Betsy Mayotte (00:00): If consumers remember that the name of the game is paying the least amount over time and approach their student loan strategy with that in mind, rather than the word forgiveness or what's the lowest payment I can possibly get. I think that will lead to the best long-term strategy.

The Student Loan Podcast Intro (00:15): 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, where your hosts, Daphne, Vanessa and Shamil Rodriguez.

Shamil Rodriguez (00:33): Welcome to another episode of the student loan podcast. I hope he ever thinking caps on today because our guest Betsy Mayotte is going to share her over 20 years of experience and knowledge of the student loan industry. We jump into why Betsy started the nonprofit free student loan advice.org, her experience, negotiating the details of regulations that directly impact your rights as a student loan borrower and the three most important takeaways she believes every listener should implement after listening to this student loan podcast episode. So with that being said, enjoy the show. Okay. Betsy, how about you tell the audience a little bit about yourself?

Betsy Mayotte (01:13): Well, I'm Betsy Mayotte. I have, I'm currently the president of a nonprofit called the Institute of student loan advisors. Uh, our mission is to ensure that all consumers have access to free, neutral and expert student loan advice. I feel like I've been in the industry, the student loan industry since the tiny stores round. Um, I spent the majority of my career as a compliance officer at a nonprofit student loan guarantee agency. Uh, I was there for almost 20 years and while I was there, that's sort of how I acquired most of my kind of nerd level knowledge of student loan, uh, regulations and law. Um, I was also able to do a lot of, uh, borrow advocacy and outreach work as well as work with the department of education and other, uh, members of the industry to help write some of the student loan regulations. And here I am, I live in Massachusetts. I'm a huge red Sox fan.

Shamil Rodriguez (02:13): Oh man. I can't, I can, uh, I think we have to end this podcast here. Um, it does get a Yankees fan over here, so, well,

Betsy Mayotte (02:25): I'm going to make the rest of this interview very hard on you.

Shamil Rodriguez (02:31): Um, no. So Betsy, uh, tell me, um, I guess I was curious the, uh, what is a student loan guarantee, uh, organization, right? We want to make sure that our listeners are really keeping up with, uh, with some of the work that you did that built up this experience that you've developed over the years

Betsy Mayotte (02:47): Back before 2010, there were two federal student loan programs. There was the federal family education loan program or the fel and the direct loan program. And both of those programs were exactly the same except where they were different. Um, both had Stafford loans, both had parent plus both have graduate plus both have consolidation. The difference is that the fell program was the older of the two and the way federal student loans used to work is the government, um, convinced private lenders to lend money to 18 year olds that might not have a good or any credit history under the terms that the government gave them. And knowing that they wouldn't start getting payments until the student was out of school. And in exchange for that, the federal government said to the lenders, if this person doesn't pay you back, then we will buy the loan from you. So what a guarantee agency was in the fel program, it was essentially the, almost like the insurance on behalf of the federal government. So the federal government task guarantee agency to manage these claims, uh, to pay the lenders if the borrower defaulted on the loan, but they also tasked them with oversight of the lenders as well as default prevention. So their job was to try to reach out to bars that might be struggling and to help prevent them from defaulting in the first place.

Shamil Rodriguez (04:07): So the model changed is it because the federal government became their primary lender?

Betsy Mayotte (04:13): So the direct loan program came into being in 1994, you know, not to oversimplify, but I'm gonna essentially the direct loan program was the Democrats baby. And the fel program was the Republican's baby. And for it, both programs existed together, you know, between 1994 and 2010. And whether you got a direct loan or fell long dependent, exclusively on what school you went to. So schools chose whether to participate in the fel or the direct loan program. And up until about 2009, probably 70 or 80% of all schools participated in the fell, but then they, they ended up changing the way these loans were scored in the budget. And when they changed the way these loans were scored, it came out. Whereas it used to be that the fell program was the least expensive of the two. Once they changed the way they accounted for them, all of a sudden the fell program became the more expensive of the two. So in 2010, Congress got rid of said, no more new loans under the fel program. And everything went a hundred percent direct loans.

Shamil Rodriguez (05:20): That's actually a good, a good historical perspective. I know you, like you said, you oversimplified it, but I think it's good to have that perspective of how schools were shifting. Uh, and the reality is politics plays a part of a lot of how, uh, the federal student loan programs, uh, I guess have been implemented over the years. I know there's another part of your background. And I thought it was really interesting was the American student assistance, um, organization that you've been a part of, uh, out in Boston. Uh, would you mind just sharing with the, with the audience, what, uh, what that organization does, if that's an organization they should be aware of?

Betsy Mayotte (05:53): Yeah. So ASA was the guarantee agency that I, that I worked for for almost 20 years as their compliance officer, as well as doing bar outreach and advocacy, um, as they used to be called, um, the best cheesits, higher education, higher education assistance corporation, it was a state chartered. It is a state chartered, uh, organization. They actually fun fact. They gave out the very first federal student loan back in, I believe it was 1956. That is a fun fact. They, they were one of the biggest student loan guarantee agencies. They are still a federal guarantee agency because, you know, even though they stopped making fellows in 2010, about 18% of the, of all federal student loans are still fell. So ASA does still manage, um, you know, ensure a portfolio of fell loans on behalf of the department of education. However, they refocus their mission in 2017, you know, over the years, ASA has always said that they felt that more help should be given to consumers that have student loans.

Betsy Mayotte (06:59): And they felt that it was the government's responsibility to provide that help. So over the years, ASA had a ton of really innovative programs, um, to, to try to help student loan borrowers as much as possible. Well, they also, they also realized that it, it, actuality student loans are just a symptom. The problem is the cost of higher education, where they refocus their mission in 2017. What they're doing now, when students are in middle school, helping them understand what their, uh, career pathways and higher education pathways might look like. And depending on what that pathway is, how to pay for it, hopefully without getting into student loan debt in the first place. So they're just not looking at college. You know, they believe that everybody should have some sort of higher ed, but higher ed doesn't always mean college. Uh, for some people it might mean an apprenticeship for some people, it might mean some other type of experience pathway to, to get the additional knowledge that they need to have the successful career. So they, they work with middle schoolers to help, you know, on programs to help them understand that, um, before they get into the depth of first,

Shamil Rodriguez (08:09): I really liked that idea. I think that's, uh, something we've discussed on the podcast before in previous episodes, how all of it is linked, right? We've, we've had some, some experts in the K through 12 education space. Uh, and, and the idea behind that is that there it's all linked, it's all connected, right? The idea that, um, making decisions at your middle school point, aren't even making decisions, right. They're not necessarily saying I'm going to the school, right. But the idea of having an understanding, I really liked that, that, that concept, um, because in the end, if you're trying to change someone's financial perspective or understanding of how to finance their education and understanding what type of education they need, um, if you wait until they get to colleges, it's already too late, in my opinion, uh, for a lot of people, unless you can get ahold of them before they sign off on these student loans. Right. Okay. No, thank you. So, so Betsy, I mean, uh, can you share a little bit more about the idea that higher education is really a part of the source of the, of the issue here? Uh, could you just share a little bit more about what you think there, you know,

Betsy Mayotte (09:15): Back when the first colleges, you know, a couple hundred years ago when the first colleges were being created, it was all about it was it wasn't about getting an education to get a career. It was about education for education's sake. And we are so far away from that today. I mean, it's, it's sad if you think about it, but today, you know, college is, it comes down to the, the return on investment and the cost of college. I mean, there's data everywhere, but the cost of college has increased significantly way more than, you know, the con the consumer price index or the other economic, uh, factors that people look at. Um, and it's become unaffordable except for, unless you're very rich or very, very poor. Um, if you're very, very poor, then it's likely that you're going to qualify for more grants and scholarships. If you're very, very rich, you can pay for it out of pocket.

Betsy Mayotte (10:15): Well, that leaves the majority of consumers out in the cold, you're looking at your low and middle income families. Um, they might get some grants, um, but they don't have, you know, $25,000 a year to, to support towards a college education. So that leaves us with loans back in the day, sort of starting with the GI bill, the United States made the decision that they realized that access to higher education was important and that access to higher ed should not be based on your current financial situation. And they made the decision to pay for it with loans. And that's sort of where we're at today, but unfortunately the woman that sort of created the basis for our current loan scheme right now, she just passed away in the last year or two, but they interviewed her about a year before she died. And one of the things that she mentioned that I thought was really interesting is that when they were building this sort of student loan platform or student loan policy never occurred to them, not that not everybody would complete.

Betsy Mayotte (11:17): So that's one of the, that's one of the things that we run into when, when you look at people that struggle with student loan debt, you're way more likely to default if you actually have a really low balance. And the reason for that is because the people with a really low balance probably didn't get their degree. So they have debt and no degree. So there are no better off from a job prospect perspective, but now they have this additional debt. People widen their eyes. When they hear about somebody that owes a hundred thousand in student loan debt, or 200,000 in student loan debt. Um, but those people are, are much less likely to default. And then they're much more likely to get into a program that can help that debt be affordable as to the, as opposed to the people that are less than $10,000.

Daphné Vanessa (12:01): Just brainstorming here. What are your thoughts on potentially being more clear on data points for students that are entering school? Right. So at no point in my college education process was the question asked to me, why are you here? Are you here to get a job? Or are you here for the sake of education? Like you said earlier, how do you think that metric would help universities provide a more adequate service?

Betsy Mayotte (12:29): I actually don't think that data point would what that, what, what data points I do wish that more students, um, understood before they made the college decision. Uh, this, this one I'm about to say is by far number one, um, over 70% of all students change majors before they complete, right? So, you know, you run into a lot of students who say, Oh my God, I have to go to the school. I'll do whatever it takes. I don't care how much debt I have to go into this as a school I want to go into, I want to go to, and that's fine, except that you come to the realization that two thirds of them are going to end up changing majors and probably schools by the time they finish. So letting people, making sure that people understand that no matter how passionate they are about a particular school or a particular major today, if that's likely going to change and they shouldn't, they, they, they should sort of take a step back and evaluate all their options with that in mind.

Betsy Mayotte (13:24): The other thing to consider is when you change majors, that usually means that you lose some of the credits that you've already accrued, which is why it takes an average of five years to complete a four year degree for most students sort of going down the list on a related note, you know, the first year that students attend college and they take out loans, they may look at the loans they took out and say, well, it's 15,000. Um, I can handle 15,000, but they're not taking into account the four or five years, they're going to be there. So if they're borrowing 15,000 this year, um, then by the time they're done, they're going to owe a minimum of 75,000. And even that doesn't necessarily speak to most people like 75,000. I think we can all agree. Sounds like a lot of money, right? But it doesn't, it's not a real number in anybody's head. That's not a real number. You need to take into account how much that's going to cost you later. So rule of thumb, every 10 grand, you borrow that's about $125 a month every month for 10 years. So if you're borrowing $75,000, you're looking at over $900 a month, every month for 10 years, do you see the difference of the impact of that number?

Daphné Vanessa (14:40): Huge. Yep. Totally see the difference. Yeah.

Betsy Mayotte (14:42): So, you know, again, 75, all, yeah, it's a big number, $900 a month. It's a bigger number if you're smelling what I'm cooking. So those are data points that I wish that students understood before they made the college decision. Got it.

Shamil Rodriguez (14:58): Yeah. I think that that's actually a good, a good point. They're making that decision and looking at your total package to say like, Hey, you're a freshmen you're coming in. Now, if you sign on this dotted line, it's not just the 10 K or 15 K for this semester. It's, it's all of this for the four years. Uh, and then it would be great if people actually looked at an amortization schedule to say, Hey, that $40,000 that you took out actually will be $60,000. Um, obviously just throwing out numbers here, uh, by the, you know, if you just paid it, make the minimum payments for the lifespan of the world,

Betsy Mayotte (15:32): Right. And then, and then considering your take home like $900 a month every month for 10 years, when your take-home after taxes might, if, you know, if you're lucky might be three or $4,000, so you're gonna, you're going to spend a quarter of your take home every month for 10 years. You know, again, that's, those are the data points that I want people to look at. And then from a college choice perspective, we're really lucky today, as opposed to, you know, when I, when the dinosaurs roamed and I was making a college choice, we have the college scorecard, um, that will tell you, you know, you want to look at the graduation rate of the school. The college scorecard will also tell you the average starting salary, um, the default rate. So if you see a school whose student loan default rate is around the same as their graduation rate, you, it's something you might want to think twice about.

Shamil Rodriguez (16:25): That's a, that's an interesting perspective to look at it that way. I guess it's almost like a reverse engineering, the, the results that you'll, you'll end up getting, uh, based on the graduation rate, that's an interesting perspective. What about the idea of some creative financing for school? Right. I like the, um, like how, how would you say are some way that students outside of just scholarships are paying for school, right? Like, or not just the creative financing, but I think more so the, the different alternatives, right? Is it just community colleges is adjust for years, like, um, you know, myself, I took, I took advantage of, of, of a military benefit to be able to pay for grad school. Um, you know, something that was good for me, but like, what are some of the other, uh, I guess, solutions out there that people may not be considering when they're only solely focused, you don't have tunnel vision on a four-year school?

Betsy Mayotte (17:16): Well, one of the tips that we talk about all the time that I wish more people took advantage of is, you know, attend community college for your first year or two, that hopefully you can pay out of pocket and then transfer into your dream school. So you've just cut the co the cost potentially in half for that. The other benefit to that is that if you're one of those two thirds of students that ends up changing majors or changing schools, you will, you will not have lost as much as you would have if you'd gone to the more expensive school, right from the, the other thing that is can save a lot of money is if you can get away with it, don't live on campus, live at home. And I know that's not as fun. I know mom and dad don't put on the keg parties as awesome as baby happen on campus.

Betsy Mayotte (18:04): However, that could be a huge expense. Um, it living on campus or not, I should say, not living at home. Um, so that's something else that could be done to cut the cost. Uh, also working, you know, attending school time. So you're still eligible for financial aid, but working and taking, you know, maybe you take six years to finish, but maybe when you finish, you finish debt free or almost debt free as opposed that if you didn't work and you went full time and, and borrowed, and then the flip sort of the flip side of that, if you're a real go-getter and you have the discipline to do it is to accelerate your time there. See if you can finish, you know, take extra classes and see if you can finish in three years, rather than four.

Daphné Vanessa (18:52): I think they really help cut costs and especially the community college piece. But I know that's your wheelhouse for mills. So please go ahead.

Shamil Rodriguez (18:59): No, no, no. I was going to say the, the, I love the, the combination idea and adapting. You've done that as well. Um, you know, you graduate with, you know, a lot of people, you hear the double majors, you hear the people with majors and minors. Um, it always made sense to me where it was like, wait a minute, I can go to school and I don't have to just get my one major. I remember when I first came in, they're like, yeah know, you can get two I'm like, but am I paying double? And they're like, no, no, you, as long as you get it done in that time period, you're good to go. And I just remember being like, Oh, well, that makes complete sense. Like, why wouldn't I do that? Yeah.

Betsy Mayotte (19:30): You know, graduate degrees, which is where the loan debt really tends to rack up. You know, I would encourage people to go to work and then pref, hopefully you end up working for an organization that does tuition reimbursement. So maybe you can get that graduate degree again, it might take you a little bit longer, but if you can get a graduate degree and not have to pay anything for it, that's enormous. And your ROI is just increased exponentially.

Shamil Rodriguez (19:54): Absolutely. That's a good point. The, the, I love the idea also about the community college. And I think Daphne alluded to that earlier when, when I was on a board with the community college here locally, I was there right out of college point is that we had a program that was starting to grow, to recruit some of the top performers in the area. We had specific folks going out to different high schools, looking for those top performers and saying, Hey, if you join in on this program that we're offering to this specific cohort of students like yourself, there's high performers. We will help you get into your dream school. And now you'll have less of that debt. So I thought that's a fantastic idea that you brought up there, Betsy, but it's interesting that the social part of going to a four-year school and not staying at home is a really big driver. Like I know we say it like in passing, but there are a lot of people that make that decision for that reason, right. To say, like, that's the difference for sure. And I don't to discount the college

Betsy Mayotte (20:48): Experience. That's fair. There's a lot of growing. My best friends today are people that I made well that I met in college. So I don't want to, I don't want to discount that all of these things that we've talked about, you know, you should have a pros and cons list and you have to, you have to balance those things. But on the other hand, I've talked to so many families over the years where there's no reason that the student can articulate that they want to go to this particular school. It's just, they want to go to that particular school. You know, one story that I've told many times, because when it happened, it really illustrated for me. The issue is this was years ago, I was asked to talk to a family. They were trying to figure out how they were going to pay for school for their daughter.

Betsy Mayotte (21:29): And the family lived in Massachusetts. The daughter wanted to go to the university of Rhode Island and they had really, they had gotten an excellent financial aid package. There was really no other money to be found out there. They'd gotten a lot of scholarships and grants and, and the federal loans. And they were still 15 grand short for the year. So after I'd gone through all the, all the things and made sure that we checked all the boxes, I took a step back and I said, so what does your daughter want to study? And the woman said, Oh, she wants to study criminal justice. Well, at the time, university of Massachusetts in Lowell had a nationally recognized as one of the best criminal justice programs in the country. And so I said, well, that's great news because you're a Massachusetts resident. And based on the financial aid package you've already received, she could go there for free. And that woman called me names. I'd never heard before, like yelled and screamed. No, that her daughter wanted to go to URI and they were going to do whatever it took, even if it meant going into unaffordable debt to send her to URI. And I said, why? And I was said, because that's where she wants to go. And it made no sense she could have gone to a school that was better at what her career choice was for, for nothing. She could have gone for free.

Daphné Vanessa (22:45): It was her goal to work in Rhode Island.

Betsy Mayotte (22:47): She wanted to go to URI.

Daphné Vanessa (22:50): Okay. So sometimes there's a, I want to work in this city. So that's why I was just wondering, but maybe not. So,

Betsy Mayotte (22:57): I mean, I've, I could, I've run into that so many times in my career. Um, so it's just a matter of, you know, getting the student to articulate why they want to attend that particular school and try to break it down, try to break it down to tangible things.

Shamil Rodriguez (23:16): Yeah. Having going through that, that, that like checklist process and the pros and cons, and then walking through to say, Hey, what is it that you really want here? And like you said, don't discount the college experience because that definitely is a part of not only what they want right. Or at least part of the consideration, but it's also like what's marketed, right? Like it's, it's something that's totally marketed as like what you should do, uh, Betsy. And I'm glad you brought that story up. It's just, it's unfortunate that sometimes that's the way are made, even though the numbers don't make sense. You know, sometimes people would just make that emotional decision. So, but I wanted to turn our attention over. If you don't mind, I wanted to, for you to speak about, about your background, your, you served as the primary negotiator for rulemaking sessions that impact student loans directly, right. It's not, not often you hear, you know, a lot of times people just think elected officials make these decisions, but would you mind just sharing with the audience what that actually means or like how that even came about? I think it would be, it would be fun to learn a little bit more about that.

Betsy Mayotte (24:18): Yeah, no problem. I love to go shoot a rulemaking if it works the way it's supposed to work, but let me take a step back and explain what that is. So Congress writes the overarching law about student loans, but they don't write the details of the law. They just sort of write in, in the law, what they want the outcome to be. The department of education is tasked with writing, sort of the, how the steps on, on how to get that. For example, back with the fel program, it was written into the law that if a borrower fails to pay their bill on time, that the lenders required to do outreach, to try to get them to be current. And that's pretty much all it says, it's like one sentence there's, there's probably six pages of regulations that explains to that what the, exactly, what the fell under is required to do for that outreach send a letter at 15 days past due.

Betsy Mayotte (25:08): Um, make sure you explained to the borrower what their lower payment options are. If they reach 30 days past due. I mean, I'm making up the specific Greg's, but that's just an example of the difference between law and regulation. Now, the law requires that in most cases, that basically except in the cases of emergency, that the department of education is not allowed to write those regulations all by themselves. They're required to go through this process called negotiate a rulemaking. We also call it neg reg and nag. Gregg requires them to pull together someone to represent every affected party in the potential regulation. So if it's regulations related to student loans, they're going to have people there representing borrowers, representing fel, lenders, representing servicers, representing all the different types of schools. So there's not just one person representing all colleges and universities that someone representing four year colleges is someone representing a two year colleges to someone representing, um, community colleges, some net Greg's also have, um, people representing state attorney General's offices, advocacy organizations, et cetera.

Betsy Mayotte (26:20): So I'm on, I've attended every Nate, Greg, I think since the year 2000 and I was a negotiator for four or five of them, I forget which, but the way the process starts is first day. Um, and this is how everybody can get involved. The first thing they do is they announce public hearings and there's usually at least three of them in different parts of the country. Part of announcement, they say, we're, we're going to have a nag ag. And here are the topics that we're going to go over, that we're going to write regulation for. So maybe it's total and permanent disability discharge, and income-based repayment and public service loan forgiveness. Anybody can book an appointment and get up and speak during that public hearing. And during that public hearing, what you're saying is here's the problem in the current regs. And here's the solution that we think that you should develop.

Betsy Mayotte (27:10): So they take all those, all that testimony back, they develop a neg agenda, and then they asked for nominations from the industry for negotiators. And they generally pick from those nominations. So I was nominated multiple times and one of the sessions I actually didn't get picked, but once the night Greg started, they actually picked me after it started. So, and then we, we have, um, multiple meetings. They're all day meetings. They're open to the public. These days are also live streamed that never used to be the case, but now they're live streamed as well, but you can just walk in and sit down and listen. And then at the end of every day, they ask if the public has any comments. So that's another opportunity for the public to comment, but we essentially sit around and negotiate. Um, the way we think the regulation should be written and the way it works is if the committee agrees to everything.

Betsy Mayotte (28:09): So let's say there's 12 agenda items, and they agree on the draft regulatory language on all 12 items. The department of education is required to publish that language as is, but if they don't agree on everything, let's say they agreed on 11, but not the 12th. The department of education can write whatever they want. So that's a real incentive for compromise in the room that after they published the draft language, anybody from the public can comment, it's usually a 45 or 60 day comment period. The department of ed is required to read and respond to every single comment. And then the, the final version of those regulations come out. The reason I love it is that if it works the way it's supposed to work to me, that's the way all policies should be written. You have a representative from every affected party in the room, they all have their own agenda.

Betsy Mayotte (28:59): And they work together to come up with a compromise of what might work best for everybody. I mean, that's what democracy is supposed to be about, right? Uh, I was not a negotiator for this one, but the last night, Greg, that the prior administration did on, um, something called borrower defense to repayment, which is essentially a group of regs. That's supposed to protect consumers that were defrauded by their schools. That was the war. That was the worst net Gregg that I've ever seen because the department of education came in with their own agenda. And as far as I'm concerned, not everybody at the table was necessarily negotiating in good faith. The how, how do you, how do you that, right. I mean,

Shamil Rodriguez (29:42): I guess we want to encourage everyone to check this out and if you can, Betsy, you can share with us and we'll, we'll post it on the show notes so that people can start to see the calendar and try to sign up for it when they can. What, what do you recommend that people do you think they should just send it because clearly we don't all have your expertise, right? Is it just participating in the public comment or listening in, or can they like reach out to the negotiator directly and say like, Hey, here's this like really big point that I wanted to make sure that I brought to your attention? Like, how does that part of that process works?

Betsy Mayotte (30:13): I'm gonna reach out to an negotiator. You would reach out to a negotiator that represented your particular constituency. So for example, if you're a college student, there's, there's most likely going to be someone at the table representing college students, and that's the negotiator you would want to reach out to, you know, the most impactful time. And the easiest way to participate is to submit comments during the public comment period. Once the draft regulations have been written, um, you can you just do that online? Now you mentioned a calendar. There is no calendar, essentially. At some point, the department of ed announces that they're going to be doing a negotiated rulemaking. We don't know when that we don't, they could do that tomorrow. They might not do one for a year and a half. So there is no until they announce it. There's no calendar the best way to know if a neg is coming up, you know, maybe do a Google alert for news about student loans to go shoot a rulemaking because the education reporters do report on it.

Shamil Rodriguez (31:09): Oh, okay. So they, they would at least be able to put it out there for you to know. Okay. What would you say out of that process really stood out to you that that said like, Hey, I really made an impact there. And that one, that one, that was a good one.

Betsy Mayotte (31:23): Um, boy, that's a tough one. So I was actually, uh, uh, the primary negotiator for another borrower defense to repayment, the first borrower defense to repayment named Greg. So that was under the Obama administration. And that was the hardest neg reg I've ever been on. Um, there was a lot of really strong personalities at the table and it was a really tough issue. Um, we wanted consumers to be able to get relief if they were defrauded by their schools and we didn't want them to have to jump through hoops to do it, but on the other hand, it also, we needed to make sure that it was a fair process for schools. And so if schools were accused of something, you know, that they didn't do, I mean, the schools needed to have, it needed to be a fair process for schools too. So I mean, the results that came from that night, Greg certainly wasn't perfect.

Betsy Mayotte (32:18): Um, and again, it was a challenging one because there was a lot of strong personalities, um, and people that were really passionate about their issues at the table. But, you know, I felt like what we came off with was a good start. You know, sometimes good regulations don't happen all at once. Sometimes they happen over years. Another Nate, Greg that I in, um, was one of the things that we worked on was loan rehabilitation, which is, um, how far away that, uh, a student loan borrower that defaults can not only get out of default, but help fix their credit. And so on. It's, it's a pretty good program and we made some pretty significant changes to that program to make sure that more people could access it. Um, and that one, I walked away from thinking that, you know, we may be made a big difference with, for people.

Daphné Vanessa (33:11): I have a final question on, on Negra, if that's okay before we jump to the next topic. So I know that there are multiple demographics selected. Um, but for the student demographic, it looks like they consistently choose. And I don't have the historical view that you have, which is why I'm asking you. But from my very brief view, a brief period of time in this industry compared to you, it seems like they select one or two people that represent students very broadly. And there are so many different types of student demographics. And because this space mostly materially impacts students. What are your thoughts on the department of education, including more participation for the different types of students? So when I say different types of students, I mean, perhaps, uh, students that are full-time versus part-time, but getting a little bit more complicated students that, uh, have children versus students that are just going to school with without, uh, familial obligations, uh, you know, like there are just so many different types of, of demographics. I think it's, uh, interesting that only one person is chosen just to represent students broadly.

Betsy Mayotte (34:32): Well, the other hand, there's only one person chosen to represent, you know, all four year schools and there's only one first. Um, but the thing is you have 50 people at a net Gregg table. You're not going to get anything done. You don't want to have. 12 is 12 is, is about right. 15 is pushing it. Um, remember the goal is to, as you know, to compromise and to come to agreement and the more people you have at the table, the less likely that that agreement's going to happen makes sense with that said it is the responsibility. So, you know, when your, at, if you're a negotiator, you have to take your own hat off. Um, and you have to take, whoever's issuing your paycheck. Whoever's, you know, you actually work for, you have to take that hat off to, um, you're not negotiating in good faith if you're not representing the interests of your entire constituency.

Betsy Mayotte (35:30): So, you know, for example, there were times that when I was at the table, that the people I worked for would have preferred that I was advocating for something different than I was, but the majority of the majority of my constituency wanted X. So I have to, even though that's not what my boss wants, I have to advocate for X, the student, the people representing students. Um, and I will say in my experience, they're pretty good about remembering that there's not just one student, that there are part-timers that there are single parents. They, they think about the people attending minority serving institutions. So they're pretty good. You know, if you're, if you're athlete decent, then you're going to remember everybody in your constituency.

Daphné Vanessa (36:15): Got it, got it. And I'm happy to hear that. Um, and I know, like I would definitely believe that you do that, but I wonder if everybody is, you know, if you're not a compliance officer and an attorney, somebody who understands the obligation, I wonder what holds your feet to the fire to do that from an accountability perspective, but it looks like the process is working.

Betsy Mayotte (36:36): Listen, if, if, if it appears that someone isn't negotiating in good faith, they can be taken off the committee. Um, the other thing to keep in mind is it's not just there's the negotiator, and then there's an alternate. The alternate is always sitting right behind the negotiator. So the alternate also would make sure that the primary is taking everybody into consider, you know, if the primary went rogue, the alternate would be there to sort of check and balance that.

Daphné Vanessa (37:04): Okay. All right. That sounds like a good process. Thank you for sharing.

Shamil Rodriguez (37:09): Yes. I think this is a good segue though. That was really a good, detailed, uh, dive into how Congress, uh, and the regulatory side of the executive branch really impacts how, uh, rules are made on this process. But there is another part of the, of this process that, that I think would be a good topic to cover here, Betsy. And that would be, um, the president's ability to, uh, use his executive order and his executive powers to, to make change in this space. And I think one of them that has come up recently, and I would love to hear your thoughts on is the idea of, uh, president Joe Biden, uh, forgiving a lump sum of student loans using, uh, his executive powers. Yeah,

Betsy Mayotte (37:50): Yeah. So, listen, I'm not an attorney. I am not a constitutional scholar and I may not be the smartest person in the room, but I'm smart enough to know what I don't know. And so I don't have a personal opinion about whether president Biden has the authority under executive order to forgive a lump sum of student loans. With that said, I have talked to very, very smart people, uh, that are attorneys and that, um, you know, have worked in high level, higher ed positions for a very long time, um, who have done that analysis. Some of them have done that analysis at the request of other really smart high ranking people. And they have told me that they do not think that Biden has the power under executive order, except perhaps for a very small amount of Perkins loans. Um, these are people that are, um, in favor of broad student loan forgiveness.

Betsy Mayotte (38:49): So I know them, I trust them. I think they're really smart if they tell me that he doesn't have the authority, then that's what I, that's what I'm going to believe now with that said, we know that Schumer and Presley and Warren have also engaged some really, really smart people to do their own analysis. And they have come to the conclusion that he does have the legal authority to do it. Um, but what's what Matt, it doesn't matter what I think and what my colleagues think and or what Warren thinks and what Warren's colleagues think, not as what Biden's things. And apparently his advisors and the justice department, um, don't feel a hundred percent confident that he has the authority to do it. I think if he did think he had the authority to do it, I think he probably would have done it. Um, which is why he keeps saying that he's very much in support of student loan, forgiveness, not the 50,000, but perhaps the 10,000 and perhaps tiered based on income. Um, any, every single time he says that he encourages Congress to do it. So I think, I think that's where we're at with that.

Daphné Vanessa (40:00): Do you think that they might be looking for alternate solutions to solve the problem because the S you know, the small window that he may have of constitutional authority to forgive in terms of amount may not put a dent in the problem as much as, uh, the public is asking for what are some alternative ways that you think the administration could leverage to tackle the problem a little bit more head-on

Betsy Mayotte (40:30): Daphne, I'm going to grab one word that you said in that, and hang on to it. You said, you know, to address the problem student loans, aren't the problem student loans are the symptom. The problem is the cost of higher education. And that is a good segue to explain it. And I will go back to your actual question. I promise, um, I'm just gonna duck down the side street for a second. Sure. I think that even a lot of Democrats have a difficult time justifying broad student loan forgiveness as a standalone policy. Even if you just forgive 10 grand, that's 377 billion of taxpayer money. Um, and you've just forgiven money. That's just going to accrue again. So I think, I don't think that I think it's a, it's a very steep, uphill climb, and last they bundle it with some of the other policy proposals out there that address the cost of education.

Betsy Mayotte (41:29): For example, Biden has suggested doubling the Pell grant, which could make community college free for, for most, if not all, low income borrowers, uh, low-income students. Um, there's also talk of, um, incentivizing the States to reinvest in higher ed and do some other things that would make a public college. Uh, debt-free not free, but debt-free, I think if they bundle those things together, there may be a possibility that this could end up in maybe the next reconciliation bill, but as a standalone, I think it's a really a really steep Hill decline. Getting back to your actual question is what are some alternatives? Well, what's interesting which I'm starting to hear a little chatter about with policymakers, but I've heard I heard about it. The loudest from borrowers, believe it or not. Um, what I was hearing from borrowers was listen, forgiveness would be awesome, and I'm certainly not going to turn it down, but I would rather, but I would rather have a permanent reduction in interest rate. Um, I can pay my loans back. I want to pay my loans back, but I feel like I'm not on a level playing field because the interest is just so overwhelming. And I thought that was really interesting. And I wonder if they would, might be more appetite by bi-partisan appetite for a permanent reduction, not elimination of interest, but a permanent reduction in interest. So that might be it. That might be an alternative,

Daphné Vanessa (43:01): Fantastic idea. And I can see how borrowers would say that, right? The compounding interest is, uh, over overwhelming when you make consistent payments and your bill overall is going up. It's a bit demoralizing I can imagine for borrowers. Right. So I would be interested to see where that creative proposal goes. It's a great, great piece of advice.

Betsy Mayotte (43:26): Yeah, it's it, it will. I think what I've heard is that it's harder to score a permanent interest rate reduction than it is to score broad student loan forgiveness. But hopefully they don't not take an idea because it might be hard. Um,

Daphné Vanessa (43:43): Yeah, I think they've taken on a lot of hard things this year, so far day one. So I have faith in this administration, if any,

Shamil Rodriguez (43:52): No, that's good. A good point. I think what's going to happen cause for the response to COVID-19 and we really covered a lot of the government's response to student loans here with COVID-19, you know, under the Trump administration, uh, and under secretary Devoss, they came up with, and with Congress, obviously their action, but they extended the deferment of payments towards the federal student loans by the administration extended to September 30th, expiring this year. Would you mind just sharing some thoughts about that process and then also what do students or borrows, excuse me, have to look towards, uh, on October 1st.

Betsy Mayotte (44:26): Yeah. So as you said, um, most federal student, not all, um, so about 80, 82% of federal student loans have not had a payment due and I've had a 0% interest rate starting on March 13th of 2020. And that's due to end September 30th of 2021. I do not foresee them extending this again, unless something terrible happens with the virus. Um, I just don't see them extending it again. So, um, you know, unfortunately what I see, so what you're looking at is 42 million student loan borrowers, all entering repayment at the same time. And I know the department of education and the servicers are working really, really hard to try to prepare for that. But you just can't, uh, you can't prepare for that many people entering your S reentering your system all at the same time. So I do expect there's gotta be longer wait times on the phone.

Betsy Mayotte (45:23): Um, I expect it to take longer to get paperwork process. For example, if you need to apply for a lower payment option or a deferment, um, that would take longer. So what I'm hoping, you know, what I'm encouraging borrowers to do is, you know, roundabout like July, you should be looking at your financial situation, looking to see what your student loan payment is going to be once the waivers are lifted. And if you don't think you're going to be able to afford it, start looking at your options then, and you should be planning on submitting any paperwork that you might have to submit like an application for income driven repayment plan. For example, I would plan on trying to get that in by August. If you need to talk to somebody about what your options are call over the summer, you know, again, I, I just think it's going to take a while for all of this to shake out. Now, what I'm hoping is that the department of education or Congress, while not extending the waivers, I hope that they put a hold on, maybe credit Bureau reporting or new defaults for like a year to let all this sort of shake out. But I haven't seen any indication that they, that they plan on doing that. So, um, this is one of those prepare for the worst and hope for the best scenarios.

Shamil Rodriguez (46:36): Good point. I think that's a really smart idea for people to try to take advantage of the time now and like call if they know that their financial situation is not going to allow for them to make those payments. Now, quick question, Betsy, do you think that people, if they can, should they be making payments now? I mean, you'll have to make payments there's zero interest. So in theory, or not even theory, but in actual reality, right? You, you can make payments and cut down on your principal while the interest rate isn't accruing.

Betsy Mayotte (47:04): Absolutely. So what I was telling people, right, when the waivers started is, you know, we don't know what the long-term economic impact of COVID is going to be. So you should make sure that your financial house is in order first. So, you know, usually you recommend three months emergency fund. Most people are saying you should have at least six months of emergency fund. So get that together. If you have any other high interest debt, like a credit, for example, get that paid off. Um, once all those, all those ducks are in a row, uh, absolutely in, in last year, pursuing forgiveness under public service loan forgiveness, or one of the income driven plans, you act absolutely should be taking advantage of this period. Um, and I know quite a few borrowers that are really excited because they've been able to take a big chunk off their loans over these months.

Betsy Mayotte (47:53): Now there are some borrowers that are like, well, I don't want, I don't, you know, what if they do forgive 50 grand or even 10 grand, I don't, I don't want to have paid that loan off. Well, you know, again, I think the chances of them forgiving 50 are as close to zero without actually being zero as they possibly can be. Um, but if you all less than 10 grand, I suppose there's no harm in banking, those payments, you don't earn a little interest and then you'll have a much better sense, um, by August, whether, you know, the 10,000 forgiveness is going to happen. Um, and if it's not, then, you know, make that payment before September 30th and you'll, you'll be able to wipe that chunk away.

Daphné Vanessa (48:36): I love that idea. And when you say banking, the payments, you're saying, act like you're paying it, but instead of paying your student loan servicer, put it in a high interest account that you can leverage if needed, if they don't forgive $10,000. Right. Nice. I love that idea that we should definitely add to the show notes.

Betsy Mayotte (48:59): Do you not use it to buy game, stop, stop, stop.

Daphné Vanessa (49:06): Oh,

Shamil Rodriguez (49:07): This is great. Betsy. I really appreciated the, the value and content that you've been able to provide and the great advice for people where, where can, where can folks find you? So would you mind just sharing why you founded Tesla and, and, uh, you know, what is it that what's the ultimate goal?

Betsy Mayotte (49:24): Yeah. So the Institute of student loan advisors, our website is free student loan, advice.org. Um, it's, we don't require registration. Um, we're not going to ask you for any of your information, hopefully. Um, what you find on the website is anything you might need to help you figure out how to successfully manage your loans in plain English. Um, that that's really important to us. And the voice that we have is to make sure that it's, that it's all in plain English and easy to navigate, but if you need help beyond that, if you have questions, you can email us, we answer most questions. We answer within a business day. And, um, you know, it doesn't matter how complicated the question is or how quote unquote, easy. The question is we're there to answer for you. We even help with dispute resolution. Um, sometimes that's educating the consumer on how to self-help, um, or for really sticky situations, we'll get their permission to speak on their behalf and we'll reach out to their loan holder, um, ourselves.

Betsy Mayotte (50:27): So we also have a forgiveness database on our site. Um, we've collected all the student loan forgiveness programs that we know of. There's over a hundred of them. And that database is easy to, um, is free to access as well. What we will not do is we don't provide legal advice and we will not recommend a lender or a service, or we get a lot of people saying, I want to refi my private loans, who should I go with? It's really, really important that we maintain our neutrality. So we will not give advice on one lender over another.

Daphné Vanessa (50:57): The idea that you just give free advice to people is something that we really encourage the audience to take advantage of. Um, and a very neat aspect is that you guys are not beholden to anyone, right? You are a nonprofit, um, and funded off of donations. Am I correct? Correct. So I would encourage our audience who has paid off their student loans to pay it forward and donate to, to slump because this is the future for allowing for everybody a larger population to be in the same boat as you are. Um, so thank you so much for, for offering that. Yeah, no problem.

Shamil Rodriguez (51:36): Betsy, one more item. So remember guys go to, we'll have it on the show notes, but it's free student loaded advice.org, uh, and Betsy, thank you so much for sharing so much of your wisdom with us today and what the audience, um, I really hope that, uh, they will take advantage of these resources, uh, and also like definitely put, donate to your organization because you clearly have a lot of expertise you have, uh, put a lot of your time and your energy into it. And you can hear that. And I, I want to say, thank you Betsy for doing that. Uh, because it's, it's really changing lives, right? You, you are, uh, I've, I've been very impressed to see how many different angles you've thought of to try to help people. Um, and so thank you. Is there anything, before we go, before we wrap up here, Betsy, you want to share with the audience,

Betsy Mayotte (52:23): Thank you for the kind words people get really caught up in the different forgiveness programs and lower payment options. And it absolutely can be overwhelming. I think if, if consumers remember that the name of the game is paying the least amount over time and approach their student loan strategy with that in mind, rather than the word forgiveness or what's the lowest payment I can possibly get. Um, I think that will lead to LA you know, the best long-term strategy. The other thing I would mention is, um, people should reevaluate their student loan management strategy on an annual basis. I recommend tax time. So once you file your taxes, the next thing you should do is take a look at your student loan strategy and see if it should change. And that will help lead you to paying the least amount over time on your student loans. Um, and finally, when in doubt call, um, you know, I've worked with thousands of people over my career and this, I can probably count on one hand the number of people that there really wasn't a solution for. So whether it's contacting Tesla or reaching out to your loan holder or reaching out to the department of education, just don't pay anybody. There's no reason to pay anybody for help with your students.

Shamil Rodriguez (53:34): Uh, Betsy, where can people find you on social media? Do you have a Twitter, Instagram, or what's the best method for you?

Betsy Mayotte (53:41): Yeah, so, um, Tesla's, uh, Twitter handle is at Tesla underscore S L I, if people are looking to be sort of kept up to date on what's going on with student loans, I would recommend that they follow the Tesla underscore SL. We also have a Facebook page that we keep up to date, um, pretty frequently.

Shamil Rodriguez (54:02): Betsy, thank you so much. Um, we will include these links to your social media. We'll include links, a Tesla on there as well, and any other resources that you want us to post for our users and our, and for our listeners to engage with, uh, it has been a pleasure, um, and we will see you soon. Thank you for more information on this episode and the links that we discussed visit the student loan podcast.com forward slash episode 18. That's the student loan podcast.com forward slash episode 18.