven Democratic candidates, from Elizabeth Warren. Yeah, 0:04:02.160 --> 0:04:06.880 she talked about eliminating student loans for people who have 0:04:08.280 --> 0:04:10.640 what was it fifty thousand? She was saying she would. 0:04:10.640 --> 0:04:13.960 I think it was eliminate fifty thousand dollars of student 0:04:14.000 --> 0:04:17.159 loan debt if you make less than one hundred thousand. Okay, 0:04:17.279 --> 0:04:18.720 I said, I'll see you trying to build up the 0:04:18.720 --> 0:04:20.680 middle class. As soon as everybody said that, they're like 0:04:20.960 --> 0:04:24.880 Elizabeth Warren for president. But everybody's jumping on the bandwagon. 0:04:24.920 --> 0:04:28.360 But occasionally there was a lot of backlash too. There was, 0:04:28.480 --> 0:04:30.960 and so then I was like, but wait, that sounds 0:04:30.960 --> 0:04:33.159 good to me. So now I'm starting to think I 0:04:33.160 --> 0:04:37.000 don't know enough, and there's so many other things that 0:04:37.040 --> 0:04:39.240 are going on with the student loan process that I 0:04:39.279 --> 0:04:42.279 am not privy to that could mean that this whole 0:04:42.800 --> 0:04:46.720 eliminating student debt is a bad thing. I don't see 0:04:46.760 --> 0:04:48.080 how it could be a bad thing. I know a 0:04:48.080 --> 0:04:50.719 lot of people that are crushed by student debt. But 0:04:50.760 --> 0:04:52.360 I do think there are things I want to know. 0:04:52.800 --> 0:04:55.040 It's time for the recitation. I think first we want 0:04:55.080 --> 0:04:57.839 to know do most people have student loans? And like, 0:04:57.920 --> 0:05:00.720 we know what a student loan is. I guess, yeah, 0:05:00.920 --> 0:05:03.000 how does it work? And how's it different from other 0:05:03.080 --> 0:05:05.520 standard loans? Right? What's so different about it that so 0:05:05.560 --> 0:05:07.960 many people are defaulting on their student loans. Why does 0:05:08.000 --> 0:05:09.640 it take so long to pay back? The struggle is 0:05:09.640 --> 0:05:11.920 real with paying them back and then what happens if 0:05:11.920 --> 0:05:14.760 you can't pay? And is everyone borrowing equally? My other 0:05:14.839 --> 0:05:17.839 question is what was up with that stuff that Elizabeth 0:05:17.839 --> 0:05:21.480 Warren was saying, Like she introduced something about in her 0:05:21.520 --> 0:05:24.440 platform about student loan forgiveness. I want to know more 0:05:24.440 --> 0:05:28.360 about that. Yeah, student loan forgiveness, is it real? Like 0:05:29.680 --> 0:05:33.720 is it? This is a trick, isn't it? And what 0:05:33.720 --> 0:05:35.520 would that look like? So now we want to lay 0:05:35.560 --> 0:05:38.320 the foundation right, what's the history of student loans? The 0:05:38.360 --> 0:05:41.440 first student loans were given out to students at Harvard 0:05:41.960 --> 0:05:44.000 back in like eighteen forty or so. That is a 0:05:44.040 --> 0:05:47.680 long time ago, Yeah, and only to Harvard's students. But 0:05:47.800 --> 0:05:50.400 since then we've gone through various iterations of things that 0:05:50.440 --> 0:05:52.200 are like a student loan or a grant like the 0:05:52.240 --> 0:05:56.040 GI Bill, the Federal Family Education loans, the Peil grant 0:05:56.040 --> 0:05:58.279 which you didn't have to pay back. But then we 0:05:58.360 --> 0:05:59.960 kind of did away with a law of that stuff 0:06:00.040 --> 0:06:04.360 by twenty ten, and then by twenty twelve, the amount 0:06:04.400 --> 0:06:06.640 of student loan debt that we have in the United 0:06:06.640 --> 0:06:11.560 States it got up to one trillion dollars. That's tr 0:06:11.880 --> 0:06:19.120 tr million illy on. We also know there's another problem, 0:06:19.200 --> 0:06:22.920 right aside from overwhelming student debt, the cost of education 0:06:23.400 --> 0:06:26.840 is so drastically different. I'm tired of baby boomer saying 0:06:26.880 --> 0:06:29.039 I went to college. You paid three thousand dollars for 0:06:29.080 --> 0:06:32.080 all four years exactly. That's completely different from what we 0:06:32.240 --> 0:06:35.520 paying these days. Those are the fees for a semester. Okay, 0:06:35.560 --> 0:06:37.840 I'm not trying to hear it. Yeah, I feel like 0:06:37.880 --> 0:06:39.760 baby boomers were going to college for like a nickel 0:06:39.839 --> 0:06:43.560 and a bag of chips. College is way more expensive now. 0:06:43.600 --> 0:06:46.800 In twenty seventeen to twenty eighteen, the average cost of 0:06:46.839 --> 0:06:50.960 attendance was over forty thousand dollars for an out of 0:06:51.000 --> 0:06:53.960 state public school. But even for in state public education 0:06:54.040 --> 0:06:57.520 that's twenty five thousand dollars. And private schools they cost 0:06:57.640 --> 0:07:00.320 over fifty thousand dollars just for one year. So now 0:07:00.360 --> 0:07:02.359 we're talking about let's say you stick to this grip, 0:07:02.720 --> 0:07:04.840 you take all those classes, maybe some summer courses too. 0:07:05.200 --> 0:07:08.040 Four years at a private school two hundred thousand dollars, 0:07:08.279 --> 0:07:10.520 you bought a house, You get about a lot of things. 0:07:10.680 --> 0:07:13.040 So I have questions about that. So to find out 0:07:13.040 --> 0:07:14.640 the answer to some of these questions, we turn to 0:07:14.680 --> 0:07:16.239 our good friend, Colleen Campbell. 0:07:16.400 --> 0:07:18.760 My name is Colleen Campbell, and I'm the director for 0:07:18.800 --> 0:07:22.360 post Secondary Education at the Center for American Progress Action Fund. 0:07:22.600 --> 0:07:27.120 I do research and advocacy on student debt. 0:07:27.000 --> 0:07:29.160 And for the purposes of today's lab we're going to 0:07:29.160 --> 0:07:32.120 focus mainly on federal student loans, which make up the 0:07:32.120 --> 0:07:34.880 majority of the student loan pie. Some people do choose 0:07:34.880 --> 0:07:37.000 to take out loans from private institutions, but those are 0:07:37.000 --> 0:07:39.760 harder to get in a lot less flexible. Okay, so 0:07:39.840 --> 0:07:42.160 let's just rip off the band aid. I want to 0:07:42.200 --> 0:07:44.760 know what the current state of the federal student loan 0:07:44.800 --> 0:07:46.800 debt is today. How bad is it? 0:07:46.840 --> 0:07:50.600 So there's about one point five trillion dollars outstanding of 0:07:50.720 --> 0:07:54.240 federal student loan debt. That's about forty three million people 0:07:54.240 --> 0:07:56.480 who have student loans, so it's about a fifth of adults. 0:07:56.840 --> 0:08:01.320 For context, it's pretty comparable to auto debt. Actually, so 0:08:01.440 --> 0:08:05.520 there's about one point one trillion outstanding in auto loans. 0:08:05.560 --> 0:08:07.720 But the number of adults in the US who have 0:08:07.760 --> 0:08:10.000 a car loan that's more than double the number of 0:08:10.040 --> 0:08:12.560 adults who have student loan debt. Yeah, about forty four 0:08:12.600 --> 0:08:15.400 percent of American adults are paying off car loans compared 0:08:15.440 --> 0:08:17.960 to twenty percent of adults who are paying off student loans. 0:08:18.040 --> 0:08:20.720 So that's more debt but fewer people. That's not a 0:08:20.720 --> 0:08:24.560 good look. So who are these people that are taking 0:08:24.560 --> 0:08:27.720 on this combined one point five trillion dollars in debt. 0:08:27.840 --> 0:08:30.640 Before we dive into the policy and economics around student loans, 0:08:30.720 --> 0:08:32.800 let's kind of survey the landscape of higher ed in 0:08:32.800 --> 0:08:35.520 the United States. So let's start with who's going to 0:08:35.559 --> 0:08:36.720 college in the first place. 0:08:36.800 --> 0:08:39.839 Most college students are adults, they're over twenty four, they're married, 0:08:39.880 --> 0:08:43.000 they have children. Most people are not enrolling in a 0:08:43.040 --> 0:08:45.760 public four year college or a private four year college. 0:08:46.080 --> 0:08:48.320 And you better be damn sure that most people are 0:08:48.320 --> 0:08:48.920 not getting. 0:08:48.640 --> 0:08:51.959 A graduate degree. This is so important to hear, right, 0:08:52.040 --> 0:08:54.240 because the image of a college student in the media 0:08:54.360 --> 0:08:57.680 is this bright eyed, bushy tail, button up polo shirt, 0:08:57.760 --> 0:09:03.480 pop collar, boat shoes, lay your pot in the ear, right, 0:09:04.920 --> 0:09:10.000 But really it is all the cost, no vineyard vines, 0:09:10.200 --> 0:09:13.640 vineyard vines. But it's really like a mom who's nursing 0:09:13.640 --> 0:09:16.920 her newborn and reading introduction to sociology and trying to 0:09:16.920 --> 0:09:18.360 make sure that the spaghetti don't burn. 0:09:18.440 --> 0:09:20.320 One of the things with student debt that I think, 0:09:20.559 --> 0:09:22.280 really I like to do this level setting before we 0:09:22.480 --> 0:09:25.120 dig into these issues, is to frame for people that 0:09:25.840 --> 0:09:28.400 we are very much biased by the people around us 0:09:28.400 --> 0:09:29.719 and our own experiences. 0:09:29.800 --> 0:09:31.559 All Right, so it's time to talk to the woman 0:09:31.640 --> 0:09:34.520 in the mirror. Our understanding of student loans is probably 0:09:34.600 --> 0:09:37.679 based on our own experiences and the experiences of our 0:09:37.720 --> 0:09:39.560 friends and the people that we know. Yeah, people in 0:09:39.559 --> 0:09:43.120 our bubble. But in order to really understand the whole 0:09:43.240 --> 0:09:46.880 complicated mess that's associated with student loans, you really have 0:09:46.920 --> 0:09:47.920 to burst that bubble. 0:09:48.040 --> 0:09:49.720 If most of the people you know have degrees, you 0:09:49.800 --> 0:09:52.880 actually are like your bubble is relatively small, especially if 0:09:52.920 --> 0:09:55.480 you only know people with graduate degrees. Yeah, twelve percent 0:09:55.480 --> 0:09:57.080 of adults have graduate degrees. 0:09:56.760 --> 0:09:58.640 And Colleen says that the number of people without a 0:09:58.720 --> 0:10:01.040 high school diploma is almost equal to the number of 0:10:01.040 --> 0:10:04.000 people with a graduate degree. That's crazy. This really helps 0:10:04.040 --> 0:10:06.720 put our bubbles in perspective. Right, how many people do 0:10:06.760 --> 0:10:09.120 you know without a high school diploma versus people with 0:10:09.160 --> 0:10:11.880 a graduate degree. The chances are that you know more 0:10:11.880 --> 0:10:13.480 in one group or the other. 0:10:13.559 --> 0:10:15.440 So we really have to think through kind of like 0:10:15.520 --> 0:10:19.480 what the landscape of the American population looks like, particularly 0:10:19.520 --> 0:10:21.760 when we break these things down by race, so that 0:10:21.800 --> 0:10:24.240 we can have a better understanding of who we're going 0:10:24.280 --> 0:10:26.199 to be affecting and like where we might want to 0:10:26.200 --> 0:10:27.520 be prioritizing those dollars. 0:10:27.600 --> 0:10:29.480 We'll get to that later in the show, but first 0:10:29.640 --> 0:10:32.360 let's start off with the basics of student loans. How 0:10:32.360 --> 0:10:33.680 do they actually work. 0:10:34.000 --> 0:10:37.280 When people take out a loan, that's what we call 0:10:37.320 --> 0:10:40.120 their principal balance, and then there's an interest rate attached 0:10:40.120 --> 0:10:44.400 to that loan. Right now, for undergraduates, interest rates are 0:10:44.520 --> 0:10:47.920 between usually about three and a half percent, like five 0:10:48.000 --> 0:10:48.600 or six percent. 0:10:48.640 --> 0:10:53.360 There are also subsidized and unsubsidized loans. With subsidized loans, 0:10:53.559 --> 0:10:56.760 while you're in school, your loan won't accrue interests. So 0:10:56.800 --> 0:10:58.640 if you borrow three thousand dollars in your first year 0:10:58.640 --> 0:11:00.760 of college and you graduate four you years later, your 0:11:00.760 --> 0:11:06.240 DEA's three thousand dollars. Unsubsidized loans begin accruing interests right away. 0:11:06.080 --> 0:11:10.240 So in this way, your balance will increase over time 0:11:10.640 --> 0:11:11.000 and is. 0:11:10.960 --> 0:11:13.720 Actually shockingly easy to get a loan and that's how 0:11:13.760 --> 0:11:16.560 I was designed. Federal student loans were created for anyone 0:11:16.600 --> 0:11:19.680 who wanted to pursue higher education. Yeah, did you know 0:11:19.720 --> 0:11:21.160 you don't even have to have a credit check to 0:11:21.200 --> 0:11:22.920 get a federal loan. You got to get a credit 0:11:23.040 --> 0:11:25.320 check to get like a washing machine. These days, if 0:11:25.360 --> 0:11:27.679 I want to open a five hundred dollars store car, 0:11:27.840 --> 0:11:29.559 that's a credit check. But if I want to take 0:11:29.600 --> 0:11:34.000 out ten thousand dollars in loans at age eighteen, no 0:11:34.080 --> 0:11:34.720 problem nothing. 0:11:34.880 --> 0:11:37.720 There is kind of this tenant of federal law that 0:11:37.760 --> 0:11:41.360 says we should loans are an entitlement. We should give 0:11:41.360 --> 0:11:44.080 loans to anybody who wants to borrow a loan to 0:11:44.200 --> 0:11:46.440 enroll in higher education. And that's kind of like a 0:11:46.480 --> 0:11:48.520 great thing about student loans, right, Like I would not 0:11:48.520 --> 0:11:49.800 have been able to go to the college I went 0:11:49.800 --> 0:11:51.960 to without student debt. I was able to take on 0:11:52.000 --> 0:11:54.200 student debt, and I'm very successful now, like I'm a 0:11:54.200 --> 0:11:56.520 success story of student loans. But for a lot of 0:11:56.520 --> 0:11:57.720 people that is not the case. 0:11:57.960 --> 0:12:01.800 Right people are drowning in debt and unable to pay 0:12:01.800 --> 0:12:04.079 their loans back. It's a mess out there. Student loan 0:12:04.120 --> 0:12:07.439 reform has become a major part of a lot of 0:12:07.559 --> 0:12:11.960 the presidential candidates platforms. Yeah, the presidential candidates for twenty 0:12:12.000 --> 0:12:14.720 twenty are popping up, and a lot of the conversation 0:12:14.840 --> 0:12:17.040 has shifted to student loans and student loan debt. But 0:12:17.120 --> 0:12:20.400 why are student loans becoming a problem for so many people? Well, 0:12:20.480 --> 0:12:22.280 I mean, I feel like there are many reasons why 0:12:22.280 --> 0:12:24.800 the current system isn't working, and one of them is 0:12:24.840 --> 0:12:27.000 that some colleges haven't been playing fair. 0:12:27.160 --> 0:12:29.800 A lot of schools have really taken advantage of these 0:12:29.880 --> 0:12:32.160 programs and taken advantage of students. So if you think 0:12:32.160 --> 0:12:35.120 of things like for profit colleges that have been like 0:12:35.200 --> 0:12:38.000 predatory trying to get people to enroll so that they 0:12:38.040 --> 0:12:40.160 can make all, you know, tons and tons of money 0:12:40.200 --> 0:12:42.160 off of these students and not offer them a high 0:12:42.200 --> 0:12:45.520 quality education, then really those are the people who are 0:12:45.559 --> 0:12:46.679 in really bad shape. 0:12:46.880 --> 0:12:48.920 That's kind of like how UNO's trying to change the rules, 0:12:48.920 --> 0:12:51.240 how they're saying that you can't put a draw to 0:12:51.520 --> 0:12:53.480 on top of a draw four, because that's exactly what 0:12:53.520 --> 0:12:57.040 the government is doing, right, And I absolutely draw six. 0:12:57.200 --> 0:12:59.319 You need to draw six cards. I think student loans 0:12:59.360 --> 0:13:03.160 are worth to fly and is like draw eight loans 0:13:03.280 --> 0:13:06.480 like draw eight and also never buy a house, You'll 0:13:06.520 --> 0:13:09.440 never be able to afford it. Another reason is that 0:13:09.480 --> 0:13:11.320 a lot of people who take out loans to go 0:13:11.360 --> 0:13:14.760 to college don't end up finishing, making it more difficult 0:13:14.760 --> 0:13:16.360 for them to find a job that allow them to 0:13:16.400 --> 0:13:17.319 pay off their student debt. 0:13:17.440 --> 0:13:19.880 Typically, what we end up seeing is that people will 0:13:19.960 --> 0:13:23.760 enroll in either for profit colleges or community colleges, be 0:13:23.880 --> 0:13:26.480 enrolled for a semester or a year, and just be like, 0:13:26.800 --> 0:13:28.920 I can't do this. Life is getting in the way. 0:13:29.080 --> 0:13:31.439 I'm taking care of children, I'm taking care of my family. 0:13:31.520 --> 0:13:33.920 I need to work. And they drop out of school 0:13:34.080 --> 0:13:37.760 and then they have these smaller loan balances and they 0:13:37.800 --> 0:13:38.600 just can't repay them. 0:13:38.679 --> 0:13:41.280 And for some people, it's like they're running on a treadmill, right. 0:13:41.600 --> 0:13:44.199 So even though they're making monthly payments, their interest rate 0:13:44.240 --> 0:13:46.400 is too high for them to make a dint in 0:13:46.480 --> 0:13:49.199 their overall loan a miilt, and even if they make 0:13:49.240 --> 0:13:52.360 a dent, those interest rates just pop those dents back out. Yep. 0:13:52.520 --> 0:13:56.760 There are instances where people go into what's called negative amortization, 0:13:56.880 --> 0:13:59.439 which basically means that their balance is increasing even though 0:13:59.440 --> 0:14:00.960 they're making pays on that debt. 0:14:00.760 --> 0:14:02.800 And so then what happens when you can't pay. When 0:14:02.840 --> 0:14:05.360 you can't pay, you run the risk of defaulting on 0:14:05.400 --> 0:14:08.160 your loans, which can have really serious consequences. Yeah, if 0:14:08.160 --> 0:14:09.720 you have default on the loan, that's a ding on 0:14:09.720 --> 0:14:12.720 your credit score. But also defaulting on your student loan 0:14:12.880 --> 0:14:15.400 means that the government might try to get that money 0:14:15.679 --> 0:14:19.120 in other ways. So they might take your tax return, 0:14:19.800 --> 0:14:23.120 or they might garnish your wages. So they're going to 0:14:23.200 --> 0:14:25.440 be going into your check that you're getting from your 0:14:25.560 --> 0:14:27.600 job and saying, I'll take a little bit of that, 0:14:27.640 --> 0:14:30.880 thank you, that's mine. Did you know they can even 0:14:30.920 --> 0:14:34.120 sue your employer? Oh my gosh. Of the forty three 0:14:34.160 --> 0:14:37.840 million people currently struggling with student loan debt, nine million 0:14:37.880 --> 0:14:39.880 are in default. But they're not who you think. 0:14:39.920 --> 0:14:41.640 And so what we actually end up seeing is that 0:14:41.680 --> 0:14:44.200 the people who default on their federal student loans are 0:14:44.200 --> 0:14:48.120 people largely who didn't finish college, and they have much 0:14:48.200 --> 0:14:50.840 much lower balances than the people who are actually paying 0:14:50.840 --> 0:14:51.600 down their loans. 0:14:51.680 --> 0:14:54.920 So when Colleen says much lower balances, she means like 0:14:55.000 --> 0:14:57.600 less than ten thousand dollars. That is crazy, Yeah, because 0:14:57.600 --> 0:14:59.320 you would think that people default on their loans. There 0:14:59.320 --> 0:15:02.040 are people that have li seven hundred and fifty thousand 0:15:02.080 --> 0:15:04.440 dollars in student loan debt right and they just can't 0:15:04.680 --> 0:15:05.840 sustain those payments. 0:15:05.840 --> 0:15:08.320 You'll hear news stories about people has like six figures 0:15:08.320 --> 0:15:10.240 in debt and like, how are they paying it? We 0:15:10.320 --> 0:15:12.920 actually have options to help those people, and those people 0:15:13.000 --> 0:15:15.560 tend to use those options a whole lot more than 0:15:15.600 --> 0:15:18.600 people who are taking on smaller amounts of debt, dropping 0:15:18.640 --> 0:15:20.760 out of school and then defaulting on their debt. 0:15:20.800 --> 0:15:22.160 When we come back from the break, we're going to 0:15:22.200 --> 0:15:25.120 talk about how people are paying off their debts and 0:15:25.160 --> 0:15:28.160 who's benefiting from the current programs in place and who's not. 0:15:47.040 --> 0:15:49.040 We're back, So in the first half of the show 0:15:49.120 --> 0:15:52.040 we really focused on the ins and outs of student 0:15:52.080 --> 0:15:54.960 loan debt. How much is there, how does it work, 0:15:55.040 --> 0:15:57.760 you know all that stuff. Now we want to turn 0:15:57.800 --> 0:16:01.400 to diagnosing the problem. And one thing I'm really curious 0:16:01.400 --> 0:16:04.880 about is how long has this been a problem. It 0:16:04.920 --> 0:16:07.880 definitely feels like the amount of overall student loan debt 0:16:08.040 --> 0:16:11.200 has exploded recently. Is that true? 0:16:11.360 --> 0:16:14.560 What we've seen is really a big jump in indebtedness 0:16:14.600 --> 0:16:17.920 over the last decade In particular. So when we think 0:16:17.960 --> 0:16:22.000 about the recession that happened, what typically happens during recessions 0:16:22.040 --> 0:16:23.960 is lots of people in roll in college. What that 0:16:24.000 --> 0:16:27.760 also means if we're not investing grant aid, is a 0:16:27.800 --> 0:16:28.720 lot of indebtedness. 0:16:28.760 --> 0:16:30.360 And when you're in a recession, you don't have a 0:16:30.360 --> 0:16:32.680 lot of money and there's not a lot of jobs available, 0:16:32.760 --> 0:16:34.800 so you go to college and you take on some debt. 0:16:35.280 --> 0:16:37.680 At the same time, the price tag for college education 0:16:37.880 --> 0:16:41.520 has also gone up, and programs like the pilgrimt they 0:16:41.520 --> 0:16:42.640 don't cover as much as they. 0:16:42.560 --> 0:16:45.400 Used to As time has gone on, what people, basically 0:16:45.480 --> 0:16:49.560 legislators have said is we're going to instead put all 0:16:49.600 --> 0:16:51.720 of our kind of eggs in the student loan basket. 0:16:51.960 --> 0:16:53.840 So student loans used to be a tool just for 0:16:53.920 --> 0:16:56.440 the middle class and upper middle income people, but now 0:16:56.440 --> 0:16:58.840 it's a tool for college access for everyone. 0:16:58.520 --> 0:17:01.680 And we're seeing that it's having real disperate affects, particularly 0:17:01.720 --> 0:17:02.720 for borrowers of color. 0:17:02.960 --> 0:17:05.399 So even though it feels like the expansion of student 0:17:05.400 --> 0:17:08.479 loan debt would make college more accessible to everyone, is 0:17:08.560 --> 0:17:10.680 not that simple, right. It's a little more smoke and 0:17:10.720 --> 0:17:13.600 mirrors than it might initially see. So what's actually happening. 0:17:14.000 --> 0:17:16.119 So imagine we have this pot of money that's focused 0:17:16.119 --> 0:17:18.920 on people with high financial need. It covers seventy five 0:17:18.960 --> 0:17:20.840 percent of their expenses and they don't have to pay 0:17:20.840 --> 0:17:24.879 it back after college. That's the pail grant. Then legislators decided, nah, 0:17:25.160 --> 0:17:28.160 we won't spend so much money on the pelgrant program. Instead, 0:17:28.359 --> 0:17:31.640 we'll encourage student loans for everyone. Now more people can 0:17:31.640 --> 0:17:35.160 go to college. But there's an unintended or maybe intended 0:17:35.240 --> 0:17:38.320 who knows side effect of this. Now you have people 0:17:38.320 --> 0:17:41.640 with great financial need using a pel grant, But now 0:17:41.800 --> 0:17:45.400 since legislators have disinvested, the pil grant will only cover 0:17:45.440 --> 0:17:47.919 about thirty percent of their expenses and they're taking student 0:17:47.960 --> 0:17:50.240 loans for the other seventy percent of their costs. And remember, 0:17:50.240 --> 0:17:52.960 student loans, unlike peil grants, have to be paid back. 0:17:53.119 --> 0:17:55.600 So when people say, oh, my granddad went to college 0:17:55.640 --> 0:17:57.960 on the pel grant in nineteen sixty five, yeah, brah, 0:17:58.040 --> 0:18:00.359 that pel grant cover most of his costs. You didn't 0:18:00.359 --> 0:18:02.320 have to pay a bet. So my cousin who went 0:18:02.359 --> 0:18:05.720 to public institution is drowning in student loans and entering 0:18:05.720 --> 0:18:08.640 into a much more competitive job market and earning less 0:18:08.640 --> 0:18:12.040 with her college degree and paying back way more coins 0:18:12.080 --> 0:18:14.760 than your granddad could ever see how that works. With 0:18:14.880 --> 0:18:17.280 all these people in debt, there are a bunch of 0:18:17.359 --> 0:18:20.640 government assistance programs set up to help with repayment. Right. 0:18:20.680 --> 0:18:23.359 There's income based repayment, where a portion of your income 0:18:23.560 --> 0:18:25.920 is exempt before you start paying off your loan. There's 0:18:26.040 --> 0:18:29.320 also a program called Public Service Loan Forgiveness for people 0:18:29.359 --> 0:18:32.760 who work at nonprofits, where the remainder of their debt 0:18:32.880 --> 0:18:35.399 is forgiven after ten years. And then there are specialized 0:18:35.400 --> 0:18:39.359 forgiveness programs for specific careers like teachers, nurses, and people 0:18:39.359 --> 0:18:42.879 in the military. But with nine million people defaulting on 0:18:43.040 --> 0:18:47.240 loans that are under ten thousand dollars, something isn't working. Yeah, 0:18:47.720 --> 0:18:50.080 what's keeping those folks from getting the help that they need. 0:18:50.160 --> 0:18:52.360 So there's a little bit of a mix, right, So, 0:18:52.560 --> 0:18:55.359 some people leave school not knowing that they have student 0:18:55.400 --> 0:18:58.840 loan debt. Some students also believe that if they don't 0:18:58.880 --> 0:19:02.000 finish their education that they aren't going to oh the 0:19:02.080 --> 0:19:05.200 loan back, which is not true. But again it's kind 0:19:05.200 --> 0:19:06.679