I know the administration is looking at a plan B and unfortunately let's go by.
Just take a step back for one second and realize that student loans have
become politicized, right, so bar words are confused. I'm by not going
to pay back? Am I paying it back? What's going on? You're
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Carrie Letz. Well, you recently heard there was a huge setback to
the current administration's plans to forgive student loan debt. The Supreme Court struck it
down basically said the President does not have authority to a unilaterally give debt forgiveness
to millions of student loan borrowers. If you recall, during the global pandemic,
the repayments of these loans were suspended. I mean we're talking a trillion
and a half nearly two trillion dollars worth of debt. The president announced a
plan that he was going to forgive a number hundreds of thousands of people's student
loan debt. It went to court, he lost, and now we're back
to square one. But more importantly is what effect does this have on you?
What effect will it have on the economy? And our good friend Paul
Auster is with us now, and Paul, it's great to have you back
on. You're the credit expert here. I mean, you know that that
it's going to have a huge impact. What's your take on it? What
do you think it is going to be the impact of this, Paul.
So, so we already know from certain surveys that have been done, and
but it was millions of borrowers. A certain percentage of those barrowers will not
make the first payment that comes due in October, right, so they start
the clot back on September one, injuries will start to a crew. First
payments will be due October first, and borrowers are going to miss the first
thirty day about payment. And the other side of the coin here is not
having any of that debt canceled will equate to hire credit card debt for a
certain amount of the other barrowers. And as soon as you start taking up
on credit card debt, your your credit scores come down. So it's going
to cost them more for everything else. So this is a credit killer.
It's a one two punch for sure, between the late payments between the higher
credit card debt. It's going to have a tremendous impact on the economy.
Now I'm not saying that you know, they should have forgiven the debt.
They shouldn't have forgiven the debt SIPs way above my pay grade. But what
I do know in terms of the impact on the economy and consumers credit,
this will not be a good thing. Now, does the economy need to
slow down anyway? Does this have some type of benefit indirectly? Maybe?
Ads? All right, so, and I should note your firm is called
better Qualified. You're in New Jersey, but work around the country. And
so it's somewhere around fifteen billion dollars a month in payments that will start flowing
into the government. But a substantial number these people have already spent that money,
if you will, or counted on not having to make any repayment.
So there's going to be a huge number of defaults. So effectively, here
they've just kicked the can down the road, haven't they make sure had it?
You know when you start you know again, these early thirty daily payments,
we already see the uptick on auto payments. These are typically the early
bellweathers of a downturn in the economy. So we see the uptick in pre
foreclosures, we see the uptick in auto payments. You're going to see it
in student loans. So it's not a good situation. And now what will
happen also is you will effectively remove a couple of million in barrowers from the
housing market from buying a car. Because this will destroy their credit. They
will not be in a position to obtain any type of financing. So this
is definitely going to have a negative impact. So potentially this could be the
have many more times the effect of a federal reserve rate. I couldn't it,
it, sure could it Sure couldn't. Now, Look, I don't
think anybody would argue with suspending the payments. During the pandemic, these young
bars were in some of the worst positions coming out of school. The job
market was obviously crushed, so suspending the payments during the pandemic was a good
move. Trying to forgive that much debt after the pandemic under you know,
loosely associated the Heroes Act of two thousand and three. It just didn't I
didn't think there was any way that the Supreme Court was gonna, you know,
uphold it. And here we are, so the solution's going to have
to come from Congress. And maybe this is a good time to revisit the
entire student loan scheme, all right, the fact that it's the only type
of debt virtually out there, with some other exceptions, but the only type
of debt that is non dischargeable in bankruptcy, maybe it's time for Congress to
say, you know what, a student loans, especially if the person never
graduated from college got the value that they were seeking. Maybe this is the
time to revisit this, and maybe it's going to result in forgiveness. But
on the other hand, you've got to be sympathetic to the people who either
paid for their college in whole or paid back their student loans, spend ten
years paying them back, and then is that fair to them? To see
millions of people have their loans forgiven just for showing up. Yeah, I
mean there were already income based repayment plans. There are page you go plans,
there are service loan forgiveness that if you work for a government agency or
a nonprofit for ten years, um. After the ten years, then it's
it's forgiven. So those types of incentives are still herere and barrowers need to
be very proactive. But what I've been trying to do is just get the
message out there. You can't wait until September one. It's it'll be here
in a blink of an eye October one. You have to have a plan
in place and figure this out. It's not just gonna go away. UM,
so do something. When was the last time you logged in to your
to your student loan account? You even know what the principal balances do?
You know what those monthly payments are going to look like? Um? You
know when they when they start to kick in. So be proactive. Go
to student aid dot gov. Student aid dot gov is the only website,
the only place borrowers should go to get information. As you don't carry what's
going to happen is you're gonna have all these bad actors jumping in here.
It's a perfect time for them to pray on these bar works who are very,
very susceptible right now. They're panicking, So you're going to have people
wind up getting it, you know, caught up in scams and fraud and
situations like that because they're so vulnerable right now. So student aid student aid
dot gov is the only website a bar where should go to. And again,
there are retainment plans out there that are going to be directly correlated to
your current income, So you have to figure it out. So what do
you think, good? What do you think is going to be the upshot
of this? I mean, you know you're being a not being a gambler
as such, but knowing the magnitude of the problem out there and how many
people will be suffering as a result, where do you think this is heading?
So again, that's the only time is going to tell that. But
I know the administration is looking at a plan bum and unfortunately let's go by
Just take a step back for one second and realize that student loans have become
politicized, right so bar words are confused by not going to pay it back?
Am I paying it back? What's going on, and of course human
nature says, let's hope for the best. Right, They're going to get
this through, and I'm not going to have to pay back, um,
maybe all of my student loan or ten twenty five thousand dollars worth of the
student loan. It's going to significantly decrease my payments. And that's These are
just carrots that have been you know, hanging out there, being dangled in
front of these students causing confusion. So the politic is the poet is the
politics behind this um. You know, ongoing debacle is not a good thing
for anybody. So what happens, you know, moving forward, we know
there will be ex out of the falls. We know there's going to be
x amount of late payments. We know they're going to carry higher credit our
debt because of the student loan debt. And again what I am saying that
is this is a real one two punch killer for these young people because they
don't have a long credit history. So people loans are very powerful helping these
young people build their credit. Well it's gone in the blink of an eye
with one thirty daily late payment. You know, you could lose a young
person like that could lose fifty seventy five one hundred points off their credit scores.
So this is not a good situation, to say the least. It's
a nightmare scenario. People who've been trying to do the right thing. The
government gives them this relief, and it's questionable whether they really have the authority
to do that in the first place. But nobody seems to be challenging that,
right. So you know, uh, you gotta wonder the government has
caused this mess, so they need to They need to settle the problem.
They need to solve it, right, Congress, and go back to what
you were saying before. You don't solve it by forgiving the debt um that's
already been obtained, right, because that's not fair to a guy like me
who paid my student loans back. You know, I didn't come from a
high net income family. I had to pay my student loans back. And
what about the students that invest in trade schools and and try and start their
own businesses. You know, where do you draw the line? So you
draw the line in you signed a contract for these student loans. Why does
it cost so much money? Some of these universities have you know, endowments
that are that are the size of countries GDP. I mean, it's just
an amazing situation that you diversities have become these powerful, powerful financial vehicles.
So how did we get here in the first place. The universities are charging
way too much in room board and tuition, and it's offset. It's kind
of like the healthcare industry. They charge that because they know that these students
are going to be able to get financing. They paid for it. So
there really has to be a going to peel back the onion all the way
and kind of almost start over and then you know, deal with the problem.
But you know, canceling the debt is not solving the problem. Yeah,
definitely not. And well, I guess we're gonna find out. You
know, Congress got us into this mess, and Congress it's up to Congress
to get us out, right. That's a scary thought. Care. That's
just you don't have a good track record. They have a great track record
and getting us into mess, but they don't have a great track record in
getting us out. It's certainly not without causing pain somewhere else, or just
like you had said, just kicking the can down the road. You know,
and what you were saying about these large college institutions here creating this problem.
You know, they're the beneficiaries of it, right, I mean,
they benefit from the problem that was created here. And so you can't just
let them off the hook and say they have no you know, they become
these wealthy institutions here, you know, as a result of government large s.
So they got to be part of the solution, and they have to
they have to bite the bullet here, right, there's no doubt, there's
no doubt that they have to be held accountable and also participate in in how
we move fall right, could not agree with you more. Hey, just
tell us again where we find you, how we connect with you on the
web, and and what else you can do. Listen, just go to
better qualified dot com. You can ask questions anonymously. You can get access
to two different self help guides. You can speak to one of our credit
experts to figure out, you know, what's the best way to move forward.
We can suggest debt management programs to kind of deal with all your other
debt. You know, like you had said, if if it's a federal
student loan, there is no you know, even if you have filed for
bankruptcy, it will be excluded. So we have to look at this holistically
for each consumer. So just go to better Qualified dot com, set up
a brief phone call, and the consultation and analysis is always free, and
let's figure out if if we can provide any sort of relief and assistance.
All right, Hey, we really appreciate you coming on as always, Paul.
If you've got a question for Paul myself kl at kryltz dot com,
just shoot us an email, leave your comments on the YouTube channel below.
If you're watching us there and make sure go over to Financial Survival Network dot
com show notes this interview. Paul's link will be there. Paul, always
a pleasure, Thanks for stopping by, Thanks you having back on, Thanks
for listening to carry Let's Financial Survival Network, your solution to today's trying times.
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