Transcript
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We are in a student debt crisis, so right now, roughly 43 million Americans are struggling with federal student loan debt, and students that take on loans are really taking them on the promise that college education is going to provide them at least a ticket to the middle class, if not more.
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But between 1980 and 2020, the cost of college has increased by 180%.
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So think about that.
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We are elder millennials, right?
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I'll read it again Between 1980 and 2020, the cost of college increased by 180%, while wages haven't kept up, no kidding.
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So now millions of student loan borrowers are barely treading water.
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Welcome to the Sugar Daddy podcast.
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I'm Jessica.
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And I'm Brandon.
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And we're the Norwoods, a millennial couple here to help you build wealth and live the life of your dreams.
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Brandon's an award-winning licensed financial planner with over a decade of experience and millions managed in client assets.
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Tune in as we demystify the realm of dollars so it all makes sense, while giving you a glimpse into our relationship with money and each other.
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We are so glad you're here.
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Let's get started.
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Hey babe, what are we talking about today?
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Today we are talking about student loan debt in this country, and I recently listened to an episode of the Brown Ambition podcast.
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It's one of my favorite podcasts, hosted by Mandy Woodruff Santos and Tiffany Aliche, sometimes known as the Budgetnista, and Tiffany was actually invited to a congressional debriefing on student loan debt at I believe it was at Kamala's house, so at the vice president's house, and they put together this report by Elizabeth Warren and then they shared out this information.
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But the episode was so shocking to me that I instantly came home and I said, oh my gosh, you have to listen to this episode and we need to tell our listeners about this information.
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So definitely want to give credit where credit is due.
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Thank you for Tiffany and the Brown Ambition podcast for making us aware of this really incredible information.
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So definitely want to give credit where credit is due.
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Thank you for Tiffany and the Brown Ambition podcast for making us aware of this really incredible information and for not gatekeeping it.
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Tiffany, I think, has over 680,000 followers on Instagram and she's all about, you know, financial literacy and helping build wealth.
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She's a New York Times bestseller, has written two books, and so her sharing these documents as resources is really her way of giving back to the community.
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She's done a ton of work on actually putting financial literacy into schools as a requirement, and so she does a lot of active work, social action work.
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What am I trying to say here?
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Good work.
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What am I trying to say here?
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Good work.
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She's really trying to just make sure that people have the resources that they need to make really great financial decisions, and so this information that we're going to share today is coming directly from the document that has been prepared by Elizabeth Warren and her office.
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So we hope that you leave this conversation kind of enraged, honestly, because we are in an election year and we are not only voting for the next president and vice president, but we are also voting for people who put laws and block laws left and right, right, put laws into place, block laws, and I know I had student loans, you had a tiny amount of student loans, but the majority of Americans right now are sitting on a ton of student loan debt and it really is debilitating and crippling in a variety of ways.
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So we have some stats to share with you, and you know it's just.
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We want to share this information with you.
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Did I miss anything before we kick off?
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No, I just want to, you know, point out that, whether or not you know student loan forgiveness being, you know, something that's actually going to fully happen.
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That's happened to a certain extent, but whether or not it's fully going to happen, there's seems to be people that you know obviously believe that it should happen.
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It's happened to a certain extent, but whether or not it's fully going to happen, there's seems to be people that you know obviously believe that it should happen.
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There's people that disagree with it.
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It's kind of a conversation even about that, because I think there's also a lot of misconceptions behind student loan debt overall, because I would say, the people that are kind of on the other side of, oh, you know, I didn't take out student loan debt, why should you get yours forgiven when I could have taken it out and done the same thing?
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Or I paid off my student loan debt, why shouldn't you pay yours?
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I think one of the biggest misconceptions is that people are taking out student loans and then just having all of it forgiven, when in reality, what they're fighting for is for people who've already paid back what they took out, and some it's just the initial um, excessive, like interest rate that was on them so they're paying interest or not that they took out the loan and they didn't pay back what they have literally been paying for 20 years yeah and are still.
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Yeah, we're going to get into those facts, but that that really is the premise of, you know, the predatory loans in a lot of cases and we're we're going to get into those facts, but that really is the premise of the predatory loans in a lot of cases.
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And we're not talking about private loans here, we are talking about federal student loans.
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Those are the ones that can be forgiven, and so let's just get into these details.
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Yeah, we're going to get into the sad part of people who, unfortunately, through miseducation, misinformation, went ahead and privatized their loans.
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Yeah.
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And there's issues there.
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So many issues.
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So this meeting originally took place on July 10th 2024 on Capitol Hill, and it was the Biden administration's way of providing as many details as possible to describe their efforts in relieving borrowers of the financial burden, because we know that the Biden administration has been very adamant about helping forgive student loans, and the reality is is that we are in a student debt crisis.
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So right now, roughly 43 million Americans are struggling with federal student loan debt, and students that take on loans are really taking them on the promise that college education is going to provide them at least a ticket to the middle class, if not more.
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But between 1980 and 2020, the cost of college has increased by 180%.
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So think about that.
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We are elder millennials, right?
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I'll read it again Between 1980 and 2020, the cost of college increased by 180 percent, while wages haven't kept up, no kidding.
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So now millions of student loan borrowers are barely treading water, and I mean the statistics just keep going.
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And so President Biden has canceled student loan debt for more Americans than any president in history, more than all previous presidents combined, and under his administration, nearly 5 million people have gotten student loan debt relief, and he has approximately canceled 10% of all student loan debt.
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Which, again, if there's 43 million Americans who are struggling with student loan debt and he has canceled 10% of all student loan debt, which, again, if there's 43 million Americans who are struggling with student loan debt and he's canceled 10% of that, that is a massive amount.
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And we have friends who especially friends who've been in education, have gotten higher ed degrees, et cetera, who've gotten their loans forgiven.
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Right, they went into their portal and dollar amount was at zero.
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That is life changing.
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I mean I have one friend who has a PhD in education, had over $160,000 in student loans forgiven and has been a community servant and a community leader for close to two decades.
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Right, I mean, that is a significant amount of money back that he can now help with.
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You know his family, give back to the community, come up for air and breathe again.
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I mean, that's it really is life changing.
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Well, also, the thing is, too, is that a lot of people forget that there are a lot of important occupations that require you to get a four-year degree and additional education, such as a master's degree, in order to even just do the job, and it is an essential job.
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So, for teachers, the number one way that teachers get an increase in their income well, one teachers don't get paid enough to begin with, but the way that they're able to make a little bit more is that the higher education they have achieved.
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So that's why you have teachers that are getting master's degree, so they can at least just get a little bit more money to be closer to a livable wage.
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Yeah, the biggest bump that you can get in education, as a former educator, is going from a bachelor's degree to a master's degree.
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Then there's another bump where you can go from a master's to a master's plus 30, which means that you've taken additional courses that have either gone into another master's degree or you could stop short of getting another degree.
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And then, of course, you can go into the PhD and additional certifications like becoming board certified.
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But really the largest jump in all of that is going to be either that master's degree jump from a bachelor's degree or getting board certified, and board certification is a long process.
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Getting a master's degree.
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You don't get that overnight, so you're really having to sacrifice hours and hours a week to do both, and so we don't want to be penalizing people who've worked so hard to give back to our communities.
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Just again, like Brandon said, hard to give back to our communities.
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Just again, like Brandon said, to make a livable wage.
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It's really outrageous and to not take too much of a detour, but if every teacher was to quit tomorrow, the United States would fall apart, would literally fall apart, and not even just from an education standpoint.
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It would also fall apart from a violence standpoint, and not even just from an education standpoint.
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It would also fall apart from a violence standpoint.
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It is statistically proven that a more educated population has less violence, because most violence comes from a lack of options.
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So when you have a higher educated society and they're able to meet their basic needs, roof over their head, food in their mouth, they are less likely to commit crimes.
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And over here at the Sugar Daddy Podcast, we deal in facts.
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This isn't my opinion, this isn't somebody else's opinion.
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These are proven facts.
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And I think.
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Drop it, babe.
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Love it, mic drop.
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So obviously we know that the Republicans are working overtime to block student debt cancellation, and the Republican led states and special interest groups have filed lawsuit after lawsuit to block Biden's cancellation plans.
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And in June 2023, a Trump stacked Supreme Court blocked President Biden's initials plans to cancel student loan debt for around 40 million Americans under the HEROES Act.
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But the Biden administration did not let the court setbacks stop them.
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Instead, they adapted and found new ways to deliver on their promises.
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And so if you have student loans and you've been paying attention, there are programs that you can and should look into, if you have not already.
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So there is the public service loan forgiveness, and I know this is a special one for some of your clients, right, babe?
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Because if you're in that public service realm you're working for a federal state, local tribal government or any kind of other qualifying nonprofit organization for 10 years or more, you can have your loans forgiven.
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And the PSLF.
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The updates they did to it is huge, because prior to that you had to basically be a perfect steward of your student loans so you couldn't have missed any payments or anything of that nature, where with the new program they actually loosen some of those requirements.
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So some individuals who maybe previously would not have qualified for that forgiveness now may qualify for the forgiveness.
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And also just to kind of point out that during COVID, while for student loan payments were on pause, those actually counted as payments.
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So if you had your student loans on pause for two years and you're thinking, oh, I still need to have two years to pay off, no, those two year, that two year pause period counts towards that forgiveness.
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Which that's huge, and before the Biden administration actually only 7,000 borrowers had received relief through the public service loan forgiveness, which is insane.
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It's like you know they put these programs in place but then they don't actually want to have them serve the public, which you know is infuriating in itself.
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You can also potentially qualify for the income-driven repayment plans, which is an IDR.
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So an IDR plan lowers people's monthly payments based on their income and other factors and or cancels people's debts after 20 years and 25 years of payment.
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Did I say that correctly?
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Yeah, and the one thing I do want to point out too with the income driven repayment plan is that individuals need to be aware that if you currently, you know, go into the income driven repayment plan and you are single and by single I just simply mean not married you could be dating someone, engaged, whatever maybe single on your tax records on your tax records.
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If you get married you could change as far as your income driven repayment plan being increased because that is based off of the household income.
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So when you get married and you file your taxes together now you have a higher household income because you're more than likely dealing with two spouses income.
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So what I'm hearing is don't get married until you pay off your student loans.
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Or I'm just saying, I'm pointing that out, because I've had individuals that were very shocked when they saw their payment went up automatically and I was like well, you got married and you filed taxes, so now your household income is more, so it's just something to be aware of, just to call out, that's all.
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Yeah, yeah.
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So far under Biden's administration they have canceled more than 1 million borrowers' student loans through the IDR plans, which is a huge jump because of the new specifications that they have, because previously the number was in the two digits and I can't even say it out loud because it's going to make me gag, but just know that again, that program was a farce and was not meant to actually help people out, and the Biden administration helped change that.
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You can also file for the SAVE plan, which is saving on a valuable education plan, and that is President Biden's new income-driven repayment plan.
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It's the most borrower-friendly IDR plan and it's cutting many borrowers' payments in half and dropping some borrowers' and it's cutting many borrowers payments in half and dropping some borrowers payments to zero dollars.
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So borrowers who keep say borrowers, five times fast borrowers, borrowers who keep up with their required payments will no longer see their loans grow due to unpaid interest and that is absolutely massive.
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So so far the Biden administration has canceled the student debt of more than 414,000 borrowers through the save plan.
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So let's pause there for a minute, okay, cause I think there is something to go a little bit deeper than here.
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So, as we kind of, you know, mentioned before, a lot of people that were against student loan forgiveness are like why should you have the money forgiven that you voluntarily borrowed?
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And, as we stated, the case is that people have paid back what they borrowed.
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So let's just say, hypothetically, they borrowed $20,000.
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They paid that back and some, but they still have a significantly high balance to pay back because of the interest.
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So you would think that normally the payments on a student loan would cover enough to take care of the principal and also paying down some of the interest, and that wasn't the case always.
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So sometimes that interest.
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It just crushes you.
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Well, the thing is you would think that would automatically be accounted, and for a lot of student loans out there it was not automatically accounted, so they were given hey, this is the amount that you should be paying on a monthly basis.
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And being young and not knowing anything about it, they're like okay, you say, that's right, that's what I'm going to pay.
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And then you have someone that's been paying for 15 years and they don't see their balance going down.
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Yeah, I mean literally, like if you started paying your student loans in your early twenties, right, like, let's say, you're the traditional student I'm doing air quotes for those of you who aren't watching us on YouTube.
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You know, from 18 to 22, you're in college, so at 22, you start paying your loans and you are now 42.
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There are people who are still paying those loans and that balance is not going down because of the crippling interest.
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They have paid more than what they've taken out and they still owe.
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And so that's when you hear people say I'm just going to die with my student loans.
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They're not kidding.
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That is literally how it feels.
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And it's not because they're not paying them.
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They're paying the monthly payment that has been presented for them, and that's why I really want to stress that idea.
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Also, for those individuals who are still against student loans being forgiven, it's not taking any money out of your pocket to have it forgiven.
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Yeah, literally zero money out of your pocket to have it forgiven, because, once again, these people have already more than likely paid back what they owed and some, and then also student loan doesn't come out of your pocket anyways.
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Have you been listening to our podcast and wondering how am I really doing with my money?
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Am I doing the right things with my investments?
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Am I on track to reach my financial goals?
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What could I be doing better?
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If you answered yes to any of these questions, then it's time for you to reach out to Brandon to schedule your free yes, yes, I said free 30-minute introduction conversation to see how his services could help make you the more confident moneymaker we know you could be.
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What are you waiting for?
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It's literally free and at the very least, you'll walk away feeling more empowered and confident about your financial future.
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Link is in our show notes.
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Go, schedule your call today.
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Let's get into some of these people.
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Who are these people taking out the loans?
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Because these numbers are really going to be mind-blowing.
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So the majority of student loans are held by those with no household wealth at all.
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So these are people who do not have assets to start with.
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Right, think about assets versus liabilities.
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Your largest asset is usually going to be, or is going to be, real estate.
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And then your investments.
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What do you have in your investment portfolios?
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Think about your 401ks, your IRAs, et cetera.
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Women hold about two thirds of the student loan debt.
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We also know that women, especially black women, have more degrees than black men, for example, and so you have these black women who are leveling up, they're getting their education and they're consumers of this very large debt, and that is why women are holding two thirds of the student loan debt.
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This is exactly right here.
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I have a bachelor's degree, that's it, and I have two master's degrees.
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Okay, so let's talk about people without four-year degrees.
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So around 43% of borrowers don't have a four-year degree.
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So these are people who weren't able to either finish school or attended community college or went into the trades.
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That's another call out is that people taking out student loans to do trade work.
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That is needed Right, because right now there's actually a big issue with not having enough people doing trade and vocational work.
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Think about your plumbers, your electricians, your welders, your car technicians.
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We need those people.
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I know I do, because I do not plan on learning those skills, so people are still taking out loans to go into those professions and learn those skills, get those licenses, get those certifications.
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Because it all costs money and if you're coming from a background where you're in a lower socioeconomic level, you don't have any other option more than likely yeah and I think that's also another call.
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I was like step outside of your own situation be empathetic like just because maybe you have, you know, grew up in a household where you guys had a little bit more money, that wasn't an issue, and you're like, oh well, the other person should pull them the same.
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Pull them up by their own bootstraps, these people don't have boots.
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Yeah, there are no straps.
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There are no boots.
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They are working from ground zero and it really just comes down to empathy again.
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Right, like we actually like.
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I don't have my student loans in the federal student loan institutions.
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However, when this finally came through and I saw that millions of people were getting their student loans forgiven and some of our friends included all I felt was joy and happiness for them.
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And if you cannot step outside of your situation whether that is, you didn't take student loans or you've already paid for them don't be that person that feels like your piece of the pie is now gone.
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Everybody can have pie.
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Everybody can have a piece and, to Brandon's point, it's not coming out of your paycheck.
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This is not taking away anything from you.
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If anything, it's a blessing and a bonus, because you're going to have more people in society who aren't stressed out of their minds, who aren't anxious, who aren't angry, walking around in society because of these large numbers of student loan debts that they still have to pay back.
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Well, so here's another take that I would say majority people are not going to think about is if these individuals didn't have these large student loan payments and I don't think a lot of people.
00:22:05.153 --> 00:22:07.406
If you don't have student loans, you don't realize how large these payments can be.
00:22:07.406 --> 00:22:11.843
They can use people forking out a thousand dollars additional a month for a student loan payment.
00:22:11.843 --> 00:22:23.205
If they did not have to worry about that student loan payment, half of that could be used as far as purchasing goods within the economy, and that's going to be a boost to the economy and that's going to be good for everyone.
00:22:23.786 --> 00:22:27.691
Yeah, I mean, again, it closes that loop, right?
00:22:27.691 --> 00:22:37.137
Everything's a cycle and so the less people you have stressed, anxious, barely making it, the better, the better off we're going to be.
00:22:37.137 --> 00:22:48.422
Those are the people who then maybe they're paying that thousand dollars a month and they can't make it to their kid's soccer game or their kid's performance or their band concert, right, because they're working two or three jobs.
00:22:48.422 --> 00:22:51.744
If they didn't have that payment now they can show up for their kid.
00:22:51.744 --> 00:22:54.734
Think about the impact that that has on our community.
00:22:54.734 --> 00:23:01.920
Think about how impactful it is to have a more present parent because they now don't have to work that extra job.
00:23:01.920 --> 00:23:09.520
That's huge, not only for our economy and for our schools but for our children and that ripple effect, right.
00:23:09.520 --> 00:23:15.375
So I mean, listen, I don't think there's anything bad that can happen by having people's student loans forgiven.
00:23:16.218 --> 00:23:25.222
And it's also just like you said earlier, having empathy for other people and also realizing that not everything that's good has to benefit you personally.
00:23:25.222 --> 00:23:34.982
Like, just because there's a possibility of like something that's going to benefit a good portion of the population but it happens that you're not part of that population, doesn't make a negative for you.
00:23:34.982 --> 00:23:44.327
Like, I can think of plenty of programs that I a hundred percent support, that do not benefit me specifically, but they are going to help those people who are in need.
00:23:44.875 --> 00:23:47.059
Yeah, 100%, 100%.
00:23:47.059 --> 00:23:58.803
I do have a statistic about people of color, and this one I'm going to read twice, because it blew my mind when Tiffany said it and we need you guys to hear it as well.
00:23:58.803 --> 00:24:00.642
So this is specific to people of color.
00:24:00.642 --> 00:24:03.477
We need you guys to hear it as well.
00:24:03.477 --> 00:24:04.578
So this is specific to people of color.
00:24:04.578 --> 00:24:09.588
So, 20 years after taking out their student loans, the typical white borrower owes about 6% of their original debt.
00:24:09.588 --> 00:24:20.046
The typical black borrower owes 95% of their original debt after 20 years.
00:24:20.046 --> 00:24:30.847
I'm going to read it again 20 years after taking out their student loans, the typical white borrower owes 6% of their original debt.
00:24:30.847 --> 00:24:38.396
The typical black borrower owes 95% of their original debt after 20 years.
00:24:38.396 --> 00:24:52.711
That delta 6% for typical white borrowers and 95% for typical black borrowers just blew my mind, like I don't even know how to process that information.
00:24:53.000 --> 00:24:57.490
And the reasoning behind it is multifaceted, so it's not just one thing that's causing it.
00:24:57.490 --> 00:25:06.076
So you know, one of the things that you know is causing that is that majority of people, when they have their student loans taken out, they didn't take them out themselves.
00:25:06.076 --> 00:25:07.442
Their parents did so.
00:25:07.442 --> 00:25:10.627
There was a complete lack of education across the board in regards to the.
00:25:10.627 --> 00:25:12.151
I can't even talk.
00:25:12.551 --> 00:25:13.693
I know it's so frustrating.
00:25:13.759 --> 00:25:16.148
The specifics of that loan and how it functions.
00:25:16.148 --> 00:25:37.980
So you might've had people whose parents are not college educated, have no knowledge of this, taking out loans because they want a better life for their child and then what ends up happening is that they ended up maybe somewhere down the line um uh, privatizing the loan, which you know, especially back in the you know, 2005 to 2010, 2015,.
00:25:37.980 --> 00:25:52.387
There was a lot of predatory private loans focused around student loans Just a lot where it was just wrong, which is why it's not allowed, which was why they had a lot of changes come from a regulation standpoint of what you can and cannot do, and it's based off of that.
00:25:52.387 --> 00:25:54.090
So that's a huge issue there.
00:25:54.090 --> 00:26:04.632
But then also, on top of that, additional money that could be allocated towards paying off your student loans for a lot of these individuals was not available because they were the first person in their family to go to college.
00:26:04.632 --> 00:26:08.444
So when they did start making more money, you know where that extra money went.
00:26:08.987 --> 00:26:09.788
Back to their family.
00:26:09.808 --> 00:26:10.590
To help out their family.
00:26:18.559 --> 00:26:21.084
But then let's take that even a step further and let's talk about the racial wealth gap, right?
00:26:21.084 --> 00:26:24.410
So you have black and brown people in jobs that are already earning less than their white counterparts.
00:26:24.410 --> 00:26:28.423
So maybe you have the same student loan payment, right?
00:26:28.423 --> 00:26:32.490
You both took out the white person and the black person took out $50,000.
00:26:32.490 --> 00:26:35.061
The loan terms look exactly the same.
00:26:35.061 --> 00:26:41.241
The loan payment is $800 a month and the white person earns 20% more than the black person.
00:26:41.241 --> 00:26:46.318
And you know that Delta, every month of man, I cannot keep up with these payments.
00:26:46.318 --> 00:26:47.681
I cannot keep up with these payments.
00:26:47.681 --> 00:26:50.443
Maybe they're in default, but the interest keeps accruing.
00:26:50.443 --> 00:26:52.164
I mean, maybe they're in default but the interest keeps accruing.
00:26:52.164 --> 00:26:56.348
I mean the scenarios of this 95% versus 6% delta.
00:26:56.348 --> 00:27:04.415
Those are endless, right, because we know the myriad of factors that contribute to the wealth gap, as is.
00:27:05.117 --> 00:27:11.073
I also want to get rid of the idea that people just think that, oh, the reason for it is because the Black people are not allocating their funds properly.
00:27:11.073 --> 00:27:12.625
That is not the answer.
00:27:12.625 --> 00:27:13.521
That is not.
00:27:13.521 --> 00:27:14.986
That is not it Now.
00:27:14.986 --> 00:27:15.729
Could that be the case?
00:27:15.729 --> 00:27:18.865
For some people, yes, but for the majority of people that is not the case.
