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Speaker 1: Welcome to out of money.

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Speaker 2: I'm Joel and I am Matt.

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Speaker 1: Yes he is, and today we're talking about the impending

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Speaker 1: student loan cliff.

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Speaker 2: That's right, buddy, we are talking about student loans, and

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Speaker 2: it's there's a good reason for us to talk about

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Speaker 2: this because there are changes on the horizon. Even though

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Speaker 2: I personally am not affected, I am actually fortunate. Either

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Speaker 2: Kate nor I were fortunate enough some would say privileged

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Speaker 2: enough to not have any student loans by the time

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Speaker 2: we are we know ever, but certainly when we graduated,

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Speaker 2: Emily and I we both had student loans, and we're

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Speaker 2: currently paying cash for her grad school, so we've paid

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Speaker 2: for education over here, but it's paid a little bit

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Speaker 2: of a little bit of interest on your your higher education.

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Speaker 1: I will say we were lucky when when we graduated,

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Speaker 1: rates words were crazy, crazy low on the student loans.

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Speaker 1: So it but there's a lot of good news for

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Speaker 1: people who have student loans. If you're like the erabous

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Speaker 1: about what's coming this fall, yes there's a cliff coming,

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Speaker 1: but that cliff has been I don't know, there's like

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Speaker 1: a soft pad at the bottom of the cliff for

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Speaker 1: a lot of people, given kind of all the changes

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Speaker 1: that are that have occurred. We're going to discuss all

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Speaker 1: that today.

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Speaker 2: It's like one of those blow up mattresses the firefighters,

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Speaker 2: but right there's a jumper where they're like, as long

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Speaker 2: as you land within the circle exactly, we think that

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Speaker 2: there is a maybe a soft landing ahead for you.

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Speaker 1: But Matt, before we get to that, I just wanted

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Speaker 1: to mention really quickly that one of my tenants, they

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Speaker 1: reached out for the email and they said, Hey, we're

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Speaker 1: thinking about changing the way we pay you every month.

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Speaker 1: Is that okay? And I was like, well, we can

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Speaker 1: pay you in pennies. What's you thinking? That would be

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Speaker 1: messed up?

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Speaker 2: Pay you in greasy pennies? Coded and motor oil I did.

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Speaker 2: It was a story we talked about like three yeah,

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Speaker 2: two three years ago.

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Speaker 1: I made a bet one time with a friend and

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Speaker 1: he about whether or not one one player was going

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Speaker 1: to make the All Star Game. I won the bet

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Speaker 1: and he paid me in pennies. You're so man, but

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Speaker 1: what you get right? But so no, my tenant was like, Hey,

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Speaker 1: I think I'm gonna pay with this this thing called

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Speaker 1: the built master Card. And I was like, I'm so.

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Speaker 2: Proud of them I know about the built card.

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Speaker 1: Ye talk about that all the time. I was like,

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Speaker 1: this is going to add one small extra hassle every

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Speaker 1: week or every month right when I collect rent, because

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Speaker 1: now I have to actually like take a picture of

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Speaker 1: the check and deposit it. But still not really that

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Speaker 1: big of a deal. And the tenant now gets the rewards.

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Speaker 1: And I've never I haven't been on the receiving.

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Speaker 2: End yet someone using it. Sure can't you enroll in

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Speaker 2: within the belt program the platform and then it gets

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Speaker 2: sent directly to you? Is that?

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Speaker 1: Is that not correct? Oh? As a landlord? Yeah, dude,

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Speaker 1: I should have thought of that, and I don't. I

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Speaker 1: haven't even thought of that now, So I don't know.

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Speaker 1: I haven't.

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Speaker 2: Like obviously we've talked about all the show and I

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Speaker 2: know something about it, But like, do you actually get

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Speaker 2: rewards too, like as as the receiver, No.

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Speaker 1: I don't think so that's just the pay. But it's

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Speaker 1: just a good reminder too, you have boom. You don't

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Speaker 1: need to keep your iPhone after all, you don't need that.

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Speaker 1: Nicer Cameron, No, that pictures of the checks the pixel

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Speaker 1: camera was just fine, but it's important mentioned to to

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Speaker 1: people out there who are renting. This is the built

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Speaker 1: Master card. It's the only card out there that rewards

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Speaker 1: you for paying your rent with a credit card. And

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Speaker 1: so obviously, as Matt and I always say, be responsible

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Speaker 1: with your credit card. If you can't pay the balance

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Speaker 1: off on time and in full every month, it's not

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Speaker 1: for you skip it, but it's mortgage can yeah, and

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Speaker 1: mortgage payers they don't get the same perk, but but

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Speaker 1: renters do. So the built Master Parts School, We've got

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Speaker 1: a review. We'll link to that in the show notes.

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Speaker 1: But I was like, I was just so proud of

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Speaker 1: my tenant earning rewards on that payment, like.

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Speaker 2: A proud parent. Do you have like a sense of

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Speaker 2: like a paternal sort of feeling towards your tenants in

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Speaker 2: a certain way.

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Speaker 1: Not really, I mean there's sometimes I can, Like I

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Speaker 1: told him, I was like, oh, dude, because I want

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Speaker 1: some congrats.

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Speaker 2: But I want them to do well and when they're

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Speaker 2: making the right financial decisions, because like you get to

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Speaker 2: know them and their finances a little bit in the

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Speaker 2: screening process. I'm rooting for them, but I try not

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Speaker 2: to bring it up as a topic. You know, I

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Speaker 2: don't bring it up. But when they, for instance, are

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Speaker 2: paying on time, and when you know that maybe they

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Speaker 2: had an issue with that, or or maybe they had

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Speaker 2: a bunch of debts in the passing. Granted, I don't

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Speaker 2: know how caught up they might be now like at

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Speaker 2: the time I knew where they were when it came

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Speaker 2: to screening. But even still, the ability to not only

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Speaker 2: sometime paying on time, but even paying slightly early, it all,

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Speaker 2: it just it bodes well, right Like it makes me

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Speaker 2: think that, Okay, I think they're doing a good job

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Speaker 2: over there, makes me feel feel good about what it

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Speaker 2: is that they're up to. But cool man.

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Speaker 1: Yeah.

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Speaker 2: Again, We'll make sure to link to that built card

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Speaker 2: review if you are looking, if you are interested in

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Speaker 2: getting one of those, we'll link to that there in

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Speaker 2: the show notes. Let's introduced the beer that we're going

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Speaker 2: to enjoy during this episode. Buddy, This is an IPA

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Speaker 2: and I know that because on the can here from

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Speaker 2: Japan it says beer I PA.

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Speaker 1: It's literally the only thing you can read.

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Speaker 2: And there's a bunch of Japanese on there, and actually

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Speaker 2: I looked it up, and so we know the actual

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Speaker 2: name of the brewery of the brewery now, but I'm

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Speaker 2: not going to try to say it it's a total

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Speaker 2: mouthful except for people what they want to hear. So

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Speaker 2: waku wako that's I'll say that part. But you sound

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Speaker 2: like Fozzy from the Muppets right now. Waka waka waku

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Speaker 2: waku tezukori farm kawakita.

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Speaker 1: I guess this is a very good I think I'll

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Speaker 1: give you an A plus one.

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Speaker 2: That's again from Julia. We're looking forward to uh enjoy

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Speaker 2: do I just maybe did you ever watch the wedding

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Speaker 2: singer back in the day?

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Speaker 1: Julia? Julia?

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Speaker 2: Gulia, Uh, Juli. We're not making fun of your name,

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Speaker 2: unless I guess your last name was Gulia, which I

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Speaker 2: don't think it is. But we will let everyone know

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Speaker 2: our thoughts on this beer at the end of the episode.

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Speaker 1: For sure. I always fun to have something a little,

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Speaker 1: a little out there from the other side of the world.

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Speaker 1: So literally, you would have to go to Japan in

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Speaker 1: order to try this beer, which is here. We are

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Speaker 1: in a shortlist of places to visit. By the way,

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Speaker 1: for real, I want to catch a baseball game in Japan?

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Speaker 1: Is that going to be our next the next couple's trip?

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Speaker 1: Maybe maybe next year. That's so, that's an expensive flight.

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Speaker 1: They got a great coffee culture over there too, do they? Yeah,

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Speaker 1: Oh my god, you don't know about this. No, oh,

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Speaker 1: you got a good coffee culture. There's a YouTube rabbit

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Speaker 1: hole you can go down there.

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Speaker 2: Yes, yes, Okay, dude, like I don't spend enough on

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Speaker 2: uh coffee coffee paraperialia us.

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Speaker 1: All right, well let's get to the topic and hand Matt,

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Speaker 1: we're talking about the impending student Luan Cliff, and it

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Speaker 1: made me think, Yeah, I'm guessing there's some how to

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Speaker 1: money listeners out there, myself included, who have had a

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Speaker 1: health issue that maybe they chose to ignore for a

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Speaker 1: little while, maybe there was like a mole on their back,

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Speaker 1: and they're like, eh, I'll get a checked out at

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Speaker 1: some point in the future. And you know you should

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Speaker 1: go see a dermatologist. Right, So it's the ABC's right.

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Speaker 1: You look for what is it, asymmetry, the border and

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Speaker 1: the color. I still know that I remember from dude.

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Speaker 2: It was all those days of sitting in the dermatologist's

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Speaker 2: office as a teenager with all my zits. All right, well,

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Speaker 2: now I'm reading the skin cancer. Now I could run

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Speaker 2: my skin issues by you before I go see a pro.

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Speaker 2: ABC's asymmetry border and color. If you got some irregular

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Speaker 2: irregularities there, buddy, you might want to go and get

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Speaker 2: that thing looked at it. Right Well, no, I'm fine

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Speaker 2: right now, at least as far as I know. I mean,

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Speaker 2: have you had Emily look you over. We have, It's

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Speaker 2: the end of the summer. You just spent a lot

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Speaker 2: of time outside.

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Speaker 1: I'll ask her tonight. I got your back, okay. Well,

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Speaker 1: And the truth is, some of those little things could

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Speaker 1: be like, not a big deal. It could be completely

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Speaker 1: it could be not a problem. You might be overanalyzing, overthinking.

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Speaker 1: You're like, it's regular old mole, literally just a mole.

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Speaker 1: Get not a big deal. Sure, but you could be

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Speaker 1: risking something though by doing nothing. And the longer we

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Speaker 1: kick the can down the road, the bigger the problem

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Speaker 1: can become. It can negatively affect your health and then

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Speaker 1: your finances because now you're paying for, you know, a

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Speaker 1: bigger procedure to get that resolved, and a skin issue

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Speaker 1: that could have maybe been resolved with a quick in

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Speaker 1: office visit. Now it's like you got to see the

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Speaker 1: surgeon or something like that. And you know, we might

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Speaker 1: have given this episode an intense title, but the truth is,

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Speaker 1: tens of millions of folks feel like there's this impending

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Speaker 1: cliff coming in October when payments resume, like they're walking

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Speaker 1: the plank or something like that. To take it back

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Speaker 1: to kind of the I just finished reading Treasure Island,

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Speaker 1: so I guess I have Pirates on the mind. That's a

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Speaker 1: good one. It's just revisiting some of the classics, is

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Speaker 1: what I'm doing. But we're going to talk about that

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Speaker 1: and the impending reality, basically what to do about it

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Speaker 1: so that you can have a plan and so that

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Speaker 1: you can rest easier, maybe maybe see that giant patting

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Speaker 1: at the bottom of that cliff and sure not feel

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Speaker 1: as daunted by what's coming.

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Speaker 2: Yeah, you might still lose your lunch as your folly,

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Speaker 2: but the actual impact isn't going to be what you

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Speaker 2: thought it would be. But the biggest problem, man, is that, honestly,

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Speaker 2: like a lot of folks, they just didn't use the

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Speaker 2: payment pause as the financial catalyst that it could have been. Instead,

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Speaker 2: we kick the can down the road. Instead of getting

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Speaker 2: that mole checked out, you just keep waiting and boom,

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Speaker 2: all of a sudden, Yeah you got to go under

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Speaker 2: the knife. It's something that we've just a lot of

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Speaker 2: folks have avoided is paying any attention to their student loss,

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Speaker 2: and not only just on borrowers' behalf, Like not only

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Speaker 2: on you know that is this something that they did,

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Speaker 2: but the government did as well. This is something that

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Speaker 2: kept getting prolonged, which only cemented the out of sight,

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Speaker 2: out of mind sort of mindset that I think a

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Speaker 2: lot of folks took towards their student loans.

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Speaker 1: People started to think, oh, sure, payments are going to resume,

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Speaker 1: because like by the fifth kick the can, you're like

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Speaker 1: maybe again, And especially when we were talking about forgiveness

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Speaker 1: and all that kind of stuff, and I think people

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Speaker 1: just assumed understandably, so, hey, guess what these student loans,

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Speaker 1: somebody else is gonna take care of them.

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Speaker 2: Yeah, but it's honestly, it's something that we have been

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Speaker 2: recommending for folks to do, you know, like not having

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Speaker 2: to make any payments for three and a half years.

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Speaker 2: It could have been massively helpful, and honestly it was

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Speaker 2: for some We've heard from a ton of how to

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Speaker 2: money listeners who made hay while the sun was shining

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Speaker 2: right they saved up a massive nest egg to pay

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Speaker 2: off a big chunk all at once, or even to

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Speaker 2: eliminate those loans altogether. But that wasn't the case for everyone,

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Speaker 2: as you might imagine. A recent survey found that one

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Speaker 2: in three borrowers spent money instead of saving it because

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Speaker 2: they thought that they wouldn't have to actually pay their

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Speaker 2: loans back, because all.

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Speaker 1: The messaging was telling them that it's going to be true.

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Speaker 2: Yeah, those forgiveness attempts by the government, they actually hurt

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Speaker 2: people financially because they ended up counting their chickens before

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Speaker 2: they hash.

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Speaker 1: Right.

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Speaker 2: It makes me think one of our favorite quotes from

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Speaker 2: Morgan Housel, which is save like a pessimist and invests

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Speaker 2: like an optimist. And so we're looking at the saving

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Speaker 2: like a pessimist side of that quote, and folks did

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Speaker 2: the exact opposite. They spent like optimists. They spent like

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Speaker 2: this was going to continue. It just only reinforces like

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Speaker 2: recency bias, where you're only looking at the past, like

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Speaker 2: just the recent period of time, and you're thinking that

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Speaker 2: things are going to continue like they have been. There's

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Speaker 2: another another paper from the University of Chicago, and they

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Speaker 2: found that borrowers whose payments were paused, and this is

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Speaker 2: regardless of their income, they took on more credit card.

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Speaker 2: They took on more mortgage and auto loan debt than

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Speaker 2: borrowers whose payments weren't on hiatus. It's clear that there

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Speaker 2: are a lot of folks who did the exact opposite

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Speaker 2: thing that they should have done, and there's it's almost

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Speaker 2: like there's a reckoning. But the good news is that

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Speaker 2: there are some things, like you said, that are going

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Speaker 2: to help lessen the fall as we approached that cliff.

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Speaker 1: Yeah, and so we'll get to that. That's that's really

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Speaker 1: we're going to talk about here in just a bit.

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Speaker 1: That the Save Plan is what it's known as, and

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Speaker 1: there's a whole lot of stuff to talk about on

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Speaker 1: that and how it's going to change your life if

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Speaker 1: you're a student loan borrow Really it's going to change

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Speaker 1: your finances in a big way. But at that same

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Speaker 1: paper you just referenced, the one from the University of Chicago,

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Speaker 1: it said that American households live in hand to mouth fashion.

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Speaker 1: Is what they said. They just spend whatever comes in, which,

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Speaker 1: in my experience and from what we see, isn't terribly

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Speaker 1: far from the truth. Right, three quarters of the people

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Speaker 1: in the survey you just mentioned said they were confident

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Speaker 1: that debt relief was coming. They believed it was coming,

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Speaker 1: and so they spent like it was bound to happen.

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Speaker 1: And now fifty eight percent of folks say they're unprepared

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Speaker 1: for student loan payments to resume. And we again, we

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Speaker 1: totally understand why people feel this way. It kind of

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Speaker 1: felt like the wol was pulled over your eyes. You

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Speaker 1: were told something that didn't end up being true. The

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Speaker 1: confidence with which student loan forgiveness was proposed and almost implemented,

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Speaker 1: it led a lot of people to believe that they

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Speaker 1: weren't going to be on the hook for the remainder

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Speaker 1: of their loans, or that a big chunk was going

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Speaker 1: to be forgiven, which was going to give you more

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Speaker 1: breathing room. They planned based on the confident assertions and

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Speaker 1: promises of elected officials, and then they were let down.

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Speaker 1: And this isn't the first time politicians let somebody down,

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Speaker 1: but it almost feels like it's even more of an

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Speaker 1: injustice because it caused people to believe something that wasn't

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Speaker 1: true for so long that they're in a worse position

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Speaker 1: now than they would have been had that promise never

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Speaker 1: even been made in the first place.

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Speaker 2: Yeah, Yeah, it made it worse. And the fact is,

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Speaker 2: if you would have been listening to the show, you

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Speaker 2: would have heard us in telling you about this basically

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Speaker 2: like heads up, and you might not have liked what

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Speaker 2: we said over the past, you know, three plus years

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Speaker 2: about preparing for student loans to resume and the unlikeliness

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Speaker 2: of forgiveness to actually become reality. But we did end

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Speaker 2: up being right in this case. And it's a I've

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Speaker 2: told you some moments why I'm not going to say it.

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Speaker 2: I'm not going to say it, but we do want

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Speaker 2: encourage folks to listen to the show. We don't want

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Speaker 2: to dwell on the past, but it is important to

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Speaker 2: mention that that political promises are a dime a dozen.

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Speaker 2: And if money from the Feds comes your way, sure

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Speaker 2: that's great and we're going to talk about it. But

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Speaker 2: banking on the government to come through in the clutch,

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Speaker 2: it's a poor financial strategy. And of course folks didn't.

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Speaker 2: They did the exact opposite of banking that money. They

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Speaker 2: just they spent it. Yeah, exactly. They took those promises

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Speaker 2: as fact when they weren't facked yet. And it makes

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Speaker 2: me think of Matt. Let's say, your kid's gonna be

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Speaker 2: less disappointed if you don't get them a pony for

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Speaker 2: their birthday, if you didn't promise it in the first place.

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Speaker 2: But if you told them you're getting a pony for

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Speaker 2: your birthday and then you end up pulling the rug

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Speaker 2: out from under them, how disappointing is that, Like it's

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Speaker 2: even more their hopes and dreams to that actually happened, right,

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Speaker 2: and so because why you always set the barlow right,

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Speaker 2: Daddy loves you, but probably not get anything, and then

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Speaker 2: you get something and then their thrilled boom.

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Speaker 1: Yeah, parenting hack exactly. If you want to save money

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Speaker 1: as a parent, that's the way to do it. But

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Speaker 1: that's you know, we try to stay away from politics

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Speaker 1: on the show, but we're very much in campaign season

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Speaker 1: right now, and so some of these promises that you're hearing,

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Speaker 1: they can sound so nice from people on both sides

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Speaker 1: of the aisle, by the way, but keep a healthy

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Speaker 1: degree of skepticism when you're hearing those things. Hopefully not

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Speaker 1: a disbelief and positive change, But know that many of

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Speaker 1: the campaign speeches we hear are even if they're well intentioned,

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Speaker 1: they're unlikely to result in sweeping change. Even people that

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Speaker 1: I may be a politician that I gravitate towards, or

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Speaker 1: that I like or that I respect. I have to

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Speaker 1: keep take everything they say with a grain of salt,

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Speaker 1: because I know that there's a decent chance a lot

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Speaker 1: of things they want to do they can't actually.

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Speaker 2: Get done and not actually going to be able to implement.

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Speaker 2: They might have the right ideas, but what's the reality

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Speaker 2: of that actually coming to fruition. But so let's also

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Speaker 2: talk about just like the larger impacts, like the macro

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Speaker 2: impacts of student loans resuming. And first of all, this

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Speaker 2: could help calm inflation even more than we've seen it

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Speaker 2: come down over the past few months. I know it's

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Speaker 2: not quite the silver lining that you're looking for if

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Speaker 2: you have a four hundred and fifty dollars payment that

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Speaker 2: is exiting your spending account every single.

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Speaker 1: Month, cold comfort something, shut up, Matt.

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Speaker 2: But the financial constraints that student loans will create, oddly enough,

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Speaker 2: it could be good for the economy as a whole.

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Speaker 2: It's like the exact opposite of Semischek's which were a

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Speaker 2: big reason obviously, I mean, why we were in this

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Speaker 2: current inflation situation again, though we have seen it subside

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Speaker 2: a little bit but this will also cost taxpayers a

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Speaker 2: pretty penny. As we've been saying, this is actually more

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Speaker 2: generous than the actual the straight up forgiveness that the

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Speaker 2: administration Biden administration was going for. In the New York Times,

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Speaker 2: they recently confirmed that and over the next decade, this

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Speaker 2: could be a trillion dollar wealth transfer program. Yeah, it's

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Speaker 2: a lot of money.

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Speaker 1: It could be like what in the first ten years,

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Speaker 1: something like four hundred and fifty billion, But over twenty plus,

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Speaker 1: I mean, yeah, we can get to that trillion dollar market.

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Speaker 1: So this is going to cost more, in our likelihood

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Speaker 1: than that straight up forgiveness amount that people were so

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Speaker 1: excited about. Well, this could be this can make a

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Speaker 1: bigger impact, but it's also going to have a bigger

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Speaker 1: impact on people, you know what, the federal government are.

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Speaker 2: Folks aren't as excited about it though, because it's not

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Speaker 2: the sexy sure, Like people aren't patient, right, and so

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Speaker 2: the basically saying that, like, over the course of time,

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Speaker 2: this will be better for you, people don't want that.

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Speaker 2: They want the they want the whatever the sexy option is.

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Speaker 1: Forgiveness sounds so much better, But the truth is this

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Speaker 1: is kind of like forgiveness under another name, because it's

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Speaker 1: just gonna dramatic lower the amount that people have to

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Speaker 1: pay towards their student loans, a good portion of people,

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Speaker 1: and so for a large swath of people without standing

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Speaker 1: student loan debt, it's going to have a bigger impact. Yes,

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Speaker 1: a bigger impact than that blanket ten or twenty K

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Speaker 1: worth of loan forgiveness that you were hoping for. And

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Speaker 1: so that is how big this Save Plan is. It's

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Speaker 1: going to cost a lot of money, but it's going

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Speaker 1: to have a big impact. And so the biggest cost

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Speaker 1: center of the Save Plan is those lower payments that

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Speaker 1: it's going to create for most people, for tens of

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Speaker 1: millions of people really. So we're going to talk about

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Speaker 1: the SAVE plan next, how it works, how much you

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Speaker 1: might save, and some of those gory details for how

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Speaker 1: impactful it can be for you. We'll get to that

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Speaker 1: right after this.

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Speaker 2: All right, we're back from the break talking about the Specifically,

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Speaker 2: we're going to talk about the SAVE Plan. What does

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Speaker 2: it stand for? Again, Saving Americans valuable valuable education. Yeah,

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Speaker 2: like that again, it's the acronym. It's political, doesn't really

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Speaker 2: matter what it stands for. It's the Safe Plan. It's

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Speaker 2: just it's branding, right, and branding gets used by companies

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Speaker 2: all over the place, but it also gets used by

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Speaker 2: the federal government and politicians. Stud you got to sell

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Speaker 2: these ideas. A quick note, I wanted to mention, we're

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Speaker 2: talking about federal loans here. By the way, this does

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Speaker 2: not go towards private loans. Those are very different. Those

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Speaker 2: don't come with the same opportunities and these federal benefits

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Speaker 2: plus the forgiveness opportunities that we're going to describe here.

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Speaker 2: So if you have federal loans, we would encourage you

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Speaker 2: to think long and hard before you even consider refinancing

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Speaker 2: with a private lender. It did make more sense for

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Speaker 2: a bigger chunk of folks years ago, but it makes

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Speaker 2: very little sense for almost anyone these days. That's particularly

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Speaker 2: true given the generosity of the safe plan, which is

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Speaker 2: what we're going to dive into now.

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Speaker 1: Yeah, be federal or private loans, they definitely restrict some

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Speaker 1: of those some access to two awesome things like these

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Speaker 1: repayment plans. You might get a lower interest rate, but

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Speaker 1: the almost nobody should can mate it now, yeah, right,

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Speaker 1: and you might not as much these days, right with

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Speaker 1: like where rates are going seven or eight years ago

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Speaker 1: it made sense for some people, not so much anymore.

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Speaker 1: And one other thing to mention too, Matt before we

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Speaker 1: get into all the details of the SAVED plan. There's

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Speaker 1: a lot to cover. But just like we're start with

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Speaker 1: all our some caveats, I mean, just like with the

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Speaker 1: forgiveness attempts, legal challenges are going to try to prevent

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Speaker 1: SAVE from coming to fruition. They don't want some people

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Speaker 1: don't want to see this plan come to come to

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Speaker 1: the light of day, come to the rescue of student

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Speaker 1: loan borrowers. But we would say from where we're sitting,

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Speaker 1: not legal experts or anything like that, but there's less

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Speaker 1: credibility to those attempts. We knew from the very get

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Speaker 1: go there was a distinct, meaningful challenge to the student

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Speaker 1: loan forgiveness attempt and that that could easily be overturned.

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Speaker 1: But it's unlikely to happen in the same way to

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Speaker 1: this repayment plan because similar repayment plans currently exist in

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Speaker 1: the Department of Education. Clearly, from what we've read, has

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Speaker 1: the oversight to be able to make changes to those

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Speaker 1: repayment plans and make them a little more generous. And

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Speaker 1: so those challenges.

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Speaker 2: Which is what's happened. As opposed to the blanket forgiven rights.

434
00:19:04,920 --> 00:19:08,800
Speaker 2: They're modifying the terms of repayment, which has stood in

435
00:19:08,840 --> 00:19:09,200
Speaker 2: the past.

436
00:19:09,320 --> 00:19:12,520
Speaker 1: Yeah. Yeah, so the challenges they're unlikely to be successful,

437
00:19:12,560 --> 00:19:15,360
Speaker 1: but it's still possible that save might not ever see

438
00:19:15,400 --> 00:19:17,399
Speaker 1: the light of day. And so it's a good idea

439
00:19:17,480 --> 00:19:21,600
Speaker 1: to be preparing for full payments to resume, which means

440
00:19:21,600 --> 00:19:24,080
Speaker 1: you'll maybe have saved more than you needed to write.

441
00:19:24,280 --> 00:19:27,800
Speaker 1: But that's that's a better downside than the alternative, which

442
00:19:27,840 --> 00:19:30,600
Speaker 1: is not not being prepared, not having enough on hand. Sure.

443
00:19:30,640 --> 00:19:32,680
Speaker 1: And then i'd also say too that the safe plan

444
00:19:33,000 --> 00:19:35,919
Speaker 1: it doesn't fully go into effect until next summer, and

445
00:19:35,960 --> 00:19:39,080
Speaker 1: so when the payment restart happens, you won't have these

446
00:19:39,119 --> 00:19:41,240
Speaker 1: newer lower payments quite yet.

447
00:19:41,520 --> 00:19:44,800
Speaker 2: But which, like you've already mentioned, like the campaign promises

448
00:19:44,800 --> 00:19:48,359
Speaker 2: but doesn't. Isn't the timing uncanny? Like I can already

449
00:19:48,359 --> 00:19:51,520
Speaker 2: hear the campaign slogans ahead of the presidential election in

450
00:19:51,560 --> 00:19:55,119
Speaker 2: November of next year talking about student loans and just

451
00:19:55,200 --> 00:19:57,480
Speaker 2: the different from both sides of the island.

452
00:19:57,520 --> 00:19:59,800
Speaker 1: It's like, don't you love that newer, new lower payment

453
00:20:00,000 --> 00:20:01,760
Speaker 1: and don't you want to vote for me? Sure? Correct?

454
00:20:01,760 --> 00:20:04,040
Speaker 1: There's a lot of politics a wash in this too, but.

455
00:20:04,280 --> 00:20:08,439
Speaker 2: It's simultaneously like, yeah, we live in crazy times and

456
00:20:08,480 --> 00:20:11,239
Speaker 2: you never know, like what actually might happen to this.

457
00:20:11,400 --> 00:20:13,879
Speaker 2: So there is like a small sliver of a chance

458
00:20:13,880 --> 00:20:16,560
Speaker 2: that something does happen, that it's challenged legally, that it

459
00:20:16,600 --> 00:20:19,360
Speaker 2: gets white from the books, but it does not seem

460
00:20:19,440 --> 00:20:23,200
Speaker 2: nearly as likely as the forgiveness attempt, which literally folks

461
00:20:23,280 --> 00:20:25,120
Speaker 2: were saying, oh, yeah, yeah, you can't do that.

462
00:20:25,400 --> 00:20:28,280
Speaker 1: Right, Okay, since since the signup form is live now, Matt,

463
00:20:28,320 --> 00:20:30,439
Speaker 1: since people can actually go to the Department of Education

464
00:20:30,520 --> 00:20:33,480
Speaker 1: website and they can you know, I guess the signup

465
00:20:33,520 --> 00:20:36,280
Speaker 1: form was live for student loan forgiveness and a lot

466
00:20:36,280 --> 00:20:38,680
Speaker 1: of people signed up for it even you know, before

467
00:20:38,720 --> 00:20:41,760
Speaker 1: it was struck down. But the signup form is live.

468
00:20:42,080 --> 00:20:45,320
Speaker 1: So let's talk about what SAVE is planning to do

469
00:20:45,480 --> 00:20:47,280
Speaker 1: and what the likely changes are going to be for people.

470
00:20:47,520 --> 00:20:50,560
Speaker 2: Some of the changes, because we've talked about how student

471
00:20:50,600 --> 00:20:54,240
Speaker 2: loans resuming, how it might impact the economy, the macro

472
00:20:54,680 --> 00:20:56,479
Speaker 2: environment as a whole. So now we're going to kind

473
00:20:56,520 --> 00:20:58,840
Speaker 2: of dive into the micro for for a second. Here,

474
00:20:58,880 --> 00:21:01,280
Speaker 2: we're going to dive into the personal because it's not

475
00:21:01,600 --> 00:21:04,399
Speaker 2: going to be easy to reincorporate those payments after so

476
00:21:04,480 --> 00:21:07,800
Speaker 2: much time off from having to make them. Some borrowers

477
00:21:07,840 --> 00:21:10,120
Speaker 2: have even said that, like it feels like a this

478
00:21:10,160 --> 00:21:11,960
Speaker 2: is I think from a Wall Street Journal article, but

479
00:21:12,040 --> 00:21:14,560
Speaker 2: it feels like a distant memory after all this time,

480
00:21:14,760 --> 00:21:17,040
Speaker 2: like they don't hardly even remember making payments.

481
00:21:17,080 --> 00:21:19,640
Speaker 1: Probably do I have student loans, I don't even remember anymore.

482
00:21:20,640 --> 00:21:23,520
Speaker 2: I think it's true that the payment restart, it's gonna

483
00:21:23,560 --> 00:21:26,639
Speaker 2: be a rude awakening, but it also it's going to

484
00:21:26,720 --> 00:21:28,520
Speaker 2: feel less like this year Cliff that it would have

485
00:21:28,640 --> 00:21:32,560
Speaker 2: been had the safe Plan not been implemented. This will

486
00:21:32,680 --> 00:21:35,000
Speaker 2: change the ball game for student loan borrowers, making it

487
00:21:35,040 --> 00:21:37,560
Speaker 2: less onerous than it would have been otherwise. Some estimates

488
00:21:37,600 --> 00:21:41,000
Speaker 2: have figured that when the payment resumes, though, it'll feel

489
00:21:41,040 --> 00:21:44,000
Speaker 2: like a five percent pay cut, which I don't know.

490
00:21:44,040 --> 00:21:45,680
Speaker 2: It depends on how you look at all. One hand,

491
00:21:45,720 --> 00:21:48,760
Speaker 2: I think I want to earn five percent more, yeah,

492
00:21:48,840 --> 00:21:50,959
Speaker 2: But on the other hand, it's just like, okay, five percent,

493
00:21:51,000 --> 00:21:54,320
Speaker 2: that's you know, that doesn't seem like a massive upheaval

494
00:21:54,359 --> 00:21:56,120
Speaker 2: to the way that you have been spending your money.

495
00:21:56,119 --> 00:21:58,280
Speaker 2: When it comes to your week to week, month to

496
00:21:58,280 --> 00:22:00,720
Speaker 2: month expenses, but so much of it depends on your

497
00:22:00,720 --> 00:22:04,000
Speaker 2: income and specifically the amount of student loan debt that

498
00:22:04,000 --> 00:22:04,440
Speaker 2: you're in.

499
00:22:04,800 --> 00:22:06,440
Speaker 1: Surprise, you don't think five percent is a big deal.

500
00:22:06,480 --> 00:22:08,600
Speaker 1: I think for most ordinary Americans, five percent of their

501
00:22:08,640 --> 00:22:09,800
Speaker 1: budget is a massive deal.

502
00:22:09,880 --> 00:22:12,240
Speaker 2: I guess when you think about the different changes like

503
00:22:12,320 --> 00:22:14,399
Speaker 2: tax practs for instance, Like you see a change to

504
00:22:14,400 --> 00:22:16,040
Speaker 2: a tax bracket and you're like, oh, cram okay, and

505
00:22:16,040 --> 00:22:18,400
Speaker 2: I've got to pay three percent more in tax. It's

506
00:22:18,440 --> 00:22:20,040
Speaker 2: not like the end of the do I want that

507
00:22:20,080 --> 00:22:22,639
Speaker 2: three percent back? Absolutely, like one hundred percent. I wouldn't

508
00:22:22,640 --> 00:22:25,040
Speaker 2: want to have to pay an additional five percent. But

509
00:22:25,080 --> 00:22:27,680
Speaker 2: being able to save five percent, and we're going to

510
00:22:27,760 --> 00:22:29,399
Speaker 2: dive into that here in a second, is what a

511
00:22:29,400 --> 00:22:32,040
Speaker 2: lot of folks have basically sure felt is if they

512
00:22:32,040 --> 00:22:33,760
Speaker 2: have been thinking about it through the lens of what

513
00:22:34,480 --> 00:22:37,560
Speaker 2: terms were previously in effect, things look a lot rosier

514
00:22:37,560 --> 00:22:38,280
Speaker 2: than these two. Yeah.

515
00:22:38,280 --> 00:22:39,639
Speaker 1: I think a lot of student loan borrowers are going

516
00:22:39,680 --> 00:22:41,600
Speaker 1: to find that that it is a big deal to

517
00:22:41,800 --> 00:22:43,520
Speaker 1: that extra five percent. And then so a lot of

518
00:22:43,560 --> 00:22:45,240
Speaker 1: people said it's going to be more impactful than a

519
00:22:45,320 --> 00:22:47,520
Speaker 1: year of crazy inflation was for a lot of people's

520
00:22:47,520 --> 00:22:50,600
Speaker 1: personal finances. But yeah, because of that out of sight,

521
00:22:50,640 --> 00:22:53,240
Speaker 1: out of mind factor, now it's coming back into their

522
00:22:53,280 --> 00:22:56,320
Speaker 1: lives unexpectedly, even though it shouldn't have been unexpected, it

523
00:22:56,359 --> 00:22:58,240
Speaker 1: feels like it is unexpected for a lot of people.

524
00:22:58,760 --> 00:23:01,800
Speaker 1: But let's talk about specifically the Save Plan how much

525
00:23:01,840 --> 00:23:04,680
Speaker 1: it's going to help people save. The administration, the Biden

526
00:23:04,680 --> 00:23:07,679
Speaker 1: administration estimates that a typical graduate of a four year

527
00:23:07,720 --> 00:23:09,960
Speaker 1: public university is going to save like two thousand dollars

528
00:23:09,960 --> 00:23:12,760
Speaker 1: a year or forty thousand dollars over twenty years, which

529
00:23:12,760 --> 00:23:15,440
Speaker 1: is why that headline number we mentioned. It could cost

530
00:23:15,440 --> 00:23:18,119
Speaker 1: a trillion dollars over a couple of decades, and some

531
00:23:18,160 --> 00:23:20,040
Speaker 1: people are going to say more than others. But that

532
00:23:20,160 --> 00:23:23,119
Speaker 1: smaller monthly payment amount well, is going to mean less

533
00:23:23,160 --> 00:23:26,800
Speaker 1: constraint for most borrowers than before. So people who aren't

534
00:23:26,840 --> 00:23:29,480
Speaker 1: making much, they're going to see their payment reduced to

535
00:23:29,600 --> 00:23:32,520
Speaker 1: nothing at all, especially if you're not making much and

536
00:23:32,520 --> 00:23:34,760
Speaker 1: you've got a couple of kiddos, because they take into

537
00:23:34,880 --> 00:23:38,240
Speaker 1: accounts your family size at the same time. But then

538
00:23:38,240 --> 00:23:40,480
Speaker 1: in addition to that, something else, another perk of the

539
00:23:40,520 --> 00:23:43,720
Speaker 1: Safe Plan is that the balance that you owe, it's

540
00:23:43,760 --> 00:23:46,040
Speaker 1: not going to balloon. It's not going to go up

541
00:23:46,680 --> 00:23:50,000
Speaker 1: because capitalized interest is gone. It's being removed from the equation.

542
00:23:50,040 --> 00:23:52,560
Speaker 1: And so as long as you make your required monthly

543
00:23:52,560 --> 00:23:55,520
Speaker 1: payment amount, even if what's required is just a tiny amount,

544
00:23:55,600 --> 00:23:58,040
Speaker 1: now your balance won't crow. So let's say the federal

545
00:23:58,040 --> 00:24:01,680
Speaker 1: government says, hey, you're your your loan payment. Before under

546
00:24:01,720 --> 00:24:04,960
Speaker 1: the Repay program, which was the predecessor to Save, was

547
00:24:05,000 --> 00:24:07,320
Speaker 1: two hundred twenty dollars, and now under the Save plan

548
00:24:07,640 --> 00:24:10,000
Speaker 1: it's forty nine dollars. As long as you make that payment,

549
00:24:10,359 --> 00:24:12,800
Speaker 1: you you're not going to see your balance grow, whereas

550
00:24:13,240 --> 00:24:16,040
Speaker 1: before people were seeing their balances grow even when they

551
00:24:16,040 --> 00:24:18,360
Speaker 1: made their payments in full and on time exactly.

552
00:24:18,400 --> 00:24:21,320
Speaker 2: And because of the cap which I'm about to get

553
00:24:21,320 --> 00:24:22,680
Speaker 2: into is in place too.

554
00:24:22,720 --> 00:24:23,680
Speaker 1: That keeps the.

555
00:24:23,840 --> 00:24:26,080
Speaker 2: To say, like, you've got the cap, but your actual

556
00:24:26,119 --> 00:24:29,560
Speaker 2: amount owed was beyond what that cap is. That additional

557
00:24:29,600 --> 00:24:32,119
Speaker 2: interest oftentimes got added on to the principle, and so

558
00:24:32,280 --> 00:24:34,880
Speaker 2: even at the were you to make the payments on time,

559
00:24:34,920 --> 00:24:37,480
Speaker 2: at the end of that term, you were tax on

560
00:24:37,480 --> 00:24:40,639
Speaker 2: that forgiven amount, which ballooned. So in effect, that's how

561
00:24:40,680 --> 00:24:43,280
Speaker 2: those balances got to be so large, But like I

562
00:24:43,359 --> 00:24:46,480
Speaker 2: hinted at, there is an actual cap to the amount

563
00:24:46,480 --> 00:24:48,119
Speaker 2: that you're gonna have to pay every single month. And

564
00:24:48,119 --> 00:24:50,199
Speaker 2: if you're wondering how much you'll you're going to owe

565
00:24:50,280 --> 00:24:52,199
Speaker 2: each and every month under the new plan, the new

566
00:24:52,240 --> 00:24:55,280
Speaker 2: Safe plan will link to a helpful calculator, But the

567
00:24:55,320 --> 00:24:57,800
Speaker 2: monthly payments are going to be capped at five percent

568
00:24:58,240 --> 00:25:00,240
Speaker 2: of borrowers discretionary fund.

569
00:25:00,440 --> 00:25:03,760
Speaker 1: Which begs the question, what's discretionary funds? Matt, Yeah, so well,

570
00:25:03,800 --> 00:25:05,600
Speaker 1: first of all, this is cut in half from the

571
00:25:05,640 --> 00:25:07,679
Speaker 1: current repayment plans, right, so prior to this it was

572
00:25:07,800 --> 00:25:12,480
Speaker 1: ten percent of your discretionary income. Basically, the SAVE program

573
00:25:12,520 --> 00:25:15,920
Speaker 1: it increases the income exemption from one hundred and fifty

574
00:25:15,920 --> 00:25:19,080
Speaker 1: percent to two hundred and twenty five percent of the

575
00:25:19,119 --> 00:25:22,440
Speaker 1: federal poverty line. So in this way, it's doubly generous,

576
00:25:22,440 --> 00:25:26,800
Speaker 1: like you are benefiting from multiple angles, from multiple facets

577
00:25:26,880 --> 00:25:29,080
Speaker 1: of the SAVE program. The easiest way to figure out

578
00:25:29,080 --> 00:25:32,000
Speaker 1: what your discretionary income, though, is to take your total

579
00:25:32,000 --> 00:25:35,720
Speaker 1: income minus thirty two thousand, eight hundred dollars that's essentially

580
00:25:35,720 --> 00:25:38,320
Speaker 1: the minimum, that's the floor, and then just multiply that

581
00:25:38,359 --> 00:25:40,320
Speaker 1: by zero point zero five in order to get that

582
00:25:40,320 --> 00:25:43,359
Speaker 1: five percent, Individuals earning less than that they're going to

583
00:25:43,400 --> 00:25:46,840
Speaker 1: pay they got a grand total payment of zero dollars

584
00:25:46,880 --> 00:25:50,120
Speaker 1: a month, and then families of four with an agi

585
00:25:50,240 --> 00:25:53,680
Speaker 1: of less than sixty seven, five hundred dollars, they're also

586
00:25:54,000 --> 00:25:56,880
Speaker 1: going to have a zero dollar monthly payment as well. Yeah,

587
00:25:56,880 --> 00:26:01,320
Speaker 1: so your family size matters, your income matter. But then

588
00:26:01,520 --> 00:26:05,960
Speaker 1: once that's factored in, it's a greatly reduced amount because

589
00:26:06,119 --> 00:26:10,600
Speaker 1: of the new more generous way that discretionary income is considered.

590
00:26:10,680 --> 00:26:12,679
Speaker 2: Right, Yeah, so it's not even, yes, it's more than

591
00:26:12,720 --> 00:26:15,040
Speaker 2: even just doubly. I just covered three different ways. Yeah,

592
00:26:15,040 --> 00:26:18,280
Speaker 2: that this is my last point that this is more

593
00:26:18,359 --> 00:26:20,720
Speaker 2: attractive to borrowers than the previous plan.

594
00:26:20,880 --> 00:26:23,600
Speaker 1: Yeah. And on top of that, so there's even more

595
00:26:23,840 --> 00:26:27,320
Speaker 1: room for generosity under the new Save plan. While the

596
00:26:27,880 --> 00:26:30,359
Speaker 1: blanket forgiveness plan was struck down, like we've said so

597
00:26:30,400 --> 00:26:33,080
Speaker 1: many times this on this show, even on this particular episode,

598
00:26:33,160 --> 00:26:35,600
Speaker 1: the Save plan still offers a path to full forgiveness

599
00:26:35,640 --> 00:26:38,400
Speaker 1: for some people. Loans with an original balance of twelve

600
00:26:38,440 --> 00:26:41,000
Speaker 1: thousand dollars or less, they can be canceled with just

601
00:26:41,080 --> 00:26:44,480
Speaker 1: ten years of on time payments. And I believe if

602
00:26:44,520 --> 00:26:47,159
Speaker 1: your original loan balance was like thirteen thousand, then you

603
00:26:47,160 --> 00:26:49,159
Speaker 1: can you can have forgiveness in eleven years. It's like

604
00:26:49,400 --> 00:26:53,320
Speaker 1: a grand every additional thousand dollars you borrow it tax

605
00:26:53,400 --> 00:26:55,040
Speaker 1: on an additional year to how long it's going to

606
00:26:55,080 --> 00:26:58,320
Speaker 1: take to receive forgiveness. Kind of convoluted, I know, but

607
00:26:59,080 --> 00:27:00,639
Speaker 1: this in particular is going to help Matt a lot

608
00:27:00,640 --> 00:27:03,440
Speaker 1: of community college grads out. Some estimates say that eighty

609
00:27:03,440 --> 00:27:05,600
Speaker 1: five percent of community college graduates are going to be

610
00:27:05,600 --> 00:27:08,440
Speaker 1: able to have their loans forgiven under this new save plan,

611
00:27:08,840 --> 00:27:11,879
Speaker 1: and that's far more generous than the current soon to

612
00:27:11,920 --> 00:27:14,880
Speaker 1: be irrelevant income based or payment methods.

613
00:27:15,040 --> 00:27:17,520
Speaker 2: Yeah, that's right, and hopefully listeners out there to how

614
00:27:17,520 --> 00:27:19,800
Speaker 2: the money are more ready than the typical student loan

615
00:27:19,840 --> 00:27:22,440
Speaker 2: borrower for payments to begin again. But just in case

616
00:27:22,480 --> 00:27:25,240
Speaker 2: you aren't, it's important to note as well that folks

617
00:27:25,280 --> 00:27:27,920
Speaker 2: who aren't able to make payments, they're not going to

618
00:27:27,960 --> 00:27:30,480
Speaker 2: be considered delinquent. They're not gonna be placed into default

619
00:27:30,840 --> 00:27:34,920
Speaker 2: until next fall again, when the plan actually goes into effect.

620
00:27:35,320 --> 00:27:37,600
Speaker 2: And so what does this mean as to what you

621
00:27:37,640 --> 00:27:40,120
Speaker 2: should be doing in the meantime. This does not mean

622
00:27:40,119 --> 00:27:42,879
Speaker 2: that you shouldn't start paying if you can, but it

623
00:27:42,920 --> 00:27:44,600
Speaker 2: is important to note that you're not going to be

624
00:27:44,600 --> 00:27:47,440
Speaker 2: penalized if you can't in the meantime.

625
00:27:47,160 --> 00:27:50,680
Speaker 1: Right exactly. And so I think that's like a it's

626
00:27:51,040 --> 00:27:54,160
Speaker 1: a grace period ethical tightrope that we're kind of walking

627
00:27:54,200 --> 00:27:57,000
Speaker 1: here where it's just like it's not like a license

628
00:27:57,080 --> 00:27:59,080
Speaker 1: to just do whatever it is that you want to do.

629
00:27:59,640 --> 00:28:02,440
Speaker 2: You still should, but this is yeah, like you said,

630
00:28:02,440 --> 00:28:03,080
Speaker 2: it's a great period.

631
00:28:03,280 --> 00:28:04,240
Speaker 1: There's a period.

632
00:28:04,040 --> 00:28:06,040
Speaker 2: Here where you do have a little bit of time

633
00:28:06,040 --> 00:28:06,840
Speaker 2: to get your stuff together.

634
00:28:06,880 --> 00:28:09,520
Speaker 1: And since these new lower payments they're not gonna you know,

635
00:28:09,680 --> 00:28:11,679
Speaker 1: they're not gonna start happening until summer of next year,

636
00:28:11,760 --> 00:28:15,720
Speaker 1: until July. I think this is the way to kind

637
00:28:15,760 --> 00:28:18,720
Speaker 1: of help people who are stuck with higher payment than

638
00:28:18,760 --> 00:28:21,280
Speaker 1: they can afford right now, to say, hey, guess what

639
00:28:21,520 --> 00:28:24,520
Speaker 1: if you can't actually afford to make those payments, it's okay,

640
00:28:24,600 --> 00:28:26,600
Speaker 1: Like we're not going to ting your credit. You know,

641
00:28:26,640 --> 00:28:28,639
Speaker 1: you're not going to get in trouble necessarily for not

642
00:28:28,680 --> 00:28:31,760
Speaker 1: making those payments. And then hopefully once July rolls around,

643
00:28:31,880 --> 00:28:34,800
Speaker 1: you see a massive production to the payment that you owe,

644
00:28:35,040 --> 00:28:37,240
Speaker 1: and by then hopefully you don't have any problem making

645
00:28:37,280 --> 00:28:40,680
Speaker 1: those payments on time and infull every single month in perpetuity.

646
00:28:40,840 --> 00:28:41,160
Speaker 1: That's right.

647
00:28:41,200 --> 00:28:42,600
Speaker 2: That's why we're talking about this now to give you

648
00:28:42,640 --> 00:28:45,600
Speaker 2: plenty of heads up. But that being said, you might

649
00:28:45,600 --> 00:28:47,680
Speaker 2: be wondering, how is it that I can apply for

650
00:28:47,760 --> 00:28:50,920
Speaker 2: this sweet new save program that you guys are talking about.

651
00:28:51,160 --> 00:28:52,640
Speaker 1: It'll hold out on me, let me know how do

652
00:28:52,640 --> 00:28:53,520
Speaker 1: I get the good stuff?

653
00:28:53,880 --> 00:28:56,320
Speaker 2: If you are already in the repay plan, there's actually

654
00:28:56,320 --> 00:28:58,840
Speaker 2: no need for you to do anything. You will be

655
00:28:58,920 --> 00:29:02,320
Speaker 2: automatically enrolled in the Save plan once it launches. By

656
00:29:02,320 --> 00:29:03,960
Speaker 2: the way, this feels like a lot of alphabet soup,

657
00:29:04,040 --> 00:29:06,800
Speaker 2: I know it is. There's the original pay plan pay

658
00:29:06,800 --> 00:29:08,240
Speaker 2: as you are, and then then with the revised pay

659
00:29:08,240 --> 00:29:09,840
Speaker 2: as you are in repay. Now there's the safe plan,

660
00:29:09,880 --> 00:29:12,040
Speaker 2: and so it is a little bit confusing.

661
00:29:12,120 --> 00:29:13,600
Speaker 1: IBr What's that? Is that a disease?

662
00:29:13,680 --> 00:29:15,720
Speaker 2: Right? Should I get that checked out by my dermatologist?

663
00:29:16,400 --> 00:29:17,880
Speaker 2: Maybe you should if you want to save your life

664
00:29:17,920 --> 00:29:20,880
Speaker 2: and save some money. We will link to where it

665
00:29:20,960 --> 00:29:22,520
Speaker 2: is that you can apply for this, though, if you

666
00:29:22,600 --> 00:29:25,479
Speaker 2: are not enrolled in repay. But say it's not going

667
00:29:25,520 --> 00:29:27,960
Speaker 2: to be officially launched until nextra life it is still

668
00:29:28,000 --> 00:29:29,640
Speaker 2: a good idea to get the ball rolling now, to

669
00:29:29,920 --> 00:29:32,360
Speaker 2: start thinking ahead. How it is the new plan is

670
00:29:32,400 --> 00:29:33,760
Speaker 2: going to impact your payments.

671
00:29:33,800 --> 00:29:36,440
Speaker 1: Yeah, that lower payment doesn't come around till extra life,

672
00:29:36,440 --> 00:29:38,040
Speaker 1: but I think some of the things that we've mentioned

673
00:29:38,120 --> 00:29:40,720
Speaker 1: do come about a little bit earlier. So enrolling in

674
00:29:40,760 --> 00:29:43,400
Speaker 1: this plan, making sure that you're on the saved path

675
00:29:43,560 --> 00:29:45,840
Speaker 1: before October hits is wise.

676
00:29:46,000 --> 00:29:49,200
Speaker 2: Yeah. So we've kind of detailed some of the details,

677
00:29:49,520 --> 00:29:52,280
Speaker 2: some of the specifics of the Safe Plan and what

678
00:29:52,360 --> 00:29:55,640
Speaker 2: it entails. But we will next talk about how it

679
00:29:55,680 --> 00:29:57,400
Speaker 2: is that you should that folks out there should be

680
00:29:57,440 --> 00:29:59,760
Speaker 2: approaching student loans. Maybe we've got some younger listeners or

681
00:29:59,800 --> 00:30:02,760
Speaker 2: even and some parents out there who have high school

682
00:30:02,800 --> 00:30:06,040
Speaker 2: seniors or juniors and colleges in your future. How should

683
00:30:06,040 --> 00:30:08,720
Speaker 2: you approach student loans? What's the healthy approach? Will get

684
00:30:08,720 --> 00:30:10,080
Speaker 2: to that right after.

685
00:30:09,840 --> 00:30:21,760
Speaker 1: This, Matt, Let's keep talking student loans, and when the

686
00:30:21,760 --> 00:30:23,520
Speaker 1: facts on the ground change, you and I were not

687
00:30:23,600 --> 00:30:27,960
Speaker 1: afraid to change our opinion. And the truth is that

688
00:30:28,040 --> 00:30:30,960
Speaker 1: this Safe Plan, it does a lot to change how

689
00:30:31,000 --> 00:30:32,800
Speaker 1: we feel about student loans and how we feel about

690
00:30:32,840 --> 00:30:35,880
Speaker 1: people taking on student loan debt. It does revise kind

691
00:30:35,880 --> 00:30:37,680
Speaker 1: of the mindset people should have when they're going into

692
00:30:37,680 --> 00:30:40,440
Speaker 1: taking on student loans. Taking out student loans. It makes

693
00:30:40,440 --> 00:30:42,560
Speaker 1: me think similarly of kind of the changes that were

694
00:30:42,560 --> 00:30:44,760
Speaker 1: made to five twenty nine plans recently that allow you

695
00:30:44,880 --> 00:30:49,080
Speaker 1: to convert unused money not spend for college to retirement

696
00:30:49,120 --> 00:30:50,680
Speaker 1: money inside of a row for your kid. And so

697
00:30:51,040 --> 00:30:53,680
Speaker 1: now with that added flexibility, guess what we like five

698
00:30:53,720 --> 00:30:56,280
Speaker 1: twenty nine plans a whole lot more than we did before.

699
00:30:56,440 --> 00:30:58,960
Speaker 2: Sure, But that being said, I don't think the changes

700
00:30:59,000 --> 00:31:01,560
Speaker 2: that have taken place with these with the safe Land

701
00:31:01,720 --> 00:31:03,880
Speaker 2: it's not as drastic as the five twenty nine plan.

702
00:31:04,000 --> 00:31:06,400
Speaker 1: It's drastic for people who currently have to have it,

703
00:31:06,480 --> 00:31:09,080
Speaker 1: but it doesn't necessarily change for future borrowing all that

704
00:31:09,160 --> 00:31:11,720
Speaker 1: much about how we think about yeah, how people take

705
00:31:11,720 --> 00:31:12,560
Speaker 1: it onto them exactly.

706
00:31:12,640 --> 00:31:15,320
Speaker 2: Yeah, and we'll kind of, I guess, maybe explain how

707
00:31:15,360 --> 00:31:16,480
Speaker 2: it is that we're thinking about it.

708
00:31:16,520 --> 00:31:19,480
Speaker 1: But clearly four hundred billion dollars slashing around that's going

709
00:31:19,560 --> 00:31:23,000
Speaker 1: to change, right, incentives for borrowers and for the colleges alike.

710
00:31:23,040 --> 00:31:26,040
Speaker 1: And so what we've said all along is that what

711
00:31:26,240 --> 00:31:29,200
Speaker 1: SAVE is doing and kind of the the attempt at

712
00:31:29,200 --> 00:31:31,720
Speaker 1: forgiveness it doesn't do anything to address the root of

713
00:31:31,720 --> 00:31:33,880
Speaker 1: the problem, which is that college costs a whole lot

714
00:31:33,920 --> 00:31:36,720
Speaker 1: more than it should and when But here's the thing.

715
00:31:36,720 --> 00:31:40,240
Speaker 1: When borrowing gets cheaper and repayment becomes even easier, it

716
00:31:40,440 --> 00:31:44,480
Speaker 1: incentivizes universities to charge more, knowing that the federal government

717
00:31:44,520 --> 00:31:46,200
Speaker 1: is going to be footing a lot of the now

718
00:31:46,240 --> 00:31:49,480
Speaker 1: higher bill and they're less price sensitive than most people

719
00:31:49,480 --> 00:31:52,440
Speaker 1: are than individuals and families are. So how should you approach,

720
00:31:52,600 --> 00:31:55,920
Speaker 1: you know, student debt given the new landscape. We've got

721
00:31:55,960 --> 00:31:57,680
Speaker 1: a few thoughts on how this might change things at

722
00:31:57,800 --> 00:31:58,880
Speaker 1: least a little bit, that's right.

723
00:31:58,960 --> 00:32:02,120
Speaker 2: Yeah, So, as far as folks who have not yet

724
00:32:02,360 --> 00:32:05,000
Speaker 2: taken on student loans, our advice. You know what we've

725
00:32:05,040 --> 00:32:07,640
Speaker 2: always said about how much to borrow, it still stands.

726
00:32:08,320 --> 00:32:11,080
Speaker 2: Don't borrow more than you're likely to make in that

727
00:32:11,160 --> 00:32:15,320
Speaker 2: first year after you graduate. Ideally you'd borrow even less

728
00:32:15,360 --> 00:32:18,280
Speaker 2: than that. The smaller you're student loan balance upon graduation,

729
00:32:18,360 --> 00:32:21,160
Speaker 2: the better. But let's say, for instance, you're planning on

730
00:32:21,160 --> 00:32:23,800
Speaker 2: becoming a social worker. Well, the average starting wage is

731
00:32:23,800 --> 00:32:26,360
Speaker 2: something like forty six thousand dollars, and in that case,

732
00:32:26,840 --> 00:32:29,240
Speaker 2: forty six thousand dollars, because what that's your absolute ceiling,

733
00:32:29,280 --> 00:32:31,960
Speaker 2: that is the most that you should borrow. We do

734
00:32:32,000 --> 00:32:35,680
Speaker 2: not want you to count on like the best case,

735
00:32:35,880 --> 00:32:39,080
Speaker 2: best possible case scenario happening and saying well, I'll be

736
00:32:39,080 --> 00:32:42,640
Speaker 2: able to offset, you know, my higher tuition costs because

737
00:32:42,640 --> 00:32:45,160
Speaker 2: I want to go to this private school, assuming that

738
00:32:45,520 --> 00:32:49,120
Speaker 2: everything is going to line up. Unless you know, like

739
00:32:49,160 --> 00:32:51,800
Speaker 2: if you've got some sort of guaranteed job, then okay,

740
00:32:51,800 --> 00:32:54,400
Speaker 2: maybe like that's something you consider, But bottom line, it's

741
00:32:54,440 --> 00:32:56,840
Speaker 2: like a pretty rare situation, very rare. Yeah, the rule

742
00:32:56,880 --> 00:32:58,920
Speaker 2: of thumb still stands. Do not borrow more than you're

743
00:32:58,920 --> 00:33:00,480
Speaker 2: going to make that first.

744
00:33:00,400 --> 00:33:02,920
Speaker 1: Year after you graduate. Yeah, even though student loans are

745
00:33:03,000 --> 00:33:04,480
Speaker 1: kind of like a blank check in some ways and

746
00:33:04,520 --> 00:33:07,760
Speaker 1: you could borrow more, it's just not wise. You're putting

747
00:33:07,760 --> 00:33:14,880
Speaker 1: yourself in an unnecessary financial hardship upon graduation. And so yeah,

748
00:33:15,160 --> 00:33:16,640
Speaker 1: that's a really good rule of thumb. And I think

749
00:33:16,640 --> 00:33:19,560
Speaker 1: that rule of thumb stays in place. It stays the

750
00:33:19,600 --> 00:33:22,000
Speaker 1: same even with these changes made to how you have

751
00:33:22,040 --> 00:33:24,080
Speaker 1: to repay back student loans. But Matt, it does kind

752
00:33:24,080 --> 00:33:25,560
Speaker 1: of make me think of something we talked about on

753
00:33:25,600 --> 00:33:27,840
Speaker 1: the Friday flight last week. The new eighty four month

754
00:33:27,880 --> 00:33:30,680
Speaker 1: car loans from Tesla. And just because you can borrow

755
00:33:31,040 --> 00:33:33,160
Speaker 1: for seven years, it doesn't mean you should. Right, just

756
00:33:33,200 --> 00:33:35,120
Speaker 1: because someone will give you a loan for that length

757
00:33:35,200 --> 00:33:38,720
Speaker 1: of time doesn't mean that it's smart on your part

758
00:33:38,920 --> 00:33:41,720
Speaker 1: to actually take them up on that offer. And so, yeah,

759
00:33:41,920 --> 00:33:44,520
Speaker 1: if taking out a longer loan means you would get

760
00:33:44,760 --> 00:33:47,040
Speaker 1: a bigger portion of that payment subsidized by someone else,

761
00:33:47,120 --> 00:33:49,640
Speaker 1: especially like the federal government, you would, you know, take

762
00:33:49,640 --> 00:33:53,320
Speaker 1: that into consideration. So that is worth thinking through. It's

763
00:33:53,320 --> 00:33:55,520
Speaker 1: definitely true that it's about to become less risky than

764
00:33:55,560 --> 00:33:58,720
Speaker 1: ever to borrow money for a higher education, So that

765
00:33:58,920 --> 00:34:01,479
Speaker 1: is one thing to think through. But either way, it's

766
00:34:01,520 --> 00:34:03,560
Speaker 1: a good idea to keep borrowing and check for your

767
00:34:03,600 --> 00:34:06,120
Speaker 1: mental sanity and for your financial solvency too.

768
00:34:06,280 --> 00:34:08,040
Speaker 2: Yeah, yeah, it's it's a I feel like this is

769
00:34:08,040 --> 00:34:09,560
Speaker 2: an instance where you don't want to let the tail

770
00:34:09,600 --> 00:34:11,239
Speaker 2: wag the dog, because if you go into at the

771
00:34:11,280 --> 00:34:14,160
Speaker 2: wrong mindset, you could say, oh, why not borrow even more?

772
00:34:14,200 --> 00:34:15,880
Speaker 2: Because the more I borrow, the more the government is

773
00:34:15,880 --> 00:34:19,080
Speaker 2: going to subsidize, Like like an equivalent example. It makes

774
00:34:19,120 --> 00:34:22,200
Speaker 2: me think of as like credit card rewards and you're thinking, Oh,

775
00:34:22,280 --> 00:34:24,319
Speaker 2: the more I spend on my credit card, the more

776
00:34:24,360 --> 00:34:27,080
Speaker 2: points I get. If only I could just spend more

777
00:34:27,080 --> 00:34:30,200
Speaker 2: and more money, Well, you're not. You're not looking at

778
00:34:30,200 --> 00:34:33,560
Speaker 2: your entire financial situation, and obviously, as an individual, that's

779
00:34:33,600 --> 00:34:35,319
Speaker 2: what we need to do. We're not only looking at

780
00:34:35,400 --> 00:34:39,280
Speaker 2: one small sliver of truth here and how Yeah, in reality,

781
00:34:39,320 --> 00:34:43,320
Speaker 2: the government could subsidize a high or a very large

782
00:34:43,360 --> 00:34:46,640
Speaker 2: portion of your college education cost, but that is not

783
00:34:46,680 --> 00:34:48,400
Speaker 2: how we want folks to be thinking about it.

784
00:34:48,520 --> 00:34:51,640
Speaker 1: Or even with a seventy five hundred dollars federal tax

785
00:34:51,640 --> 00:34:54,080
Speaker 1: credit to buy an electric vehicle. Well, is your current

786
00:34:54,120 --> 00:34:55,040
Speaker 1: vehicle working just fine?

787
00:34:54,960 --> 00:34:55,120
Speaker 2: Yah?

788
00:34:55,120 --> 00:34:55,799
Speaker 1: Do you need a new car?

789
00:34:55,880 --> 00:34:59,239
Speaker 2: Like, what's the big picture coolizing it? Yeah, the very

790
00:34:59,239 --> 00:35:01,320
Speaker 2: small incentive or benefit that's.

791
00:35:01,200 --> 00:35:03,200
Speaker 1: There, and maybe five years from now, maybe that's when

792
00:35:03,200 --> 00:35:05,239
Speaker 1: it's time to upgrade. But don't let the Yeah, don't

793
00:35:05,280 --> 00:35:07,040
Speaker 1: let like you said, the tail wag the dog, like, oh,

794
00:35:07,080 --> 00:35:09,439
Speaker 1: go some bite a v now because slightly discounted, Well,

795
00:35:09,520 --> 00:35:10,240
Speaker 1: that'd be short.

796
00:35:10,080 --> 00:35:12,759
Speaker 2: Sighted exactly, Yeah, maybe not. We would also encourage folks

797
00:35:12,800 --> 00:35:16,040
Speaker 2: to shop around when you are looking at specific schools,

798
00:35:16,080 --> 00:35:18,080
Speaker 2: because where it is that you go to school, it

799
00:35:18,120 --> 00:35:20,440
Speaker 2: matters a lot. So, for instance, we were reading a

800
00:35:20,520 --> 00:35:23,840
Speaker 2: journalism degree at Miszoo. It's going to get you into

801
00:35:24,080 --> 00:35:26,759
Speaker 2: twenty thousand dollars a student loan debt, and it's also

802
00:35:26,800 --> 00:35:29,800
Speaker 2: going to deliver you a starting salary of about fifty

803
00:35:29,880 --> 00:35:33,279
Speaker 2: thousand dollars. And this is specifically for a master's degree. Well,

804
00:35:33,280 --> 00:35:36,480
Speaker 2: if you went to Northwestern instead, you'd be graduating with

805
00:35:36,880 --> 00:35:39,759
Speaker 2: much more student loan debt. We're talking about fifty five

806
00:35:39,800 --> 00:35:43,319
Speaker 2: thousand over twenty thousand dollars, and your salary is actually

807
00:35:43,360 --> 00:35:46,080
Speaker 2: going to be closer to forty one thousand dollars. It's

808
00:35:46,080 --> 00:35:50,440
Speaker 2: actually a little bit less than graduating from Miszoo. So

809
00:35:50,520 --> 00:35:52,920
Speaker 2: it's a good idea. I mentioned this example because we

810
00:35:52,960 --> 00:35:55,600
Speaker 2: want folks to shop colleges like basically like you would

811
00:35:55,640 --> 00:35:58,640
Speaker 2: shop for mortgage rates. And a great resource is the

812
00:35:59,320 --> 00:36:02,759
Speaker 2: US Department of Education's College Scorecard. You can enter in

813
00:36:02,920 --> 00:36:06,279
Speaker 2: specific colleges and they've got the average tuition costs as

814
00:36:06,280 --> 00:36:09,560
Speaker 2: well as average starting salary costs. Once you were to graduate,

815
00:36:09,600 --> 00:36:12,239
Speaker 2: you can compare degrees. There's a lot. I feel like

816
00:36:12,280 --> 00:36:13,840
Speaker 2: there's a lot that the government isn't great up, but

817
00:36:13,880 --> 00:36:17,320
Speaker 2: they're really good at collecting data, requiring colleges in particular

818
00:36:17,440 --> 00:36:19,759
Speaker 2: to submit that data, and they have that it's there

819
00:36:19,880 --> 00:36:21,880
Speaker 2: on hand for you to use as a resource, So

820
00:36:22,000 --> 00:36:23,319
Speaker 2: be sure to check that out as well well. Linked

821
00:36:23,320 --> 00:36:24,640
Speaker 2: to that in the show notes well what if you

822
00:36:24,680 --> 00:36:25,560
Speaker 2: don't already know about it?

823
00:36:25,560 --> 00:36:27,040
Speaker 1: When we talk to people who are trying to buy

824
00:36:27,040 --> 00:36:28,560
Speaker 1: a home at one of the fatal flaws that people

825
00:36:28,600 --> 00:36:30,759
Speaker 1: often experience is I fell in love with the home

826
00:36:30,800 --> 00:36:32,279
Speaker 1: and I just have to have it right. And I

827
00:36:32,280 --> 00:36:34,359
Speaker 1: think the same fatal flaw is true when it comes

828
00:36:34,400 --> 00:36:36,440
Speaker 1: to choosing a college. It's like, I'm in love with it.

829
00:36:36,480 --> 00:36:38,239
Speaker 1: I went on campus. This has to be the place I.

830
00:36:38,200 --> 00:36:40,440
Speaker 2: Go, even more so than the home, right Because with

831
00:36:40,760 --> 00:36:43,839
Speaker 2: a college, it's like, but I've watched that football team

832
00:36:43,920 --> 00:36:46,320
Speaker 2: my entire life, where mom and dad went there. It's something.

833
00:36:46,360 --> 00:36:49,760
Speaker 2: It's man, it's so ingrained. We're brainwashed to a certain

834
00:36:49,800 --> 00:36:50,840
Speaker 2: extent when it comes.

835
00:36:50,719 --> 00:36:52,600
Speaker 1: To high d and when you're not running the numbers

836
00:36:52,680 --> 00:36:55,040
Speaker 1: before you fall in love, when you're not making a

837
00:36:55,080 --> 00:36:58,960
Speaker 1: decision based on value comparing a few apples against each other,

838
00:36:59,200 --> 00:37:01,919
Speaker 1: you're liable to make a poor decision. You're liable to

839
00:37:02,000 --> 00:37:03,719
Speaker 1: sign up for a whole lot more student loan debth

840
00:37:03,719 --> 00:37:06,239
Speaker 1: than you need to and you know you're like you

841
00:37:06,239 --> 00:37:09,000
Speaker 1: were mentioning there too, your income might not be as

842
00:37:09,080 --> 00:37:11,799
Speaker 1: high either going to that school, which that's I don't know.

843
00:37:11,840 --> 00:37:13,719
Speaker 1: I think that you have to take those things into

844
00:37:13,719 --> 00:37:16,200
Speaker 1: consideration before you make a choice of where to go

845
00:37:16,239 --> 00:37:18,320
Speaker 1: to college. And I know that sounds like Debbie Downer,

846
00:37:18,600 --> 00:37:20,360
Speaker 1: like don't go do something you love or don't go

847
00:37:20,400 --> 00:37:20,960
Speaker 1: to the place you love.

848
00:37:21,040 --> 00:37:23,640
Speaker 2: Stop being such a realist. I think it is like

849
00:37:23,640 --> 00:37:24,719
Speaker 2: a value based proposition.

850
00:37:24,719 --> 00:37:27,080
Speaker 1: It is. So there's a bunch of cool, cool colleges

851
00:37:27,120 --> 00:37:28,880
Speaker 1: out there, just like there's a bunch of great houses,

852
00:37:28,960 --> 00:37:31,480
Speaker 1: and falling in love with the one is likely going

853
00:37:31,520 --> 00:37:34,120
Speaker 1: to put a lot of people into financial difficulty because

854
00:37:34,120 --> 00:37:36,799
Speaker 1: they didn't think long and hard enough before they made

855
00:37:36,800 --> 00:37:37,360
Speaker 1: that decision.

856
00:37:37,480 --> 00:37:39,600
Speaker 2: Yeah, and here's the thing. I mean, there is a

857
00:37:39,719 --> 00:37:42,600
Speaker 2: chance that you are the outlier, right like that you actually,

858
00:37:42,640 --> 00:37:44,759
Speaker 2: well that's just the average. I'm going to make make

859
00:37:44,880 --> 00:37:46,919
Speaker 2: way more than that. Well, yeah, there's a chance that's

860
00:37:46,960 --> 00:37:48,480
Speaker 2: going to be the case. But there's a reason that

861
00:37:48,640 --> 00:37:51,000
Speaker 2: these numbers exist. There's a reason that this is the

862
00:37:51,040 --> 00:37:53,360
Speaker 2: average because this is what most people do. And so

863
00:37:54,200 --> 00:37:56,040
Speaker 2: I don't know I don't want people to think too highly.

864
00:37:57,239 --> 00:37:59,560
Speaker 2: We want folks to be realistic in what it is

865
00:37:59,560 --> 00:38:01,879
Speaker 2: that they're likely going to incur, the amount of debt

866
00:38:01,920 --> 00:38:03,840
Speaker 2: that they're going to be burdened with, but also realistic

867
00:38:03,840 --> 00:38:05,279
Speaker 2: when it comes to how much that they're likely going

868
00:38:05,320 --> 00:38:06,360
Speaker 2: to make once they do graduate.

869
00:38:06,440 --> 00:38:08,840
Speaker 1: Yeah, all right, And so I think we basically said

870
00:38:08,920 --> 00:38:11,759
Speaker 1: that one of the things that this new repayment plan

871
00:38:11,800 --> 00:38:15,799
Speaker 1: that Saved does is it limits the risk for a

872
00:38:15,800 --> 00:38:17,400
Speaker 1: lot of borrowers. And so there are a lot of

873
00:38:17,440 --> 00:38:19,280
Speaker 1: people if you do take on too much in student

874
00:38:19,320 --> 00:38:22,200
Speaker 1: loan debt, let's say, and you don't earn quite the

875
00:38:22,200 --> 00:38:24,880
Speaker 1: income you expected, well, the SAVE plan is here to

876
00:38:24,960 --> 00:38:29,080
Speaker 1: kind of be like that trampoline underneath you to ensure

877
00:38:29,360 --> 00:38:32,319
Speaker 1: that you're not as screwed as you would have been otherwise. Right,

878
00:38:32,760 --> 00:38:36,920
Speaker 1: And I think of this matt as enhanced downside protection.

879
00:38:37,000 --> 00:38:39,680
Speaker 1: Maybe that's what we'll call it. If the decree didn't

880
00:38:39,680 --> 00:38:42,399
Speaker 1: pan out like you wanted, your student loan payment isn't

881
00:38:42,400 --> 00:38:43,719
Speaker 1: going to eat you alive in the same way that

882
00:38:43,760 --> 00:38:45,479
Speaker 1: it would have when you're trying to get your career

883
00:38:45,520 --> 00:38:47,319
Speaker 1: off the ground. So I would say, think about these

884
00:38:47,360 --> 00:38:51,360
Speaker 1: rule changes less as a license to borrow bigger sums

885
00:38:51,400 --> 00:38:53,479
Speaker 1: to take on a bigger chunk of student loan debt

886
00:38:53,719 --> 00:38:55,680
Speaker 1: and throwing caution to the win in that regard, and

887
00:38:55,760 --> 00:38:58,399
Speaker 1: more as kind of like a nice insurance policy, right,

888
00:38:58,480 --> 00:39:01,319
Speaker 1: some meaningful protection if you lose your job or your

889
00:39:01,360 --> 00:39:03,120
Speaker 1: earnings aren't growing as fast as you'd hoped.

890
00:39:03,239 --> 00:39:06,400
Speaker 2: Yeah, it basically keeps like the worst case scenario from happening. Yeah,

891
00:39:06,440 --> 00:39:09,480
Speaker 2: and we don't want you to count on it though, right, Like,

892
00:39:09,520 --> 00:39:11,439
Speaker 2: this isn't like it's not a goal to be able

893
00:39:11,480 --> 00:39:13,480
Speaker 2: to pay nothing on your student loan.

894
00:39:13,480 --> 00:39:15,359
Speaker 1: It's like that's the worst case scenario. It's like, because

895
00:39:15,400 --> 00:39:17,359
Speaker 1: then your income's not awesome. We want you to grow

896
00:39:17,360 --> 00:39:17,840
Speaker 1: your incomes.

897
00:39:17,840 --> 00:39:21,600
Speaker 2: And it's like it makes me think of like income tax. Oh,

898
00:39:21,640 --> 00:39:23,520
Speaker 2: here's a trick. Here's a way that you can avoid

899
00:39:23,560 --> 00:39:26,400
Speaker 2: paying any income tax, don't earn anything. I feel like

900
00:39:26,400 --> 00:39:27,960
Speaker 2: it could be like the Eddie Murphy meme where it's

901
00:39:28,000 --> 00:39:30,360
Speaker 2: it's like I want to pay zero dollars in federal

902
00:39:30,360 --> 00:39:33,360
Speaker 2: income tax, earn no money. It's the same thing with

903
00:39:33,480 --> 00:39:33,960
Speaker 2: the student loans.

904
00:39:34,080 --> 00:39:34,960
Speaker 1: Your job and live in a tent.

905
00:39:35,120 --> 00:39:37,280
Speaker 2: Want to not have to make a student loan payment

906
00:39:37,280 --> 00:39:41,719
Speaker 2: every month earn less than thirty two five hundred dollars. Smart,

907
00:39:42,320 --> 00:39:44,400
Speaker 2: but that is not the goal. We want folks obviously

908
00:39:44,520 --> 00:39:46,279
Speaker 2: to be doing much better than that.

909
00:39:46,400 --> 00:39:48,359
Speaker 1: Yeah, Okay, I think something else of this does Matt

910
00:39:48,400 --> 00:39:51,120
Speaker 1: another kind of tweak, another change to the way we

911
00:39:51,160 --> 00:39:53,480
Speaker 1: can think about student loans moving forward. Is it paying

912
00:39:53,480 --> 00:39:57,360
Speaker 1: off student loan debt is becoming less advantageous. And I

913
00:39:57,360 --> 00:40:00,600
Speaker 1: think because of the new repayment rules and that kind

914
00:40:00,600 --> 00:40:04,160
Speaker 1: of additional downside protection, there's just no need to rush

915
00:40:04,200 --> 00:40:06,400
Speaker 1: to pay off your loans. To start throwing you know,

916
00:40:06,480 --> 00:40:09,000
Speaker 1: oh I got a bonus at work, Let me hurl

917
00:40:09,040 --> 00:40:10,680
Speaker 1: it all towards the student loan and pay that off

918
00:40:10,680 --> 00:40:13,799
Speaker 1: as quickly as possible. It's kind of like throwing extra

919
00:40:13,840 --> 00:40:16,440
Speaker 1: money towards the principle on your two point seventy five

920
00:40:16,440 --> 00:40:19,040
Speaker 1: percent mortgage. Right. It's like, there are better things you

921
00:40:19,040 --> 00:40:21,200
Speaker 1: could do with your money. It's not that that's like

922
00:40:21,560 --> 00:40:24,680
Speaker 1: some sort of financial evil or malpractice or anything like that,

923
00:40:24,880 --> 00:40:27,360
Speaker 1: but it just doesn't make the most financial sense to

924
00:40:27,400 --> 00:40:29,600
Speaker 1: start paying off that principle when there's other things you

925
00:40:29,600 --> 00:40:32,400
Speaker 1: can be doing. And there's just a lot of Similarly,

926
00:40:32,440 --> 00:40:34,640
Speaker 1: with student loans, there's a lot of other financial priorities

927
00:40:34,840 --> 00:40:38,600
Speaker 1: that take precedence given the change to these repayment programs,

928
00:40:38,600 --> 00:40:40,839
Speaker 1: and so for most folks, it makes sense to pay

929
00:40:40,840 --> 00:40:44,080
Speaker 1: as agreed to stick dollars towards the other money goals

930
00:40:44,080 --> 00:40:46,160
Speaker 1: that you've got, like saving for retirement and paying off

931
00:40:46,440 --> 00:40:49,080
Speaker 1: other debts that that might be worse and then that

932
00:40:49,160 --> 00:40:51,359
Speaker 1: might not come with and that don't come with some

933
00:40:51,400 --> 00:40:54,200
Speaker 1: sort of insurance policy essentially from the federal government. So

934
00:40:54,520 --> 00:40:57,120
Speaker 1: I would say for a lot of people, yeah, pay

935
00:40:57,160 --> 00:41:00,480
Speaker 1: the amount you're supposed to pay, but paying more an

936
00:41:00,680 --> 00:41:04,560
Speaker 1: attempt to accelerate the payoff of that debt just doesn't

937
00:41:04,600 --> 00:41:05,879
Speaker 1: make as much sense it used to either.

938
00:41:06,000 --> 00:41:07,680
Speaker 2: Yeah, certainly, if you're into the numbers, go ahead and

939
00:41:07,680 --> 00:41:10,400
Speaker 2: crunch them and see how much you actually are going

940
00:41:10,440 --> 00:41:12,279
Speaker 2: to be paying an interest. But the bottom line is

941
00:41:12,320 --> 00:41:15,359
Speaker 2: we've just detailed all the different ways that the SAVE

942
00:41:15,480 --> 00:41:18,800
Speaker 2: program plan is making your payments less painful. It's a

943
00:41:19,120 --> 00:41:21,680
Speaker 2: lower rate, there's a floor as to how much you

944
00:41:21,719 --> 00:41:24,399
Speaker 2: need to earn in order before you're making payments at all.

945
00:41:24,719 --> 00:41:27,680
Speaker 2: There are just multiple ways that SAVE has made it

946
00:41:27,920 --> 00:41:31,160
Speaker 2: less attractive to aggressively attack your student loans. And it's

947
00:41:31,200 --> 00:41:34,080
Speaker 2: also important to note too, that different employers, different companies

948
00:41:34,080 --> 00:41:37,200
Speaker 2: are offering to help pay your student loans off. Part

949
00:41:37,360 --> 00:41:40,000
Speaker 2: of why it's becoming more popular is a provision that

950
00:41:40,080 --> 00:41:43,239
Speaker 2: allows companies to offer up to five thousand, two hundred

951
00:41:43,280 --> 00:41:46,319
Speaker 2: and fifty dollars in loan repayment as a tax free

952
00:41:46,360 --> 00:41:49,640
Speaker 2: benefit through twenty twenty five. So it's worth looking to

953
00:41:49,640 --> 00:41:52,919
Speaker 2: see if that's a benefit that's offered where you currently work.

954
00:41:53,000 --> 00:41:55,719
Speaker 2: It could even influence where you decide to apply for

955
00:41:55,800 --> 00:41:58,960
Speaker 2: a job in the future. The story we were that

956
00:41:59,000 --> 00:42:03,200
Speaker 2: we came across highlight how Navidia that is microchips or

957
00:42:03,239 --> 00:42:04,520
Speaker 2: whatever computers.

958
00:42:04,320 --> 00:42:06,920
Speaker 1: But they're making all those AI chips now they're so

959
00:42:06,960 --> 00:42:08,959
Speaker 1: hot right now, their stock was so hot.

960
00:42:08,960 --> 00:42:11,359
Speaker 2: But they're paying something in the range of three hundred

961
00:42:11,360 --> 00:42:14,880
Speaker 2: and fifty dollars a month towards their employees student loans.

962
00:42:14,960 --> 00:42:17,440
Speaker 2: That is a lot of money. That is a seriously

963
00:42:17,680 --> 00:42:20,360
Speaker 2: awesome benefit and could have this and some of these

964
00:42:20,400 --> 00:42:22,480
Speaker 2: different planes do have caps as well as like as

965
00:42:22,480 --> 00:42:24,719
Speaker 2: far as like the lifetime amount that they're willing to

966
00:42:24,760 --> 00:42:26,839
Speaker 2: pay towards your student loans, but seriously check that out.

967
00:42:27,080 --> 00:42:30,080
Speaker 2: I think that could certainly end up swaying, which company

968
00:42:30,120 --> 00:42:30,839
Speaker 2: you decide to go with.

969
00:42:31,000 --> 00:42:34,040
Speaker 1: Yeah, yeah, And the truth is, Matt, student loans remain

970
00:42:34,080 --> 00:42:37,200
Speaker 1: this kind of oddball products, right, Like we're asking teenagers

971
00:42:37,200 --> 00:42:39,120
Speaker 1: to make really big decisions that are going to affect

972
00:42:39,120 --> 00:42:41,799
Speaker 1: them for decades to come. This is where parents come into,

973
00:42:41,880 --> 00:42:45,200
Speaker 1: Like parents have to help their kids not just say like, yeah,

974
00:42:45,280 --> 00:42:47,120
Speaker 1: go to the college of your dreams, but like think

975
00:42:47,160 --> 00:42:49,480
Speaker 1: through the numbers and the burden that that child is

976
00:42:49,520 --> 00:42:51,640
Speaker 1: going to endure for years to come if they make

977
00:42:51,760 --> 00:42:54,080
Speaker 1: a bad decision. And so it's you know, because the

978
00:42:54,120 --> 00:42:56,279
Speaker 1: federal government is a lender. On top of that, there's

979
00:42:56,280 --> 00:42:58,320
Speaker 1: no due diligence being done on whether or not the

980
00:42:58,640 --> 00:43:00,959
Speaker 1: barrower is going to be able to addictally repay those loans.

981
00:43:00,960 --> 00:43:03,560
Speaker 1: Whereas when you buy a house, guess what they're looking

982
00:43:03,640 --> 00:43:06,640
Speaker 1: at every single piece of your financial life. That'll get

983
00:43:06,640 --> 00:43:09,000
Speaker 1: at your credit score, they'll get your debt to income ratio. Hey,

984
00:43:09,000 --> 00:43:10,920
Speaker 1: what are the assets that you own? What sources of

985
00:43:10,920 --> 00:43:13,719
Speaker 1: income do you have? They want to know everything about you.

986
00:43:13,760 --> 00:43:15,879
Speaker 1: But when you take out student loans, none of those

987
00:43:15,960 --> 00:43:18,839
Speaker 1: questions that you get asked. And so it's all.

988
00:43:18,800 --> 00:43:20,040
Speaker 2: About potential, that's right.

989
00:43:20,120 --> 00:43:22,120
Speaker 1: Yeah, it's like seriously, you're going to be a superstar,

990
00:43:22,200 --> 00:43:23,640
Speaker 1: and so that's why we think you should, you know,

991
00:43:23,680 --> 00:43:25,879
Speaker 1: take out one hundred kN and student loans and this

992
00:43:25,920 --> 00:43:28,799
Speaker 1: is likely going to be continue to be a hot

993
00:43:28,840 --> 00:43:31,360
Speaker 1: button issue, right we'll continue to do our best to

994
00:43:31,400 --> 00:43:34,520
Speaker 1: address it in a level headed manner. And by the way,

995
00:43:34,520 --> 00:43:37,279
Speaker 1: if you're still unsettled about student loan payments resuming, we'll

996
00:43:37,280 --> 00:43:38,719
Speaker 1: link to an article that we just wrote on the

997
00:43:38,760 --> 00:43:41,799
Speaker 1: site that hopefully can help you think about and start

998
00:43:41,880 --> 00:43:44,319
Speaker 1: to incorporate those payments back into your life. But I

999
00:43:44,320 --> 00:43:45,600
Speaker 1: also hope for a lot of people out there and

1000
00:43:45,680 --> 00:43:49,200
Speaker 1: at this savee plan does help limit reduce the burden

1001
00:43:49,640 --> 00:43:52,640
Speaker 1: of that student loan payment resuming again. And by the way,

1002
00:43:52,880 --> 00:43:55,280
Speaker 1: if you have a question about some of the nuance

1003
00:43:55,520 --> 00:43:57,719
Speaker 1: of this safe plan, oh feel free to holler at

1004
00:43:57,760 --> 00:43:59,560
Speaker 1: us because Great Plug love to take it on an

1005
00:43:59,640 --> 00:44:02,080
Speaker 1: upcoming ask Htam episode. We know there's like a lot

1006
00:44:02,120 --> 00:44:04,600
Speaker 1: of murky stuff that we went through and hopefully there's

1007
00:44:04,600 --> 00:44:05,960
Speaker 1: a lot of We spoke about it clearly, but I

1008
00:44:06,000 --> 00:44:07,440
Speaker 1: don't know, it's sure, it's a little.

1009
00:44:07,200 --> 00:44:09,920
Speaker 2: Confusing sometimes I don't say very clearly. But there's a

1010
00:44:09,920 --> 00:44:11,839
Speaker 2: lot of details in specifics too that we didn't cover,

1011
00:44:11,960 --> 00:44:15,240
Speaker 2: so if you have a specific situation scenario, we would

1012
00:44:15,239 --> 00:44:17,680
Speaker 2: love to hear it for sure. All right, man, let's

1013
00:44:17,680 --> 00:44:19,640
Speaker 2: get back to the beer. You and I enjoyed the

1014
00:44:19,680 --> 00:44:23,600
Speaker 2: IPA from the Japanese breery. It's your turn to say

1015
00:44:23,600 --> 00:44:23,799
Speaker 2: it now.

1016
00:44:23,800 --> 00:44:26,640
Speaker 1: Waku wakuo tza coori farm kawakita.

1017
00:44:26,760 --> 00:44:29,080
Speaker 2: Eh oh, pretty good. You already heard me say it,

1018
00:44:29,120 --> 00:44:32,000
Speaker 2: So you're right. I would love to live in a

1019
00:44:32,000 --> 00:44:34,080
Speaker 2: world where you're fluent in Japanese and I'm the guy

1020
00:44:34,120 --> 00:44:36,120
Speaker 2: that's Asian and people expect me to be able to

1021
00:44:36,120 --> 00:44:40,120
Speaker 2: speak in my new hobby, learn that guy. It's the

1022
00:44:40,200 --> 00:44:43,160
Speaker 2: it's the white Norwegian guy. He's the one that can

1023
00:44:43,200 --> 00:44:45,520
Speaker 2: speak it. But yeah, this was an ipa. What your

1024
00:44:45,640 --> 00:44:47,120
Speaker 2: thoughts on this beer?

1025
00:44:47,239 --> 00:44:49,920
Speaker 1: It was more multy definitely not like New England style ipa,

1026
00:44:50,120 --> 00:44:52,400
Speaker 1: super juicy, top bomb any of that kind of stuff.

1027
00:44:52,440 --> 00:44:55,799
Speaker 1: So really like an IPA from fifteen twenty years ago,

1028
00:44:56,400 --> 00:45:00,359
Speaker 1: but also not overly bitter, not West Coast style ipa either, like.

1029
00:45:00,320 --> 00:45:03,960
Speaker 2: Truly the first versions of American IPAs that showed up

1030
00:45:03,960 --> 00:45:06,720
Speaker 2: on the scene exactly because I feel like so American

1031
00:45:06,719 --> 00:45:10,640
Speaker 2: IPA one point zero was old school multi this like.

1032
00:45:10,640 --> 00:45:12,120
Speaker 1: An anchor steam Ipa style.

1033
00:45:12,360 --> 00:45:14,000
Speaker 2: I don't know if that was two point zero were

1034
00:45:14,040 --> 00:45:17,280
Speaker 2: the West coast ones, that's what like tiny the residue beers,

1035
00:45:17,640 --> 00:45:19,879
Speaker 2: some of those flavors came on the scene. And then

1036
00:45:20,080 --> 00:45:22,680
Speaker 2: three point zero the third generation, or in my mind,

1037
00:45:22,800 --> 00:45:24,920
Speaker 2: are the New England New England hazes.

1038
00:45:25,360 --> 00:45:29,680
Speaker 1: The folks out of you know, Maine and Thistle Brothers, Trillium,

1039
00:45:30,040 --> 00:45:33,160
Speaker 1: Boston Burial, even all the way down to North Carolina.

1040
00:45:33,280 --> 00:45:34,640
Speaker 2: I mean a lot of folks on the East Coast,

1041
00:45:34,719 --> 00:45:36,520
Speaker 2: a lot of folks everywhere are making the New England

1042
00:45:36,520 --> 00:45:39,359
Speaker 2: haze style now. But this, Yeah, you definitely like roll

1043
00:45:39,440 --> 00:45:41,040
Speaker 2: back the clock. It's like you're sitting down on the

1044
00:45:41,040 --> 00:45:44,560
Speaker 2: time machine and the DeLorean punched in two thousand and

1045
00:45:44,640 --> 00:45:46,439
Speaker 2: five to two thousand and eight. I want to drink

1046
00:45:46,440 --> 00:45:48,879
Speaker 2: an ipa from that period, from that period of time.

1047
00:45:49,080 --> 00:45:53,319
Speaker 1: Yeah, so super fun, especially since it's again this exotic beer.

1048
00:45:53,360 --> 00:45:54,440
Speaker 1: Always fune to try something new.

1049
00:45:54,520 --> 00:45:56,760
Speaker 2: It's up privilege to be able to just drink something

1050
00:45:57,040 --> 00:45:58,160
Speaker 2: that you can only get overseas.

1051
00:45:58,280 --> 00:46:00,800
Speaker 1: Yeah, and that's thanks to Julia. So thank you, super

1052
00:46:00,800 --> 00:46:02,680
Speaker 1: fun Julia for sending this one our way. We really

1053
00:46:02,680 --> 00:46:04,560
Speaker 1: appreciate it. That's right, and matth that's going to do it.

1054
00:46:04,600 --> 00:46:07,440
Speaker 1: For this episode. We'll have, of course links in the

1055
00:46:07,480 --> 00:46:09,400
Speaker 1: show notes up on our website. Let's run out to

1056
00:46:09,400 --> 00:46:11,080
Speaker 1: money dot com, to that calculator, to some of the

1057
00:46:11,120 --> 00:46:12,920
Speaker 1: other resources we mentioned.

1058
00:46:13,120 --> 00:46:16,920
Speaker 2: College scorecard, the article about student loans in order to

1059
00:46:17,000 --> 00:46:19,120
Speaker 2: dive into the details. You can find all of that

1060
00:46:19,160 --> 00:46:22,000
Speaker 2: up at how toomoney dot com. And that's gonna be it, buddy.

1061
00:46:22,000 --> 00:46:24,640
Speaker 2: So until next time, best Friends Out, Best Friends Out.