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Speaker 1: Happy Wealth Wednesdays, everybody. We are very excited to have

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Speaker 1: hopefully some relief for all of you because I know

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Speaker 1: a lot of people out there started paying their student

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Speaker 1: loans back this month, yeah, October first, Yes, so we're

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Speaker 1: really excited to have the Money Coach Lynette Califani Cox,

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Speaker 1: who is a New York Times bestselling author of Zero Debt.

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Speaker 1: She's spent on over one thousand TV segments, including Oprah,

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Speaker 1: Doctor I, Everybody, You Name It, Today's Show.

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Speaker 2: Steve Harvey, Steve Hard Morning America.

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Speaker 1: Co owns a financial education company, The Moneycoach dot net, LLC,

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Speaker 1: with her husband Earl. So Lynette, thanks so much for

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Speaker 1: being with us.

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Speaker 3: Thank you my pleasure.

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Speaker 2: Yes, this is a really important topic right now as

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Speaker 2: we're talking about student loan debt repayment. And when I

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Speaker 2: tell you, you know, I own a coffee shop and

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Speaker 2: one of my managers was telling me that there's been

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Speaker 2: a lot of people now who are applying for extra

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Speaker 2: jobs because people have to start paying back those student loans.

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Speaker 4: And so I want you to give us some insight.

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Speaker 2: There's a lot of information and a lot of misinformation

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Speaker 2: out there, so we're turning to you to find out

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Speaker 2: what's real, what's not, and what are some things that

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Speaker 2: people can do?

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Speaker 4: So start what happened?

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Speaker 5: It happened, Well, the big thing that happened is you

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Speaker 5: have to start repaying those loans, like you said, effective October. First,

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Speaker 5: we went through the pandemic, and obviously there was a

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Speaker 5: period of relief about three years where folks really didn't

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Speaker 5: have to make payments on their federal student loans. This

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Speaker 5: you didn't have the same type of palls on those

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Speaker 5: private loans.

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Speaker 3: That's a whole nother story. But we know there's about.

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Speaker 5: Forty five million Americans who owe federal student loan debt

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Speaker 5: to the one point seven trillion dollars, and so obviously

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Speaker 5: different people have different amounts of debt depending on if

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Speaker 5: you had undergraduate degree, if you went to graduates school,

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Speaker 5: professional school, all that good stuff.

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Speaker 3: But you know, the.

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Speaker 5: Average student loan payment for a lot of people are

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Speaker 5: somewhere between three hundred and eighty four hundred dollars or so.

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Speaker 3: So now they have to start.

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Speaker 5: Repaying those payments every single month, and it's a big

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Speaker 5: chunk out of people's monthly budgets. So fortunately there are

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Speaker 5: a lot of things that they can do and we're gonna,

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Speaker 5: you know, obviously get into it in this segment.

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Speaker 2: Now, some people did get their student debt canceled, right,

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Speaker 2: Is that correct? Because I know at first they were

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Speaker 2: trying to get this bill passed and it didn't go pass,

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Speaker 2: but then the Biden administration managed to still make that available.

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Speaker 4: Can you tell us something about that.

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Speaker 2: Some people might not even know that they don't have

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Speaker 2: to that they can have access to that, right, So you're.

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Speaker 3: Correct, Angela.

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Speaker 5: We went through this period where there was a big

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Speaker 5: fight that you know, Biden tried to push through loan

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Speaker 5: forgiveness up to about twenty thousand dollars, especially for folks

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Speaker 5: who got pell grants while they were in school. And

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Speaker 5: pell grants, of course are given to the neediest student borrowers.

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Speaker 5: But bottom line, Supreme Court said, nah, he can't do that,

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Speaker 5: And so immediately when that ruling happened, Biden was like, Okay,

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Speaker 5: well I'm gonna take another route.

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Speaker 3: I'm gonna take several other routes.

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Speaker 5: He really has been, in my opinion, trying to deliver

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Speaker 5: on that promise of a student loan relief. So they

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Speaker 5: did a number of other measures to provide some you know,

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Speaker 5: kind of financial cushion for folks. So one is they

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Speaker 5: actually did cancel, as you mentioned, a whole you know,

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Speaker 5: billions and billions of dollars worth of debt for people

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Speaker 5: in specific categories. So some are folks who had disabilities,

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Speaker 5: Some are folks who had been making payments and who

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Speaker 5: were under public service loan forgiveness plans of various kinds.

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Speaker 5: But they might have had a technical reason why their

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Speaker 5: loan was not given, maybe they didn't fill out a

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Speaker 5: form on time, but they were like, look, these people

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Speaker 5: been making the payments, get there, you know, the relief

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Speaker 5: that they were promised. You had some people who had

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Speaker 5: their loans forgiven because they were in for profit institutions

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Speaker 5: that had shut down or that had made kind of

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Speaker 5: false promises to borrowers. So that was another category of

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Speaker 5: folks who got their student loans forgiven.

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Speaker 3: But it's been billions and billions.

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Speaker 5: Of dollars actually that has been forgiven this Supreme Court

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Speaker 5: decision notwithstanding.

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Speaker 1: So this administration is I think forgiven more student loan

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Speaker 1: debt than any other, even though we don't hear about

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Speaker 1: that a lot. One thing I really want you to

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Speaker 1: break down for our audience. In addition, they kind of

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Speaker 1: built an onboarding process into this student loan repayments that

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Speaker 1: started October first, and kind of put in a lot

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Speaker 1: of safeguards for people. Can you tell us about those

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Speaker 1: I know, for example, you don't have to pay, they're

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Speaker 1: not going to report to credit bureaus for a year.

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Speaker 1: A lot of people don't know this stuff, so really

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Speaker 1: break it down to know way our audience can understand.

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Speaker 5: Sure, so you know, when you have gone from a

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Speaker 5: place of not paying something to all of a sudden

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Speaker 5: having to pay. There's this concept called payment shock, right,

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Speaker 5: It's like, oh, this is something new to my budget.

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Speaker 5: And so they wanted to avoid that payment shock and

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Speaker 5: that sense of you know, hurting people's cash flow. So

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Speaker 5: they created what they called a twelvemonth on ramp period

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Speaker 5: really to ease the transition back towards paying student loans.

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Speaker 5: So then over the next month, over the next twelve months,

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Speaker 5: rather if you don't make a payment, or if you

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Speaker 5: are laid or make a partial payment. They're really trying

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Speaker 5: not to be punitive to folks. So yes, they're not

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Speaker 5: gonna be reporting you to the credit bureaus. They're not

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Speaker 5: going to throw your loan into delinquency. They're not gonna

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Speaker 5: put you in default status again, all those things can

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Speaker 5: hurts your credit. They're not going to be adding on

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Speaker 5: extra interests, finance charges, penalty fees, things of that nature,

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Speaker 5: so they're.

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Speaker 3: Really doing a lot.

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Speaker 5: You're not going to be subject to wage garnishment, which

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Speaker 5: would have been the case before if you were, you know,

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Speaker 5: in a default status that kind of thing.

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Speaker 2: And these are federal loans, is that correct, just federal loans, yes.

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Speaker 5: And all of this is all exclusively for federal loans.

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Speaker 5: You can get some relief and that's a whole separate track,

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Speaker 5: but you can get some relief through your private student

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Speaker 5: loans as well, but you have to really go to

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Speaker 5: your lender specifically or your loan servicing company. Some of

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Speaker 5: them will have options for deferment or forbearance or hardship

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Speaker 5: cases if you're unemployed for example, some of them if

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Speaker 5: you've just had a baby or you know, and you're

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Speaker 5: out of work for several months, that kind of thing.

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Speaker 3: So you should always ask if you're in need.

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Speaker 5: But there really are better loan forgiveness for barns and

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Speaker 5: kind of workout options that are available to federal student

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Speaker 5: loan barbers.

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Speaker 3: And that's what we're talking.

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Speaker 2: About right now, And Lynnette, I wanted to also ask

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Speaker 2: about rising interest rates and what effect does that have

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Speaker 2: now on your student loans. Does that impact how much

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Speaker 2: money you're going to own?

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Speaker 5: Yeah, so you know, some folks have floating interest rate loans,

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Speaker 5: variable rate loans, and yeah, those are going to be

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Speaker 5: subjected to what's going on in the marketplace. We know

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Speaker 5: that the Federal Reserve has raised interest rates about eleven

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Speaker 5: times over the last year and a half or so,

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Speaker 5: and so those any loan that has a variable rate

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Speaker 5: that's attached.

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Speaker 3: To it could change.

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Speaker 5: If you have a loan though, that's a fixed rate,

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Speaker 5: and every June the government sets the interest rates on

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Speaker 5: federal student loans. So if you have a fixed rate loans,

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Speaker 5: those are supposed to be locked in. But each year

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Speaker 5: it kind of you know, can go up, and it

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Speaker 5: has been you know, of course, just like mortgage rates

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Speaker 5: for an example, have pretty much doubled more than doubled over.

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Speaker 3: The past year year and a half.

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Speaker 5: I remember a couple of years ago, student loans were

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Speaker 5: ultra low interest rates, and again now those have have

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Speaker 5: ticked higher as well, so they are subject to some

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Speaker 5: of the same market forces.

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Speaker 1: Student loan. That's one of those things that makes you

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Speaker 1: want to stick your head in the sand because it's

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Speaker 1: so overwhelming, and it's been really easy to stick your

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Speaker 1: head in the sand over the last three years. A

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Speaker 1: lot of people out there don't know who owns their

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Speaker 1: student loans, like if you ask them, Okay, particularly people

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Speaker 1: with private loans, they don't really understand who owns their loans.

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Speaker 1: Sometimes those companies sell those loans. So even if they

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Speaker 1: want to tackle this, they don't know where to get started.

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Speaker 1: Stick their heads in the sand. How can people find

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Speaker 1: out about their loans federal and private?

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Speaker 3: Right?

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Speaker 5: Well, first off, don't stick your head in the sand.

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Speaker 5: All that the Ostrich maneuver. You know, you're it's not problem.

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Speaker 5: It's just gonna make things worse. Right, So I do

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Speaker 5: understand though, you know, when I got out of grad school,

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Speaker 5: I went to USC in Los Angeles, I went to

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Speaker 5: UC Irvine undergrad, and I got when I got out

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Speaker 5: of school, I had forty thousand dollars in student loan

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Speaker 5: that it took me over fifteen years to pay it off.

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Speaker 5: So I totally get it that it's like, you know what,

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Speaker 5: it's a burning on a lot of folks right, and

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Speaker 5: now I won't tell you what. Yeah, I graduated, but

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Speaker 5: now it's you know, a heavier toll for a lot

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Speaker 5: of people. We have a lot of data that shows

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Speaker 5: that people who have you know, excessive student loans, especially

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Speaker 5: in black and brown communities. It holds us back in

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Speaker 5: so many ways, from home ownership, from starting businesses, from

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Speaker 5: getting married, you know, from just saving money, and from

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Speaker 5: reaching our goals.

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Speaker 3: So I understand the.

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Speaker 5: Reluctance of some people to not want to kind of

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Speaker 5: deal with the problem. But alas you got the debt,

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Speaker 5: you gotta you gotta pay the piper at some point,

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Speaker 5: or you got to figure out a solution, because honestly,

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Speaker 5: there are other solutions. So first off, if you have

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Speaker 5: federal student loans, you should absolutely log on to studentaid

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Speaker 5: dot gov and then that's the site where you know

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Speaker 5: the federal government.

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Speaker 3: You'll be able to.

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Speaker 5: Track and see your federal student loans. They will show

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Speaker 5: you the status of your loans and the amount of

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Speaker 5: your loans, right, and they'll start you'll start to be

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Speaker 5: able to see, Okay, what options exist for me? So

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Speaker 5: you'll see is my loan current is it? You know,

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Speaker 5: had its been and it shouldn't be right now, but certainly,

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Speaker 5: typically it will show if there was a delinquency, a

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Speaker 5: default status. They'll show you the amount of debt outstanding

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Speaker 5: when you took out the loans.

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Speaker 3: Because a lot of people forget.

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Speaker 5: They're like, wait, year that take out that loans or

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Speaker 5: you know, but I always tell people, you know, you

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Speaker 5: might have forgot about stuff, but the folks you, oh,

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Speaker 5: they forget.

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Speaker 3: Okay.

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Speaker 5: The same thing is true with your private student loans.

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Speaker 5: So certainly if you remember, oh, okay, I had a

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Speaker 5: loan from Discover, I got a loan from you know,

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Speaker 5: via Sally May or you know, I got a loan

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Speaker 5: from XYZ Bank. If you remember that, then of course

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Speaker 5: you want to reach out to those specific lenders or

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Speaker 5: the loan servicing company that might be handling your payments. Otherwise,

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Speaker 5: you can also look on your credit reports. That's a

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Speaker 5: great place to find information because again you forgot, but

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Speaker 5: they forget it. It's on your credit okay, it's showing you.

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Speaker 5: It'll have your account number, or at least the last

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Speaker 5: or digits if your account number. It'll show an address,

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Speaker 5: a phone number, that kind of thing, and then you

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Speaker 5: can reach out to them to contact them, to say

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Speaker 5: to start that process or to ask to inquire what

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Speaker 5: options exist, especially if you're in a hardship of any kind,

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Speaker 5: if you have reduced hours, if you've been laid off,

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Speaker 5: if you have you know, a family situation that's going on,

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Speaker 5: and you've you know, had your cash flow been affected

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Speaker 5: that kind of thing. It's always a good idea to

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Speaker 5: reach out to a creditor and to you know, let

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Speaker 5: them know the circumstances and see what relief might exist.

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Speaker 4: And that's very true.

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Speaker 2: I had student loans myself, and one thing that I'm

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Speaker 2: happy that I did was when I couldn't make those payments,

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Speaker 2: I deferred them.

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Speaker 4: And I think I did that like three times.

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Speaker 2: But at least I was able to do that because

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Speaker 2: it would have been worse to just ignore it and

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Speaker 2: not pay it. I was able to, you know, defer

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Speaker 2: my loans for like six months at a time until

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Speaker 2: I was in a position to be able to start

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Speaker 2: making those monthly payments.

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Speaker 1: And doing something like that makes you feel like you're

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Speaker 1: more powerful, like you're doing something instead of the ostrich maneuver.

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Speaker 4: I don't like those calls coming in.

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Speaker 5: Like nobody wants that and this is you know what,

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Speaker 5: this is another thing too, because I want to get

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Speaker 5: give your audience some hope, especially those who are coming

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Speaker 5: out of the payment pause and going back to having

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Speaker 5: to repay those federal student loans.

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Speaker 3: You know, the Biden administration. One of the things that

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Speaker 3: they did, besides that.

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Speaker 5: On ramp that I mentioned, the twelve month period, the

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Speaker 5: grace period to let you kind of ease back into payments,

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Speaker 5: they actually have tweaked the entire formula for repayment. Doesn't Yeah,

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Speaker 5: they're gonna be pleasantly surprised to see, oh, wait a minute,

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Speaker 5: my payments are gonna be way, way, way less than

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Speaker 5: they were before.

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Speaker 3: And they did this in a number of ways.

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Speaker 5: So first of all, they are reducing the amount of

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Speaker 5: discretionary income that you have to put towards student loan repayments.

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Speaker 5: At one point it was like twenty percent. Then they

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Speaker 5: have ten percent of your discretionary income that has to

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Speaker 5: go towards it this year.

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Speaker 3: In twenty twenty.

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Speaker 5: Four, it's going to be five percent of your discretionary

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Speaker 5: income that has to go towards it. So they're knocking

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Speaker 5: folks payments down in half right off the back. Then

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Speaker 5: some people are going to who are basically considered low income,

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Speaker 5: if you're making like fifteen dollars an hour, you're gonna

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Speaker 5: actually qualify for zero monthly loan payments. And the good

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Speaker 5: news is that even having a zero monthly payment can

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Speaker 5: count towards loan forgiveness. So they've created again another pathway

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Speaker 5: to loan forgiveness, especially for folks who owe like twelve

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Speaker 5: thousand dollars or less. They're saying, well, after ten years

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Speaker 5: of payments, whatever you owe is just gonna be written off.

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Speaker 5: Now ten years is half the time that it was before.

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Speaker 5: Before it was like twenty years. You have to be

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Speaker 5: paid twenty five years. So they're really cutting in half

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Speaker 5: a lot of the ways in which people have to

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Speaker 5: make payments, either by saying you're gonna have to contribute

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Speaker 5: less of your available cash or you're gonna pay for

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Speaker 5: a shorter amount of time. So they have this new

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Speaker 5: program that is income based. It's called the Save Plan,

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Speaker 5: Save because you're going to be savings the money, and

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Speaker 5: that one is replacing what was called the pay plan.

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Speaker 5: It was pay as you earn, and then they had

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Speaker 5: a revised program called Repay Revised pay. But basically those

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Speaker 5: two programs are kind of going away. They're being replaced

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Speaker 5: by the SAVE program. So I really would encourage people

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Speaker 5: go just you know, show them what your income is

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Speaker 5: and see what your new monthly payment is based on

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Speaker 5: this income based payment payment program called Save. You're probably

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Speaker 5: gonna be very very very pleasantly safe.

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Speaker 4: Sounds way better than pay and repay. I just want to.

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Speaker 1: Know you're telling us. They were like, okay, listen, where

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Speaker 1: do people find save.

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Speaker 3: Again?

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Speaker 5: Studentaid dot gov is where they get all the information

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Speaker 5: on that for the federal loans, so.

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Speaker 1: We're talking federal loans. I can't turn on my television,

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Speaker 1: I can't look at my phone or anything until not

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Speaker 1: see some company advertising that they can help me with

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Speaker 1: my student loan debt. There's so many apps, there's so

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Speaker 1: much out there. What do you think of those? And

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Speaker 1: how you know a lot of people do have private

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Speaker 1: loans and part of their loans are private, Well, how

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Speaker 1: do they choose one?

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Speaker 4: How do you know it's credible?

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Speaker 1: Exactly?

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Speaker 5: Yeah, So in general, I like to see companies that

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Speaker 5: have a decent track record, that have good ratings, that

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Speaker 5: have excellent reviews from other consumers.

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Speaker 3: That's a good place to start. You can you know

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Speaker 3: whether it's it's kind.

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Speaker 5: Of a YELP rating, or whether it's just online reviews.

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Speaker 5: You can do Google searches, et cetera, and just literally

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Speaker 5: put the company name and ratings reviews. You can check

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Speaker 5: Better Business Bureau.

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Speaker 3: That kind of thing. I'm kind of like fifty to fifty.

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Speaker 5: On the balance between like history and you know, a

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Speaker 5: track record, because on the one hand, you do want

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Speaker 5: to see you don't want to be the guinea pig.

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Speaker 3: You don't want to be like.

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Speaker 5: The very first you know customer, like Okay, well what

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Speaker 5: if this is not you know, a good customer experience

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Speaker 5: or whatever. But on the other hand, you don't want

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Speaker 5: to just totally rule out a company, you know, say

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Speaker 5: if it has a three year track record or whatever

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Speaker 5: something like that, because we have seen the rise of

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Speaker 5: so called fintech companies, you know, financial technology companies that

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Speaker 5: are very smart, very into using big data, artificial intelligence,

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Speaker 5: and they're doing this in a way that they're pricing risk.

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Speaker 5: They're just saying, look, we have a lot of information

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Speaker 5: and data at our disposal, and we don't have to

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Speaker 5: give everybody the exact same interest rate we can we

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Speaker 5: can see you probably are a better credit risk, and

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Speaker 5: so they are doing you know, from a modeling, from

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Speaker 5: a financial modeling standpoint, they're doing some things different than

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Speaker 5: traditional banks. So these kind of fintech companies are called

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Speaker 5: neo banks or alternatives or FinTechs.

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Speaker 3: And again, I mean you have.

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Speaker 5: Startups, you know, one two, three years kind of in existence,

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Speaker 5: and then you have others that have been around for

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Speaker 5: quite some time, you know, whether it's a SOFI or

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Speaker 5: other brands that are out there that offer student loans,

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Speaker 5: or offer loan consolidation or loan refinancing, things of that nature.

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Speaker 3: But absolutely, do your homework, do.

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Speaker 5: Some comparisons, get online, check out and see what other

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Speaker 5: people have said in terms.

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Speaker 3: Of reviews, ratings and things of that nature.

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Speaker 5: And I think then you kind of just make the

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Speaker 5: best choice that you think works for you.

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Speaker 2: All right, Well, thank you so much for this timely conversation,

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Speaker 2: Lynette caka Finie Cox, the money Coach. And once again,

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Speaker 2: where can people find you? If they need more information?

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Speaker 5: Sure they can find me at my free financial advice site,

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Speaker 5: askthemoneycoach dot com.

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Speaker 3: We're gonna have.

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Speaker 5: Specialty content up there just around this idea of student

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Speaker 5: loans and how do you manage your student loans? In

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Speaker 5: twenty three and twenty twenty four going forward.

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Speaker 1: Thank you so much for explaining so much and teaching

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Speaker 1: us so many new things. Lynette, always a pleasure.

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Speaker 4: Thank you, Thank you

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Speaker 2: Well