Ep 107: Breaking Down the Student Loan Crisis in America

EPISODE 107
Welcome to the Think Generational Wealth Podcast, and this is episode number 107. I am your host, Amir Estimo. Thank you for tuning into today's podcast episode. I know it's been a while, your boy's been on the hiatus since seventh quarter podcast episode Since, I would say my last episode was back in like March 29th, 2023. That's the last time I recorded an episode. But ever since then, I've just been on a hiatus, just trying to regroup things and, you know, just to kind of give you retrospect. But first I'd like to say, wherever you at, [speaker other languages 01:24], anything you can think of. So wherever you at right now just to kind of open that up. 

So, first of all, I always like to open up each podcast episode with thanks and appreciation or gratitude and appreciation. I'm very grateful for you taking the time to listen to this podcast. Even through the hiatus, the podcast is actually still getting download, still averaging a decent amount of downloads for the podcasting one week. So, for a podcast that's used to probably getting, let's say 1000 episodes per drop, whereas this podcast doesn't get that, you know, I probably get less than 10% of that, but I'm appreciative, whoever listens to this podcast. This podcast is not about a hundred thousand downloads. This podcast is about information. Now, could it get to that point? Yes. But right now it's about information, especially with today's topic. 
So with today's podcast episode, we're going to talk about, again, I appreciate you taking the time to listen to this podcast episode because you could be doing anything in the world, but the fact that you're listening to this podcast, it's much appreciative.

So, today's podcast, we're going to talk about the student owned debt crisis in America. Now, as out of you are quite cognizant of the student loan repayment. The student loan pause will be ending as of August 31st, 2023. Back in June, I think Biden signed something to where there wouldn't be no more pause on the student loans. And it's time for buyers to pay up. So now your student loans, the pause will end August 31st. Interest will begin occurring beginning September 1st, and first payment probably won't be until October. So even with that being said, you get the pause, but then interest starts to build up beginning September 1st, which is one of the main issues with the student loan, which it didn't address anything. Through all this pause and all of this stuff, we went through three years, COVID, post-COVID, even pre-COVID, the same issue still resides, and it's probably even worse now.

So, we're going to talk about that a little bit here. So, if you are going through the same thing like me, who's someone who owes student’s loan, hey this is part of the podcast episode for you. 

First of all, podcast episode, brought to you by [inaudible 04:10] Amirison Financial. [inaudible 04:12] Amirison Financial is the sponsor of this podcast. And in this [inaudible 04:18] Financial, our goal is to educate, eradicate debt. So we want to build assets. We want to talk about educating ourselves to lead generational wealth. And to do so, we want to be financially independent and financially free. So I'm not going to bore you with the history of all that with student loan, you can look that up, but I'll give you a short little timeline of it.

So in 1958, there was the National Defense Education Act. And what that was because the Soviet Union launched a satellite called a Sputnik. And the NDA wanted to enact a program education in science, mathematics, and foreign languages. And then this also include the first federal loan program for college students providing low interest rates to students pursuing higher education. And in 1965, you had the landmark legislation established where the federal government got involved in higher education, comprehensive framework for federal involvement, higher education. 

So, you aim to make college more accessible by providing financial aid to low income families through federal Perkins Loan Program and also basic educational opportunity grant known later on as Pell Grant. So, that was the Higher Education Act of 1965. And then the Guaranteed Student Loan program in Acton, also in 1965. And under the Higher Education Act, it was allowing private lenders to offer federally guaranteed loans to students.

So this ensured that the government's repayment of these loans, if the borrow was defaulted. Then in 1978, the Middle Income Student Assistant Act, this is basically for middle income family who's struggling to pay for colleges, right? So this was also extended to them in 19… Although, basically other forms of financial aid was extended to them, which then introduced the Federal Family Education Loan Program, which offered subsidized and unsubsidized loan. So if you guys kind of have an idea, so if you want to look into that, like the subsidized and unsubsidized loans, again, I'm not going to get too much into that. You can always look that up. 

The Higher Education Amendments in 1992, which significantly overhauled federal student loan programs, it was replaced what was called the F F E L Program, direct Loan Program, shifting responsibility of the originating loans from private lenders to the Department of Average Education, and then ensuring the continued access to Student Loans Act. That came in ACT in 2008, which was in response to the global pandemic, not pandemic, but that's when we had the, can't think of the word right now, but when we were in recession, that's recession, sorry. So that inactive in 2008. So that basically started up, then in college, cost Reducing act, this legislation was made in 2007.

And this was basically for Pell Grant. And this was introduced to income driven payment plan. So this was a public service loan program. So basically like you went to school to become a teacher or something to that nature, your loans would be forgiven after a certain amount of time. Then, the college Cost Reduction and Access Act, which we talked about. And then now the Healthcare and Education Reconciliation Act. So I can speak there as part of a broader healthcare reform, eliminate subsidies to private lender, originally through the F F E L program, making the direct loan program. And so provide a student loan program. Okay? So that's just a kind of a breakdown of a timeline of the student loan in different acts that came about, if we were to talk about 1958.

So from my perspective, if you don't live in the US, this is basically…, here's the gist of it, so in the US, you go up to 12th grade here. So you go up to the first, you can say kindergarten and 12th grade in some cases pre K to 12th grade, depending, right? And then as you graduate your senior year, you decide to go to college. But not everybody's capable of going to college because college is very expensive. I remember I went to University of South Florida, and I say in-state tuition was like almost 10,000, maybe 15,000 per semester. So considering the fact per semester, meaning that if you went to school from August to December, that's a semester, January to April/May, whatever, that's a semester and you have to pay 10 to $15,000 per semester.

Now if you're going part-time, that was cheaper. But the issue there is you don't get as much student loans when it comes to going to school part-time. So you basically have to be a full-time student, which is 12 credit hours or more to be considered for student loans or for aid or grants, whatever. So that's the aspect. And you generally go to college from that point anywhere between four to five or four to six years. And then depending on whatever your major you're studying in, then you go to your master's afterwards and your doctor's. So it's called continuing education. So in that, at retrospect, that's basically the gist of it. But the issue here though is if you're someone, or your family's not capable of sending you to college, so you apply for student loans or you apply for basically financial aid and then whatever you qualify, you may get more.

It may be a mixture of you getting grants and you getting loans at the same time to fund your education. And upon graduation, usually about six months after that, you're expected to make your first payment. And I'm talking about college. As long as, if you're not pursuing a higher education, then what happens is meaning that you go to your masters, go with your doctor, meaning that then in the retrospect, you'd have to start paying your student loans because you're no longer continuing education, right? And even that within itself becomes more expensive. Master's program, doctor's program and whatnot, right? So that's to give you a gist of it, to give you a breakdown. 

Not like the political, you may see verbiage that's used. This is just basically my experience with it. And I was someone that, to be honest with you, I was in college for seven years, and the reason is this, five of those years, I would say probably the last two years of college, I went more than I needed to because I was mentally checked out and I think my confidence got shattered a little bit when I took a course and then in the course, I failed it and then I had to wait another year basically to take that course, which was pushing back another year to graduate.

And at this point, I was just like, this is kind of pointless. So I myself have student loan debt and it's basically five figure debt. Is it one of the high, no, I'd probably say high tier. It would be student mid before the six figure, mid 50, not 50 but like mid five figure. That's somewhere around there. Some cases you hear people owing a six figure from student loan debt, right? And if you're someone who don't come from a family that's wealthy or has so many, any type of money, it is very hard when you fund your education. So you have no choice but to take whether the grants or student loans. And me coming from a Haitian descendant background, it's not like my parents were blessed or whatever with a whole bunch of money, when they came here, all they knew how to do was come here and work, work, work. That's all they end up doing here. 

So the situation was that when I went off to college, yeah, you had to apply for student loans and it was kind of a no choice. But if I had to look back, certain things I would've did different with it is even if I had got the student loans, I probably should have started a business. Look at doing some type of, because that's when the internet started. We're talking early two thousands where the internet was still a thing. It was not like what it's today, but it was just still growing. It was an infancy, right? And if I had to figured that out by then, because the reason I'm saying this is because there's certain books I've listened to and you're hearing how these people, some people while they were in college, they started a business. And if I was smart enough, if I had that thought process back then, then guess what?

I wouldn't need to take out student loans. I would've graduated college, probably have my school paid for and then have a business that was flourishing right afterwards. But you know what? You can't be living in the past. Those decisions you already made. You just got to keep it up and keep moving, right? So what it is now is fast forward, we hit probably about 2019, beginning 2020, somewhere around there, the student loan, it gets a pause, right? So what's really hurt, like for me, I'm one of the people, I don't mind paying my student loan back. Where I’m having issue is the interest because there's an issue that I remember one year, I can't remember the year, but I paid like $5,000 and only went like 500 to the principal. Which is disheartening because you pay 5,000 and you only made $500 debt, which is 10%.

That was it. So if you owed like 60,000, you still owed 59,500, which was just, it was just mind boggling. And now that we're about to deal with that same issue again and which is where the reason why people can't pay those student loans is because the continuing occurred interest. So if you not wealthy or you don't have the funds or the access to go, you decided to go to college because most of us, culture wise, outside probably in America, we're all taught to go, you got to go to college becoming something, whether it's a doctor or lawyer or engineer, tech, whatever. But some of us don't have the capability. And that's what I was in. I didn't have the capability, I didn't have, my parents had no money and stuff, so I had to take off school loans and I went and studied a very difficult degree, which is engineering.

But I can say this, the funny thing is all that stuff I learned in college, I’m actually applying it in the real world and I'm making more money, right? And I'm using the stuff I learned in college. But it could have been an easier route for me. It could have been instead of let's say the business thing, right? It could’ve been I went to community school and taking most of easy core classes. I mean not a core, but your easier prerequisites to knock those out and then went to college and actually take the courses you need to graduate. So, you're there for that college for two years. But I was so enamored, the college experience, just being able to be just a college student and it was just a different experience. But after a while, it was just like, you got to stop playing around and you got to get serious about this because this was getting serious.
And to think about it. 

Now I'm recording this episode to think about that, how things changed for me when I went from college and then just to see that even though I don't have a degree, but I went and built up certain skill sets, I went into tech and I'm still making the same amount of money that was made if I got went to college, right? I went to college, graduating my degree. So I actually walked. And I did that thinking about that now because I didn't want to disappoint my parents. And my parents were, hey, graduate, whatever, you know, you're the first person to graduate. But to see that now you’re in this position, it's like, I could've probably never went to college and still got in this situation, okay? And I'm not saying no one should, but what I'm saying is the past could have been different.

Now you always think of these what ifs. What if I had just did that, started a business with my financial aid money, who's the state right now, I would've been worth like $10 million or something, a hundred million dollars or something like that. And sometimes it's all about just the education. That's what we're going to talk about, it’s the education. And when you're educated and you have the mindset and these things that come to fruition, then you would have a different thought process. And I think that's where I'm looking back at my life now when it comes to the student loan issue, is that what could I have done differently? And it probably a lot of us have asked ourselves that question, right? So, we talk about the cost of education is getting higher, right? So now we just dealt with the pandemic, global pandemic and now it's time to pay up, right?

So a lot of things went up now, food is up, gas is up, all that is up, inflation is up, but the income is still staying the same. And that's where you get the issue when it comes to the student loan, it’s that’s if I'm going to be paying loss from the principal of the interest, that's killing, right? Because the interest is what is hurting. It’s you're not putting much dent into the principal. And then on top of that, you're looking at this now, it's like, okay, I'm paying, paying, paying. It's not going down. So what do I do? So cost of education has went up, it's extremely expensive. I actually was talking to a mother and a daughter about a few months ago. I was out and about and they were discussing about how the mother sent one of her younger kids to college and it's cost 75,000. It was not even for a private institution, it was for a public institute, 75,000. So if you break that out, that's like $37,500 per semester. That is extremely ridiculous. I have a 16 year old which wants to go to college and it's going to be tough.

Not saying we can't do it, but it's going to be tough because it's so expensive. And she's like, she wants to go out of state. Which you know, at first when she mentioned that, I was like, you know, it's going to be tough for you. But now that I think about it, it could be the best thing for her too. Because you want your kid to, for me is even though I didn't leave the state of Florida, I left the city I was at and I was actually happy that I did that, I made that decision because a lot of my friends ended up getting into a lot of stuff they shouldn't have gotten into. And who's to say if I didn't fall into that same track versus me going off to college, going off to another city, it actually helped me grow. Now the downside about that is when you start having first line of trouble financially, then you're calling your parents.

And that's where, I'm kind of in between a rock and a hard place. I would love for her to stay but I would love for her to grow too. So it's going to be up to her, her decision. But when that time comes, you got to look at all alternatives because college is extremely expensive. Extremely expensive. 75,000 for a whole year for a public university. You're not even talking about a private institution. So you think about it. Now, let's say your family, you can't even afford debt, do you want to take out student loans? You're probably not. So what happens now is you don't even go that route. You know, when I was growing up before college, it was only basically college. Now it's like there's so many other opportunities. You don't have to just send your kid off to college or anything to that nature unless it's like you want to go study engineering lawyer or doctor or something to that nature.

There's some of that stuff. You don't need to waste time going to college. Even IT, there's IT schools that there's self-taught courses you can take and you can get into the IT industry that way. So I think the mindset from where back then and now is so much different. If I was going to college now, I would be, no, I probably wouldn't waste time going into university. I probably wouldn’t. Unless you really feel like graduating and all that is important to you, then you can do that. But however, I don't think it is. That's my opinion though, right? So you look at the economic, if you're someone who's not capable, and who is that really impacting? Low income? Generally African American, black, black Americans, Hispanics, those are the ones who are struggling to send their kid off to college. They don't have the means, they can't afford it, right?

So what happens now is sometimes you have these kids who could have gone off to college, could have done something, probably don't even have the right leadership and they're off in the streets doing whatever, committing crime and now they're locked in the society, become a society of badness. So we have to think about that when it comes to the student loan. What can we do to help correct this? So now Biden actually had a plan. He was shot down by the Supreme Court. Basically you made a certain amount of money, you would've gotten 20,000 of loan forgiven. You made, I think it was another set of money, you got 10,000. That was shut down by the Supreme Court where they voted, I think it was the panelist tonight. And they got shut down six to three, right? So can we say, well can we really count on the government?

No, because it go to show you the president didn't even have that much power. I mean the fact that this, the president of America couldn't even get this passed is sad. It's sad. So we are now in a position where we can't just sit here and be, what am I going to do? What is this? We got to start taking it into our own hands. And that's why I'm going to share with you eight tips. Okay, so eight tips.
 
So number one, we're going to educate ourselves. That's what we're going to do. Understand the term and conditions of your loan. You know, look at different payment plans, interest rates, right? What are the potential benefits? Forgiveness programs. You know, there's things in here you could like research the government websites, loan services platforms. And then just to see, to know your rights and obligations as a bar. Start with there.

Number two, create a budget. Expose yourself to the numbers. That's what I would say. Take a look at your numbers because your spending habits has changed since before the pre pandemic. Now post pandemic, you're not spending the same, because the money that you probably would've put into your student loans, you were probably using it for other stuff. You're paying bills, going out, taking family, traveling, so and so and so on, right? Now you're going to have to expose yourself to the numbers, and you're going to have to look at it and say, okay, where am I at now? Where was I? And where am I now currently, what am I going to have to do differently? It could mean maybe now I'm not going out as much. It could mean maybe if you are leasing the vehicle, when your lease is up, you may have to just start paying on it.

Actually take out a loan to pay off your car. There's a lot of things now you're going to have to expose yourself to because your life has changed from before the pandemic to now. It's different. 
Number three, explore repayment options. I've even thought about this, maybe say you got [inaudible 25:49] is that if you, let's say you refinance out of your student loan. What happens now is, let's say you go to SoFi or something because I've seen SoFi have been sending some marketing letters to me. If you go to that, what happens now is that you lose the governmental. So like the pause that happened, if you were SoFi or let's say you some other company to refinance your student loan, guess what happened? You wouldn't get those benefits because you are now dealing with a private company to service your loan, not the government.

This is not a governmental loan anymore. So you wouldn't get the pause that you have, right? So maybe you have to look into that now, looking at to refinance your student loans because I can tell you my student interest was 6.75% interest. So which one is it at this point? Do I ever want to deal with a daily occurring interest or just refinance and just don't, you know, I don't care no more. I'm just going to pay off my student loans because that's what I did. That's what I told myself was, when I graduate, I'm going to pay off my student loan. Obviously, you're not going to get the help from the government, so you might as well just forget that. So, unless you do some like income driven plan. See that's the thing, if you refinance your student loan, you don't get those options. Those are not available to you anymore. So that's something to really ponder on and pontificate, right? So you think about that.

Number four we talked about refinancing, repayment options. So there's different ones. So, you have to look at the I D R, which is the income driven plans. There's different sets of plans for that. So it's based off of your family size, and they give you a payment every single month. Some people end up paying like zero for a whole year. But again, the interest continuing to piles up, you got to consider it. So it's kind of a gift and a curse type of thing, right? 

Number five, seek loan forgiveness assistant programs. So maybe you have to do something in the public service sector, right? Maybe look into going into that. And then what happens with that is after tenure, which is 120 quantified payments, the rest of your loan is forgiven. So let's say you, you pay 10 years when you're on and you end up owing like 30,000 or let's say 20, the rest of it's forgiven. So that's maybe something you have to look into. 

Number six, prioritize your payments. Again, it's going to be, this is going back to point number two, which is budget, right? So maybe we're going to have to look at paying, you know, you probably incur some credit card debt. I know I did during this time. These vast few months that's happened to me. So you maybe have to look into how you're going to make your payments. If you're someone with multiple student loans, you may have to look at which one is more important. Do I start paying the smaller bonds? How do I use the quote unquote dead Dave Ramsey plan that snowball fed or do I use the other one? You know, snowball, which is usually you just pay off the lowest balance first until you pay everything off, where you go the highest other route where you pay off the high interest rate first and then you go the other route, right? So those are something you're going to have to look into. Okay? 

Number seven, seek professional guidance. Talk to a financial advisor. Talk to someone to help steer you in the direction because things are about to be changed for you. And that's for all of us. For us. Things are about to change for us. And if you're someone that means that education, reach out to someone. Okay? please don't use YouTube and TikTok. Those are actually, those information I've got on TikTok when [inaudible 29:37] professional. I'm like, no, that's not true. And you know, those are not going to be ways to educate yourself. Educate yourself by actually finding someone, a financial provider or financial that can help you put your money in better position. 

And number eight, which has been difficult for us, which is I would say advocate for policy changes. And that hasn't happened, right? But should we stop because we still got another generation behind us that's coming. So we got to figure out how to be able to get Congress to listen to us. Yeah, we can complain, shoot TikTok, go on TikTok and complain about, you know, the issues or we got to do something about it. So maybe in situation where you support organizations that are lobbying for student loan reform, you know, so maybe it's good that once you got some people that go on TikTok and you share their stories and that stuff goes viral, that content goes viral, right? So, there's a lot of things you're going to have to understand here now, but the changes is about to happen after August 31st and you want to take those action now, don't wait later. And even again, there's some things I'm looking into.

I'm already looking into maybe repayment option, refinance, consolidate the student loan. I don't, those are things I've thought about because how we're going to make it. And you know, if it's something in a situation where I end up losing, I go a route where I just refinancing, just say, you know, what the heck with it? Let just go this route. And I just want to pay my student loan. I don't care about government help, all this, blah. I just want to pay my student loans off. Okay?
 
So hopefully this helps. This podcast episode helps and I appreciate again, you taking the time to listen to this podcast episode. And I'm going to give you a word of day. Let me leave you with a word of today. Okay? So it's going to be probably three languages because I've been learning French, Portuguese, and Spanish.

And of course I already know, I know Haitian Creole. So my goal is really to speak five languages, but where are they [inaudible 31:51]. So that's your head. So you got to use your head in this situation, okay? So I understand that when it comes to this aspect, we're going to have to use our head. Okay? All right. [inaudible 32:05], so that means listen. [inaudible 32:08] says listen. And then, and let me see. And Brazilian/Portuguese is Bom dia. So that's good morning, Bom dia. Boa noite,  Good night, good evening. So again, folks, these are these. We got this, but it's going to take time and effort. It's going to take work. So we got to put in the work, okay? All right. So thank you for tuning into this podcast episode and see you next week. Much love, peace.