WEBVTT - Student Loans: UGH! 0:00:01.120 --> 0:00:03.400 Welcome to Stuff You Should Know, a production of My 0:00:03.600 --> 0:00:12.600 Heart Radios How Stuff Works. Hey, and welcome to the podcast. 0:00:12.640 --> 0:00:15.640 I'm Josh Clark. There's Charles W. Chuck Bryan over there, 0:00:15.920 --> 0:00:21.160 there's Dave c the guest producer extraordinaire. That's right, Um, 0:00:21.160 --> 0:00:25.360 and this is stuff you should know about. Wait, don't 0:00:25.400 --> 0:00:29.720 go anywhere student loans now, really don't go anywhere. Yeah, 0:00:29.760 --> 0:00:33.559 this is uh, this is pretty dry. I mean, we'll 0:00:33.560 --> 0:00:37.599 add our funnies. I know we won't. We'll add our 0:00:37.600 --> 0:00:41.080 funnies like we always do. But uh, there's no getting 0:00:41.080 --> 0:00:42.519 around it that this is one of those stuff you 0:00:42.520 --> 0:00:45.440 Should Know episodes that sort of falls under the banner 0:00:45.600 --> 0:00:49.839 of p s A a little public service announcement for 0:00:49.880 --> 0:00:51.920 people to learn about something that they may not get. 0:00:52.000 --> 0:00:56.240 But it's just not scintillating. How's that to drive people away? 0:00:56.280 --> 0:00:59.520 I really think you're you hooked him for sure. No, 0:00:59.680 --> 0:01:02.760 listen for the funnies. And hey, man, if you're out 0:01:02.800 --> 0:01:06.640 there and you don't understand student loans, don't know what 0:01:06.640 --> 0:01:09.360 you're getting into, your high school student, or if you're 0:01:09.400 --> 0:01:12.640 already drowning in debt, already drowning in debt, we'll pay 0:01:12.640 --> 0:01:15.319 that debt for you to send us an email with 0:01:15.400 --> 0:01:17.160 your monthly bills and we'll pay them all on. Now. 0:01:17.160 --> 0:01:18.840 That should really clear up a lot of that stuff though, 0:01:18.880 --> 0:01:22.319 because um, it's it's not complicated, but there's just a 0:01:22.360 --> 0:01:25.280 lot to it. Yeah, but like the how we got 0:01:25.319 --> 0:01:29.679 into this place, because yes, there's student loans and applying 0:01:29.720 --> 0:01:32.360 for student loans and you know what you should know. 0:01:32.640 --> 0:01:34.920 But then there's also what you should know about after 0:01:34.959 --> 0:01:39.880 that when you join this forty five million clubs student 0:01:40.120 --> 0:01:44.800 loan debt holders or debt owers. Um. Who oh, like 0:01:44.920 --> 0:01:48.240 one point six trillion dollars worth of debt and like 0:01:48.840 --> 0:01:51.640 a lot of that, about a trillion of it I 0:01:51.680 --> 0:01:55.360 think a little less than a trillion has been generated 0:01:55.400 --> 0:01:57.960 since two Yeah, I mean there are a lot of 0:01:58.400 --> 0:02:01.160 progressives in this country. That's a you want to really 0:02:02.440 --> 0:02:05.800 kick start the economy in a long, permanent way, just 0:02:05.840 --> 0:02:09.440 forgive all these student debts. Yeah, and other people say 0:02:09.840 --> 0:02:14.240 you're a communist. Some people do. Um, yeah, you know. 0:02:14.320 --> 0:02:17.440 I should go ahead and preface this with my personal experience. 0:02:18.120 --> 0:02:21.640 I did not get a student loan. I went to 0:02:21.720 --> 0:02:23.880 school and college. You were a little behind me, but 0:02:25.160 --> 0:02:27.760 it wasn't as big of a thing back then. No, 0:02:27.919 --> 0:02:30.880 I saw in the nineties that average student loan debt 0:02:30.919 --> 0:02:33.920 for a bachelor degree, not a year, not a minute, 0:02:35.000 --> 0:02:38.600 a bachelor's degree was nine grand. Yeah, college used to 0:02:38.600 --> 0:02:41.960 be a lot cheaper. Um. State universities are still, you know, 0:02:42.480 --> 0:02:44.720 not the most expensive. But when I was going to 0:02:44.840 --> 0:02:48.480 University of Georgia, dude, it was like tuition for a 0:02:48.560 --> 0:02:51.239 full load for a quarter was something like six dollars. 0:02:52.000 --> 0:02:57.400 Not that much money in like pot, especially at Georgia's. 0:02:57.480 --> 0:03:01.200 So when my parents got to worced that part of 0:03:01.240 --> 0:03:04.800 the divorce was them, uh selling a couple of things, 0:03:04.840 --> 0:03:08.160 like we had an airstream camper and not like things 0:03:08.200 --> 0:03:11.880 that clearly the family wouldn't be using anymore. Uh. And 0:03:11.919 --> 0:03:14.760 so they agreed, like, let's sell these couple of things. 0:03:14.840 --> 0:03:17.440 And Chuck's the last one going through because my brother, 0:03:17.480 --> 0:03:19.840 of course had an academic scholarship. Of course, I didn't 0:03:19.840 --> 0:03:23.359 have to pay for anything. Uh, Chuck's he needs that 0:03:23.400 --> 0:03:25.720 money for school because he's not getting anything. He needs 0:03:25.720 --> 0:03:29.200 that camper money. I needed that camper money. So they said, 0:03:29.240 --> 0:03:30.840 let's put that in an account for Chuck to go 0:03:30.880 --> 0:03:34.440 to school. Uh. That lasted me a two or two 0:03:34.600 --> 0:03:38.680 or three years. Camper money did yeah, because Georgia was 0:03:38.680 --> 0:03:42.160 so cheap. It was a heck of a camper two Okay, 0:03:42.960 --> 0:03:44.840 but yeah, Georgia was really cheap and I was in 0:03:45.000 --> 0:03:47.800 living there was cheap and books were pretty cheap. Uh 0:03:47.840 --> 0:03:50.040 So that lasted me a few years. And then after that, 0:03:50.160 --> 0:03:52.880 I just, um, you know, I've been working since I 0:03:52.920 --> 0:03:55.000 was thirteen. Anyway, I was gonna say, you had a 0:03:55.080 --> 0:04:00.320 job throughout the yeah, totally. Um, And I just kept 0:04:00.440 --> 0:04:03.040 paying for my college after that. It wasn't like some 0:04:03.160 --> 0:04:05.400 big like, hey, I'm gonna pay for my school starting 0:04:05.440 --> 0:04:07.760 from now. I was just like, well, that money's gone, 0:04:07.760 --> 0:04:09.600 so I need to I'm not gonna ask my parents 0:04:09.600 --> 0:04:11.760 for it. Like I've been working since I was a teenager. 0:04:11.840 --> 0:04:14.400 They sold their camper, so I'll just keep working and 0:04:14.440 --> 0:04:17.760 pay for my my remaining education. And it was not 0:04:17.839 --> 0:04:19.880 that big of a deal. I live very well in college. 0:04:19.960 --> 0:04:22.160 You know what that's called is pulling yourself up by 0:04:22.160 --> 0:04:25.360 your bootstraps nineties style. I don't even feel like it 0:04:25.440 --> 0:04:26.919 was though. I was just like, hey, I wait tables 0:04:26.960 --> 0:04:29.040 and make pretty good money. I can afford that six 0:04:29.080 --> 0:04:31.960 hundred bucks a quarter. The thing is is like the 0:04:32.000 --> 0:04:37.080 idea of being able to live as a college student 0:04:37.520 --> 0:04:40.239 and pay for college and feel like you're doing fine 0:04:40.839 --> 0:04:48.520 waiting tables is it's just outrageous, outlandish everything. I cannot 0:04:48.520 --> 0:04:54.680 imagine leaving Georgia with thirty thousand dollars of student debt. 0:04:54.839 --> 0:04:57.240 I cannot imagine that. And that's well, that's one of 0:04:57.279 --> 0:04:59.600 the things that makes all of those people who say 0:04:59.640 --> 0:05:02.560 like whiners, you took out these loans, you owe them. 0:05:02.560 --> 0:05:05.080 We paid off our student loans when we went to school. 0:05:05.240 --> 0:05:07.719 All those older people who are saying that are missing 0:05:07.760 --> 0:05:12.080 the point that college has gotten way more expensive than 0:05:12.080 --> 0:05:16.400 the last ten about tennis years for um a lot 0:05:16.440 --> 0:05:18.960 of different reasons, but it turns out largely because of 0:05:19.000 --> 0:05:23.440 an Obama era initiative to make higher education accessible to 0:05:23.480 --> 0:05:26.120 more people. There were just a couple of safeguards that 0:05:26.160 --> 0:05:28.560 were put in place that really let this thing run 0:05:28.680 --> 0:05:32.719 rampant um. And that if you say, like like I 0:05:32.760 --> 0:05:35.679 paid off my student loans with no problem, why can't you, 0:05:35.680 --> 0:05:38.640 you're missing the point that that it's different. It's a 0:05:38.680 --> 0:05:41.599 different world now. Things are different, and it used to 0:05:41.640 --> 0:05:45.640 be before. When you had your first real piece of 0:05:46.000 --> 0:05:49.719 life long or long term debt. It was a mortgage 0:05:49.760 --> 0:05:52.440 for a house. You were paying for that house, and 0:05:52.480 --> 0:05:55.720 you were virtually guaranteed that at the end of that mortgage, 0:05:55.760 --> 0:05:59.239 that last mortgage payment, what you paid for that house 0:05:59.680 --> 0:06:01.880 was going to be less than what the house was worth. 0:06:01.920 --> 0:06:07.040 Then it was an investment. Now we're putting out teenagers 0:06:07.600 --> 0:06:11.799 into the world who have in some cases mortgage level 0:06:11.839 --> 0:06:17.760 debt um without having any income yet whatsoever. And when 0:06:17.800 --> 0:06:21.279 they pay off that last bit of debt, there's nothing 0:06:21.400 --> 0:06:24.840 that was a value necessarily associated with it because they 0:06:24.839 --> 0:06:27.599 had to get a college degree just to try to 0:06:27.640 --> 0:06:31.040 get a job. Whereas before it was like you got 0:06:31.080 --> 0:06:34.080 a college degree, and you you automatically, we're going to 0:06:34.120 --> 0:06:36.560 get a good paying a job. Are certainly a better 0:06:36.640 --> 0:06:38.440 paying job than you would have gotten with the high 0:06:38.440 --> 0:06:41.919 school diploma. It's a different world now, definitely, you probably 0:06:41.960 --> 0:06:43.719 don't get a student one either. Did you know, I 0:06:43.839 --> 0:06:48.159 luckily didn't need them. They had the Oh what was 0:06:48.240 --> 0:06:52.000 that the lottery paid for? Yeah? I think when you 0:06:52.160 --> 0:06:55.000 came along, that was in place. That started right as 0:06:55.040 --> 0:06:57.120 I was leaving. I think first year for me, was 0:06:57.120 --> 0:06:59.279 it the pel or was it it was the Georgia 0:06:59.320 --> 0:07:02.600 lottery pay for it? Uh? Man, I can't remember. I 0:07:02.600 --> 0:07:04.320 can't remember the name of it either, but it was 0:07:04.360 --> 0:07:06.599 a kind of grant that like like, yeah, you had 0:07:06.600 --> 0:07:08.560 basically a free ride in school if your d p 0:07:08.680 --> 0:07:11.800 A was high enough at an in state school, that's right, 0:07:12.080 --> 0:07:15.720 great deal. Yeah, and if you are a student, hope, Hope, 0:07:15.760 --> 0:07:17.920 that's it, hope, because I just remembered all of the 0:07:18.040 --> 0:07:21.120 parents saying you better not lose that Hope grant. I 0:07:21.120 --> 0:07:22.880 think it was like it was at three point or something, 0:07:22.880 --> 0:07:26.040 three point to something like that, because something definitely attainable. 0:07:27.080 --> 0:07:30.119 So uh, I mean our first bit of advice, We're 0:07:30.120 --> 0:07:33.000 gonna pepper some advice in here as old old dudes. Oh, 0:07:33.280 --> 0:07:35.200 so I should say shout out to my dad. He 0:07:36.040 --> 0:07:38.840 once I inevitably lost the Hope grant, he stepped in 0:07:38.920 --> 0:07:42.640 and helped pay for college for me. Yeah, the herbal Elvis. 0:07:43.240 --> 0:07:47.040 So uh, we want to give out a few pieces 0:07:47.040 --> 0:07:50.080 of advice here and there. Um, avoid taking student loans 0:07:50.120 --> 0:07:53.200 if you can. Yeah, try and get as much free 0:07:53.200 --> 0:07:56.680 money as you can, grant scholarships. What I don't get 0:07:56.800 --> 0:08:01.960 is why so many parents of these children didn't set 0:08:02.000 --> 0:08:05.840 them up for college. What do you mean start saving 0:08:05.840 --> 0:08:09.280 for college? Like by the time my daughters graduating high school, 0:08:09.760 --> 0:08:11.560 all her college is going to be ready to go. 0:08:12.240 --> 0:08:15.480 So if she wants to go to college. Um. One 0:08:15.480 --> 0:08:19.440 of the things that this this Obama era initiative to 0:08:19.600 --> 0:08:23.760 expand higher education, one of the purposes of it was 0:08:23.840 --> 0:08:28.080 to make it so that people lower income families, um, 0:08:28.320 --> 0:08:33.480 had an easier opportunity to go to college. Yeah. So 0:08:33.559 --> 0:08:36.760 they basically said, come all, who want to borrow money 0:08:36.800 --> 0:08:40.560 to go to college, regardless of your ability to repay, well, 0:08:41.040 --> 0:08:43.400 go finish. But I want to amend my statements to 0:08:43.480 --> 0:08:47.120 go ahead and so so. Um. A lot of people 0:08:48.480 --> 0:08:51.720 who started to get to go to college, their families 0:08:51.760 --> 0:08:55.600 didn't have any money to put them through school. So um, 0:08:55.720 --> 0:08:58.360 they I think for people whose parents have been planning 0:08:58.400 --> 0:09:02.720 for very little change. But it was that an entire 0:09:02.880 --> 0:09:07.200 tranche of Americans that hadn't really had much access to 0:09:07.679 --> 0:09:10.440 higher education all of a sudden did starting in two 0:09:10.440 --> 0:09:14.920 thousand ten. Yes, to be crystal clear, was not talking 0:09:14.920 --> 0:09:18.080 about those people. Did their parents just set them up? 0:09:18.520 --> 0:09:21.600 Romney thing right, remember when he said that. No, he 0:09:21.679 --> 0:09:23.160 was like, why don't you just go borrow the money 0:09:23.160 --> 0:09:27.320 from your parents? When he was binders full of women. Uh, 0:09:27.480 --> 0:09:31.280 was that Romney who had binders. Um, now I'm talking 0:09:31.320 --> 0:09:36.280 about the the tranche of kids whose parents could afford 0:09:36.480 --> 0:09:38.800 to save money for their kids college and did not. 0:09:41.120 --> 0:09:42.880 I don't know. I think one of the other things, 0:09:43.200 --> 0:09:44.840 maybe there are a lot of parents who are like, 0:09:44.840 --> 0:09:46.720 you know what, this is your education, you pay for 0:09:46.760 --> 0:09:48.760 it yourself. I think there are also a lot of 0:09:48.800 --> 0:09:53.080 selfish people in that generation of parents, narcissists too. Uh, 0:09:54.160 --> 0:09:57.160 did not plan for that stuff for their children because 0:09:57.160 --> 0:09:59.400 they were busy taking care of themselves, but they blew 0:09:59.400 --> 0:10:05.719 it all on. Hey. I don't know, man, I'm not 0:10:06.000 --> 0:10:08.560 I'm not saying that, but I just want to make 0:10:08.559 --> 0:10:11.280 it clear. I was not talking about less fortunate people 0:10:11.280 --> 0:10:13.080 that are totally now able to go to school. I 0:10:13.080 --> 0:10:16.120 think that was good that you amended that. But if 0:10:16.160 --> 0:10:19.120 anybody didn't know that that you weren't saying that, they 0:10:19.120 --> 0:10:21.000 haven't listened to stuff. You should know very that's true. 0:10:21.000 --> 0:10:24.600 We haven't even started this podcast. It's gonna be three 0:10:24.640 --> 0:10:28.319 hours long. No, we'll we'll blaze through this. Uh. There 0:10:28.360 --> 0:10:31.720 are different types of student loans. The main two big 0:10:32.120 --> 0:10:35.000 groups are federal student loans and then private sector student 0:10:35.040 --> 0:10:39.360 loans and so so again, after you've exhausted all chances 0:10:39.400 --> 0:10:42.400 for grant scholarship, any kind of free money, and you 0:10:42.480 --> 0:10:45.480 turn to right the first ones you want to turn to, 0:10:45.679 --> 0:10:47.880 or the federal governments, because the loans you get from 0:10:47.920 --> 0:10:51.640 them are top quality as far as your being a 0:10:51.679 --> 0:10:54.280 borrower is concerned. That's right. And there are a few 0:10:54.280 --> 0:10:58.200 different kinds of those. They are direct subsidized, direct unsubsidized, 0:10:58.240 --> 0:11:01.520 and direct plus plus is capitalized all the way across 0:11:02.280 --> 0:11:07.199 subsidized direct loans. Um, the Department of Education as your lender. 0:11:07.360 --> 0:11:09.880 I didn't know any of this stuff. Well it's new, yeah, 0:11:09.920 --> 0:11:11.800 I mean, I was just surprised at some of this stuff. 0:11:11.800 --> 0:11:14.160 But it's not I'm sorry, it's not new. These member 0:11:14.240 --> 0:11:17.920 stafford Stafford loans. Yeah, that's what they used to call 0:11:18.000 --> 0:11:20.280 direct loan. Okay, I remember, it's basically the same thing, 0:11:20.360 --> 0:11:24.160 but it's just radically expanded since two thousand ten. Okay, 0:11:24.200 --> 0:11:29.000 So I don't I don't feel as old as I thought. So, Um, 0:11:29.200 --> 0:11:31.640 the Department of Education is going to cover the interest 0:11:31.720 --> 0:11:34.840 under a few circumstances. And the interest is you're gonna 0:11:34.880 --> 0:11:36.600 hear that word a lot. That's a big deal with 0:11:36.640 --> 0:11:39.120 any kind of loan or credit that you get. That's 0:11:39.200 --> 0:11:41.320 that's where they get you. And this is specifically the 0:11:41.400 --> 0:11:44.280 direct subsidized loan that they will cover the interest. That's 0:11:44.360 --> 0:11:49.480 right if uh, you were in school at least part time. Uh, 0:11:49.520 --> 0:11:51.720 that is one during the first six months after you 0:11:51.800 --> 0:11:55.280 leave school. Don't you have to graduate, but you've either 0:11:55.320 --> 0:12:01.920 graduated or disenrolled or whatever unenrolled been dishonorably question rulled 0:12:03.200 --> 0:12:07.720 or if your loans are in deferment um. Only undergraduates 0:12:07.720 --> 0:12:10.760 can get these. They are based on financial need and 0:12:10.800 --> 0:12:13.080 the school is going to say how much you can borrow. 0:12:13.120 --> 0:12:15.960 You can't just say like, yeah, tuition's ten grand, but 0:12:16.080 --> 0:12:18.640 i'd really like thirty. Well even if even if you 0:12:18.679 --> 0:12:22.400 could do that, these things are capped because the interest 0:12:22.480 --> 0:12:24.600 is covered by the Department of Ed, like you were saying, 0:12:24.600 --> 0:12:26.280 which is a big deal. So if you go to 0:12:26.320 --> 0:12:29.240 school full time for four years and get your bachelor's degree, 0:12:30.080 --> 0:12:34.000 that whole time, you're not accruing a penny of interest. Yeah, 0:12:34.040 --> 0:12:37.040 and that's a big, big deal, huge deal. But there's 0:12:37.080 --> 0:12:39.880 a cap on this on the amount that you can 0:12:39.920 --> 0:12:43.679 borrow if you're a dependent student, meaning that your parents 0:12:43.720 --> 0:12:46.079 still claim you as dependent on their taxes and they 0:12:46.080 --> 0:12:49.040 could conceivably help you out or whatever. They don't have 0:12:49.080 --> 0:12:52.280 campers to sell exactly, or they've sold all the campers 0:12:52.280 --> 0:12:56.640 and now they're tapped out. Um, you can conceivably borrow 0:12:56.960 --> 0:13:02.360 UM thirty five hundred dollars and have it be subsidized. 0:13:03.160 --> 0:13:06.079 And I think over the course of your college career 0:13:06.640 --> 0:13:11.120 it's something like, uh twenty three thousand dollars or something. No, 0:13:11.280 --> 0:13:15.679 I'm sorry, it's UM thirty one thousand dollars for a 0:13:15.679 --> 0:13:20.160 four year degree. UM that could possibly be subsidized, which, 0:13:20.160 --> 0:13:22.679 as we'll see, is not enough to cover a four 0:13:22.720 --> 0:13:26.120 year degree basically anywhere these days. I didn't I didn't 0:13:26.120 --> 0:13:27.679 tell you what the second thing they sold though. By 0:13:27.679 --> 0:13:33.000 the way, we had a food truck. What this is 0:13:33.040 --> 0:13:35.720 pre food truck. It was a trailer. Didn't even call 0:13:35.720 --> 0:13:37.400 it a food truck. You know what it was called? 0:13:37.640 --> 0:13:40.720 What the food factory? What? What kind of food? So 0:13:41.000 --> 0:13:43.400 my dad and my mom would go to these arts 0:13:43.400 --> 0:13:45.720 and crafts festivals and set up and sell like hot 0:13:45.760 --> 0:13:48.120 dogs and hamburgers and popcorn and stuff. And they still 0:13:48.160 --> 0:13:52.160 got a divorce after that kind of experience together. Some 0:13:52.280 --> 0:13:56.800 might say it had a direct correlation burned the popcorn again. 0:13:57.200 --> 0:13:59.320 So they sold the airstream in the food factory. Wow, 0:13:59.440 --> 0:14:02.120 we so would they sleep in the air stream and 0:14:02.120 --> 0:14:04.640 the food factory would tow the air stream? No? No, no, 0:14:04.720 --> 0:14:07.079 these were just local things. She goes set up for 0:14:07.120 --> 0:14:09.440 the weekend at the Yellow Daisy Festival in sal hamburgers 0:14:09.440 --> 0:14:11.960 all weekend to rednecks. Did they do it for fun? No, 0:14:12.080 --> 0:14:13.800 they did it to make money. My dad was always 0:14:13.800 --> 0:14:16.760 trying to make extra money. He always had these, Uh. 0:14:16.800 --> 0:14:18.880 I don't know about get rich quick schemes because they 0:14:18.920 --> 0:14:22.280 weren't but make a just enough money to cover the 0:14:22.280 --> 0:14:26.240 cost schemes. Yeah, he was great schemes. Yeah, it's funny. 0:14:26.240 --> 0:14:28.160 My brother's kind of the same way, but he's actually 0:14:28.160 --> 0:14:32.320 smart and uh and it does make money on the side, 0:14:34.480 --> 0:14:38.720 I said, way too much direct unsubsidized Our Wikipedia page 0:14:40.280 --> 0:14:44.160 so annoying. Uh, these unsubsidized direct loans you can get 0:14:44.560 --> 0:14:48.200 undergraduate and graduate students. Uh, they're not based on your 0:14:48.200 --> 0:14:50.440 financial need, even though the school is still going to 0:14:50.520 --> 0:14:54.560 say how much you can borrow. It can't be more 0:14:54.640 --> 0:14:58.440 than the costs to attend the school obviously, Um, and 0:14:58.520 --> 0:15:01.400 the interest rate is probably pretty low, but you are 0:15:01.440 --> 0:15:04.480 going to pay interest and they're accruing interest over the 0:15:04.560 --> 0:15:09.120 life of the loan. Um. That's a big deal. It's 0:15:09.240 --> 0:15:14.800 it's basically like like you're it's you're still accruing interest. 0:15:14.880 --> 0:15:17.240 So it's like a regular loan. But what makes it 0:15:17.320 --> 0:15:20.320 so much more attractive than say, like a private loan, 0:15:20.360 --> 0:15:23.040 which we'll talk about, is that the interest rate is 0:15:23.080 --> 0:15:27.000 fixed and it's low. The government's like, we're not trying 0:15:27.040 --> 0:15:30.000 to like screw you over anything like that. We're gonna 0:15:30.040 --> 0:15:32.760 loan you money. It's still alone, but we're gonna make 0:15:32.800 --> 0:15:35.200 the terms pretty good to just bend over and we'll 0:15:35.200 --> 0:15:39.040 make a deposit. You're still going to Wow. We where 0:15:39.160 --> 0:15:42.440 they're like teens getting ready for college listening to this 0:15:42.560 --> 0:15:45.520 with their parents right now. They get it. Yes, kids, 0:15:45.560 --> 0:15:48.840 ask your parents what Chuck just meant. They get it. Um. Okay. 0:15:48.920 --> 0:15:52.040 So there's direct subsidized, there's direct unsubsidized, and then there's 0:15:52.080 --> 0:15:54.720 the one that comes from the federal as that most 0:15:54.760 --> 0:15:59.320 resembles like a regular private lender bankload. That's the direct 0:15:59.400 --> 0:16:02.560 plus loan. Do you know what plus stands for? No? 0:16:02.840 --> 0:16:05.560 I should have looked that up. This is a house 0:16:05.560 --> 0:16:09.000 stuff Works article. By the way, very thorough. Um, I 0:16:09.040 --> 0:16:13.200 wasn't telling you I want to know to Uh, all right, 0:16:13.200 --> 0:16:16.520 so you look that up, but rare in show look up, Um, 0:16:18.280 --> 0:16:20.760 federal student loans. These are the direct plus. They are 0:16:20.760 --> 0:16:25.840 federal student loans UM borrowed by your parents or if 0:16:25.880 --> 0:16:29.280 you're a graduate student or a professional student. Let's say, 0:16:29.680 --> 0:16:34.520 what is it parent loan for undergraduate student whether you 0:16:34.560 --> 0:16:36.400 have it? Okay, but it doesn't really make sense in 0:16:36.440 --> 0:16:40.880 a second, Uh, really what am I missing? Then? Just 0:16:40.920 --> 0:16:44.080 go ahead? Okay, Um, if your parents are eligible, is 0:16:44.120 --> 0:16:45.880 just going to be based like your regular loan, on 0:16:45.920 --> 0:16:49.040 their their credit score and that kind of thing, and 0:16:49.520 --> 0:16:52.880 the cost of attendance where you're going to be going 0:16:52.920 --> 0:16:55.840 to school or enrolling in school is going to set 0:16:55.880 --> 0:16:58.920 that limit again kind of like the other ones. But 0:16:59.040 --> 0:17:02.040 your parents are just king this loan and these are unsubsidized, 0:17:02.080 --> 0:17:06.399 so they're unsubsidized. You can also borrow for an entire education, 0:17:06.960 --> 0:17:09.080 and you can also use them not just for undergrad 0:17:09.160 --> 0:17:12.040 but for graduate school too, which is why it doesn't 0:17:12.080 --> 0:17:16.160 make sense because the grad plus loan means graduate parent 0:17:16.280 --> 0:17:21.040 loan for undergraduate students. Somebody didn't think that one through. Um, 0:17:21.080 --> 0:17:25.760 Thanks Obama, but with with the with the plus loans um, 0:17:25.800 --> 0:17:29.359 that cost of attendance is a really big deal. And 0:17:29.400 --> 0:17:32.600 it's true with any loan. Every school you go to 0:17:33.359 --> 0:17:36.080 has the cost of attendance. And every year they calculate 0:17:36.440 --> 0:17:42.280 how much it costs for everything, for tuition, fees, books, transportation, 0:17:42.920 --> 0:17:45.920 room and board, everything, how much it will cost the 0:17:46.040 --> 0:17:51.280 out of the person pot um to go to the 0:17:51.320 --> 0:17:53.879 school for a year. But the problem and you can 0:17:53.920 --> 0:17:56.080 borrow up to that amount. You can't borrow pass to 0:17:56.119 --> 0:17:57.720 each borrow up to that amount. So you can say 0:17:57.760 --> 0:18:00.000 I'm borrowing and I don't need to spend a penny 0:18:00.040 --> 0:18:02.679 other than what I borrowed. The problem is is it 0:18:02.720 --> 0:18:06.280 may cost you less to go to school than that 0:18:06.480 --> 0:18:10.520 average amount, and so you've borrowed up to that amount, 0:18:10.520 --> 0:18:12.680 which means you're paying interest on money you don't need. 0:18:13.560 --> 0:18:16.040 And there's when you get these loans. There's a lot 0:18:16.119 --> 0:18:19.480 of different things, a lot of different processes there that 0:18:19.640 --> 0:18:21.679 it's going to go through. But the upshot of all 0:18:21.720 --> 0:18:24.520 of them is it doesn't come to you. It goes 0:18:24.560 --> 0:18:27.600 to the school. Never knew that. I didn't either, But 0:18:27.640 --> 0:18:29.840 the school says, okay, let's deduct for this and this 0:18:29.920 --> 0:18:32.840 and this, and oh, they have the scholarship, so we 0:18:32.880 --> 0:18:34.840 can take that out. They have this grant, we can 0:18:34.880 --> 0:18:38.040 take that out, and let's say that there's some money 0:18:38.119 --> 0:18:41.280 left over there. Then they will send you a check 0:18:41.400 --> 0:18:44.639 or deposit it directly into your account. But when they 0:18:44.640 --> 0:18:48.800 do that, you would be very wise to say, no, no, no, 0:18:48.920 --> 0:18:50.879 you guys, hold onto this. I'm gonna use it for 0:18:50.960 --> 0:18:53.080 next year. You can just roll that right on over. 0:18:53.440 --> 0:18:56.879 That's the best thing you could do with a bad situation. 0:18:57.080 --> 0:18:59.040 And the reason it's a bad situation is because you 0:18:59.080 --> 0:19:04.159 have borrowed too much and now you're paying interest on 0:19:04.400 --> 0:19:07.080 money that's just sitting there for a year in the 0:19:07.119 --> 0:19:10.119 school's coffers. They're actually making money off of that interest. 0:19:10.359 --> 0:19:12.720 You're paying interest on that money you're not using until 0:19:12.800 --> 0:19:14.800 next year. So the best thing you can do is 0:19:14.840 --> 0:19:16.960 really try to calculate the best you can, down to 0:19:17.000 --> 0:19:19.640 the penny, how much money you really need to borrow, 0:19:20.160 --> 0:19:22.600 and borrow that amount and not just borrow the cost 0:19:22.680 --> 0:19:24.880 of attendance because it might be less than that. Yeah, 0:19:24.960 --> 0:19:28.080 is the school really making money on that? Sure? Yeah. 0:19:28.119 --> 0:19:31.840 Anytime any institution has money that they're holding, they make 0:19:31.880 --> 0:19:33.800 interest off of it. I didn't know if it was 0:19:33.840 --> 0:19:36.159 like an s grow situation. I don't know, alright, I 0:19:36.200 --> 0:19:39.600 don't know. That's a good point. So that's a great point. 0:19:40.040 --> 0:19:42.280 Oh I thought you were You said you knew for sure. 0:19:42.359 --> 0:19:44.720 You just were thinking, Hey, they got the money in 0:19:44.760 --> 0:19:47.640 the bank. They're making some money. Basically, like Tony from 0:19:47.720 --> 0:19:52.240 Jersey would think. So, Uh, here's the deal. If you 0:19:53.200 --> 0:19:56.720 some private schools are really really expensive. Uh, you might 0:19:56.800 --> 0:19:59.040 not be able even if you max out, you may 0:19:59.080 --> 0:20:00.679 not be able to cover the call of your school. 0:20:02.560 --> 0:20:04.280 Take it or leave it here some more advice from 0:20:04.280 --> 0:20:08.560 your uncle Chuck. Don't go to one of the schools. Yeah, 0:20:08.960 --> 0:20:11.919 just don't do it. Go to a school you can afford. 0:20:12.720 --> 0:20:15.200 Because you know what, it doesn't matter. The one thing 0:20:15.240 --> 0:20:18.800 I saw, get that college degree. How many people have 0:20:18.920 --> 0:20:23.240 been like, oh, well, I mean there are some prestigious schools, 0:20:23.240 --> 0:20:27.480 sure where that really does matter that them. I don't 0:20:27.480 --> 0:20:29.480 think it really matters. I think it's more than the 0:20:29.720 --> 0:20:33.440 networking that's available to you those schools. That's what they 0:20:33.440 --> 0:20:38.080 say is necessarily a degree these days, I think. But 0:20:38.119 --> 0:20:39.760 the thing is they go to a big state school 0:20:39.800 --> 0:20:42.480 with so many more students in such a bigger net 0:20:43.359 --> 0:20:45.800 the thing I saw that was, like, the most foolish 0:20:45.800 --> 0:20:48.520 thing you can do is to go to a state 0:20:48.600 --> 0:20:53.800 school that's out of state for you, because you get 0:20:53.800 --> 0:20:56.160 at that state school is going to be virtually identical 0:20:56.280 --> 0:20:58.479 to the education you get at the in state school, 0:20:58.800 --> 0:21:01.000 but you're paying three to four times as much for 0:21:01.040 --> 0:21:03.280 that same education. But your parents don't live an hour 0:21:03.440 --> 0:21:06.520 I guess so. I guess so. But surely there's another 0:21:06.640 --> 0:21:09.879 state school four hours away or two hours away or whatever. 0:21:10.240 --> 0:21:12.800 I get wanting to be a your parents or whatever. 0:21:12.840 --> 0:21:16.920 I totally get that, but like, figure out another way, 0:21:17.080 --> 0:21:19.600 Like going to a different state school is a not 0:21:19.760 --> 0:21:22.080 a good idea, agreed, And you know you can just 0:21:22.400 --> 0:21:25.760 flush all this advice down the toilet. Kids, But um, 0:21:25.800 --> 0:21:27.800 what you really shouldn't do, I think, is go to 0:21:27.840 --> 0:21:32.600 that super expensive private school that has like students because 0:21:32.600 --> 0:21:38.280 you're not. The networking opportunities there are so slim, you know. Well, 0:21:38.800 --> 0:21:42.800 they say that people who borrow for a litteral liberal 0:21:42.920 --> 0:21:47.639 arts degree um typically have the hardest time repaying it, 0:21:48.240 --> 0:21:51.639 even if they come from the socio economic class that 0:21:51.720 --> 0:21:53.800 is more likely to repay it, that could repay it 0:21:54.320 --> 0:21:58.600 because the wages don't pan out to be anything that 0:21:58.600 --> 0:22:00.879 that can really pay off a really so you have 0:22:00.920 --> 0:22:05.920 a really expensive education and then reading poetry. Yeah that 0:22:05.920 --> 0:22:08.920 that that that doesn't graduate well. And it's not all 0:22:08.920 --> 0:22:12.600 about money totally. I totally get that. Chuck gets that too. 0:22:12.800 --> 0:22:14.800 That's not that's not the point, and it's not the 0:22:14.840 --> 0:22:17.919 answer to to everything. Money is not the answer to everything. No, 0:22:18.640 --> 0:22:22.360