The Student Loan Podcast – Episode 10 – Daphné Vanessa and Shamil Rodriguez
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Daphné Vanessa

Shamil Rodriguez

 

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About This Episode

DDaphné Vanessa(@daphnevanessa) and Shamil Rodriguez(@LinkedIn) The Student Loan Podcast co-hosts and co-founders of StartNoo.com provide a 2020 end of year recap and look forward to possible changes to student loans, tuition and everything in between in 2021.  

This episode is fun twist from the traditional interview format as Daphné and Shamil share their thoughts on some of the student loan headlines that dominated 2020 and look forward to what’s on the horizon in 2021. They discuss topics such as student loan forgiveness, payment deferral programs, remote learning and much more.

What Daphné Vanessa and Shamil Rodriguez Discuss During the 2020 Year End Recap:

  • How the principle of unity stood out in 2020 in the face of adversity.
  • Is loan forgiveness on the horizon? If so, do student loan borrowers derserve it?
  • Will alternative forms of education continue to grow their market share?
  • Will programs such as income-based repayment and public service loan forgiveness be implemented more aggressively?
  • Student loan borrower protection programs and what that actually means for borrowers.
  • Major headlines in 2020 and what will come in 2021 for student loans and tuition.
  • And much more…

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Resources from this Episode:

The Student Loan Podcast Intro (00:00:00): Welcome to the student loan podcast. Here, you'll find practical advice on tackling student loan debt, paying down your higher education expenses and inspiring stories about paying off student loans. We're your hosts, Daphne Vanessa and Shamil Rodriguez.

Daphné Vanessa (00:00:18): Welcome to the student loan podcast. I'm your host, Daphne Vanessa Rodriguez. And today's episode is the 2020 look back 2021 look forward episode where we talk about all things, student loans, what happened this year? What do we have to look forward to? We all know 2020 for so many was a wash, right? The Corona virus epidemic happened. People in America and around the world had a racial reckoning where they realized that a lot of injustice was happening and people took action towards it. There were so many beautiful things and negative things about this year. But one thing that I really appreciated was what seemed like the country coming and the world coming to a place of unity, where we're starting to look at ourselves as one human race. And part of that is us getting through a lot of challenge issues that cause friction we're of the belief that student loans are one of those issues.

Daphné Vanessa (00:01:20): And, and so, uh, it's going to be very interesting to see, you know, what happened this year. What do we have to look forward to next year in the world of us accomplishing the elimination of our student loans? So today's episode is going to be a little different, but we hope you enjoy just the same first step. Um, this year 2020 so much happened with the Corona virus. Um, stimulus bills were passed and student loans benefited from some of those stimulus bills. And part of that benefit was the for federal loans, not having to pay payments and not having compounding interest accrue during the non-payment time. And that is unique. That's not something that we've had as a benefit in the past, even when you had forbearance, your interest was accruing. Um, and, and I will note for private loans, the interest is still accruing by the way, even if you are on some sort of pause, but, uh, for your federal loans, not to have that interest accrue during periods of non-payment, that's a huge benefit. Um, so Chanel, what are your thoughts on that relief bill?

Shamil Rodriguez (00:02:42): Yes. I think that the, the, the well said in terms of the idea of unity and approaching our student loans and not forgetting about this demographic, it's taken on over $1 trillion of student loans. I mean, we are clearly a segment of the, of the, of the population at least financially. And, uh, what what's beneficial is that in March, I just like our listeners a quick history back in March, right at the peak of coronavirus, uh, in the United States, uh, legislators passed the cares act and they included some deferral program for federal student loans. So, you know, students didn't have to make payments on their student loans at that point, federal suit loans. And as you said before, interest wouldn't accrue then in August, uh, president Trump signed an executive order to continue the, the, the program where the inf the student loan interest free, uh, forbearance through the end of December.

Shamil Rodriguez (00:03:41): And then later, uh, this year, I guess this month actually, um, sex education, secretary, Betsy Devoss extended it until January 31st. Um, so it's, it's been interesting to see how, you know, w we're dealing with so many issues as we responded to the coronavirus and, and, and other issues that student loans haven't been forgotten, uh, at least the federal ones. So, um, the expectation is that that that will be extended. Uh, we'll see, um, in the new year, but at least for now, it's been really refreshing to see that, that wasn't something that people had to worry about. And in some cases, some people have taken advantage of that and actually started paying down the principal amounts on their federal student loans, so that when payments go back to normal, again, they, they have a smaller interest payment to make because their principal is lower. So this goes back to the idea of, you know, trying to tackle what I could, what I call negative compound interest, right?

Shamil Rodriguez (00:04:44): We, we speak about compound interest in such a positive way for investing in retirement. But if your, if your student loan payments are so large and you've got interest rates that continue to compound over time, it will work against you. Um, so just something to keep in mind, but, but definitely where the coronavirus relief act is going now with the, just to keep a note for the listeners, the most recent stimulus package that was passed, uh, had a lot of great things that people were ready for or whatever the case may be, but in terms of student loans, um, it actually wasn't included. I thought that was pretty interesting. Definitely. What did you think about, uh, or what are your thoughts about why it may or may not have been included in the, in the second stimulus package that was just passed?

Daphné Vanessa (00:05:30): Yeah, well, uh, part of it seems to be, um, a discord between the two sides of the house in the United States, the government, um, unfortunately is not on the same page. They're not working towards unity. And so hopefully the incoming administration, whoever that is, will help, uh, bring both sides of the aisle together so that we can work towards change for all Americans right now, it just seems like there's too much fighting going on. So politics are getting in the way of progress at this point. And that's my personal opinion.

Shamil Rodriguez (00:06:12): So well said. So I think that the, yeah, so that, that would be the, the perspective on, on the stimulus relief and student loans. I do think that in the next year in 2021, what, what we should expect is some sort of, uh, attempt to address or add some new, new relief. Like I said, what I've read and what I've seen is that, uh, what I've seen in the research is that a lot of organizations are, are really just looking at the idea that it will be extended in the new year. But the question then really becomes is like, well, what, what are we doing to like, actually address the issue? Cause like, this is literally the proverbial kicking the can down the road. Like this is like the definition of like, we'll take care of it later. Um, it's still beneficial and it can help people if they're able to pay down the principal, but what, you know, what what's going to actually, uh, what's actually going to change. And I think, uh, you know, we'll, we'll talk about that in terms of 20, 21 looking forward. And actually that might be a good segue, uh, Daphne, uh, into, into the idea that, that you wanted to bring up here, which is canceling student loan debt, um, right. To kick that off and that idea of what may come down the road there.

Daphné Vanessa (00:07:25): Right. I think, um, that, that's the, that's the question, right? Uh, should student loan debt be canceled? Student loan debt being canceled has been a conversation for some time through in the United States throughout some, uh, political, uh, debates, but also just in circle in education circles. And actually most recently, um, the NAACP along with, um, the American Federation of teachers sent byte in an open letter, um, because they assume that he will be president asking him to take action with the first day in office to use executive level authority, to cancel all student loan debt. Um, there have been, you know, all ends of the spectrum from people saying, cancel all student loan debt to some people saying cancel $50,000 student loan debt to some people saying can cancel $10,000. Uh, but 239 organizations signed this open letter asking him to cancel student loan debt.

Daphné Vanessa (00:08:31): And, um, this has been led by the student borrower protection center. And you guys will hear more about them next year, but this is an entity that advocates for people, student loan rights. Um, it's not something that has been publicized. It's not something that a lot of people know about, but there are advocacy organizations for our demographic, which are people suffering with student loans. Um, and so the open letter essentially says there's bipartisan support for immediate debt cancellation. And that while canceling $50,000 is good. Um, the, the bigger, the bigger action would be canceling all student loan debt. And the reasons why they gave that is that student loan debt exacerbates existing racial inequities. Um, and so it would help reduce the racial wealth gap. Um, cancellation would help provide economic stimulus and they referenced the median net wealth of people with student loan, debt being negative.

Daphné Vanessa (00:09:40): I kid you not negative. Um, and so that's an entire segment of the population whose net worth it isn't even zero. Um, I think that's, that's, that's, that's, that's jarring hearing that. Um, and reading that to me really made me feel like, you know, what are we, what are we doing? But at the same time, the opposing side says student loan debt should not be canceled. It would be a mistake. And a lot of these opinions come from more the, the economic side, but people are saying, look, student loan debt is a problem. It's not, it's not that it's not a problem, but it's that we have to think about how canceling student loan debt would impact the economy. How would it impact interest rates? How would it impact lenders who have, who gave money? Um, not only the department of education, remember that before the department of education, there were private lenders who had given money and invested in securitized loan products expecting to be paid back.

Daphné Vanessa (00:10:50): And so by, by not paying back, we're saying that whoops investor, you chose something that, you know what we decided that you're not going to get paid back. So there are two, three, four, five parties involved in this discussion. We really do have to come to some sort of solution that can benefit everybody. I love to think in win-win like Steven Kobe used to say, uh, think win-win not win, lose. You know, there, there has to be a solution where all parties involved can feel like we accomplished something that helps that doesn't dig a hole for people with student loan debt, but also doesn't impact investors to the point of discouraging investment in the economy. So that's, that's one point. The next point that they raise is that people who don't repay student loan debts will be less incentivized to participate in the economy. And that's a separate argument. I think that is, you know, broader than this discussion, but that is some of the backlash you could say, or, or opposing arguments for whether student loan debt should be canceled. Uh, so yeah,

Shamil Rodriguez (00:12:12): I think we should, we should dive into that a little bit more. I think it would be beneficial for the listeners. So let's, let's go into that first topic of the idea of, you know, I keep hearing with your first argument, I keep hearing the voice of people in the path that I spoken to that are typically older and not to say, like they're all that way. But in terms of the experience they had when they went to school, lower expenses was so much lower and it was closer to what your income actually was that, you know, I've met people that were like, well, I mean, why should we cancel somebody's loan? If they, they may be independent adult decision to take out the loan to go to school. Um, and I was able to pay it off by being a waiter or waitress, uh, while I was, you know, going to school full time. Um, that's the argument that I've heard from folks that, that say that, you know, it shouldn't be canceled because you've made that commitment and a debt is a debt and it should not be forgiven. I mean, what do you, what do you, how do you respond to that argument? What's the, what's the logic there? Daphne, what do you think?

Daphné Vanessa (00:13:16): I haven't personally formed an opinion yet. I'm still taking in all the data, but the opposing argument to that, from what I've read would be that this generation has experienced the burden of student loan debt in a way that no other generation has to compare my fathers going and becoming a doctor for less than $50,000. I think it was to our generation going to law school and being in six figure student loan debt. It's just two separate conversations. And, you know, while my father was able to pay for all of his degrees, by owning a business and working, uh, that's not an option for everyone. It, I don't want to instill limiting beliefs by the way. I think that if, you know, you're getting six figure student loan debt, and you've applied to all the scholarships in the world and you haven't started an online business. I'm not saying that it's not possible to create an online business while in school and pay off your student loans if, if you're able to navigate your time appropriately,

Shamil Rodriguez (00:14:31): I guess, if anybody wants to leave know.

Daphné Vanessa (00:14:36): Um, so, so it's possible. It's absolutely possible. Um, but is it the norm? Is it what we expect of people? Are we saying that everyone should neglect their studies because don't forget you are in school. There is a work associated with that. And is everybody able to navigate, does everybody have the same level of studies and I'm not diminishing some areas of study, but I think that it's true. We can all agree that some fields require more post-work than other fields. And so for those fields, are we now saying, you know, re eliminate your opportunity at residency, eliminate your opportunities at being at the top of your class, that you can get whatever top, uh, career path you choose, um, or in the international relations space scoring at the top of the, um, of the curve so that you can be placed at a P level.

Daphné Vanessa (00:15:37): So there are certain industries where you do need to put in a significant amount of time studying, and it just doesn't allow you to also put in the time needed to grow a business. Um, I'm not saying that there aren't other options there too. I'm not saying that somebody couldn't be strategic about investing. If they already had the, the knowledge and foresight, and then leverage some of the profits from the investments to pay for their school. There are so many solutions, there are a million solutions. Um, so I'm not negating any of those solutions, but I am saying that we can't ignore, and we can't silence the people that are in the generation where the federal reserve has data showing that student loan has increased about 102%. In the past decade, we are in a generation where the cost of education is over five times what it was 40 years ago, five times when you account for inflation, um, just between last year, and this year, there was a 4% increase in the amount of student loan debt surpassing 1.7 trillion. These numbers are just, there, there is more happening than somebody choosing to go to school and not being responsible for their, for their debt. I think that there, this is a bigger conversation on that front. And that's why I don't know that the argument that I did it 40 years ago. Why can't you do it now? I don't know that that argument is analogous or fair.

Shamil Rodriguez (00:17:19): That's I think a, a very valid point to bring up there. I do have some, some notes here. Just remember that part that I think would be good for discussion here is the idea of like, there, there are plenty of options out there now. I mean, if you listen to episode two, and I guess I'll be that guy who's always plugging in different episodes when we, we cover these topics, um, is that there are plenty of options that like, when I went to school, I just didn't know about right. And so, you know, if you, the more, you know, the better, but there are also some other paths, like from my, my, my previous experience with being on a board at a community college, is that there, there are a lot of, a lot of options that sometimes people just aren't willing to, to, uh, consider right, for one reason or another.

Shamil Rodriguez (00:18:04): But I recall we used to have, and we would highlight these students that would be top performers coming out of their high school and forego going to a four year, uh, program because they, they were like, we know that all the AP courses I took and all the, the, the, the credits that I could accumulate in high school have basically covered, you know, one semester, sometimes one whole school year of, uh, of, of a college traditional four year school. Um, and I might as well start, you know, essentially getting the first two years out of my four year program done at the community college level. And then they would go onto these grade schools because they were performing so well and they saved so much money. Right. And, and, you know, we spoke to those parents that were helping those students make those decisions. So, you know, I don't want this to be, you know, uh, come off the way, which I think, unfortunately, some people have characterized the generation is like, Oh, it's poor me, poor me.

Shamil Rodriguez (00:19:04): But the idea is like, there's, there are some options out there. There are some to consider. And I think another one that's worth at least highlighting that. I think, you know, it's not to say that this has to be the way people go as to, I'm just saying that these are some other options people can consider is the idea that, um, like you can go to in-state schools too, right? There's like a, just the difference between like, just staying in state versus going out of state and saving money that way. And there are other, you know, companies that are paying for you to get your education, right? Whether it's, I'm thinking off the top of my head here, like ups or Starbucks or, or other, like other, even private organizations that will pay for you to get a higher degree in your specific field, because it helps them long-term that you become an expert, whether it's like physical therapy or whatever the case may be, these are all fields.

Shamil Rodriguez (00:19:53): And let's not forget about, and I don't want to turn, you know, flip this whole, uh, episode into just like, what can you do to find the financial education? But I think in terms of canceling and student loan debt and, and kind of rebuffing the argument that like, it only has to be cancel student loans. Um, it's like that also think about how the military also provides that type of perspective and other institutions, if you work or go to the school and you end up getting a degree while you're at that school working for that school, they also cover, uh, either some or all of it. So these are all just some ideas. Um, you know, I don't wanna hash it all out here, but I think the idea, like the dwell on your point or elaborate on your point, Daphne, that there are plenty of options out there. Don't just think that the first option you have to take is a student loan. That's I think the bigger point. Right, exactly. Um, and

Daphné Vanessa (00:20:48): I think though, a lot of those options are very good for people who are currently in school. Um, but the cancellation of student loan debt, right? Who's that going to impact a lot of people that, that impacts for people who already graduated, you know, they're working, they're either employed, employed, um, who were unemployed even, and trying to get through day by day and have this weight on their shoulders of student loan debt. And we have to be honest about representations that were made the lack of transparency that existed, you know, post 10 years ago, maybe today, um, servicers, by the way, it w the model of today didn't exist 15 years ago, but servicers today being transparent and telling people what their options are and creating videos online, that was not what was happening 10, 15 years ago, 15 years ago, sign here. There's a bunch of paperwork. You'll read it later. I need to process the next student. And is that a violation of UDaB today? Yes. The, the unfair, deceptive, abusive acts practices, something like that, but it's, it's a statute that basically says, are we making unfair representations to people that they don't know what they're signing up for that today is illegal. You know, and, and 15 years ago it didn't exist. So we're, we're looking at a segment of the population that may not have had all the information that they, that they needed from a contractual perspective to sign. Did they,

Shamil Rodriguez (00:22:39): That's a great point. I remember, you know, you would be like, Oh, you, you have a pulse. You're a student at this school. Here's a loan for $30,000 sign here. You know, like, you know what, and these are things that literally cannot happen now where banks aren't allowed to have those tents that I remember very vividly the first day that you went to school, you had all these like tents and different banks offering different programs and things like that, which is just you weren't in that frame of mind to make the longterm decision, in my opinion, at least at my age now, um, to see that, uh, and I think you bring up a very good point there, Stephanie, uh, uh, something I wanted to bring up here, just so that like, listeners can see what, uh, that canceling student debt may look like. Right.

Shamil Rodriguez (00:23:27): I don't want people to like start making financial decisions based on like what we're giving them here. So like one, we're not giving you guys any financial advice, but the idea that, you know, you, Brent brought this up earlier during the top of the topic, which was, you know, it could be $10,000 student loan debt relief. It can be $50,000, um, or it can be cancellation of Alston loan debts generally. Right? So these are all the things that are like out there floating as possibilities, but just to kind of put it into perspective for some people canceling $10,000 in student loans would eliminate over 16. Oh, it would eliminate the debt of over 16 million people. So that's about a third of all current borrowers. So this is just, you know, give you guys, my source here is coming from a Forbes article. Um, and then $10,000 in student debt cancellations that also reduce the balance by 50% for another 9.3 million people.

Shamil Rodriguez (00:24:19): So that's a, that's approximately 50% of our student loans are also the loan borrowers, uh, would see some sort of relief just from $10,000 in student loan debt cancellation. I just found that interesting because, um, there have been ideas that like, even with the $50,000 bill that was proposed back in September, um, there was the possibility of there being like an income cap on what that could be. So I'm curious to hear your thoughts on this one is that like it, what I found was that the $10,000 definitely helps, but it doesn't help the, like the professional, the professional degrees, not right. Because like the doctors and the lawyers that are, that go for extended periods of times for school end up racking up what I call, what I call mortgage student loans. Yeah. Um, that's a great term. And then, and then from there they're, they're, they're stuck, but then they say, well, you know, if you make above a certain income threshold, then you can't receive this debt relief. So it's like, wow.

Daphné Vanessa (00:25:17): I agree. I completely agree that the policies generally with the IRS have been to shoulder the economics of this country on the upper middle-class. And I hope this doesn't come off as elitist, but from a tax perspective, the group of people that are always phased out of taxes or not allowed to take certain deductions, there's always an income threshold, but the people that may meet this income threshold accrued six figure student loan debt, potentially to get to that income threshold. So the people that are working through it, um, tend to be those above the income threshold. So I agree, you know, there's a going to be a segment of people that are middle-class albeit upper-middle-class, but still middle-class. So they're not financially free. They are in debt, but because they have perhaps a high salary, they are kept out of these opportunities. And, and this is only one example. There are so many examples in the tax code of this.

Shamil Rodriguez (00:26:34): Yeah, no, but I think, I think the idea, I'm sorry, go ahead.

Daphné Vanessa (00:26:38): No. Yeah. For the purposes of student loan debt, it's unfortunate that we're even having the conversation of salary caps. When you didn't know what salary you were going to make 15 years ago, you know, like 15 years ago, you didn't know that you would eventually get lucky slash work hard slash a combination of both probably, and end up chipping away at your student loans. The truth is that let's talk about the $10,000 amount that is less than an inch, a month of interest payments for some six figure student loan. That's how sad it is. Because with compounding interest, let's say a person paid the minimum payments, their entire, the life of their loan for the past 15 years. Um, their loans have actually increased. They actually, now more than they did when they left said professional, uh, or PR or doctorate degree.

Shamil Rodriguez (00:27:42): Yeah. And I think, I think the, I, what, I, I guess what I would recommend if, if there's anybody out there that's, uh, in those fields that, that are, you know, drafting these bills or this legislation, um, would be to consider, instead of it just having some sort of hard salary cap, I think it would be smart in my opinion, if you're trying to find a middle ground, right. Cause you know, I'm a, I'm an advocate of the benefit receives the benefit and then you move forward. But the idea of how about you consider, um, income paced, um, income based in terms of like income based, like, what's your, what's your standard of living? What's your cost of living? Like we, we have the ability to calculate what very good point, you know, what, what, what someone's worth, like you're saying there, like, you know, you may have a high salary, but if you're living in New York city versus like another, another, just any other city that may have living anywhere else, that's not on the coast. Right. Then, then, you know, there's a different impact there. I think that, and that's, I think that's worth considering. And I think that we're smart enough and have the means to read a system that, that allows for, uh, relief to be allocated based on either cost of living or based on how much of your income, you know, goes towards student loan payments or, or just like your living expenses. I think that would be listening out there.

Daphné Vanessa (00:29:09): No, that's, that's such a great payment. I think, uh, very, I I'll look for the, the article long time ago. And then in the Obama administration, it's a really long time ago, not to age myself, they were speaking about student loans or education costs, not exceeding, I think it was 8% where like all of your expenses of education should not exceed 8% of your income. What happened to that, that conversation? Um, it would have been nice to develop that conversation because right now we're living in a world where people, you know, a third of your income perhaps goes towards housing. And the other third goes towards your student loan payments, perhaps. And is that healthy? Is that, does that help people be financially independent? I don't, I don't think so. I, I agree that we need to get a little bit more granular about the math.

Daphné Vanessa (00:30:05): We are more intelligent than broad-based percentages think broad base percentages, blanket numbers, to appeal to a larger group of people. I understand that, that, that, that they may think that, but in the age, the information age, people are a lot smarter than I think you give them credit for. I think that our country and our world to be honest, is a lot more educated than people are giving credence to because the education doesn't need to happen in a formal setting anymore. We no longer need to go to specialized schools with individuals that have all of the information that we learned from we no longer have these private access libraries where people, um, accrue information from that's, that's not what's happening anymore. We have the internet and people are a lot more informed then, uh, we're given credit for. So I, I think that broad base percentages, just blanket numbers that may not be the path. I think that we need to do a little, be a little bit more thoughtful around what sort of student loan package is out. And I think start, uh, we'll, we'll, we'll do a little bit of thinking ourselves too, and hopefully come up with some recommendations, Jamila. I don't know what you think about that. I know it just put you on the spot there, but I, I would love for us to come up with recommendations of, of what that, that, that is.

Shamil Rodriguez (00:31:32): You know, I think that would be something worth exploring and like sharing with the community on the student loan podcast.com back to plug of like where you can actually interact, give us feedback. Or in our instance, you can see some of these ideas that we're going to publish. And I think it would be smart to us to do that. Um, and, and let's not walk away from the idea of like creative financing opportunities, right? Like start new definitely offers that type of idea where there are service-based scholarships, service-based tuition plans. Um, and so I think that that's something that we can definitely dive into other in a future episode, or just like generally on the cinema and podcast.com, which is brought to you by starting now. Um, I think the idea that you touch on there is it very like forward 2021 thinking perspective, which is, there are other ways that people are figuring out to get into jobs without going through the traditional four year path and avoiding student loans altogether, or, um, let's not forget the, the, the ISA is right, like the income service agreements where people are going through these, let's say, for example, bootcamps coding, bootcamps from different fields, right?

Shamil Rodriguez (00:32:44): Like, I don't want people that are listening to this, like, Oh, I could never be a programmer. If you have an interest, you'd be surprised how many people make the switch, but they have these companies now where they're tying the success of your education to where you get employed and your income. So they'll say, you know what, you don't have to pay us a dime to come and join our, our education program. And then once you get a job, then you start to repay a percentage and agreed upon percentage before you even started this program. So you come in with eyes wide open and you have an understanding of what you're actually getting into and based on the results that you actually get from going through that education in the first place. Yeah. So I think those are some of the creative ones, um, that, that, as you said, just put me on the spot there, but I'm thinking those are the ones that, that come to mind that I think looking forward into the new year, especially with the pandemic and with a lot of people having to go to school remotely, you know, have their graduations remote, have their, um, their, you know, exams be performed remote.

Shamil Rodriguez (00:33:47): These are all, um, in my opinion, opportunities to reassess the value that people are placing on sitting in a classroom, um, you know, and, and, and in exchange for the amount of student loans that you take out to do that. So I think it's, it's worth, it's worth taking a deeper dive. And so that, that might be its own episode by itself. Honestly,

Daphné Vanessa (00:34:12): I agree. I agree. Um, so, so much happened in 2020. Uh, we went over some of those items and interesting point that we just want to bring it up is that student loan servicers are changing. Now, we're not going to see again, like every of, couple of, of, of quarters, this changes, but we have new student loan, servicers changing. Again, it was announced fourth quarter of this year, 2020. We're not going to see those changes until the end of December, 2021, but it's worth noting that student loan servicers are going to be changing. And just like last time we have to assess what that means for us. So you can follow us at the student loan podcast. We'll be closely following this, just to know how this impacts us as consumers. You know, what will the policy changes be? What will, um, the changes be with how you're paying off your loans and, and the servicing relationships will certain programs end with one servicer and begin with another one.

Daphné Vanessa (00:35:27): Those are all things that we don't know yet, but the announcement that there will be new servicers has been made. And those lists of servicers has been published on the department education site. So that's something that, um, we can link in the show notes, right? We'll we will link in the show notes. Yep. Yep. Well said. Um, and so the best thing you can do with this change is just stay on top of communication that you receive from your loan servicer and see how your terms and conditions are going to be updated, likely how you continue making payments will change. But there are a lot of details and the nuances in the terms of conditions that you want to be mindful of, because it may impact some of your extended repayment options. So let's look at the communications let's follow. Um, and if you haven't received communication by November, 2021, then there's likely no change for your servicer, but you are probably going to be receiving communications up to before then for most servicers. Um, again, the changes are going to happen likely at the end of 2021 December, um, and probably into 2022 for other servicers, but it's something to be aware of and to start paying attention because with new servicers come new policies

Shamil Rodriguez (00:36:55): Well said, well said. And I think the idea definitely if I may is, um, the communication piece is very important and I will do my continuous plug here. If you go back to episode four of the suit alone podcast, uh, with his interview that we had with Xena Kumar, who actually was able to cut down her student loan debt, a dramatic amount by only making $10, an extra payments per month, all because she had a call with her student loans, student loan, servicer, she literally called and said, Hey, what are some options for me? What would my debt change be like, if I made an X, Y amount of payment, they calculated the numbers with her on the phone. And that's how she came up with a strategy to save thousands of dollars and several years off of her student loan, uh, you know, payment plan journey that it was expected, the projected pay off just because she made extra $10, uh, extra that $10 payments of per month.

Shamil Rodriguez (00:37:54): So, you know, please take, take, you know, don't take it, don't take it lightly, I guess, is my point Daphne's advice here, or a recommendation that you look at the, and you keep an eye on the changes to your student loan, servicers, and, you know, take a look at the link that we've put in the show notes to see if your loan servicer is going to change or what that might mean for you, because they ultimately, they want to, ultimately they being as loan servicers, want to make sure that you make your payments, right? That's there, there's the, it's a business. And so they are going to be creative. If you're willing to communicate with them, they will be creative to help you come up with solutions to reach the ultimate goal, which for them is to pay off your student loan debt.

Daphné Vanessa (00:38:38): Yup. Yup. Um, awesome. So with that, let's talk about 2021.

Shamil Rodriguez (00:38:45): All right, let's go forward 2020 shed that off. You can deep breath everywhere

Daphné Vanessa (00:38:52): When it is over. It is over. And now we are looking at 2021. I love to go into the new year with optimism and positivity. And I think that despite what happened this year for all of us who survived the Corona virus for all of us who survived the, the tensions in the country for all of us who survived the, the isolation, to be honest.

Shamil Rodriguez (00:39:20): Yeah.

Daphné Vanessa (00:39:21): And, and, and economics, uh, we have a lot to be proud of ourselves for, for getting through that. And what 2021 looks like in the student loan world is going to be interesting. And, and we hope pray, send positive vibes into the universe that the new administration, that the new policies will help lift us up and move us past this. So the first item that I want to share with you guys is we have a new administration coming potentially, which could be new people, new leadership. And I wanted to share a little bit about Betsy Devoss and her legacy to understand what may be different. So Betsy Devoss was interesting. She didn't necessarily come from an education background, but had a lot of experience with, or I guess, as an investor, you could say in charter schools, um, she was a proponent of charter schools, and I think that's what got her to the department of education, but what were her policies in the student loan space that I think is the question, right?

Daphné Vanessa (00:40:51): I think I'm being very careful with my words, because I want to make sure that we speak about this objectively. And while she mentioned that students should have protections against predatory practices, um, she did not believe in giving free money. So she specifically, uh, said that before borrowers have their student loans erased, they have to meet a higher standard. So she was not a proponent for racing student loans. Um, she, you know, wasn't a proponent of, of any, anything close to erasing student loans, um, but really focused most of her work, it seems like in the K through 12 space, what are your thoughts on secretary Devoss? Shamil

Shamil Rodriguez (00:41:57): Yeah, I think, I think you, you hit it on the head when, in terms of, you know, her focus seems to have been the charter school space, you know, that, that debate that's still, you know, moves forward from a K to 12 perspective. And we're actually going to have a special guest that's going to discuss that. And if you Travis ode, so stay tuned for that, if you're interested in that subject matter. But I think that the, the one highlight, or I guess if we look at both sides of the coin, um, the highlight that I, that I perceive is that, you know, she at least, uh, worked with the administration to, uh, help during the pandemic, you know, push the forbearance. Let's not forget that that's like something that really happened. It's impacting millions of people and it's like a real, tangible results. So, you know, I have to make sure we acknowledge that because that's when we are angry.

Shamil Rodriguez (00:42:46): Um, I think the other, the other side of that coin is that certain programs that were slated to go into effect or were supposed to be carried up by the government from the previous administration kind of fell flat. And I think that's where the negative side or the con under her leadership has been. It's like, where is the, um, you know, public interest student loan forgiveness program where, you know, what's happened to those people that have spent the 10 years, uh, and you know, either a nonprofit space or government space and are, are now waiting, cause they've, you know, perform their part of the agreement for their sort of loan debt to be forgiven. Right. Uh, like you said earlier, what's happening with the, you know, a percentage of your income should only go towards student loan debt and nothing above that. Right? Like your income based repayment programs, where's that coming from?

Shamil Rodriguez (00:43:36): Like what, what happened to that? So, um, when you asked you about secretary of bosses perspective on student loan debt, that's, that's what I see. I see the two sides of the coin. You know, we have that, she took action and worked with the administration to help student loan borrowers across the country during the pandemic. But she also left a lot of people out in the dark because actions just weren't taken. Um, and like you said, because she may not have agreed with the concepts of, uh, Hashi Fraser, you know, giving out free money or whatever the case may be. I think that, um, if she had known about starting new, maybe she'd be an advocate for it because, you know, you, you're, you're helping the community and you're not just asking for, uh, you know, a handout. Um, but you know, all jokes aside.

Shamil Rodriguez (00:44:25): Uh, that's, that's my perspective. I do think that moving forward in 2021, uh, I am interested, very curious to see how, uh, the new incoming administration will, um, revisit some of the former student loan topics and like creative topics, right? Like income-based repayment programs when that came out. That was a really interesting creative idea. The idea of like a pump public interest loan forgiveness program, right? Those were all creative ways to help the generation. I got slammed with the great recession. And then now the question is, do we revisit these right? Because that agreement was made back then, but then now with a pandemic, that same generation that had a student loan debt bird and still has that student loan debt burden. Um, and so, uh, that's, that would be my perspective. There is, um, I really am looking forward to seeing what these new creative ideas are that will come out, whether it's, you know, service-based scholarships, service-based tuition programs, um, the continued growth of ISA right income service agreements, where you're paying back a percentage of your salary after you graduate and get a job versus paying and taking out student loan debt in the first place from the school that you go to.

Shamil Rodriguez (00:45:40): Um, and it's not just coding bootcamps by the way. I just want to make sure that like, like, like schools like Purdue and other colleges, universities across the country are experimenting with the ISA format, right? So now you can get a nursing degree or a certain other degrees with an ISA. So you're not paying upfront at all to go to school, you get the job and then you pay back a percentage of your income every year back to that program that helped me get the job in the first place. I like love that model. I'm sorry. I got super excited about that. I'm sorry, but that's, I just get super excited about that topic because we don't have to just continue to do it the way that we've done it before. Um, and so I think 20, 21, in my opinion, um, and maybe this is because of how 2020 came out, um, is that there will be some change.

Shamil Rodriguez (00:46:28): There will be some new creative ideas as we try to get back to what a new normal would look like. Um, I think that with that idea comes, uh, creative ideas and solutions that people can consider, um, or look forward to from either the administration or from the private sector. Right. Let's not forget that start new is one of those types of solutions that I think changes the game in its own way. Uh, and there are other private companies that are also trying to do, uh, work in that space in their own creative way. So that's, that's, that's, I guess those are my thoughts on that, Daphne.

Daphné Vanessa (00:47:07): Nice. Um, I think we have a lot to look forward to next year and we should definitely just focus on that optimism. What is campus life going to look like post Corona virus? Yes. Speaking of new normal, I think the,

Shamil Rodriguez (00:47:30): The idea that we've seen already, how some schools have adopted, uh, or soon to be adapted to the coronavirus, right. Some schools went right back to it. Um, you know, our back into school life, uh, we, you know, with, with the common, you know, PPE restrictions, uh, and testing in and, and contact tracing, uh, and then other schools were like, no, we're just not doing it. Like, we'll see you next year or we'll see you next semester. Uh, we're just going to go remote completely. Um, I, I am curious to see, I do think that it would be interesting, or I guess it would, I liked the idea of playing the games with like, what will happen in the future is, you know, will schools give the option of letting students stay remote and then also reflect the change in their tuition? Because there, there was some backlash let's not forget, um, that when students were going back to school, uh, either in the spring or signing up for registering for fall classes of 2020, um, I spoke with some students that were like, why is my tuition going up?

Shamil Rodriguez (00:48:34): So they like started petitions, like way I'm not going to be at campus, but I'm still paying more. Uh, and then other students said like, why am I even paying this much money if I'm not, if I'm just going to be in zoom meetings all day. Right. So I'm not going to pick one way or the other. I just think that it's interesting. And I think looking forward to 2021, that I want to see how this shakes out. Like I do want to see, like, they're typically from what I've seen is a reduction in the amount of tuition that someone pays. If they sign up as an online student, right. That online, you know, students studying programs have come a long way from when let's just say earlier, uh, in time. So we don't date ourselves, but the idea that there is a price difference and that that's all the way up to the board, right?

Shamil Rodriguez (00:49:21): Like those are real conversations that they're having, about how much do we charge our online students versus how much we charge our in-person students, because there's just a different experience. Now, the question is what if you were accepted? And usually it was based on when you were accepted to the school in which program you were accepted into. So you were accepted into an online program, you paid the online program amount, and then you were in person, you paid the in-person amount, but COVID kind of threw a wrench into that plan because what if you have been going remote for now essentially a year and almost, probably more depending on your specific school, um, you know, should you be paying on that student rate? Uh, yeah.

Daphné Vanessa (00:50:04): Well, shouldn't the school at least give you that option, right. Or schools giving the option to pay the online rate with the pandemic.

Shamil Rodriguez (00:50:13): That's the question. I think that's the question to look forward to, uh, that, you know, in my opinion, it will be optimism. I hope that, uh, boards in colleges and universities will, will really consider, you know, what's the difference there because should students have the option? Like you said, Daphne, well said, should they have the option to go from, Hey, I was accepted in my in-person program to, I've done now, basically a quarter of my learning in your program online. I want to continue that. And I should just be paying the reduced rate of what that is or what that looks like.

Daphné Vanessa (00:50:49): Well said what a year.

Shamil Rodriguez (00:50:55): Yes. And a lot to look forward to. Right? Like it's, I think it's, you bring up a really good point of, um, looking forward is definitely the perspective we should have, um, being United in that front, uh, considering all the creative ideas for how student loan debt should be tackled, uh, creating the, uh, or tackling the, all the creative ideas that are out there for how tuition should be tackled. Right? So start new offering a really creative solution for, and I'm tooting my own horn obviously. Um, but I think it's, it's out there. Uh, the idea that it helps give an option for tuition through service base and student loan repayment, but then we also have creative ideas for tackling tuition, like ISA and conservative agreements, which I mentioned to described before. Um, so, you know, there, there are plenty of opportunities and options out there to look forward to that I think are going to change the landscape, uh, because it is a $1.7 trillion, uh, you know, amounts and industry slash human beings that need to get some sort of relief, whether it's a combination of, uh, suited that constellation, whether it's the income, income based repayment programs, whether it's the public service relief programs or private organizations that are coming up with their own solutions for the matter, um, that we should be looking forward to.

Shamil Rodriguez (00:52:15): And I mean, hard to say here, Daphne, but as we learn from 2020, we're not here to make predictions because things may not turn out the way we thought.

Daphné Vanessa (00:52:23): Right. Right. The locus may take over an alien invasion may happen. We don't know. We don't know. So, um, I, I hope that we are hope I didn't call that into the universe by the way universe. That is not what I meant. I love that. I just want to reiterate that my favorite thing about 2020 was people coming together over causes and generally the world becoming more of an activist culture. I loved that about this year. What were some things that you loved about 2020?

Shamil Rodriguez (00:53:09): Uh, for me it's hard to, I'll be honest. It's hard to, so it almost feels weird to say that, right? Like what's my favorite part of 2020 when I think of, like, I just think of all the people that have passed away because of the coronavirus and, uh, and for George Floyd and for other ways that, that our country responded to that. Right. So I'll be honest. It's something that it doesn't even feel weird for me to think of it that way, but, but there were plenty of opportunities that I think were real unification moments that also existed from each of those components and to bring it back to student loans, I think the idea of both sides of the political spectrum came together to say, Hey, this needs to happen. And we need to figure out some sort of relief and they got it done.

Shamil Rodriguez (00:53:58): So, you know, in the few moments and a lot of people make the jokes about things not ever getting done, you know, but I think that's something that, that was real, it's tangible, you know, the full branch program for people that have federal student loans is real. Um, I do, uh, do a really appreciate that. I think that was, that would be one of my favorite, like demonstrative results that came out of 2020 was that unification around student loan debt to say, Hey, we know it's not the solution to all the answers, but here's something we can think of that will provide some sort of temporary relief while, while you get through this tough time. Um, but you know, with your neighbors and your family members through this pandemic. So I would say that was, that was mine was the, the idea that government took action. It was quick, it was bipartisan and it helped at least from a temporary perspective, try to, to, to help a mass segment of the population that, that carries through loan. That

Daphné Vanessa (00:54:55): That's a great one. And let's talk lessons learned. So lessons learned from 2020 that we can take into 21. What are your thoughts?

Speaker 4 (00:55:07): That's a good one. That's a really good one. Don't assume anything, right?

Shamil Rodriguez (00:55:13): That is probably my 20th 21 mantra. Uh, I think this year, uh, uh, no lessons learned, I would say for sure, don't assume anything. Um, but I also think, uh, what I've learned too, if like take advantage of the opportunity, if you can. Right. Um, like I know that a lot of people were like, Oh, I'm free. You don't have to make payments. And it's like, totally true. I get that. But if you can, and if it makes sense for you financially, you know, put that extra, you know, a hundred dollars, if you can, uh, towards a three loan payment, like while it's still just going towards your principal. Like, I guess, I guess I can't stress enough where another way to look at this is, and I think this is more, my point is like changing your perspective of like how life is, is a lesson learned that I think I took away from 2020 is like, you could focus on, you know, different angles and just flip the script on these things, like your mental model, which would be, you know, Hey, you know what, I have an opportunity here. The government basically put the interest on hold and said, Hey, Shamil Hey listener, try to pay this off as much as you can.

Speaker 4 (00:56:20): Cause guess what? That means. There's less principal. Yeah, exactly.

Shamil Rodriguez (00:56:24): Right. Like how many times do you, you know, do people say like, Oh, I wish I could just call my school or my servicer and say, I want all of my payments to go towards the principal, right? Yeah. Well guess what, now that time, if you can, like I said, I don't want to be ignorant or, you know, try to ignore the reality that there are some people that just can't and like, that's the, that's the case, but I would really say to just look at yourself in the mirror, the financial mirror, so to speak and say, Hey, you know what, you know, maybe I should just throw his extra a hundred dollars or $50, a $25, whatever the case may be. Like in Zena's case, it was an extra $10 towards the student loan principle and see how many years that saves from, from my repayment plan, call, call them, call your loan servicers. I think that's something that I've learned, especially with our guests, um, just to see how many of them changed their, their student loan repayment journeys, like cutting it down by several years and thousands of dollars by simply calling their loan servicer and saying, Hey, um, you know, what's the fastest way I can reduce this, or what will this extra amount towards my principal change? Like, would it really change anything? And you'd be surprised it actually does. So that's what I, that's what I learned from 2020.

Daphné Vanessa (00:57:37): Yup. Yup. That's a very good one. Um, I learned from 2020 that we are stronger as one. So people, again, back to the advocacy piece, joining together to push causes as a one I think was beautiful and it really showed that not all power lies in the super wealthy and the super politically powerful, but a lot of power also lies within people organizing together and unifying towards one cause. So that to me was beautiful. I had a renewed faith in democracy, ironically. Um, I had started to lose faith. I'm not going to lie, but I had a renewed faith in democracy seeing how people were able to organize. Um, and, and that people chose to that that still exists within people. And I would love to see that happen in the student loan space. I can't wait to see the day when borrowers say enough is enough. The compounding interest does not make sense. The agreement that we signed that was not transparent, did not make sense. We no longer agree with this. For example, um, I would love to see a world where we start to organize more around justice causes in the student loan space. So

Shamil Rodriguez (00:59:05): Well, so that's, that's very true. That's a good one. Um, okay, good.

Daphné Vanessa (00:59:10): Sorry. That's it. That's all I have.

Shamil Rodriguez (00:59:12): All right. No, this is, I think was, uh, uh, I mean, we're saying it for ourselves, I guess for tooting our own horns, but I actually appreciated this episode. Um, I hope the listeners also enjoyed the episode. I would like for, for folks to give us their feedback, uh, like would they like, would you like us to continue interviewing, do you want us to do more of these types of episodes where we, where we kind of talk about the topics of the day and really, you know, take a deeper dive into them. Um, you know, what do you want more of a good way to share that with us is by signing up for our email list directly on the student loan podcast. And you can also leave comments on the student loan podcast website for this shows notes, right? We leave that ability open, and if you're on Instagram, follow us on Instagram, like comments send us DMS.

Shamil Rodriguez (01:00:00): We actually do respond to those. Um, and we've really appreciated that folks have been, um, have been including us and actually tagging us in stories, uh, with their favorite podcast episodes. That was actually really fun to watch. So, um, if you are listening, you're listening to episode 10, it's a up slowed for us. We're happy to be here. And we look forward to making more, uh, you know, subscribe to our podcast. If you like it, give us five stars, rating review. Like I, I enjoy this process. I enjoy the interactions with the audience and I, and I think that 2021 is actually going to have more of that. And I look forward to seeing what our listeners share with us that I guess my, my closing comments there, Daphne

Daphné Vanessa (01:00:43): Love it. I have nothing but good things to wish everybody in the audience. Good vibes. Positivity. May you be so blessed and so fruitful this upcoming 2021, I'm looking forward to engaging a lot more with you all. Thank you for everybody who is engaged with us so far, we're looking forward to developing more of those relationships and getting closer with you all and see you in 2021. Right.

Shamil Rodriguez (01:01:14): See you in 2021. Remember if you want to see more show notes and learn more information about what was covered in this podcast episode, visit thestudentloanpodcast.com/episode10. That's the student loan podcast dot com forward slash episode 10.

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