Shamil Rodriguez (00:00): Welcome to another episode of the student loan podcast today, Daphne and I are actually going to be talking about what the world would look like in the future. If some of these radical student loan ideas actually were in place. And now when I say radical, it doesn't mean that it's endorsed by us. All we're simply doing is taking ideas that we found in reports, or that may have hit the floor of Congress and never passed and saying, Hmm, I wonder what if, so let's take a look at what the world looked like. If we made these types of changes,

The Student Loan Podcast Intro (00:38): 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 (00:56): And so just as a fresh reminder for everyone, here are some of the statistics about why the student loan debt crisis even needs to be addressed just for some of you that may be like, Oh, is there really a student loan debt crisis? But remember that student loan debt is only second to mortgages, right? That's a huge, huge, huge, huge difference compared to credit card debt or debt based on purchasing vehicles. So just keep that in mind, right? There are also about 44 million student borrowers in the country and the debt burden has grown over a hundred percent since the great recession, right? And that's the fastest growing portion of total household debt in the U S so please, we're going to link all of these stats and where these numbers are coming from in the show notes, but I just wanted to lay the foundation for why there are so many different organizations and individuals trying to figure out different and creative ways to solve the student loan debt crisis. So Daphne, you ready?

Daphné Vanessa (01:59): Can we add the fact that student loans have seen almost a 157% growth over the last 11 years and that out of all of the household debt, our dear student loans, federal student loans have the highest delinquency rate, highest 90 plus delinquency. So guys, I, I think I'm laughing of sadness. I think for people who are still questioning whether this is a problem, just haven't been paying attention to statistics.

Shamil Rodriguez (02:35): Yeah. No, and that's, that's what we're here for. So I'm just gonna jump right in, uh, with, with some of these, some of these ideas, right? Because we're going to just put one out there, Daphne share your idea, I'll share mine. And then hopefully this will spur some conversation for the audience. Uh, and then we can go from there. So the first one is actually, uh, coming from some bills that hit the floor of will never made it anywhere, uh, officially. So we'll see if that changes under the new administration, um, and with the changes in Congress, uh, but, and either way, it still makes for good conversation for us because these types of ideas, uh, need to be discussed. So the first one is proposing that, that the student loan interest rates that are provided by the federal government are actually tied to the federal reserve discount window rate. So the discount window rate is the interest rate is that banks are able to borrow from the federal government, but the idea that banks are getting a better interest rate than people that are getting federal student loans to me, this was like, Oh, wow, that's a really, really good point. Like, why shouldn't we get, and I say, we being the public, why, why shouldn't we get that type of interest rate?

Daphné Vanessa (03:48): Why shouldn't we get that interest rate? I think that is a very interesting question to ask.

Shamil Rodriguez (03:54): I just thought that was an interesting idea that, um, that that was what people were paying. Well, we can go into the next idea. Okay.

Daphné Vanessa (04:00): Well, no, let let's stay on that one. Why, why people have thought the other way, right. Like not to give that lower rate and it's probably profit motivated. However, the people and society has to decide is education of public. Good. If it is a public good, should we not look at profits in the same prioritization as we do right now? Right.

Shamil Rodriguez (04:27): Good point. That's a very good point. I mean, it, it, what's interesting and that, I think we should definitely go down this road is what, what value does it bring if we have an educated populace and correct. The reason I bring that up in that specific angle is because for a lot of times what I've heard, well, we have like this type of debate, like, should the government even be in, you know, the private sector areas like education, or let's say like mail delivery or whatever the case may be, or Medicare coverage or, or health insurance providers. And the idea there is like, well, you're like you said, you're balancing out the public good versus a profit motive. Uh, but the, the same folks in my opinion, are the same argument line that says, like we should be making a profit or that we shouldn't even be in the private sector areas as a federal government.

Shamil Rodriguez (05:17): Uh, you know, I say, well, what about being competitive on a global scale, right? When we're looking at how the rest of the world is catching up in a lot of ways or passing us in certain areas, for sure, having an educated global workforce allows for us to compete on a, on a global level and allows for the economy to continue to grow. Uh, so I think that, you know, that angle is important, that angle's important. And I think that education is a public good. Like to me, it's obvious, but that's just my, like I said before, when we started, this is my personal opinion on that topic, I don't necessarily believe that the federal government should be using the profit as the motive for educating or financing the education for its population. I think that's fantastic.

Daphné Vanessa (05:58): The question I have is what would those that have been profiting from student loans and that interest rate not being so low, how would they push back? You know, that that's a real question for the practicality, but that's not why we're here. We're here just to talk about what it is.

Shamil Rodriguez (06:17): Yeah. The one that isn't all great. What is another good? What if that we have here to discuss and we've got several of them is the idea of changing some of the income based repayment program. We're going to have a great episode with Betsy Mayer that we're going to be launching soon, that we'll go into those details. And I think it's gonna be a great episode to listen to, especially cause she goes into like step by step, by step on how to participate in the income based repayment program. But the idea of reducing it from 10 years to five years. And here's the part that I found really interesting and creative was that there was a cap as to how much the loan could grow. So there would be no more than 10% of the interest plus the amount of the original loan. So that's it. I can never go any higher than that so that you're not using compound interest in the negative for financing your education. Does that make sense? That I've stayed that clearly deaf clear to me? Yeah. So what do you, what do you think about that idea? I guess what would be some of the arguments for and against, or what would the world look like if that were the case?

Daphné Vanessa (07:22): Well, what would the world look like if we were to cap how much your student loan could grow? I think we wouldn't be in, you know, of 1.4, $1.5 trillion crisis. Um, so there are huge benefits to that piece, changing the terms. There's so many ways you could change the terms with that cap piece, I think is probably the biggest movement that we would have where we are now versus what we could have been as a country.

Shamil Rodriguez (07:52): No, I think so. And I think on an individual level, doesn't it play with the idea or I play well with the idea that you, you know, as a graduate, you know, what you're working with and you're paying off your debt, knowing that like, Hey, here's, here are the confines of this financial box for the specific loan.

Daphné Vanessa (08:10): Great. Because it is a public good. I would just add that. Yeah. You know, for a pure private sector product, I don't know that over-regulation is a good thing, but if we are saying that student loans are too, and if you look at Lyndon B Johnson's original language in creating this program, right, the government working to have more people go to school through student loan programming and et cetera, if it is a public good, if you do want a greater educated population than say 30%, I'm guessing this is what we used to be. I don't know where the United States is now, but if that really is the goal, then are you willing to get, there has to be the question, the solution I'm going to propose next is actually not a policy, a solution. We've been having a lot of intellectual policy discussions recently. So I thought I'd start off with a light idea.

Shamil Rodriguez (09:12): Okay. What is it?

Daphné Vanessa (09:14): And so this third idea is gamifying student loans in the repayment process. And there are, I don't want to name a particular product, but let's just talk from conversations that have happened on Reddit threads, for example,

Shamil Rodriguez (09:32): Which is where all the world's best discussions happen.

Daphné Vanessa (09:37): We love you, Alex, thank you for creating Reddit. So the interesting idea proposed on a Reddit thread was gamifying the payback process of student loans with a pool of friends. So almost like very similar to brackets for like basketball. Um, instead of having, you know, you in your own silo, payback your student loans, and it's the stretching process. You reward yourselves points based on whether you do a minimum payment pay extra. And then as you start paying off each loan, there are like points for that. So I thought that was a really interesting, uh, idea on paying back student loans, because while there are a number of policy changes that could happen in the long-term in our everyday lives, individuals have to think about what actions can I take what's in my control to actually get rid of this mountain. And I thought that that was a really interesting activity and I'm very interested in, you know, products that are coming out to kind of replicate that.

Shamil Rodriguez (10:46): So I liked that as somebody who plays, or I guess played it's, uh, didn't, didn't do this year, um, you know, fantasy sports for quite some time, right? The, you know, you're, you're playing a game based on, you know, somebody scoring points and that, and it, and it doesn't really impact your life at all. Right. Um,

Daphné Vanessa (11:09): Maybe that's a good thing, right? There's so much serious, serious, serious in the world, and it's nice to be a kid again.

Shamil Rodriguez (11:16): True. And I think that's a good point because it allows for you, there's also that like camaraderie part where you're being competitive with like friends that, you know, or people that, you know, and it just, it's just fun. Right? Like there's that, that fun element to it. I really would be interested to see how the gamification of student loans would like motivate some people to be like, Aw, man, you know, the season and quotes, I'm putting quotes up, but you know, the season is almost up and I'm down by five points, you know, maybe I can like make extra principle payment to get those points. That would be, I would actually, but yeah,

Daphné Vanessa (11:47): No, I, I think it's a really fun activity.

Shamil Rodriguez (11:51): That would be a good one. I'd interested in seeing that. Um, there's another idea. I guess I'm going to be the serious guy today. Um, the another idea that I thought would be interesting to discuss is allowing borrowers to be able to convert their private loans into federal loans. Like, you know, so there would be qualifications, they would only have a window. Like it couldn't be something that would be forever on the last run of the loan, but let's say it was like so many days after graduation, right? You could convert your student loan into a federal loan. Um, what do you, what do you think about that? I'm sure.

Daphné Vanessa (12:30): Or for people with private student loans, that's a huge benefit, right? Because a lot of the protections of federal student loans are not available when you go private. But the question that I have is why someone may or may not have taken out the private student loan to begin with and how that may factor into the conversion. Love the idea. I think it was proposed by Elizabeth Warren. Okay. Yeah. So, so Senator Warren

Shamil Rodriguez (13:05): Elizabeth, what's up. Yeah. Right.

Daphné Vanessa (13:09): Betsy, there's just, just kidding. Senator Warren. So yeah, no, I think, I think that is, that is a very interesting idea to think about, but Oh, I always try to think about how the entire ecosystem is impacted. Right. And what would the private lenders, you know, like how fair is it to, to them for the contracts that they entered into. So I don't know what that would look like, but again, it goes back to the public. Good. Is education of public. Good. If so, what measures are we willing to take as a society with that in mind, we still should think about everybody involved in the process, even, you know, the lenders that we all hate.

Shamil Rodriguez (13:50): Yeah. I think, and I think that what would happen is that the Sur, this also would make servicers try, or at least I would, I would believe that this could lead to servicers creating similar programs that the federal government offers that's true. Right. So it's creating a competition, uh, in a way that, you know, this person is about to leave us or has, or we've had this many borrowers leave us because of this protection. Like COVID, COVID the pandemic response is one example, right. Um, you know, the federal government had the ability to defer, uh, the interest loan payments that people had to make on the qualified loans on a federal level. So imagine if people could have switched or if the private sector was offering that, uh, based on the pandemic. Right. It's not to say that it's forever, but just to say like, Oh, because the federal government is offering this and we can lose our customers.

Shamil Rodriguez (14:46): Um, you know, during that period of time, when that window is open, that, you know, we should offer something similar because we're working with our clients here. We're actually trying to help them pay off their loans. Because the reality in my mind, the reality is that if, if I'm, you know, student a or graduate a, and I'm drowning in debt, I lost my job because of the pandemic. And I'm only collecting unemployment and, uh, I'm only working a part-time job cause that's all I can find at the time I'm going to prioritize, you know, the Maslow's hierarchy of needs first before my, yeah. I'm going to do that. And so I think it's, it's, it would be interesting to see. And I would be curious to see if there's a service or out there that provided this on their own to people that needed assistance.

Shamil Rodriguez (15:34): Right? Like who, who did this without, you know, needing to have like, you know, a bad press, you know, lead them to do that or anything like that. Cause I don't want it to be like poop one services, but like, what if I just don't know about that story? You know, it would be really interesting. Whoever's out there. If you have a, if you've seen a private servicer give you, you know, a benefit that they didn't have to give you because of the pandemic, I would love to actually hear that story because, um, such a good story that would be, yeah, I would, it would be really curious. I'd be curious to, to listen to that story and, and, and give them that shine if they're doing the right thing. Right. Because that's what we're trying to say is that it's a public good, or at least we believe that education is a public good.

Shamil Rodriguez (16:15): And, um, that the profit motives shouldn't be the number one motive when it comes to helping educate our populations on board. Totally onboard. And, and I guess one more point on that before we move on is, is the idea, like let's not forget that the reason people take out student loans is because they can't, uh, typically afford to go to school, uh, where they're applying to. And that may be based on income. It may be based on where you're from and all this other, all these other factors. So we have to think that we can't just leave it up to the folks that only can afford to go to school, to go, uh, you know, there have to be some sort of ways to allow for, for people that are top performers or that are in lower income situations to be able to afford it without necessarily exchanging their, their future. Another, did you want to share

Daphné Vanessa (17:06): Sure. A lot of companies have started where somebody takes a percentage of your income after you graduate. We've spoken about this before income share agreements. Uh, so those exist there in are an option. There are arguments against it, right? Indentured servitude, but it is an idea that, uh, the private sector could adopt more heavily to help address this problem because there are a lot of people involve audiences groups involved in this crisis. So there are federal government solutions. There are state government solutions, there are private sector solutions. There are, what can the borrowers do themselves? There are so many different types of solutions. I think it's really important that we frame and give context behind, like who would be performing the action if that makes sense.

Shamil Rodriguez (17:59): So I think that's, you bring up a good point there. It's interesting that we, it seems like there are a lot of stakeholders playing their part in trying to figure out, you know, how to alleviate the stress of student loan debt. Um, but I, you know, as you know, and I guess as our listeners that they heard in previous episodes, I am a huge fan of income share agreements. Um, I've, I've read the arguments and, and there's a report that I'll share in the, in the show notes that actually, you know, discusses why income share agreements are terrible. And that, that authors know perspective for me, the idea that my success as an employee or an entrepreneur, based on what I studied in school, um, that I'm more than willing to, to, uh, you know, give you a portion of what I'm doing because you helped me get to this point, right?

Shamil Rodriguez (18:51): That's how I look at it versus, you know, the, the arguments that I've read that are against it really, really go into like, you know, you don't want to be reminded that you're, you're, you're working for someone else. And, and my idea is like, well, I think the issue is like, if you graduate and you can't find a job and you feel like your, your school didn't prepare you properly for the workforce and for the field, like it didn't give you practical work advice. And it helped you find employment. To me, that's the bigger issue, because now you're saddled with the debt. You, you don't have the resources to help you succeed, or you feel like you weren't trained properly, whatever the case may be. Now I know, you know, as a student, we try to coach the people that we interact with on how to be proactive and find these opportunities themselves.

Shamil Rodriguez (19:33): But I'm okay with the idea of like, Hey, you helped me get here. Right? Like looking at it that way, I think is how I, I like to frame it as like, Hey, did the school help you get to where you had to go? Did they, did they train you properly? Did you take advantage of the resources? Did you work with the alumni association after the fact, you know, did you keep them updated? And if so, you know, Hey, do you think they should get a percentage of paying back? Like if they basically gave you an opportunity to go to school for free, and you got a job in that field, shouldn't you pay them back? Like, to me, it just, it seems like you're, it almost seems more fair in terms of educating the workforce. And that's what I think I like about some of these new, newer ISA, because it's not a new concept, right?

Shamil Rodriguez (20:13): This has been around for decades. But the idea that a lot of coding schools are offering a lot of new schools. I believe it's Purdue. And I'll, I'll double check and put this in the show notes. Once it gets back to that predictability to say like, Hey, I know this is my budget. This is how much goes to student loan debt. And it's not going to fluctuate. It's not going to change our me dramatically. And you know, after so many years, then I'm done with the program. That's the type of ISA that I, I, I'm a fan of where there is a cap on the rate. It lasts for so many years. And once you back, whatever agreed upon online back then, you're, you're good to go.

Daphné Vanessa (20:51): Yup. Yup. I like that. And I think it's still reflective of throwback here, not to age ourselves, but Obama's student loan principles. I think he had like a student loan bill of rights or something like that, that he proposed where he said, everybody deserves access to quality, affordable education. Every student should be able to access resources to pay for college. Every borrower has the right to an affordable payment plan, like you mentioned. And then every bar has the right to quality customer service, reliable information and fair treatment, even if they're struggling to pay back student loans. So I think what you're proposing with these newer essays still falls into those principles, right? Where they're, they're fairly treating. Um, there's hopefully good communication through customer service. People know what's going on and it's affordable. I think the, the percentage cap is what makes it affordable. And so that rolls into, uh, what I was going to propose as another solution. I know I'm going back to back, sorry about that.

Daphné Vanessa (22:01): But I was going to propose flagging student loan payments that are higher than eight to 10% of your after-tax income. I can't remember where this number came from, but it might come from the, the federal terms actually, where they say that there's a percentage of your income that you pay. Like that's the payment that you make. I don't remember where this number came from, but there is an eight to 10% number that's generally been shared in the financial. I don't even want to call it that, but the student loan community let's say where eight to 10% of your after tax income is how much you should be paying towards your student loans. And that is not always the case for a number of people it's often higher. And so at minimum, we need to have flags on payments that are higher than eight to 10%.

Daphné Vanessa (22:55): And at best that just shouldn't even be allowed, right. Is, is now how that happens. You know, whether there's a limit on how much you borrow based on the degree you have, or whether it happens after you've already taken out the loan. Like those mechanics are something that definitely have to be debated. But I do think that we need to start talking about having people pay more than 10% towards student loans is just when do they invest? When do they, sorry, not even saying invest. Like they're probably not even saving. Like you have to think about people. I think that that general statistic that people bring up in that, you know, people don't have a thousand dollars saved or something like that to do minor things. And that's sad. We're not going to move forward as a society. If people don't have a minimum amount of money saved. So we need to talk about flagging and definitely actioning accounts where people are paying more than eight to 10% of their after tax income. And I don't, I haven't seen this proposed anywhere other than buyers, our own, uh, calls to action. But, uh, but I do think that it's something that deserves to be a part of the conversation,

Shamil Rodriguez (24:15): Right? Like full disclaimer for the listeners, if you haven't already seen or heard, um, you know, start new sponsors. This podcast is a part of, uh, our creative solution that we're bringing to the public. Uh, and I think that you hit it right on the head. We have a list of calls to action that we believe that would change the landscape of, of student loan financing. And, and I think that that's a really great point because it, to me, it goes back to the idea of predictability, right? If you know how much you're going to pay every month, it is so much easier to play in your life where you can be successful in other areas and then contribute to society, right? If you're paying 30, 40, 50% of your budget is going towards student loan payments, then like you said, how are you investing?

Shamil Rodriguez (25:02): How are you saving to, let's say, purchase a home. Now these are all personal financial decisions to make on your own, right? But these are things that do help the economy on a larger scale, or at least just give you the flexibility to invest the way you want, whether it's investing in your business, or if it's, you know, just contributing to the community at large, right? Like if you have more money to put into the economy, then, then that's better for your growth better for you and your family. So I think it's a really good point. I mean, I think this segues well, Daphne into an idea that I wanted to share, uh, here, which is something that we've talked about and it's not novel or new, and that's the idea of a free to low cost college.

Daphné Vanessa (25:47): I just want to give a shout out to NYU has made tuition free scholarships for their medical program. And I obviously did not go to med school. Thank God. Although my parents think differently. Uh, but hashtag doctor, lawyer engineer, those are the three options. Um, but I did one of them. I just didn't become a doctor. I'm so sorry. So sorry, parents. So, um, but NYU med school is offering the full tuition amount for every student in med school. So I think that's amazing, right? The Grossman school of medicine offering tuition free experiences for med school and like in the pandemic, that's so important. We realize how important doctors are and you know, how, how much they're at capacity, right? These people are working 24 hour shifts. Like this is not healthy. It's just not healthy. We need, there, there is a clear capacity issue in this world, and it's fantastic that NYU is providing that program. Now I just want to add that it is a tuition scholarship. So there are still fees you still have to pay to live. You still have to buy books. You still have your, I forgot what it's called. I think us MLE fees like the exam. So you still have fees, but, um, you're not paying tuition. It still ends up costing about 30 or so, something thousand dollars per year, if you live on campus and all of that, you know, the real estate arm of NYU had to make their Monday. Just kidding. Just kidding.

Daphné Vanessa (27:38): Kidding, kidding. Um, but to offset that NYU has so traditionally the MD program is four years over there. Plus obviously residency, they have an accelerated three year program. So that's one year where you would save on those fees. So I think NYU as a private institution, because people often think NYU, like we're a public school. It's not very private because it says New York university people are like, Oh, it's a public school. It's like, no, it's not. But so I think as a private institution, NYU has done a fantastic job of addressing a part of a problem in the way that they can for this particular program. And I would really be interested to see what other private schools do to, you know, to do that.

Shamil Rodriguez (28:25): Yeah. And I have to applaud them because they're, they don't have to. Right. Like, I think that's the biggest part is like it's a private institution that does not have to jump in on that at all. Um, and I think it just says a lot about what they mean about w w how they view education and like what that can actually do for anyone who gets the education at their school, because that means that now they have the ability to change the world in that way. Uh, well said, Daphne, I appreciate NYU for doing that. There are some other like well endowed schools that are figuring out ways to help their, their student populace by allowing for them to graduate with less student loan debt. And I think that's a really important perspective that we obviously can't force schools to, to adopt, but I think it really lines up, well, it says a lot about who they are because they are doing that voluntarily. What is another, uh, idea that would be an interesting topic to share on the show for, uh, tackling student loan debt.

Daphné Vanessa (29:27): This one is, uh, a heavy one, their interest payments. And there are principal payments when a student loan is paid, often the interest is paid first and after the interest that's accumulated for the period has been paid, then payments go towards principal.

Shamil Rodriguez (29:47): So what you're saying is like your payment goes to the profit first. Yes. And then it goes to you when I say you meaning like the, the amount of a loan that you took out,

Daphné Vanessa (29:58): Correct. That's what most contracts say. That's what most MSA agreements say. I haven't seen one actually, but I have to say most just because you can contract anything. So I don't know, I haven't read every single contract. Um, but I've never seen an agreement that, that doesn't do that. So I think when we're talking about student monthly loan payments, what are we doing to allow for the person to actually pay back principle? And it goes back to his education and public good guys, the principles. So I think America is not an agreement on the principles. So that's step one is like our value systems are not aligned between all of the different audiences and those values need to be aligned of course, but the proposed solution, if education is in fact, a public good, if in fact, an educated workforce means more people to work at our companies and people to be able to contribute to society, more business leaders that are eventually created people to care for our children, all of that stuff.

Daphné Vanessa (31:07): If, if education is foundational to having a society and we all believe that we're all on the same page, then we need to talk about student loan payments, not all going towards interest. We need to talk about the option of perhaps 50% of the payment goes towards interest. 50% of it goes towards principle. And then a decision can be made on when principal is paid off. You know, when do interest payments need to continue, right? And that's heavy. I know that a lot of, uh, you know, people that are profiting from this industry would be concerned about that solution. However, I want us to go back to the public good piece and think, do we want people not contributing to our economy? We saw what happened in the crisis, right? The crisis happened, savings rates were ginormous. This was published all over the media. So this is everywhere, but people are saving more people aren't spending, spending is important to gearing the economy, because that means like small businesses are shutting down.

Daphné Vanessa (32:17): Like that is not the way of the future. And I'm not saying that people should spend more than their lifestyle or, you know, more than they make things like that. I'm not, I'm not saying that I am saying that part of the society that we've created economically, it thrives off of that interaction, dance between spending saving. And when we lean on one side too heavily, it's not good for any of us. Right? The outlet shops are closed. I'm not happy. I love the outlet, but they had to close because people aren't spending, they can't keep the lights on why aren't people spending, because it's not only student loans. Of course there are a number of obligations, but because their obligations appear to be so heavy that they felt like they couldn't go shopping anymore at a store. Um, and so closing of small businesses, the closing of, of so many hardworking people, that's also a lost job for somebody. So like everything is related in the sense. And so I think encouraging people by actually making payments that tackle the actual loan amount and that don't go towards interest. So they're not making consistent payments yet seeing their account balance go up. That's not necessarily inspiring. Right? Those are the types of people that you could be concerned may or may not eventually go into default. Like that's not the goal. We don't want people to go into default. So I think everybody's on the same page there at least. So

Shamil Rodriguez (33:55): Yeah. Well, one would hope, right? I mean, because if you're the more consistently you pay your payments, the better for the servicer, because they know that the, the amount is going to be paid off and they're going to make their profit. Right, right, right. We're not here arguing that they, that, that if you've made that agreement that you shouldn't have, like, they shouldn't make any money from giving you the opportunity to finance your education

Daphné Vanessa (34:18): And point of clarification on servicers, like servicers are paid a set amount from the lender. Right. But the lender is technically the one receiving these interest payments. Like that's, their profit is the lender, the person that eventually lended out the money. And so that person has changed. That entity has changed with the changes that happened in 2010, et cetera. But I just wanted to be clear that technically, if an entity is both a servicer and a lender, that's a different story, but technically it's the lender that's getting interest payments and the servicer is just getting the money for servicing

Shamil Rodriguez (34:51): Good chronic clarification. There that's a good one. Um, and I think that rolls well with this idea of creating like that cap, or like just making it predictable. I just think, I love that you're doing a great job of like consistently bringing up this is a public good. And for me, I'm looking at it. It's like, we just want to give predictability to people when they graduate so that they can budget and plan their lives accordingly. Right. And I think this segues well into the idea of, uh, some of the ideas here from this is actually from Senator Bernie Sanders, which is eliminating now, you know, this is like I said, these are radical ideas that have not made any movement, but I think it'd be interesting to talk about where, where we would be if these were in place. And I think this is back to the idea of the public.

Shamil Rodriguez (35:35): Good. And, uh, is it cost to eliminate federal government's profiting on student loans? Right. Like if it is a public good, why are we profiting from it? Good question. Really interesting point. And I think another, another part that I guess, ties the wall in here, just to kind of like wrap up some of the ideas that I have here, allowing students to refinance loans at today's interest rates. Right. So I feel like a lot of these like policy ideas really revolve around like how much interest, um, you know, how, how much can the principal grow? I love the idea that you brought up bleeding, the principal and interest payments. So like at least you're tackling both at the same time. It's, it's gotta be demoralizing to just pay interest and then see your principal go up. Right. It just, yeah. To me, that's the

Daphné Vanessa (36:25): Assistant payments, right. You've never missed a payment and it's still going up. Yeah. Because let's say you're on a plan where, you know, the number that you're paying is less than the interest that that's grown on your account. Yeah.

Shamil Rodriguez (36:37): And now that goes back into the idea of, well, how much of your after, after tax income should be going towards your student loans, this is all tying together. It's all timing. Um, I wish I could say that was intended to everyone who's listening, but I love that it's working out that way.

Shamil Rodriguez (36:55): Um, but no, but really seriously. I think it's, I feel like there's a theme here where it's, you know, interest rates percentages of after, after tax income, predictability, public good. You know, if all of those things are working together and are in sync, then it allows for the economy to thrive. Right. And I think you'd said it well, because it's been sad to, to see in our neighborhood. Um, and then just other places where like, there were places that I would, I'd seen they're shut down and it's terrible. And you're like, wow, man. Like that was, uh, a place that, you know, you could let's say, go get something to eat or, um, or that was a place they like, maybe you knew like your favorite person that you like, your dry cleaner or something. And you're just like, wow, like this is, this is really having an impact.

Shamil Rodriguez (37:43): And it's not to say that we didn't know that, but like you said, these are real lives that are being impacted. And so if we can help alleviate the stressors and burdens and not, not create a system that is hard to overcome. And I think that's where I think that some of those ideas that I really like that are like, um, like income share agreements or the interest rate caps, or, you know, paying, splitting the payments between interest and principal, all of those are like, you know what I call like incremental increases, right? Like, you've got one to 2% here. One to 2% here increased by 2% here. Next thing you know, we've, we've revamped the student loan pressures that people carry. And that, to me, that's a real change that people can have. And let's not forget the gamification of student loans. I still love, love, love it.

Daphné Vanessa (38:31): Yeah. Read it. Yes. Um, it should start a thread to see

Shamil Rodriguez (38:36): What new creative ideas people are coming up with. And we can do that. That would be fun to see

Daphné Vanessa (38:41): Reddit. So many Reddit friends, guys. I'm a nerd. I have internet friends. Hi, moth six, nine two two.

Shamil Rodriguez (38:56): So definitely. Do you have any other calls to actions that you want to share that we wish

Daphné Vanessa (38:59): So many? I think I'm going to try to close on two.

Shamil Rodriguez (39:05): Okay. Go for it.

Daphné Vanessa (39:06): So limiting how much. So this goes back to the different audiences, right? And so this is a shared responsibility. Part of this is policy potentially requiring title four schools to do a particular thing. But part of this is also the universities and, and, and their part in transparency. So the proposed idea is limiting the education debt to income ratio, unless there is affirmative confirmation of the understanding of risk and liabilities. And this is a complicated one because what is the education debt to income ratio? We probably could do a whole episode on that, but essentially it is looking at somebody's potential income that they would get from studying and looking how much education that they plan to take on. And whether that ratio makes sense for the amount of debt to be taken out. That's a whole episode, honestly, but, um, it's basically limiting the amount of money that is trying to discourage somebody from taking out too much student loan debt, unless there is a clear understanding of the risk and liabilities.

Daphné Vanessa (40:17): And I think there have been a ton of efforts in the past 10 years, but before those 10 years, perhaps, and I wasn't alive at that time, obviously, because I'm way too young for that. But it I've heard historically that people back then didn't have a lot of clarity, uh, what, what they were signing. And th that there was a very opaque process if you will. And so creating more transparency would be incredibly useful on that front. And that's probably a dual shared responsibility. And the second point I wanted to add, or, sorry, Chanel, do you have any feedback on that one?

Shamil Rodriguez (41:00): No, I do. I do. I'm glad you, you, you let me talk to him there because no, no. I think there were two parts that I thought of, I thought, well, I love the idea that you can like sit with someone and say, look, here's the degree you're studying. Here's what you've told me. Like, based on what you've given me, this is what you want to do based on this specific role. Right? Cause you can get a major, but like, what if there's one part of that major that allows for you to have a specific job that you really wanted, right. And the income for that job is different from the general whole, I, it would be amazing

Speaker 4 (41:34): To me if college counselors, financial aid advisors were actually doing this with every student and said, Hey, you are a government and politics major. I'm using my, my undergraduate degree here. Right. As an example, um, because it happened a lot of, a lot of people that I saw where it was like, here's what the average income is for somebody who works at a state local government officials office. Here's the income for somebody who works at a federal level in, let's say a department of I'm picking the department of education. And then here's the income for somebody who works at a lobbying firm. Um, you know, if that's the route you want to go, right. So, and here's the, you know, so they go through, here's the, here's the, here's the income, uh, examples based on what you've said and based on the job that you see yourself having after you graduate, this is what your income should be based on the region and the market that you want to go to. Now, here's the debt that you would take out to do this. And then that debt burden would actually equal this much of a monthly payment. Let's say it's like $800 a month of monthly, monthly payment. But yeah, the public sector job that you want to have is only going to pay you. Uh, I'm literally picking random numbers here. So I can't even tell you if this is accurate or not, you know, $2,500 net right.

Daphné Vanessa (42:51): Per month, per month. Right? Like you need to know,

Speaker 4 (42:53): Like, you should know what jobs are you picking. No, but I'm saying, I'm just trying to show that the person might say, well, you know what, owe $800. And I'm only making, let's say 25, $3,004,000 a month. Um, and maybe I can't do that. Right. Maybe I should reconsider, what do you know what I'm pursuing? Or, you know, is there more way

Daphné Vanessa (43:14): Profitable career path that I should start to look at?

Speaker 4 (43:18): Yes. Based on my own lifestyle I want to have, where do I want to live?

Speaker 4 (43:23): I know these things take time. Right? And like, but my thing is like, that's what the person is hired to do. Like if you're a financial aid advisor, if you're a college student advisor, get ready to go through this because you want to help people. Right. That's not my presumption, my underlying presumption. I think this is the board side of me coming out where if you're here to help and you're here to make sure that your students are making good decisions, that set them on a path for success longterm. So help them do that and take the time. Because the reality is you're usually dealing with an 18, 19 year old, 17 year old, that's making these lifelong decisions. They're looking to you and they're trusting you to help them make that decision. Yeah. So show them by example, lead by example and show them the type of careful consideration that goes into making these decisions and that you can't just be a 10 minute conversation, sign on a dotted line.

Speaker 4 (44:17): We'll see you after graduation while we're asking for money to give back to the school, that's terrible. That's terrible. And so that's why it leads me to my second point. I'm like the old, you said, like being opaque in the process where it's like, I love the idea, but would really be cautious about the waiver perspective. Because then to me it sets it up for the schools that don't do the right thing, not the school, but let's say more. So the administration officials that want to take it upon themselves to like have high numbers or like, you know, either incentive by how many students they process or whatever the case may be. And they're just like, you know what? Just sign here. Oh yeah, yeah. Oh yeah. This is what you'll make. You'll be fine. Don't worry. Sign here, sign this waiver. Oh no, this waiver is just to, you know, this, if you don't sign this waiver, you can't come to the school. Right? Like they they'll start leveraging that waiver as a way to convince people

Daphné Vanessa (45:04): That is definitely like something negative that could happen. I agree. But I'm also thinking about the people that went to a particular course of study. Not because they want to work as an employee, but because they want to start a business. And so those people still need the flexibility, let's say, take out student loans so that they can pursue the study, that they plan to have a business in, if that makes sense. And

Speaker 4 (45:32): They would sign a waiver for listening.

Daphné Vanessa (45:34): And so I'm just thinking like a lot of let's use law school as an example, a lot of people go to law school to become an attorney. A lot of people, some people are going into law school, especially more these days so that they can break into the legal tech industry.

Speaker 4 (45:51): Hmm. That's a good example. Yeah. I can see that I've met those people,

Daphné Vanessa (45:54): The amount of money and in reg tech and legal tech is just not salary numbers. So sorry. Um, but so like perhaps that person doesn't come from a family where they could just go to school, but they have the idea, they have the passion, they have the drive, they have the work ethic. Should that person be limited on going to, for example, law school so they can understand the framework of how law works so that they can create a product for that industry? I don't know. I don't know that I agree with that. So I think, I think people need to have more transparency than previous generations had in the past, but I, I don't know that it should be so limited that people can't, you know, start a business or, or, or do do things that are more creative. So I, I, I balanced between those two. That's my personal opinion.

Speaker 4 (46:51): Hmm. No, I liked that. I liked that. Um, um, I'm gonna leave that there because you bring up a valid point. And what was the second idea that you had? I like, um, so digesting some of that information. No, no. I hope that our audience takes away from this because none of these are real. These are real conversations to have.

Daphné Vanessa (47:12): Yeah, for sure. Um, so this last piece you touched on actually, which is looking, which income numbers are we looking at, right. We have to stop talking about gross income, gross income is this fictional number that like, honestly, for people who actually pay their taxes, gross income is a fictional number. It doesn't even really happen. Your quote salary for people that are on different payment schedules is also a fictional number. What actually matters is how much hits your bank account. And that's the number that people should be talking about. How much is this person actually receiving? You're like, no, no, no. We look at gross income when we're doing, I don't know, XYZ pay as you earn or repay as you earn whatever, all the government payment plans, they look at gross income. Why?

Speaker 4 (48:05): Yeah, no, I, I agree. I like it. It's something that, that I actually use in my, my, uh, personal life with negotiations. Um, to me, I never speak in terms of gross, because guess what? I'm never,

Daphné Vanessa (48:20): You should tell people that, by the way, that's such a people should know this.

Speaker 4 (48:23): When I do, when I do one-on-ones with, with people and I, and we, you know, just like personal conversations, like, it's just like, I, what I appreciate about this podcast is that having more and more of these guests, it's like, no, these topics should be shared with people because, uh, everyone out there should be learning how to try to put themselves in a better position. And what I realized when I was first, like, cause I made that mistake. It was because I made that mistake when I graduated from school and I'm like, Oh, okay, great. Like I'm making this grow. It's like, perfect. Like I did the math and I'm like, all right, great. Like totally, totally skipped over it. Like way skipped over, like what taxes would be accounting. I did not. Um, but I remember, um, I just remember being so deflated when I was like, wow, that's how much comes out in taxes?

Speaker 4 (49:07): And I was like, why don't we just talk in terms of like net? Like, what am I bringing home? Because like, you're going to take it out anyway. Right? Like it's like the job, like, um, remember I'm speaking from the employee perspective, because the reality is a mass amount of people that are graduating school are looking to become employees. I'm not disregarding the business students, but I think we're doing a job of balancing the two perspectives to me. I'm looking at it from the perspective of, well, you should negotiate it from, in terms of net. So now everyone's on the same page, right. Because it's not like you can be like, okay, I'm going to go, Hey, do you mind if I take some of my gross and pay off this bill? No, you can't do that. Like, you're just only going to get your net income.

Speaker 4 (49:45): So I know it sounds funny, but it's like, I just want to like really simplify the idea that you should. I love your idea will love it. Love it. Love. I love data. You're presenting here for, for everyone. It should be net. It should be look, how much are you bringing home? Okay. I know the argument that I've heard has been, Oh, well, your tax rates are different. Every person is different. You know, you got to speak to your accountant in my head. I'm always like what, who, who has an accountant graduating right out of college? Like for them, I'm trying to think. Lay-person like, who are the average person? It's just like, Oh, you know what, let me just go call my accountant. A lot of people are using BS, normal, you know, box, door companies, you know, to process their taxes. So they're not going to call that person if they're even still employed at that time, if it's not April or whatever, you know, the spring time, I don't, I'm going on a tangent there, but I just really love the idea.

Speaker 4 (50:37): And I think, you know this cause you know me well already that like net income is like the way I speak. I don't speak. In other terms, like you do the math that go to your team. If you're applying for a job, like speak to HR or whatever, because you know what it does, everybody's on the same page. Everyone's on the same. Exactly. Like it's, it's actually created like that conversation where you're just being honest with your potential employer. They see where like where the number really is for you. And then they go, okay, you know what? Yeah, we can get you there. Or they might say, you know what? This position doesn't allow for that type of, you know, I'm out, everybody's on the same page. Nobody got that. I gotcha. Moment. And like I got one over on you. Yep. Yeah. That's that's it. Yeah.

Daphné Vanessa (51:19): Yeah. There are so many good calls to action. I feel like this episode would be a three hour episode just over all of them. So we're going to have to link it in the show notes because I mean, there are some that I literally want to talk about right now, but we'll have to do it after the episode.

Speaker 4 (51:39): No, but this is, this is important stuff. I think, um, we are, we're trying to share topics that, that are actually possible, right. Or like, or at least just talk about ideas that maybe one day we'll see in the future. Right? One of the calls to actions that we had with star knew that actually became a part of, of legislation that passed recently was allowing for, for student debt, that's being paid off to be considered, uh, or not to be taxed. Right? Yeah. So I think that's something that you wrote on this cost action list, that it was amazing to see that that actually became a part of the changes that were recently passed. And the most recent, I want to say recent word we're in March, 2021. So the most recent stimulus package that got passed for the pandemic relief, uh, part of that was if you get your student loan debt paid off, you're not, you don't have to pay tax on that.

Speaker 4 (52:34): You know, for a, for a certain amount of years, that's a big thing. That is a big, big deal. Because imagine if you had someone paying off your student loans, but then now you're stuck with this tax bill. I remember that because I've taken advantage of some of these types of programs where I had to pay taxes on student loan debt that was paid. And I was like, wow, that really sucks. Like, like it doesn't suck because I still got, you know, the, the benefits outweighed the cost, but I just don't remember being like, why should I have to pay taxes on something that was paid off because I worked for it. Right? Or because of, uh, you know, I took advantage of a program that was available to me and my, and my peers. I, I wanted to make sure I gave you that highlight Daphne.

Speaker 4 (53:13): Cause you had, you had spoken about this for quite some time and it was really cool to see that it actually became law and it's something that people can not take advantage of. And so hopefully this podcast episode in many other reports and, and resources that we're going to link in the show notes, all of us having these types of conversations, I hope will continue to influence legislators and hopefully private sector, you know, servicers and organizations to say, Hey, this is where the population is moving. And we want to keep up with where the times are going

Daphné Vanessa (53:44): In agreement in alignment. Thank you for sharing time with us today, for staying with us and listening and being a part of this conversation. We really look forward to connecting with you. So please engage with us on our show notes page or social media, feel free to reach out to us. And we'd love to hear your thoughts on calls to action and what action should be taken by the different stakeholders to solve this crisis. Because a crisis doesn't have to be always, everything is temporary. Let's make this temporary phase of the student loan crisis go away as soon as we can. Thank you guys

Speaker 4 (54:23): For more information on today's episode, visit the student loan podcast.com forward slash episode 22. That's the student loan podcast.com forward slash episode 22 and a quick, special shout out to everyone out there. That's listening. We've been really happy to see that you guys to be giving us five stars you've been rating and reviewing. So please continue to do so. And if you can share this podcast with somebody else whose life, this might impact, thank you, everyone take care.