Insights Into Tomorrow Episode: 14 “The Specter of Student Debt”

Insights Into Things

This week we’re talking about the pandemic of student debt. Why is it a problem in the United States? We’ll talk about a brief history of student debt. We’ll take a look at what is driving the rise in student debt. And we’ll look at possible solutions to this problem plaguing today’s youth.

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Show Notes

[INTRO THEME]

  • [INTRODUCTIONS] (3-5 minutes)
    • Show introduction:
      • Insights Into Tomorrow Episode: 14  “The Specter of Student Debt”
    • Host introductions
      • Host (Joseph Whalen)
      • My co-host (Sam Whalen)
  • [SUMMARY]
    • This week we’re talking about the pandemic of student debt. Why is it a problem in the United States? We’ll talk about a brief history of student debt. We’ll take a look at what is driving the rise in student debt. And we’ll look at possible solutions to this problem plaguing today’s youth.

[TRANSITION]

[SEGMENT 1: Topic Introduction/Episode Premise] (5-10 minutes)

Why is student loan debt a problem in American?

https://www.firstrepublic.com/personal-line-of-credit/student-loan-debt-averages-2021
https://bit.ly/3AJ4L7P
  • Student loan debt plays a significant role in the lives of many Americans. 
    • The cost associated with higher education continues to increase year over year, and for many, this translates to a heavier reliance on loans to bridge the gap. 
    • Consequently, outstanding U.S. student loan debt reached $1.7 trillion at the end of 2020, according to the Federal Reserve — an all-time high.
      • To put that into perspective, that is roughly the GDP ranking of Canada, the 10th highest ranked country in the world by GDP
  • Key Student Loan Debt Statistics
    • Student loan debt national average: $39,351 per student
    • States with the highest student loan debt: 
      • Washington D.C.: $55,400
      • Maryland: $42,700
      • Georgia: $41,500
      • Florida: $39,700
      • Virginia: $39,000
    • Age group with the most student loan debt by percentage:18- to 29-year-olds (34% have student loan debt)
    • Age group with the highest average student loan debt: 35-year-olds have an average of $42,600 in student loans, and with an ending balance that is nearly three times their starting balance
    • More than half (65%) of college-educated adults have student loan debt
    • 6% of borrowers who owe more than $100,000 in student loan debt — including the 2% owing more than $200,000 — account for a third of all outstanding student loan debt.
      • The vast majority of those borrowers who owe more than $100,000 took out loans for graduate school. 
      • Loans associated with grad school account for about 50% of total outstanding student loan debt (and 25% of total borrowers). 
      • The other half belongs to the 75% of borrowers who took out loans for two- or four-year degrees.
    • US Student debt has increased by more than 100% over the past 10 years

[AD1: SSE]

[SEGMENT 2: Historical background/Symptoms and signs] (10-15 minutes)
 

A brief history of student debt in American

State of Student Debt in the U.S., Part 2
  • 1840
    • The first student loans in the U.S. were offered exclusively to students at Harvard University in 1840; public student loans did not arise until the 20th century. 
    • In fact, the U.S. Department of Education (DOE), which was founded in 1867, did not administer federal student loans until the passage of Title IV of the Higher Education Act in 1965 
  • 1944
    • In the two decades prior to the institution of federally-guaranteed student loans, the U.S. experienced a significant increase in college attendance, however, thanks in part to the passage of the GI Bill® in 1944. 
    • Fulfilling the need for affordable higher education, the GI Bill subsidized or completely covered the cost of college education for nearly half of America’s returning World War II veterans. 
    • Since its inception, this program has remained popular over the years; nearly 32% of all male veterans have used it to attend college as of 2009.
  • 1972
    • In 1972, the HEA was amended to ensure education programs whose students were receiving financial assistance and student loans did not discriminate based on gender. 
    • By 1976-77, all undergraduate students became eligible for Pell grants. 
    • Together, these two popular programs further increased college attendance rates by providing financial assistance to individuals who previously could not obtain it.
  • 1986
    • However, not all student financial assistance has been beneficial. 
    • Signs of trouble with student borrowing began to appear by the late 1980s.
    • In 1986, parents and students had incurred nearly $10 billion in federal student loans – then considered an outrageous amount. 
    • That same year, more than one quarter of student borrowers owed more than $10,000 in student loan debt; adjusting for inflation, this is equivalent to over $21,000 today.
  • 1990’s
    • Certainly by the 1990s, student loan debt began to skyrocket. 
    • In 1993, the average debt of a bachelor’s degree graduate was approximately $9,000; five years later, it was about $15,000. By 2003, it had jumped to approximately $17,500.
  • 2000’s
    • Today, the average outstanding student loan balance per debtor is roughly $30,000, though one recent study by Fidelity Investments put the figure as high as $35,200. 
    • Approximately 20% of U.S. households currently owe student loan debt, as do 40% of people younger than 35. 
    • This means an increase of nearly 200% of overall student loan debt (public and private) over the last 20 years. As of 2012, total student debt surpassed $1 trillion.

What is driving the cost increases of higher education? (9/1/2020)

https://www.forbes.com/sites/wesleywhistle/2020/09/01/what-drives-the-15-trillion-student-debt-crisis/?sh=6e818de37aec
  • College is expensive. 
  • Since the 1999-2000 academic year, the net price of tuition, fees, room, and board at a public four-year college has increased 68%. 
  • The amount borrowed to go to college each year has doubled in the same time. 
  • Today, the cumulative federal student loan debt is over $1.54 trillion, more than double the amount in 2010.
  • Much of the focus around student debt is around rising tuition, and for good reason. 
    • As states disinvested in higher education, tuition increased across the country. 
    • Published tuition at public four-year colleges rose by 36% from 2008 to 2018. 
    • In many states, tuition rose even more. 
    • Today, per student funding from states is 8.7% less than it was before the Great Recession, which should be a warning sign given the current economic situation.
  • Many have proposed making public colleges tuition-free. 
    • But that alone won’t address student debt going forward because tuition isn’t the only driver of student debt. 
    • The total cost of college also includes living expenses, like textbooks and room and board—regardless if students live on campus or not. 
    • Living costs actually are more expensive than the sticker price of tuition.
    • In fact, tuition and fees only make up 48% of the total cost of college at a public, four-year college. 
    • At public, two-year colleges, it’s an even smaller share at 29%, with living costs almost making up two-thirds of the cost to attend. 
    • And that’s just the sticker price. 
    • Tuition itself is sometimes reduced with institutional scholarships, before federal aid is applied.
  • So, covering tuition alone won’t eliminate the need for many students to borrow. 
    • Many of the existing “free college” proposals would continue the Pell Grant program and allow low-income students to use the grant to cover living costs, which would help low-income students. 
    • But the Pell Grant hasn’t kept up with the rising cost of college. 
    • The maximum grant only covers half of the living costs for students at a four-year public college.
    • Not to mention, only about 22% of undergraduates receive the Pell Grant, and not all of the ones who do receive the full amount. 
    • The average grant received is about 32% less than the maximum amount. 
    • Several advocates have proposed doubling the Pell Grant, which would help more people cover the cost. However, many would still likely have to find a way to cover living expenses.
  • There’s also another factor that plays a significant role in the rising student debt: graduate school. 
    • In 2019, the number of loans dispersed for graduate school accounted for 16% of all federal student loans issued. 
    • While they were a small number of the loans issued, they actually accounted for 41% of all federal loan dollars dispersed. 
    • That’s because of the amount graduate students borrow. 
    • Often graduate school programs are more expensive, or students receive less in scholarship money, and they also borrow for living expenses.
    • While many often talk about borrowers with six-figure student debt, that’s not undergraduates. 
    • According to federal data, the average debt for a bachelor’s degree graduate in the 2015-2016 academic year was just under $27,000. 
    • That’s partially because they are cheaper, but also because there are strict federal limits on undergraduate borrowing. 
    • The same federal data show that there is only one degree level where the median borrower exceeds six-figures. That is professional doctorates—think law or medical schools.
  • On top of all of this, another driver of the rise in student loan debt is that the sheer number of people going to college—and therefore borrowing to do so—has also increased. 
    • Undergraduate enrollment has increased by more than 3.5 million students since 2000. 
    • And more people are going to graduate school too. 
    • From 2000 to 2018, graduate school enrollment increased 41%.
  • The rise in cumulative debt looks astounding, but it’s also important to consider all pieces of context that contribute to the increase. 
    • If people truly want to eliminate student debt, it will mean finding a way to cover graduate school tuition, as well as living expenses. 
    • And no plan exists to ensure that all students can enroll in Harvard free of charge.

[AD2: Teens] (1 minute)

[SEGMENT 3: The Future/Solutions to the issues] (10-15 minutes)

Possible ways to address the student loan debt problem

https://www.washington.edu/uwra/2019/12/13/student-debt-crisis-and-possible-solutions/
  • The Student Loan Fairness Act
    • The Student Loan Forgiveness act proposes to tie interest rates to the federal reserve discount window rate. 
    • Student Loan Borrowers are currently paying 9x higher than the banks are able to borrow for.  
    • These rates would apply to Federal Subsidized Stafford Loans.
    • The Student Loan Fairness act would offer borrowers the 10/10 loan repayment plan, which limits the payment on student loans to 10% of discretionary income.  
    • Though this is already currently offered with the Income Based Repayment, one of the big differences is that the proposed 10/10 repayment also offers a maximum capitalization of 10% of interest over the loan that was taken out.  
    • This means that your loan balance will never surpass your original balance plus 10%.
    • The Student Loan Fairness Act would allow borrowers a year in which they would be able to convert their private student loans into federal loans if they qualify. 
      • Even if you do not qualify for the conversion, the mere fact that this option exists will force private lenders to work with their borrowers and offer programs to parallel what is offered in federal programs.
    • The Student Loan Fairness Act offers forgiveness to public sector employees after only 60 months.

  • The Levy Institute recently published a proposal for cancelling all outstanding student debt. 
    • The federal government would write off the debt for which it itself is the creditor (the majority of outstanding student loans), and it would assume payments on behalf of borrowers for those loans that are held by private lenders. 
    • The population’s student loan balance would be reduced to zero—a radical solution to the student debt crisis, but one that deserves serious attention, given the radical scope of the problem.
  • Economists believe that student debt cancellation would be modestly stimulative to the macroeconomy, increasing annual GDP by $86 to 108 billion per year. 
    • It would increase the demand for labor and therefore slightly reduce the unemployment rate. 
    • They argue that student debt worsens household balance sheets, and that weakness is one of the key mechanisms holding back economic growth. 
    • They go on to say that “it amounts to around the same size in net dollar costs to the government as the recent tax giveaway to the rich, although with a very different beneficiary population.”
  • “Free College”
    • Free tuition at public colleges and universities
    • Eliminate federal government’s profiting on student loans
    • Cut interest on student loans
    • Allow students to refinance loans at today’s interest rates
    • Allow low-income students to use financial aid to cover room, board, books and living expenses
  • Several states and institutions have adopted variations of the “free college” program. 
    • More than a dozen states now offer grants, often called scholarships, promising to help qualifying students pay for some or all of their college education.
  • The University of Michigan has created the High Achieving Involved Leader Scholarship, promising qualified low income students will have a four-year education without paying tuition and fees. 
    • Research has shown that the program’s guarantee was instrumental in doubling the number of low-income students at the university.
  • Tennessee Promise, adopted in 2014, offers two years of tuition-free community college or technical school to all high school graduates. 
    • The program, which had bipartisan sponsorship and was touted as a way to stimulate economic development, has proven to be very popular.
    • However, this program and others have been criticized for not doing enough to reduce affordability barriers for low-income students
  • The Education Trust has created a “scorecard” for programs based on the following criteria:
    • Covers at least four years of tuition and covers a bachelor’s degree at a four-year institution
    • Helps low-income students cover living expenses and covers fees in addition to tuition
    • Includes adults and returning students
    • No college G.P.A requirement above 2.0, or a C-average
    • Allows students to enroll half-time
    • Grant does not convert to a loan if criteria isn’t met
  • No state program meets all criteria, but Washington’s College Bound Scholarship comes the closest.
    • Since most of the programs are relatively new, it is premature to evaluate their effects. 
    • But an article by the Hechinger Report points out that most programs do not give low-income students four years of free college, and, failing that, “it’s increasingly clear that ‘free college,’ as it is often currently implemented, may be more of a marketing message than a policy that will boost the education level of the future American workforce.”

[AD3: Entertainment] (1 minute)

[SEGMENT 4: The Future/Solutions to the issues] (10-15 minutes)

The Future of Student Loan Debt

State of Student Debt in the U.S., Part 2
  • This silver lining in all this is that policymakers, college administrators, borrowers, parents, students, and prospective college enrollees are at least aware of the problem, and many are proposing solutions.
    • One popular route is to eschew the traditional four-year college in favor of a vocational certificate program. 
    • In 2012, manufacturers reported that as many as 600,000 jobs went unfilled because workers lacked vocational skills. 
    • In fact, a recent report noted there are 29 million jobs in the U.S. that require vocational skills but not a bachelor’s degree, and most award an annual salary of $35,000 or more.
  • Some solutions look to change the terms of the loans themselves. 
    • In addition to locking in low interest rates on federal student loans, some lawmakers are seeking to add provisions such as debt forgiveness for those who have made payments for a period of time, as well as suspension of interest accrual during times of high unemployment.
  • Another idea put forward would allow borrowers with student loan debt to refinance at a lower, fixed interest rate, in the same way people refinance their mortgages. 
    • Resulting in a savings of an estimated $14.5 billion for borrowers in the first year alone. Sounds like a no-brainer, right?
      • Wrong. Many don’t realize that Wall Street (and thus, lots of people with a 401k) invests in student debt to the tune of $291 billion. 
      • Additionally, the Department of Education owns another $600 billion in loan debt; DOE generated a profit of nearly $51 billion from these funds in 2013. 
      • With so many powerful interests standing to lose by transferring this money back to borrowers, it’s unlikely that a bill like this will ever pass.
  • No one has a clear idea of what the future holds for education borrowers, but all agree that solutions are needed to ameliorate the student debt crisis. 
    • With ever more experts forecasting a burst of the student debt bubble, perhaps lenders and investors will have some incentive to work proactively with borrowers to make student loan repayment easier. 
    • In any event, until we act, our young people will continue to face more and more debt on an annual basis.
  • Sadly the bottom line is that student loan debt is big business. 
    • The people that are profiting from it at the expense of the younger generation of college students are also the ones being asked to make changes to solve the problem.
    • However, it’s a problem that those investors created to their benefit.
    • As a result, they aren’t particularly motivated to take money out of their own pockets and give it back to the debt laden students who are the future of this country

[OUTRO AND CREDITS]

Transcription

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[Music]

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insightful podcasts

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by informative hosts

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insights into things a podcast network

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welcome to insights into tomorrow where

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we take a deeper look

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into how the issues of today will impact

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the world of tomorrow

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from politics and world news to media

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and technology we discuss how today’s

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headlines

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are becoming tomorrow’s reality

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[Music]

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welcome to insight into tomorrow this is

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episode

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14 the specter of student debt

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i’m your host joseph whalen and my

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co-host sam whalen

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hello everyone how you doing today sam

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doing great can’t wait to talk about

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student debt

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as someone who is a victim of it i think

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you probably are the best

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uh subject matter expert we’ve ever had

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on any of our shows

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if i’m an expert i don’t know that much

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about it so i mean they they’re they i i

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love them i know that so that’s

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much i know well you might not be an

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expert but you’re definitely a victim of

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it

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so this week we are talking about the

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pandemic

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of student debt why is it a problem in

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the united states

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we’ll talk about a brief history of

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student debt

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and we’ll take a look at what’s driving

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the rise in student debt these days

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and then we’ll take a look at possible

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solutions to this problem

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plaguing today’s youth and what the

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future of student debt looks like

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before we do that though i would invite

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our

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listening and viewing audience to

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subscribe to the podcast

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ready to get into it yep all right

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[Music]

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so what is student debt there is

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a ton of research out there or a ton of

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information i should say out there that

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i came across in doing the research for

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today’s show

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most of what we’re going to talk about

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today comes from first republic dot com

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they say student debt pay plays a

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significant role

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in the lives of many americans the cost

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associated with higher education

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continues to increase year over year and

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for many this translates to a heavier

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reliance on loans to bridge the gap

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consequently outstanding u.s student

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loan debt

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reached 1.7 trillion dollars at the end

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of 2020 according to the federal reserve

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which is an all-time high to put that

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into perspective

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that’s roughly the gdp ranking of canada

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the 10th highest ranked country in the

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world by gdp

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how does like that number to me is just

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astronomical

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what’s the impact of that number to you

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yeah i mean it’s just like you said once

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you get

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once you get past like honestly like a

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hundred it’s hard for me to fathom that

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number

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um but when we talk about trillions it’s

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it’s like when you look at the national

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debt too it’s just

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these numbers are astronomical you can’t

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even wrap your head around them let

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alone

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the notion of being able to pay that off

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which is just it seems impossible

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yeah but the thought that if we wanted

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to pay off the nash the

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the national student debt right now

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that’s more money than

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canada can generate in a year yeah

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i mean that’s just it’s ridiculous it’s

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a great way to

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enjoy the topic too framing it in that

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like how big of a

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beast it is yeah i mean it seems when

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you talk in numbers that size

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it seems kind of insurmountable

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really so we have a couple other uh

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student loan debt statistics

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uh the national average per student is

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about 39 000

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uh the states with a high student loan

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debt number one coming in as washington

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dc

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uh their average student loan debt is

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fifty four thousand four hundred dollars

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a year

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uh just below that is maryland with

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forty two thousand seven hundred

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uh age groups with the most student loan

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debt are eighteen to twenty nine year

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olds uh thirty four percent of that age

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group have student loan debt which makes

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sense because are people either going

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into college or coming out of it

0:05:28.160,0:05:32.240
uh more than half of college educated

0:05:30.800,0:05:35.199
adults have student loan debt

0:05:32.240,0:05:36.720
that’s 65 percent of people six percent

0:05:35.199,0:05:38.000
of borrowers who owe more than a hundred

0:05:36.720,0:05:40.400
thousand dollars in student loan

0:05:38.000,0:05:41.840
debt including the two percent owing

0:05:40.400,0:05:43.680
more than two hundred thousand

0:05:41.840,0:05:45.280
account for a third of all outstanding

0:05:43.680,0:05:48.240
student loan debt so

0:05:45.280,0:05:49.840
a lot of people owing a lot of money uh

0:05:48.240,0:05:51.199
the vast majority of those borrowers oh

0:05:49.840,0:05:52.000
more than a hundred thousand took out

0:05:51.199,0:05:54.080
loans for graduate

0:05:52.000,0:05:55.840
school uh loans associated with grad

0:05:54.080,0:05:58.080
school account for about fifty percent

0:05:55.840,0:05:59.360
of the outstanding student loan debt the

0:05:58.080,0:06:00.800
other half belongs to the seventy-five

0:05:59.360,0:06:02.800
percent of borrowers who took out loans

0:06:00.800,0:06:04.479
for two or four-year degrees

0:06:02.800,0:06:06.800
and then finally the u.s student debt

0:06:04.479,0:06:08.800
has increased by more than 100 percent

0:06:06.800,0:06:10.880
over the past 10 years so we’re looking

0:06:08.800,0:06:12.960
at the numbers are only getting higher

0:06:10.880,0:06:15.120
and that’s why we have the highest in

0:06:12.960,0:06:18.240
2020 with 1.7 trillion

0:06:15.120,0:06:18.960
and that’s another you know alarming

0:06:18.240,0:06:21.440
statistic

0:06:18.960,0:06:23.199
to have anything go up a hundred percent

0:06:21.440,0:06:27.120
over the course of ten years

0:06:23.199,0:06:30.479
yeah has the quality of your education

0:06:27.120,0:06:31.840
increased at the same proportional rate

0:06:30.479,0:06:33.360
i don’t know that’s a good question i

0:06:31.840,0:06:34.720
mean i’ve only been in college for three

0:06:33.360,0:06:35.759
years now we’re going i’m going into my

0:06:34.720,0:06:39.520
senior year

0:06:35.759,0:06:41.120
um but that large amount of increase

0:06:39.520,0:06:43.199
it seems impossible that there would be

0:06:41.120,0:06:44.240
a reflection in education that would

0:06:43.199,0:06:46.639
meet that as well

0:06:44.240,0:06:48.160
yeah and and you know the business side

0:06:46.639,0:06:50.080
of me looks at this and wants to say all

0:06:48.160,0:06:52.960
right what’s the cost benefit analysis

0:06:50.080,0:06:54.560
if i’m paying a hundred percent more

0:06:52.960,0:06:56.400
over the last ten years

0:06:54.560,0:06:58.160
is the salary that i’m taking when i

0:06:56.400,0:07:00.960
come out of that college

0:06:58.160,0:07:02.080
raising a hundred percent more and

0:07:00.960,0:07:04.080
statistically

0:07:02.080,0:07:06.639
it’s not salaries are not keeping pace

0:07:04.080,0:07:08.960
with the current economic scale yeah

0:07:06.639,0:07:10.880
so you’re paying all this much more for

0:07:08.960,0:07:12.960
an education

0:07:10.880,0:07:14.800
but you’re not getting the compensation

0:07:12.960,0:07:17.680
on the back end of that

0:07:14.800,0:07:21.360
to justify that cost so there’s a

0:07:17.680,0:07:22.880
massive loss of investment here

0:07:21.360,0:07:24.639
like how long do you think you’re going

0:07:22.880,0:07:27.199
to be in debt

0:07:24.639,0:07:29.039
with college debt i mean judging by what

0:07:27.199,0:07:30.800
i’m seeing now with my bills and things

0:07:29.039,0:07:31.599
for the years i’ll probably i’m probably

0:07:30.800,0:07:33.280
in that average

0:07:31.599,0:07:34.639
you know 40k range for what i’m gonna

0:07:33.280,0:07:36.240
owe back um

0:07:34.639,0:07:38.319
the bigger question is i’m going into a

0:07:36.240,0:07:39.759
field that hopefully i’ll find a job

0:07:38.319,0:07:40.639
quickly i’m going i’m planning on going

0:07:39.759,0:07:42.720
to the radio field

0:07:40.639,0:07:44.160
anything like that um so hopefully i’ll

0:07:42.720,0:07:44.720
find a job and they’ll just garner my

0:07:44.160,0:07:46.720
wages

0:07:44.720,0:07:47.919
that’s going to be my plan essentially

0:07:46.720,0:07:49.280
um now

0:07:47.919,0:07:50.639
i know some people that are going into

0:07:49.280,0:07:52.319
medical field so that’s they’re going

0:07:50.639,0:07:54.000
into grad school so that that’s half of

0:07:52.319,0:07:56.080
those loans there that people owe

0:07:54.000,0:07:57.360
um and those jobs are obviously you end

0:07:56.080,0:07:58.000
up spending a lot more and you end up

0:07:57.360,0:07:59.759
owing a lot more

0:07:58.000,0:08:00.960
debt but you’re pretty much guaranteed a

0:07:59.759,0:08:01.840
job because the world always needs

0:08:00.960,0:08:03.680
doctors and

0:08:01.840,0:08:04.879
and whatnot right um so i think it

0:08:03.680,0:08:05.840
really depends on just what you’re

0:08:04.879,0:08:08.319
looking to do

0:08:05.840,0:08:08.960
post college and how long you want to

0:08:08.319,0:08:10.240
stay in school

0:08:08.960,0:08:12.160
and then how much you’re going to pay

0:08:10.240,0:08:14.720
too well and

0:08:12.160,0:08:16.800
and like i look at it from i don’t know

0:08:14.720,0:08:19.440
i kind of try to tie it to more

0:08:16.800,0:08:22.720
everyday things so i think okay what’s

0:08:19.440,0:08:25.599
the the next closest thing i have to

0:08:22.720,0:08:28.080
uh a 40 000 debt and i think okay if i

0:08:25.599,0:08:30.879
buy a car and i finance a car

0:08:28.080,0:08:31.680
i’ll finance a car for five years after

0:08:30.879,0:08:33.519
five years

0:08:31.680,0:08:35.760
three years maybe depending on how much

0:08:33.519,0:08:36.959
of a you know monthly payment i want to

0:08:35.760,0:08:39.039
do

0:08:36.959,0:08:40.640
but let’s say five years is pretty much

0:08:39.039,0:08:43.760
i think on average

0:08:40.640,0:08:45.040
i’ll pay my car off after five years

0:08:43.760,0:08:46.800
are you going to have your student loan

0:08:45.040,0:08:47.760
debt paid off after five years probably

0:08:46.800,0:08:50.399
not

0:08:47.760,0:08:52.560
probably not no and you look at student

0:08:50.399,0:08:54.880
loan debt when it comes to

0:08:52.560,0:08:56.720
your postgraduate schools where you’re

0:08:54.880,0:08:57.680
looking at around 200 000 in debt that

0:08:56.720,0:08:59.839
you’re going to have so now you’re

0:08:57.680,0:09:01.680
looking at the cost of a mortgage

0:08:59.839,0:09:04.080
so even if i look at it from a mortgage

0:09:01.680,0:09:05.360
standpoint i’m going to pay that over 30

0:09:04.080,0:09:07.839
years

0:09:05.360,0:09:09.920
so are you going to finance your student

0:09:07.839,0:09:11.200
debt over a 30-year period

0:09:09.920,0:09:13.200
i mean i know people that are in their

0:09:11.200,0:09:14.240
40s and even 50s that are still paying

0:09:13.200,0:09:15.920
off their student debt

0:09:14.240,0:09:17.360
and that i mean sure that’s a that’s a

0:09:15.920,0:09:18.080
financial question because it’s going to

0:09:17.360,0:09:19.920
depend on

0:09:18.080,0:09:21.120
your income and and your ability to make

0:09:19.920,0:09:22.800
those payments but

0:09:21.120,0:09:23.680
it can go that long and especially it’s

0:09:22.800,0:09:25.360
going to depend on what level of

0:09:23.680,0:09:27.760
education you decided to go with

0:09:25.360,0:09:29.360
so let’s stay let’s stay on that topic

0:09:27.760,0:09:32.160
just for a second there so

0:09:29.360,0:09:33.200
if i go to get a mortgage and i’m buying

0:09:32.160,0:09:36.240
a 200 000

0:09:33.200,0:09:37.760
house i have to have an established

0:09:36.240,0:09:39.360
credit history i have to have an

0:09:37.760,0:09:41.279
established income

0:09:39.360,0:09:43.120
and i have to prove that i’m not a

0:09:41.279,0:09:45.360
credit risk for them to give me a loan

0:09:43.120,0:09:48.480
and depending on how risky i am

0:09:45.360,0:09:50.399
determines what my percentage rate is

0:09:48.480,0:09:52.320
what as a student did you have to

0:09:50.399,0:09:54.320
produce to show that you’re not a credit

0:09:52.320,0:09:55.920
risk when it came to getting loans

0:09:54.320,0:09:57.519
for school well often they have your

0:09:55.920,0:09:58.800
parents coastline which helps because

0:09:57.519,0:09:59.839
then they become responsible for that

0:09:58.800,0:10:01.120
debt too and that kind of lends

0:09:59.839,0:10:04.399
credibility to you

0:10:01.120,0:10:05.839
um i applied to college so

0:10:04.399,0:10:07.680
um i don’t know how it works for grad

0:10:05.839,0:10:09.839
school because i don’t have any you know

0:10:07.680,0:10:10.800
aspirations of of going down that path

0:10:09.839,0:10:13.760
but

0:10:10.800,0:10:14.079
it wasn’t as rigorous as a test as that

0:10:13.760,0:10:15.440
of

0:10:14.079,0:10:17.760
you know going for a mortgage it was

0:10:15.440,0:10:19.040
much more applied to the school get into

0:10:17.760,0:10:20.560
the school okay

0:10:19.040,0:10:23.279
you’re pretty much you can just get

0:10:20.560,0:10:25.120
loans and there’s nothing that long of a

0:10:23.279,0:10:26.800
approval process it’s more about how

0:10:25.120,0:10:27.200
much do you make so that we know how

0:10:26.800,0:10:29.680
much

0:10:27.200,0:10:31.040
to give you and i think that’s kind of

0:10:29.680,0:10:32.320
the point that i’m trying to make here

0:10:31.040,0:10:35.600
is that

0:10:32.320,0:10:36.640
the process itself isn’t nearly as

0:10:35.600,0:10:39.440
rigorous as it

0:10:36.640,0:10:41.440
is to make sure you’re not a credit risk

0:10:39.440,0:10:42.160
to make sure you’re capable of paying it

0:10:41.440,0:10:44.560
back

0:10:42.160,0:10:46.720
there’s almost an assumption of oh we’ll

0:10:44.560,0:10:48.560
pay us whatever we ask for

0:10:46.720,0:10:50.079
and then we’ll make sure you get an

0:10:48.560,0:10:50.880
education to get a good job that you can

0:10:50.079,0:10:52.959
pay that back

0:10:50.880,0:10:54.079
yeah and it’s i imagine it probably is

0:10:52.959,0:10:55.360
designed that way because

0:10:54.079,0:10:57.040
people going into college they don’t

0:10:55.360,0:10:58.079
want to think about after college and

0:10:57.040,0:10:59.680
they’re going to pay all this back they

0:10:58.079,0:11:01.040
want to get their education they want to

0:10:59.680,0:11:02.240
you know if they have a career in mind

0:11:01.040,0:11:02.959
they want to get to that as fast as

0:11:02.240,0:11:04.640
possible

0:11:02.959,0:11:06.160
so they’ll take any loans they have to

0:11:04.640,0:11:08.240
sure sure and i think

0:11:06.160,0:11:09.839
one of the indirect consequences of this

0:11:08.240,0:11:12.480
is that you’re seeing

0:11:09.839,0:11:14.560
um the number of people that choose to

0:11:12.480,0:11:17.680
go into a vocational

0:11:14.560,0:11:18.959
profession significantly increasing over

0:11:17.680,0:11:19.680
those that are going to college i

0:11:18.959,0:11:21.519
thought about that

0:11:19.680,0:11:23.120
i mean i was my freshman year on college

0:11:21.519,0:11:24.399
i took mostly gen ed’s

0:11:23.120,0:11:25.680
and i was like this is not what i want

0:11:24.399,0:11:27.120
to do so i started looking at

0:11:25.680,0:11:28.560
broadcasting schools and i had seriously

0:11:27.120,0:11:29.360
considered it in my sophomore year

0:11:28.560,0:11:31.760
transferring and just

0:11:29.360,0:11:33.519
going to broadcasting because um excuse

0:11:31.760,0:11:34.800
me uh going to broadcasting school

0:11:33.519,0:11:36.399
because a lot of the people that

0:11:34.800,0:11:38.399
i look up to in the area that are

0:11:36.399,0:11:38.720
broadcasters either didn’t go to college

0:11:38.399,0:11:40.720
or

0:11:38.720,0:11:41.920
went to broadcasting school and it just

0:11:40.720,0:11:43.440
seemed like you know that’s

0:11:41.920,0:11:45.760
exactly what i want to do why not just

0:11:43.440,0:11:46.560
do that um but i ended up rethinking it

0:11:45.760,0:11:48.800
because uh

0:11:46.560,0:11:50.160
you know just having the degree you know

0:11:48.800,0:11:51.519
you talk yourself into it

0:11:50.160,0:11:53.440
and i’ll probably talk more about that

0:11:51.519,0:11:54.399
later but just the mindset of kind of

0:11:53.440,0:11:56.800
just

0:11:54.399,0:11:58.560
accepting that as a notion you know you

0:11:56.800,0:12:00.720
kind of just become okay with it

0:11:58.560,0:12:02.320
and i had a i had a friend of mine her

0:12:00.720,0:12:04.480
son um

0:12:02.320,0:12:05.839
they had groomed him for for going to

0:12:04.480,0:12:07.680
college all through his high school

0:12:05.839,0:12:09.360
career his grades and

0:12:07.680,0:12:11.120
all the extracurricular stuff and the

0:12:09.360,0:12:12.880
clubs and all that stuff

0:12:11.120,0:12:14.079
and when he got to his senior year in

0:12:12.880,0:12:15.279
high school and saw how much it was

0:12:14.079,0:12:17.440
going to cost

0:12:15.279,0:12:18.320
he realized he couldn’t afford it and he

0:12:17.440,0:12:21.440
didn’t want to be in debt

0:12:18.320,0:12:23.920
for you know the majority of his life

0:12:21.440,0:12:25.200
right so he decided instead of going to

0:12:23.920,0:12:26.959
college for

0:12:25.200,0:12:28.720
accounting or business administration or

0:12:26.959,0:12:29.440
whatever he was going to be an

0:12:28.720,0:12:31.519
electrician

0:12:29.440,0:12:32.959
and he went off and he he went through a

0:12:31.519,0:12:36.000
vocational school he joined

0:12:32.959,0:12:36.800
a guild and you know is under an

0:12:36.000,0:12:40.800
apprenticeship

0:12:36.800,0:12:43.600
now and he’s making more now

0:12:40.800,0:12:45.200
within less than four years of the time

0:12:43.600,0:12:47.120
he would have spent in college

0:12:45.200,0:12:49.680
he’s making more now than if he’d come

0:12:47.120,0:12:52.320
out of college with a four-year degree

0:12:49.680,0:12:54.000
and he’s just starting out in his

0:12:52.320,0:12:56.399
profession without all that debt

0:12:54.000,0:12:57.760
yeah i don’t know i think it depends on

0:12:56.399,0:13:00.480
you know we get into deeper

0:12:57.760,0:13:01.680
questions of how do you measure success

0:13:00.480,0:13:03.680
what do you want from

0:13:01.680,0:13:05.600
your educational career and i think that

0:13:03.680,0:13:06.800
when once you once you figure out those

0:13:05.600,0:13:08.240
answers for yourself

0:13:06.800,0:13:09.920
then you can kind of decide do i really

0:13:08.240,0:13:13.120
need college do i really need to do this

0:13:09.920,0:13:14.639
right in my case yes but in that guy’s

0:13:13.120,0:13:16.079
case no he didn’t need to do that if he

0:13:14.639,0:13:17.600
if he enjoys being electrician and he

0:13:16.079,0:13:18.560
gets satisfaction from that work

0:13:17.600,0:13:20.880
there’s no reason for him to go to

0:13:18.560,0:13:22.480
college he can do exactly what you said

0:13:20.880,0:13:24.720
and not have to worry about debt which

0:13:22.480,0:13:26.959
is almost not unheard of but

0:13:24.720,0:13:28.720
rare yeah this is my generation and it’s

0:13:26.959,0:13:29.360
it’s it’s a very valid point you make

0:13:28.720,0:13:31.920
that it is

0:13:29.360,0:13:34.240
it’s very situational and very specific

0:13:31.920,0:13:36.560
to the individual yeah

0:13:34.240,0:13:37.920
so so that’s the kind of the intro to

0:13:36.560,0:13:39.040
the topic that we’re talking about we’re

0:13:37.920,0:13:40.240
going to take a quick break we’re going

0:13:39.040,0:13:41.760
to come back

0:13:40.240,0:13:45.199
and we’re going to look at a brief

0:13:41.760,0:13:49.060
history of how student debt has evolved

0:13:45.199,0:13:54.880
in the united states

0:13:49.060,0:13:57.760
[Music]

0:13:54.880,0:14:00.160
insights into teens a podcast series

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0:14:00.160,0:14:05.199
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social anxiety to financial

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[Applause]

0:14:15.680,0:14:19.680
each week we talk about the topics

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concerning today’s youth

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we look at how the issues affect teens

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how to cope with these issues

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or on the web at insightsintothings.com

0:14:49.940,0:14:59.680
[Music]

0:14:57.680,0:15:01.199
welcome back to insights into tomorrow

0:14:59.680,0:15:04.639
we’re talking student

0:15:01.199,0:15:07.680
debt today so let’s just take a quick

0:15:04.639,0:15:08.800
brief history of of what student debt

0:15:07.680,0:15:12.240
has looked like

0:15:08.800,0:15:12.720
in the united states student debt really

0:15:12.240,0:15:16.000
didn’t

0:15:12.720,0:15:17.839
come into to being until around 1840.

0:15:16.000,0:15:19.600
the first student loans in the us were

0:15:17.839,0:15:20.240
offered exclusively to students at

0:15:19.600,0:15:23.519
harvard

0:15:20.240,0:15:25.519
in 1840 public students didn’t

0:15:23.519,0:15:27.040
public student loans didn’t arise until

0:15:25.519,0:15:29.680
the 20th century

0:15:27.040,0:15:31.199
so it’s kind of a whole new concept as

0:15:29.680,0:15:33.680
far as

0:15:31.199,0:15:34.480
taking loans to go to college and you

0:15:33.680,0:15:37.360
know the

0:15:34.480,0:15:38.160
instance of people going to college

0:15:37.360,0:15:41.600
didn’t really

0:15:38.160,0:15:44.560
increase too much until around the 1940s

0:15:41.600,0:15:46.800
so the in the two decades prior to the

0:15:44.560,0:15:48.240
institution of federally guaranteed

0:15:46.800,0:15:50.160
student loans

0:15:48.240,0:15:52.800
the us experienced a significant

0:15:50.160,0:15:56.720
increase in college attendance

0:15:52.800,0:15:59.120
thanks in part to the gi bill in 1944

0:15:56.720,0:16:01.920
so fulfilling the need for affordable

0:15:59.120,0:16:03.920
higher education the gi bill subsidized

0:16:01.920,0:16:06.399
or in some cases completely covered the

0:16:03.920,0:16:08.480
cost of college education

0:16:06.399,0:16:10.560
for nearly half the americans returning

0:16:08.480,0:16:14.079
from world war ii

0:16:10.560,0:16:17.440
we jumped forward to 1972

0:16:14.079,0:16:21.680
and the hea was amended

0:16:17.440,0:16:23.600
to ensure the hea being the

0:16:21.680,0:16:25.440
something that was up top there that i

0:16:23.600,0:16:28.320
didn’t talk about

0:16:25.440,0:16:28.639
the higher education act of 18 1965

0:16:28.320,0:16:29.839
sorry

0:16:28.639,0:16:31.199
everybody knows it it’s one of the big

0:16:29.839,0:16:33.839
buildings yeah if you’re listening to

0:16:31.199,0:16:35.920
this show you should already know that

0:16:33.839,0:16:37.199
so the higher education act was amended

0:16:35.920,0:16:39.279
to ensure

0:16:37.199,0:16:41.279
that education programs whose students

0:16:39.279,0:16:43.839
were receiving financial assistance

0:16:41.279,0:16:45.360
and student loans did not discriminate

0:16:43.839,0:16:46.639
based on gender

0:16:45.360,0:16:50.639
i’m sure they didn’t discriminate based

0:16:46.639,0:16:54.079
on anything else

0:16:50.639,0:16:57.199
it’s an evolving process okay

0:16:54.079,0:16:59.279
so by 77 76 77

0:16:57.199,0:17:01.519
all undergraduate students became

0:16:59.279,0:17:03.839
eligible for pell grants

0:17:01.519,0:17:04.799
together these two popular programs

0:17:03.839,0:17:07.199
further increase

0:17:04.799,0:17:09.679
college attendance breeds by providing

0:17:07.199,0:17:11.600
financial assistance to individuals who

0:17:09.679,0:17:15.679
previously could not obtain it so the

0:17:11.600,0:17:15.679
focus so far at that point was not

0:17:15.750,0:17:20.000
[Music]

0:17:16.880,0:17:20.959
controlling student debt not controlling

0:17:20.000,0:17:24.240
the cost of

0:17:20.959,0:17:25.120
education it was making education more

0:17:24.240,0:17:27.280
available

0:17:25.120,0:17:28.880
to to those who wouldn’t be able to do

0:17:27.280,0:17:32.400
it because of

0:17:28.880,0:17:34.160
discriminatory practices or financial

0:17:32.400,0:17:37.600
difficulties and stuff like that so up

0:17:34.160,0:17:40.160
until the 1970s and mid late 70s

0:17:37.600,0:17:41.840
the drive really was to enable students

0:17:40.160,0:17:44.240
at that point

0:17:41.840,0:17:45.840
yeah so looking into the 80s now these

0:17:44.240,0:17:46.480
are when things sort of start to turn

0:17:45.840,0:17:48.559
sour

0:17:46.480,0:17:50.320
uh 1986 parents and students had

0:17:48.559,0:17:51.840
incurred nearly 10 billion in federal

0:17:50.320,0:17:53.440
student loans which is funny now that

0:17:51.840,0:17:55.520
we’re up to 1.7 trillion

0:17:53.440,0:17:57.120
10 billion to drop in the bucket right

0:17:55.520,0:17:58.559
uh then considered then in their

0:17:57.120,0:18:00.320
outrageous amount

0:17:58.559,0:18:01.840
that same year more than one quarter of

0:18:00.320,0:18:03.520
student borrowers owed more than ten

0:18:01.840,0:18:05.039
thousand dollars in student loan debt

0:18:03.520,0:18:06.799
uh adjusting for inflation that’s about

0:18:05.039,0:18:08.320
twenty one thousand dollars today

0:18:06.799,0:18:10.000
uh so this is sort of where you start to

0:18:08.320,0:18:11.039
see that the this is sort of getting out

0:18:10.000,0:18:14.240
of hand

0:18:11.039,0:18:15.840
uh and it’s in the 1990s student loan

0:18:14.240,0:18:18.240
debt begins to skyrocket

0:18:15.840,0:18:19.600
in 1993 the average debt of a bachelor’s

0:18:18.240,0:18:22.240
degree was approximately nine

0:18:19.600,0:18:22.640
thousand dollars uh and within just five

0:18:22.240,0:18:24.880
years

0:18:22.640,0:18:26.080
it was fifteen thousand dollars and by

0:18:24.880,0:18:28.160
2003

0:18:26.080,0:18:29.679
it was almost uh twenty thousand dollars

0:18:28.160,0:18:32.160
coming in at seventeen thousand

0:18:29.679,0:18:34.000
five hundred dollars and then finally

0:18:32.160,0:18:35.919
into the two thousands today the average

0:18:34.000,0:18:38.000
uh loan debt which we already mentioned

0:18:35.919,0:18:39.840
is roughly thirty thousand dollars

0:18:38.000,0:18:41.440
uh though one recent study by the

0:18:39.840,0:18:44.240
fidelity investments puts that figure

0:18:41.440,0:18:45.600
closer to thirty five thousand dollars

0:18:44.240,0:18:47.120
approximately twenty percent of u.s

0:18:45.600,0:18:47.760
households currently owe student loan

0:18:47.120,0:18:49.679
debt

0:18:47.760,0:18:50.799
uh as do forty percent of people younger

0:18:49.679,0:18:53.120
than thirty five

0:18:50.799,0:18:54.480
which is kind of wild almost half of

0:18:53.120,0:18:55.280
people young and thirty five oh student

0:18:54.480,0:18:57.280
that

0:18:55.280,0:18:59.360
this means an increase of nearly 200

0:18:57.280,0:19:01.200
percent of overall student loan debt

0:18:59.360,0:19:03.919
over the last 20 years 200

0:19:01.200,0:19:04.640
in just 20 years uh as of 2012 total

0:19:03.919,0:19:07.120
student debt

0:19:04.640,0:19:07.760
has surpassed one trillion dollars and

0:19:07.120,0:19:09.919
and that’s

0:19:07.760,0:19:12.000
that’s astronomical it really is just

0:19:09.919,0:19:14.960
that growth rate now

0:19:12.000,0:19:16.799
my first question there is what’s

0:19:14.960,0:19:19.919
driving that cost increase

0:19:16.799,0:19:22.320
is it the cost of education is it the

0:19:19.919,0:19:24.400
financing side of things what do you

0:19:22.320,0:19:25.840
where would you pin the blame there i

0:19:24.400,0:19:27.760
mean i i don’t really understand

0:19:25.840,0:19:29.679
economics but it seems like if more

0:19:27.760,0:19:31.760
people are going to be able to get

0:19:29.679,0:19:33.200
an education then from a business

0:19:31.760,0:19:36.000
standpoint because colleges are

0:19:33.200,0:19:37.679
businesses then their market base is

0:19:36.000,0:19:38.400
wider right so they can drive up that

0:19:37.679,0:19:40.799
cost

0:19:38.400,0:19:41.919
and especially once college becomes a

0:19:40.799,0:19:43.360
social norm

0:19:41.919,0:19:45.200
where you’re just expected to go to

0:19:43.360,0:19:46.720
college essentially then

0:19:45.200,0:19:48.000
that ensures their business model even

0:19:46.720,0:19:48.400
more because people want to go to

0:19:48.000,0:19:49.919
college

0:19:48.400,0:19:52.640
they could charge whatever they want

0:19:49.919,0:19:54.400
well yes to a certain extent

0:19:52.640,0:19:56.240
i agree with the principle of economies

0:19:54.400,0:19:59.919
of scale here so

0:19:56.240,0:20:01.600
back in the 1870s when you know maybe

0:19:59.919,0:20:03.520
two percent of the population went to

0:20:01.600,0:20:06.960
college

0:20:03.520,0:20:08.559
college educations should

0:20:06.960,0:20:11.120
therefore have been exceedingly

0:20:08.559,0:20:13.039
expensive but now when you have such a

0:20:11.120,0:20:16.240
large percentage of people that are

0:20:13.039,0:20:19.440
you know think of think of uh the

0:20:16.240,0:20:22.480
uh ford model t okay

0:20:19.440,0:20:24.880
so prior to mass production of

0:20:22.480,0:20:26.640
of automobiles they were very

0:20:24.880,0:20:29.840
specialized very hand built

0:20:26.640,0:20:34.240
very unique a couple of them rolled off

0:20:29.840,0:20:36.159
the uh you know plant uh per month so as

0:20:34.240,0:20:37.679
a result they were very expensive to

0:20:36.159,0:20:39.520
cover your overhead

0:20:37.679,0:20:40.720
well when the model t comes around and

0:20:39.520,0:20:42.480
you’re rolling

0:20:40.720,0:20:46.159
hundreds of these off the assembly line

0:20:42.480,0:20:47.840
per day you can now produce them

0:20:46.159,0:20:50.159
thanks to economies of scale you can

0:20:47.840,0:20:52.640
produce them much cheaper

0:20:50.159,0:20:53.919
and then distribute that overhead cost

0:20:52.640,0:20:56.400
across many more

0:20:53.919,0:20:57.360
customers and i would have thought that

0:20:56.400,0:20:59.280
same model

0:20:57.360,0:21:01.039
would have translated into your

0:20:59.280,0:21:02.880
education system

0:21:01.039,0:21:05.120
where the more students you have the

0:21:02.880,0:21:07.280
lower that tuition rate should be

0:21:05.120,0:21:09.200
logically that’d be nice it doesn’t seem

0:21:07.280,0:21:10.080
like it went that way though um

0:21:09.200,0:21:12.240
i don’t know i don’t really have an

0:21:10.080,0:21:14.640
answer for that i guess because as the

0:21:12.240,0:21:17.919
debt numbers increase too

0:21:14.640,0:21:19.360
does that allow for you know are the

0:21:17.919,0:21:21.360
are the higher tuitions not really

0:21:19.360,0:21:22.960
questioned because it just happened so

0:21:21.360,0:21:25.280
quickly over time i don’t know

0:21:22.960,0:21:26.080
um it would be nice if that logic

0:21:25.280,0:21:27.360
applied where

0:21:26.080,0:21:28.720
if the more people went to college the

0:21:27.360,0:21:29.600
cheaper it was but it seems like it’s

0:21:28.720,0:21:31.840
the opposite

0:21:29.600,0:21:34.159
it does and you know then i have to take

0:21:31.840,0:21:37.280
a look at what’s the cost of college

0:21:34.159,0:21:40.400
what has gone up so dramatically for

0:21:37.280,0:21:43.520
college education is it

0:21:40.400,0:21:46.720
technological advancements is it

0:21:43.520,0:21:49.840
the cost of campuses

0:21:46.720,0:21:52.960
is is it is it property related

0:21:49.840,0:21:53.919
like what has happened in the last 20

0:21:52.960,0:21:56.000
years

0:21:53.919,0:21:58.559
at your local college that would make it

0:21:56.000,0:22:00.799
so much more expensive to go

0:21:58.559,0:22:02.080
i’m not sure i mean if they’re dealing

0:22:00.799,0:22:03.280
with more money maybe they just feel the

0:22:02.080,0:22:04.400
need to spend more money

0:22:03.280,0:22:06.400
on things that maybe they don’t

0:22:04.400,0:22:07.679
necessarily need you know new facilities

0:22:06.400,0:22:09.200
that might look nice and

0:22:07.679,0:22:11.039
might provide for people that use them

0:22:09.200,0:22:13.760
but do we really need them

0:22:11.039,0:22:15.200
or or large structures um you know like

0:22:13.760,0:22:16.480
parking garages and things like that are

0:22:15.200,0:22:17.679
these things necessary

0:22:16.480,0:22:19.440
and maybe they’re just spending that

0:22:17.679,0:22:21.120
money because they have it and that

0:22:19.440,0:22:22.480
encourages the need for more money

0:22:21.120,0:22:24.159
to keep doing that i don’t know yeah

0:22:22.480,0:22:26.159
like it’s a self-fulfilling prophecy

0:22:24.159,0:22:27.760
that that makes a lot of sense

0:22:26.159,0:22:29.360
and i also have to look at these

0:22:27.760,0:22:32.480
colleges that are

0:22:29.360,0:22:34.320
very athletically driven you know all

0:22:32.480,0:22:36.400
your your big ten

0:22:34.320,0:22:37.919
colleges and your ivy league colleges

0:22:36.400,0:22:40.400
where you’re

0:22:37.919,0:22:42.159
you’re bringing in a significant income

0:22:40.400,0:22:44.320
from the sports and athletics that are

0:22:42.159,0:22:46.240
happening at your college

0:22:44.320,0:22:47.440
why isn’t that going into lowing

0:22:46.240,0:22:49.679
lowering the

0:22:47.440,0:22:50.799
cost of tuition for your students yeah i

0:22:49.679,0:22:51.520
mean that’s we could do a whole other

0:22:50.799,0:22:52.799
show on on

0:22:51.520,0:22:54.720
college sports like that i mean they

0:22:52.799,0:22:57.440
just had the end of their

0:22:54.720,0:22:58.799
ncaa ruling where they can get money

0:22:57.440,0:23:01.360
from their image which is nice

0:22:58.799,0:23:02.720
but schools still can’t pay them yeah

0:23:01.360,0:23:04.080
yeah and the school’s still getting a

0:23:02.720,0:23:05.840
ton of money especially

0:23:04.080,0:23:07.600
big schools like that right just on like

0:23:05.840,0:23:09.360
the broadcast rights alone

0:23:07.600,0:23:11.600
and that’s what blows my mind is there

0:23:09.360,0:23:13.280
they’re bringing in money hand over fast

0:23:11.600,0:23:16.640
to the point that you’ve got

0:23:13.280,0:23:18.480
college stadiums that are more well

0:23:16.640,0:23:19.679
appointed than professional stadiums

0:23:18.480,0:23:21.679
these days

0:23:19.679,0:23:23.520
yeah i i don’t know when i look at it

0:23:21.679,0:23:25.919
i’m i look at it very cynically

0:23:23.520,0:23:26.799
and it just seems like they’re these are

0:23:25.919,0:23:28.640
businesses

0:23:26.799,0:23:29.919
first and educational institutions

0:23:28.640,0:23:31.840
second and

0:23:29.919,0:23:33.039
they are very greedy yeah and it just

0:23:31.840,0:23:34.400
seems like they

0:23:33.039,0:23:37.120
want to get as much money as possible

0:23:34.400,0:23:40.480
out of people so forbes did do a study

0:23:37.120,0:23:41.679
on what’s driving the increases in

0:23:40.480,0:23:44.640
higher education now

0:23:41.679,0:23:46.159
now this study was done september of

0:23:44.640,0:23:48.159
2020.

0:23:46.159,0:23:50.240
and their conclusion college is

0:23:48.159,0:23:51.360
expensive good work for us yeah that was

0:23:50.240,0:23:54.640
helpful

0:23:51.360,0:23:55.440
uh they said since 1999 since the 1999

0:23:54.640,0:23:57.760
to 2000

0:23:55.440,0:23:58.720
academic year the net price of tuition

0:23:57.760,0:24:00.640
fees

0:23:58.720,0:24:02.000
room and board at a public four-year

0:24:00.640,0:24:05.760
college has increased

0:24:02.000,0:24:08.799
68 68

0:24:05.760,0:24:10.559
in 20 years that’s that’s insane the

0:24:08.799,0:24:11.200
amount borrowed to go to college each

0:24:10.559,0:24:14.159
year has

0:24:11.200,0:24:16.320
doubled in the same time and today the

0:24:14.159,0:24:17.760
cumulative federal student loan debt is

0:24:16.320,0:24:20.480
over 1.54

0:24:17.760,0:24:22.400
trillion more than double the amount of

0:24:20.480,0:24:25.440
2010.

0:24:22.400,0:24:27.039
that’s that’s insane

0:24:25.440,0:24:29.120
they say that much of the focus around

0:24:27.039,0:24:30.240
student debt is around rising tuition

0:24:29.120,0:24:32.799
and for good reason

0:24:30.240,0:24:33.840
as states disinvested in higher

0:24:32.799,0:24:37.039
education

0:24:33.840,0:24:40.080
tuition increase across increased

0:24:37.039,0:24:42.640
across the country published tuition at

0:24:40.080,0:24:46.480
public four-year colleges rose by 36

0:24:42.640,0:24:49.039
percent from 2008-2018

0:24:46.480,0:24:50.080
and in many states tuition rose even

0:24:49.039,0:24:53.360
more

0:24:50.080,0:24:56.400
today most student funding from states

0:24:53.360,0:24:58.080
is 8.7 percent less than it was before

0:24:56.400,0:25:00.240
the great recession

0:24:58.080,0:25:02.320
which should be a warning sign given the

0:25:00.240,0:25:04.240
current economic situation so there’s a

0:25:02.320,0:25:07.520
good driving force there

0:25:04.240,0:25:09.440
that we’re not talking your ivy league

0:25:07.520,0:25:11.440
schools we’re talking your

0:25:09.440,0:25:13.600
state-sponsored schools in new jersey

0:25:11.440,0:25:16.240
we’re talking

0:25:13.600,0:25:17.360
your rowans your rutgers ones that get

0:25:16.240,0:25:19.200
funding from the state

0:25:17.360,0:25:20.400
the state has now cut back because of

0:25:19.200,0:25:21.919
economic concerns

0:25:20.400,0:25:23.440
yeah i mean that makes sense states cut

0:25:21.919,0:25:24.320
the funding so the colleges have to

0:25:23.440,0:25:26.720
reach tuition

0:25:24.320,0:25:28.240
now do they have to raise it by 68 in 10

0:25:26.720,0:25:29.840
years i don’t know

0:25:28.240,0:25:32.960
well not when you’re only cutting it by

0:25:29.840,0:25:34.880
8.7 how do you justify that

0:25:32.960,0:25:36.880
so many have proposed making public

0:25:34.880,0:25:39.039
college tuition free

0:25:36.880,0:25:40.960
which i don’t think i’d argue with that

0:25:39.039,0:25:42.240
but that alone won’t address student

0:25:40.960,0:25:44.480
debt going forward

0:25:42.240,0:25:45.600
because tuition isn’t the only driver of

0:25:44.480,0:25:47.840
student debt

0:25:45.600,0:25:49.120
the total cost of college also includes

0:25:47.840,0:25:52.080
living expenses like

0:25:49.120,0:25:54.880
textbooks and room and board regardless

0:25:52.080,0:25:57.520
if a student lives on campus or not

0:25:54.880,0:26:00.159
living costs actually are more expensive

0:25:57.520,0:26:04.240
than the sticker price of tuition

0:26:00.159,0:26:06.640
in fact tuition and fees only make up 48

0:26:04.240,0:26:08.640
of the total cost of college at a public

0:26:06.640,0:26:10.720
four-year college

0:26:08.640,0:26:13.760
at public two-year colleges it’s even

0:26:10.720,0:26:16.000
smaller it’s an even smaller share of 29

0:26:13.760,0:26:18.880
with living costs almost making up

0:26:16.000,0:26:21.840
two-thirds of the cost to attend

0:26:18.880,0:26:22.720
so you were living on campus your first

0:26:21.840,0:26:24.320
year what

0:26:22.720,0:26:25.679
how did that go down that’s something

0:26:24.320,0:26:27.279
that we didn’t even talk about like

0:26:25.679,0:26:28.720
you’re taking out your college loans but

0:26:27.279,0:26:29.600
you’re also like renting an apartment

0:26:28.720,0:26:31.600
basically

0:26:29.600,0:26:33.440
and uh you know i only did it for one

0:26:31.600,0:26:34.880
year um it just wasn’t for me and i

0:26:33.440,0:26:36.559
lived close enough to campus that it’s

0:26:34.880,0:26:38.799
not really necessary and it was

0:26:36.559,0:26:40.080
very expensive living on campus at least

0:26:38.799,0:26:42.400
i mean there’s options

0:26:40.080,0:26:43.679
um where you can like just get an

0:26:42.400,0:26:44.960
apartment off campus

0:26:43.679,0:26:46.400
that i think those might be cheaper

0:26:44.960,0:26:47.919
especially if you have roommates you

0:26:46.400,0:26:49.600
split that cost

0:26:47.919,0:26:51.440
but yeah a lot of that cost is coming

0:26:49.600,0:26:54.799
from living there because it is

0:26:51.440,0:26:56.480
a secondary apartment rental essentially

0:26:54.799,0:26:57.679
and uh and it’s really great for some

0:26:56.480,0:26:58.880
people you know you’re living on campus

0:26:57.679,0:26:59.919
you’re not where i was i was in the

0:26:58.880,0:27:01.520
heart of campus

0:26:59.919,0:27:02.880
so you can get pretty much anywhere

0:27:01.520,0:27:03.679
quickly so if there’s a convenience

0:27:02.880,0:27:05.840
factor

0:27:03.679,0:27:07.039
there’s a social factor because if you

0:27:05.840,0:27:08.240
have a lot of friends on campus or

0:27:07.039,0:27:09.039
you’re part of a fraternity or a

0:27:08.240,0:27:10.880
sorority

0:27:09.039,0:27:12.480
you have easy access to that or any

0:27:10.880,0:27:13.760
clubs you’re on on campus so there’s

0:27:12.480,0:27:16.799
definitely benefits

0:27:13.760,0:27:19.279
it’s just is it worth again

0:27:16.799,0:27:20.880
it’s a personal decision is it worth the

0:27:19.279,0:27:22.799
in my opinion very high cost

0:27:20.880,0:27:24.640
that roman board is going to run you

0:27:22.799,0:27:27.039
yeah that’s a very good point

0:27:24.640,0:27:27.679
now when you stopped living on campus

0:27:27.039,0:27:29.440
did your

0:27:27.679,0:27:32.159
cost go down significantly yeah yeah it

0:27:29.440,0:27:33.760
did by these kind of percentage numbers

0:27:32.159,0:27:35.200
yeah roughly i don’t remember exactly i

0:27:33.760,0:27:36.799
can i would have to look at my actual

0:27:35.200,0:27:38.480
bill because you can see all that but

0:27:36.799,0:27:39.679
yeah definitely there was a a decent

0:27:38.480,0:27:41.520
chunk that was taken out because i was

0:27:39.679,0:27:43.600
no longer living on campus

0:27:41.520,0:27:45.520
that’s a very good point so they say

0:27:43.600,0:27:46.320
that covering tuition alone won’t

0:27:45.520,0:27:48.399
eliminate

0:27:46.320,0:27:50.399
the need for many students to borrow

0:27:48.399,0:27:52.960
money many of the existing

0:27:50.399,0:27:54.880
quote free college proposals would

0:27:52.960,0:27:57.440
continue the pell grant program

0:27:54.880,0:27:58.559
and allow low-income students to use the

0:27:57.440,0:28:01.039
grant

0:27:58.559,0:28:02.640
to cover living costs which would help

0:28:01.039,0:28:04.640
low-income students so

0:28:02.640,0:28:05.760
a lot of the financial support that’s

0:28:04.640,0:28:08.399
out there now will

0:28:05.760,0:28:10.080
would still continue even though

0:28:08.399,0:28:12.080
eliminating

0:28:10.080,0:28:13.760
tuition fees isn’t going to be the

0:28:12.080,0:28:15.679
end-all be-all but there are still other

0:28:13.760,0:28:17.200
methods out there to assist students

0:28:15.679,0:28:18.799
yeah that’s another thing i was looking

0:28:17.200,0:28:20.320
at my bill recently like i mentioned

0:28:18.799,0:28:22.159
and it goes tuition and then it just

0:28:20.320,0:28:23.679
says fees and that’s like

0:28:22.159,0:28:25.600
a third of the cost it’s like what are

0:28:23.679,0:28:27.520
fees and you know i’m sure you can

0:28:25.600,0:28:29.520
if you ask they’ll break it down for you

0:28:27.520,0:28:30.799
but it’s just it’s it’s strange seeing

0:28:29.520,0:28:32.399
all right i can i understand what

0:28:30.799,0:28:33.520
tuition is that’s my i’m paying you to

0:28:32.399,0:28:35.200
go to the school

0:28:33.520,0:28:37.200
what are fees and where are they going

0:28:35.200,0:28:38.559
and it’s like that’s where you get into

0:28:37.200,0:28:39.600
why is this costing so much and it

0:28:38.559,0:28:40.640
really makes you wonder especially if

0:28:39.600,0:28:41.440
they’re fees for things that you aren’t

0:28:40.640,0:28:43.200
using

0:28:41.440,0:28:45.120
well and you know you get that sort of

0:28:43.200,0:28:46.880
thing on utility bills and stuff

0:28:45.120,0:28:48.720
like that where you know they try to

0:28:46.880,0:28:52.159
hide all the costs but

0:28:48.720,0:28:53.360
when you’re talking 1.5 billion dollars

0:28:52.159,0:28:55.360
you need to kind of be a little more

0:28:53.360,0:28:56.960
upfront with these

0:28:55.360,0:28:59.120
so what other factors are there that we

0:28:56.960,0:29:01.919
have to weigh in uh so there’s the

0:28:59.120,0:29:03.279
uh graduate school in 2019 the number of

0:29:01.919,0:29:04.799
loans dispersed for graduate school

0:29:03.279,0:29:06.880
accounted for 16

0:29:04.799,0:29:08.320
of all federal student loans issued

0:29:06.880,0:29:10.480
while they were a small number of loans

0:29:08.320,0:29:11.039
they actually accounted for 41 percent

0:29:10.480,0:29:13.679
of the

0:29:11.039,0:29:15.679
dollars dispersed uh that’s because of

0:29:13.679,0:29:16.880
the amount graduate students borrow

0:29:15.679,0:29:18.720
because graduate school is really

0:29:16.880,0:29:19.840
expensive no matter what level you’re

0:29:18.720,0:29:22.880
going for

0:29:19.840,0:29:24.240
um while many often talk about borrowers

0:29:22.880,0:29:25.919
with six-figure student debt

0:29:24.240,0:29:27.360
that’s not undergraduates according to

0:29:25.919,0:29:28.880
federal data the average debt for a

0:29:27.360,0:29:30.799
bachelor’s degree

0:29:28.880,0:29:32.000
is about 27 k we’ve talked about that

0:29:30.799,0:29:33.279
before

0:29:32.000,0:29:34.720
that’s because they’re cheaper but also

0:29:33.279,0:29:35.840
there are strict federal limits on

0:29:34.720,0:29:37.279
undergraduate borrowing

0:29:35.840,0:29:39.120
the same federal data shows that there

0:29:37.279,0:29:40.960
is only one degree level where the

0:29:39.120,0:29:42.880
meeting bar exceeds six figures

0:29:40.960,0:29:44.720
and that’s for your doctorate so for law

0:29:42.880,0:29:46.399
or medical school

0:29:44.720,0:29:47.760
on top of all of this another driver of

0:29:46.399,0:29:49.360
the rise in student loan debt is the

0:29:47.760,0:29:50.320
sheer number of people going to college

0:29:49.360,0:29:51.200
kind of like we were talking about

0:29:50.320,0:29:55.039
there’s just

0:29:51.200,0:29:57.279
more access to it so because of that

0:29:55.039,0:29:58.799
the borrowing has also increased

0:29:57.279,0:29:59.520
undergraduate enrollment has increased

0:29:58.799,0:30:02.799
by more than

0:29:59.520,0:30:04.240
3.5 million students since 2000 and more

0:30:02.799,0:30:05.440
people are going to graduate school as a

0:30:04.240,0:30:09.120
result of that

0:30:05.440,0:30:11.200
from 2020 2018 enrollment for graduate

0:30:09.120,0:30:12.799
school increased to 41 or increased by

0:30:11.200,0:30:14.640
41

0:30:12.799,0:30:16.399
the rise in cumulative debt looks

0:30:14.640,0:30:18.080
astounding but it’s also important to

0:30:16.399,0:30:19.760
consider all pieces of context that

0:30:18.080,0:30:21.039
contribute to that increase

0:30:19.760,0:30:22.399
if people really want to eliminate

0:30:21.039,0:30:24.320
student debt it will mean finding a way

0:30:22.399,0:30:26.960
to cover graduate school as well

0:30:24.320,0:30:27.600
in addition to the expensive living

0:30:26.960,0:30:29.200
costs

0:30:27.600,0:30:30.640
and no plan exists to ensure that all

0:30:29.200,0:30:32.640
students can enroll in harvard

0:30:30.640,0:30:34.399
at free of charge so it’s it comes down

0:30:32.640,0:30:35.679
to idealism

0:30:34.399,0:30:37.440
right you would like these things to be

0:30:35.679,0:30:38.799
free but it’s in the real world that’s

0:30:37.440,0:30:41.120
just not going to happen

0:30:38.799,0:30:42.080
yeah and i don’t think most students

0:30:41.120,0:30:45.279
would

0:30:42.080,0:30:48.240
are shooting for free college i think

0:30:45.279,0:30:50.399
the vast majority of students who carry

0:30:48.240,0:30:53.760
student debt loan at this point in time

0:30:50.399,0:30:55.200
are just looking for reasonable cost and

0:30:53.760,0:30:57.679
the numbers that we’re talking about so

0:30:55.200,0:31:00.159
far kind of prove that these costs are

0:30:57.679,0:31:01.519
well beyond reasonable yeah absolutely i

0:31:00.159,0:31:02.880
mean being able to go to college is

0:31:01.519,0:31:05.360
definitely a privilege

0:31:02.880,0:31:05.919
and it’s good that more people are able

0:31:05.360,0:31:08.159
to do it

0:31:05.919,0:31:08.960
and it just so happens that that access

0:31:08.159,0:31:11.360
comes with

0:31:08.960,0:31:12.399
a literal and figurative cost of of just

0:31:11.360,0:31:14.000
being in debt

0:31:12.399,0:31:16.080
uh but if that means that somebody that

0:31:14.000,0:31:17.600
normally you know 30 or 40 years ago

0:31:16.080,0:31:19.760
wouldn’t have been able to go to college

0:31:17.600,0:31:21.440
that can now i think that’s a good thing

0:31:19.760,0:31:23.200
i just think that like you said

0:31:21.440,0:31:24.799
those numbers are ridiculously high and

0:31:23.200,0:31:26.640
don’t need to be that high yeah and i

0:31:24.799,0:31:28.880
don’t think anybody expects to be debt

0:31:26.640,0:31:30.960
free when they get out of college but

0:31:28.880,0:31:33.120
you got to make sure that the increases

0:31:30.960,0:31:34.640
in debt kind of are warranted

0:31:33.120,0:31:36.240
for what you’re getting out of it you’re

0:31:34.640,0:31:37.840
not just bleeding people dry yeah and

0:31:36.240,0:31:38.480
that’s really what it seems like at this

0:31:37.840,0:31:40.399
point

0:31:38.480,0:31:42.080
so we’re gonna take another quick break

0:31:40.399,0:31:44.159
and then we’re gonna come back and talk

0:31:42.080,0:31:45.039
about some possible ways to address the

0:31:44.159,0:31:46.960
student loan

0:31:45.039,0:31:51.929
problem

0:31:46.960,0:31:51.929
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0:32:57.440,0:33:00.960
welcome back everybody we are talking

0:32:59.039,0:33:03.039
about student debt today

0:33:00.960,0:33:05.039
uh so some ways to address the student

0:33:03.039,0:33:06.720
let uh student loan debt problem

0:33:05.039,0:33:08.960
uh this is coming from the university of

0:33:06.720,0:33:10.080
washington uh there’s the student loan

0:33:08.960,0:33:11.679
fairness act

0:33:10.080,0:33:13.279
the student loan fairness act proposes

0:33:11.679,0:33:15.039
to tie interest rates to the federal

0:33:13.279,0:33:16.720
reserve discount window rate

0:33:15.039,0:33:18.080
i don’t know what that means uh i’m not

0:33:16.720,0:33:19.360
an economist but that sounds like it

0:33:18.080,0:33:22.240
might be a good thing

0:33:19.360,0:33:24.000
uh student loan bars the are currently

0:33:22.240,0:33:26.240
uh paying nine times higher

0:33:24.000,0:33:27.840
than the banks are able to borrow for

0:33:26.240,0:33:29.760
these rates would apply to federal

0:33:27.840,0:33:31.360
subsidized stafford loans

0:33:29.760,0:33:33.679
the student loan fairness act would

0:33:31.360,0:33:34.159
offer borrowers the 10 10 loan repayment

0:33:33.679,0:33:35.519
plan

0:33:34.159,0:33:38.320
which limits the payment on student

0:33:35.519,0:33:40.720
loans to 10 of discretionary income

0:33:38.320,0:33:42.240
this is this is already offered with the

0:33:40.720,0:33:43.679
income based repayment which i think i

0:33:42.240,0:33:46.159
mentioned earlier when i was joking that

0:33:43.679,0:33:48.000
they’re just going to take from my wages

0:33:46.159,0:33:49.840
one of the big differences is that the

0:33:48.000,0:33:52.559
proposed 1010 repayment

0:33:49.840,0:33:54.080
also offers a maximum capitalization of

0:33:52.559,0:33:55.600
10 percent of interest over the loan

0:33:54.080,0:33:57.360
that was taken out

0:33:55.600,0:33:59.279
this means that your loan balance will

0:33:57.360,0:34:00.720
never surpass your original balance plus

0:33:59.279,0:34:02.000
10

0:34:00.720,0:34:03.760
the student loan fairness act would

0:34:02.000,0:34:05.039
allow borrowers a year

0:34:03.760,0:34:06.799
in which they would be able to convert

0:34:05.039,0:34:09.440
their private student loans

0:34:06.799,0:34:10.879
into federal loans if they qualify even

0:34:09.440,0:34:12.399
if you don’t qualify for the conversion

0:34:10.879,0:34:14.079
the mere fact that this option exists

0:34:12.399,0:34:15.760
will force private lenders to work with

0:34:14.079,0:34:17.679
their borrowers and offer programs

0:34:15.760,0:34:18.879
to parallel what is offered in federal

0:34:17.679,0:34:20.000
programs

0:34:18.879,0:34:21.919
and then finally the student loan

0:34:20.000,0:34:24.000
fairness act offers forgiveness to

0:34:21.919,0:34:24.800
public sector employees after only 60

0:34:24.000,0:34:27.440
months

0:34:24.800,0:34:28.879
uh so that just i don’t understand the

0:34:27.440,0:34:30.240
larger terms but in general that sounds

0:34:28.879,0:34:32.240
like it’d be a good thing

0:34:30.240,0:34:33.520
so to kind of put this into perspective

0:34:32.240,0:34:38.159
when you go and you get

0:34:33.520,0:34:40.000
a mortgage okay so you buy a house

0:34:38.159,0:34:41.839
for a hundred thousand dollars let’s say

0:34:40.000,0:34:43.839
just to keep the numbers simple

0:34:41.839,0:34:45.359
what they’ll do is they’re they’ll

0:34:43.839,0:34:47.679
charge you an interest rate

0:34:45.359,0:34:48.720
we’ll say five percent and they’ll

0:34:47.679,0:34:51.359
advertise that

0:34:48.720,0:34:53.200
over the the course of the loan and

0:34:51.359,0:34:55.200
basically what that means is they front

0:34:53.200,0:34:56.320
load your interest payments at the

0:34:55.200,0:34:57.680
beginning of your loan

0:34:56.320,0:34:59.760
and your interest payments will

0:34:57.680,0:35:00.960
gradually decrease as you pay the loan

0:34:59.760,0:35:04.079
off

0:35:00.960,0:35:06.400
you’re going to pay off

0:35:04.079,0:35:08.480
at a maximum of that five percent of the

0:35:06.400,0:35:10.160
loan you’re never going to pay more than

0:35:08.480,0:35:11.680
that five percent of the loan

0:35:10.160,0:35:13.920
but what they do is they make sure they

0:35:11.680,0:35:16.640
get their money up front there and then

0:35:13.920,0:35:18.400
the principal gradually increases the

0:35:16.640,0:35:20.960
further you pay down

0:35:18.400,0:35:21.839
what they’re saying here is your student

0:35:20.960,0:35:24.800
loans

0:35:21.839,0:35:26.160
will be capped one they’ll be they’ll be

0:35:24.800,0:35:29.680
based on

0:35:26.160,0:35:32.880
what the federal reserve rate is plus

0:35:29.680,0:35:33.599
a reasonable profit over that so when

0:35:32.880,0:35:36.480
you

0:35:33.599,0:35:38.079
go and get a loan now your interest rate

0:35:36.480,0:35:41.440
that you pay on your loan

0:35:38.079,0:35:43.760
is if you get a fixed rate it’s based on

0:35:41.440,0:35:44.960
prime rate plus whatever the bank is

0:35:43.760,0:35:47.520
charging for their

0:35:44.960,0:35:48.720
income there and then the bank has to

0:35:47.520,0:35:50.720
then pay their under

0:35:48.720,0:35:52.720
writers and all that stuff based on what

0:35:50.720,0:35:54.560
they make from you

0:35:52.720,0:35:55.520
but if you take out a loan i mean

0:35:54.560,0:35:57.040
basically what they’re doing with

0:35:55.520,0:35:58.079
student loans is like what a loan shark

0:35:57.040,0:36:00.400
does

0:35:58.079,0:36:02.480
you know i’m going to charge you 100 a

0:36:00.400,0:36:05.760
day on what you borrowed

0:36:02.480,0:36:08.800
and by the time you pay off that 100 000

0:36:05.760,0:36:10.320
loan you’ve paid 400 000 way more than

0:36:08.800,0:36:11.680
you borrowed yeah yeah which is

0:36:10.320,0:36:12.400
ridiculous and what the federal

0:36:11.680,0:36:14.880
government’s saying

0:36:12.400,0:36:15.680
no you’re going to not pay more than 10

0:36:14.880,0:36:17.760
on what that

0:36:15.680,0:36:19.760
value of that loan was so if you

0:36:17.760,0:36:21.280
borrowed a hundred thousand dollars

0:36:19.760,0:36:22.800
the most you’ll ever pay back is a

0:36:21.280,0:36:25.599
hundred and ten thousand dollars

0:36:22.800,0:36:26.240
yeah that sounds great and it makes

0:36:25.599,0:36:29.280
sense

0:36:26.240,0:36:30.880
the problem comes with who’s investing

0:36:29.280,0:36:32.320
in those loans at this point in time

0:36:30.880,0:36:35.040
we’ll talk about that a little bit

0:36:32.320,0:36:37.440
okay so the levy institute recently

0:36:35.040,0:36:40.560
published a proposal for canceling

0:36:37.440,0:36:42.720
all outstanding student debt the federal

0:36:40.560,0:36:45.359
government would write off the debt

0:36:42.720,0:36:46.240
for which it itself is the creditor the

0:36:45.359,0:36:47.760
majority of

0:36:46.240,0:36:49.839
which is the majority of outstanding

0:36:47.760,0:36:52.079
student loans and it would assume

0:36:49.839,0:36:54.400
payments on behalf of borrowers

0:36:52.079,0:36:55.359
for those loans that are held by private

0:36:54.400,0:36:57.839
lenders

0:36:55.359,0:37:00.079
the population student loan balance

0:36:57.839,0:37:02.079
would be reduced to zero

0:37:00.079,0:37:04.400
a radical solution to the student debt

0:37:02.079,0:37:06.480
crisis but one that deserves serious

0:37:04.400,0:37:07.599
attention given the radical scope of the

0:37:06.480,0:37:09.920
problem

0:37:07.599,0:37:10.880
economists believe the student debt

0:37:09.920,0:37:12.960
cancellation

0:37:10.880,0:37:14.400
would be modestly stimulative to the

0:37:12.960,0:37:18.720
macro economy

0:37:14.400,0:37:21.920
increasing annual gdp by 86 dollars

0:37:18.720,0:37:25.040
per person which would bring us up to

0:37:21.920,0:37:26.960
106 billion per year

0:37:25.040,0:37:28.480
it would increase the demand for labor

0:37:26.960,0:37:29.839
and therefore slightly reduce the

0:37:28.480,0:37:31.839
unemployment rate

0:37:29.839,0:37:33.599
they argue that student debt worsens

0:37:31.839,0:37:34.960
household balance sheets and that

0:37:33.599,0:37:37.760
weakens

0:37:34.960,0:37:39.280
and that weak the weakness is one of the

0:37:37.760,0:37:42.400
key mechanisms holding back

0:37:39.280,0:37:43.280
economic growth they go on to say that

0:37:42.400,0:37:46.079
it amounts

0:37:43.280,0:37:47.599
to around the same size and net dollar

0:37:46.079,0:37:49.760
cost to the government

0:37:47.599,0:37:51.040
as the recent tax giveaway to the rich

0:37:49.760,0:37:52.960
although

0:37:51.040,0:37:55.760
with a very different beneficiary

0:37:52.960,0:37:57.440
population yeah

0:37:55.760,0:37:59.280
you got to convince the rich white guys

0:37:57.440,0:38:01.440
to let other people get some of that

0:37:59.280,0:38:04.720
money back and that’s that’s a hard ask

0:38:01.440,0:38:06.880
that’s the hardest yeah so

0:38:04.720,0:38:08.480
the other concept is free college quote

0:38:06.880,0:38:10.160
unquote free college

0:38:08.480,0:38:11.599
free tuition at public colleges and

0:38:10.160,0:38:13.760
universities

0:38:11.599,0:38:15.359
eliminate federal government’s profiting

0:38:13.760,0:38:18.240
on student loans

0:38:15.359,0:38:20.400
cut interest on student loans allow

0:38:18.240,0:38:21.760
students to refinance loans at today’s

0:38:20.400,0:38:24.560
interest rates

0:38:21.760,0:38:25.440
allow low-income students to use federal

0:38:24.560,0:38:27.760
aid to cover

0:38:25.440,0:38:29.119
room board books and living experiences

0:38:27.760,0:38:31.520
now

0:38:29.119,0:38:33.200
this is sort of like the wish list

0:38:31.520,0:38:34.400
solution that they have but some of it

0:38:33.200,0:38:36.240
makes sense

0:38:34.400,0:38:38.320
so for instance nowadays if you have a

0:38:36.240,0:38:40.160
house and you bought your house 10 years

0:38:38.320,0:38:41.920
ago and you got

0:38:40.160,0:38:44.160
a 5 mortgage which would have been

0:38:41.920,0:38:46.400
exceedingly high

0:38:44.160,0:38:48.160
you can go back to the bank after a

0:38:46.400,0:38:51.200
certain period of time

0:38:48.160,0:38:53.280
and refinance that at a lower rate you

0:38:51.200,0:38:55.280
can’t do that with your student debt

0:38:53.280,0:38:56.320
so if you’ve got a rate of 15 on your

0:38:55.280,0:38:58.880
student debt which is

0:38:56.320,0:39:00.320
essentially what a credit card rate is

0:38:58.880,0:39:01.680
you can never go back you’re always

0:39:00.320,0:39:02.079
paying that amount for the life of the

0:39:01.680,0:39:04.800
debt

0:39:02.079,0:39:06.160
which is going to bleed you dry right so

0:39:04.800,0:39:08.000
you don’t have

0:39:06.160,0:39:09.440
with student loans you don’t have a lot

0:39:08.000,0:39:12.000
of the same

0:39:09.440,0:39:13.680
rights and freedoms that you do with

0:39:12.000,0:39:14.079
other financial loans that you might

0:39:13.680,0:39:17.520
take

0:39:14.079,0:39:19.040
out and i think one of the things that

0:39:17.520,0:39:21.040
pretty much all of these programs are

0:39:19.040,0:39:21.920
trying to do is level that playing field

0:39:21.040,0:39:23.440
to make it

0:39:21.920,0:39:25.119
more fair yeah i mean that seems

0:39:23.440,0:39:26.800
reasonable and like

0:39:25.119,0:39:28.320
i look at things like this and it feels

0:39:26.800,0:39:30.000
like it’s by design especially because

0:39:28.320,0:39:30.960
it’s the the demographic of you know i

0:39:30.000,0:39:34.160
think we said earlier

0:39:30.960,0:39:36.000
18 to 29 year olds somewhat you know

0:39:34.160,0:39:37.520
green to the world and when you’re

0:39:36.000,0:39:39.040
taking on these huge loans that you then

0:39:37.520,0:39:41.680
later have no control over

0:39:39.040,0:39:42.720
it’s it feels predatory yeah extremely

0:39:41.680,0:39:44.160
predatory

0:39:42.720,0:39:45.920
and and i think one of the problems that

0:39:44.160,0:39:49.680
we’re seeing now is a lot of

0:39:45.920,0:39:51.280
different solutions are coming into play

0:39:49.680,0:39:52.880
at different levels different state

0:39:51.280,0:39:55.040
levels the federal government’s got a

0:39:52.880,0:39:57.040
couple in place so

0:39:55.040,0:39:58.720
nobody’s coming out with a unified plan

0:39:57.040,0:40:00.640
with this like for instance university

0:39:58.720,0:40:03.760
of michigan created the high achieving

0:40:00.640,0:40:05.599
involved leader scholarship tenant the

0:40:03.760,0:40:06.960
tennessee promise which was adopted in

0:40:05.599,0:40:08.800
2014

0:40:06.960,0:40:10.800
offers two years of tuition-free

0:40:08.800,0:40:13.119
community college or technical school to

0:40:10.800,0:40:15.839
all high school graduates

0:40:13.119,0:40:17.599
all these different proposals all have

0:40:15.839,0:40:19.520
pros and cons to it

0:40:17.599,0:40:21.760
and i think what you need is you need

0:40:19.520,0:40:24.240
something at the federal level

0:40:21.760,0:40:26.240
that melds all of these different

0:40:24.240,0:40:29.760
programs together to try to give us

0:40:26.240,0:40:32.240
really the the one-size-fits-all

0:40:29.760,0:40:33.599
answer to it yeah definitely some of

0:40:32.240,0:40:34.720
those other programs you have the

0:40:33.599,0:40:37.040
education trust

0:40:34.720,0:40:38.960
which goes with a scorecard program

0:40:37.040,0:40:40.880
based on some of the criteria

0:40:38.960,0:40:42.720
following criteria covers at least four

0:40:40.880,0:40:44.560
years of tuition and a bachelor’s degree

0:40:42.720,0:40:46.240
at a four-year institution

0:40:44.560,0:40:48.160
helps low-income students cover living

0:40:46.240,0:40:50.640
expenses includes adults

0:40:48.160,0:40:52.000
and returning students no college gpa

0:40:50.640,0:40:55.200
requirement above 2.0 or

0:40:52.000,0:40:56.560
c average sees get degrees allows

0:40:55.200,0:40:58.400
students to enroll half time

0:40:56.560,0:41:01.040
and the grant does not convert to a loan

0:40:58.400,0:41:02.800
if criteria isn’t met

0:41:01.040,0:41:04.319
however no state program meets all

0:41:02.800,0:41:05.599
criteria like we were saying

0:41:04.319,0:41:07.599
but washington’s college-bound

0:41:05.599,0:41:09.359
scholarship comes the closest

0:41:07.599,0:41:10.800
some since most of the programs are

0:41:09.359,0:41:12.000
relatively new it is premature to

0:41:10.800,0:41:13.920
evaluate their effects

0:41:12.000,0:41:16.000
however an article by the hechinger

0:41:13.920,0:41:17.440
report points out that most programs do

0:41:16.000,0:41:20.240
not give low-income students

0:41:17.440,0:41:20.720
four years of free college and failing

0:41:20.240,0:41:22.319
that

0:41:20.720,0:41:24.000
quote it’s increasingly clear that free

0:41:22.319,0:41:24.880
college as it is often currently

0:41:24.000,0:41:26.319
implemented

0:41:24.880,0:41:28.240
may be more of a marketing message than

0:41:26.319,0:41:29.280
a policy that will boost the education

0:41:28.240,0:41:31.520
level of the american

0:41:29.280,0:41:32.720
future american workforce which sounds

0:41:31.520,0:41:34.160
about right if you can’t actually do it

0:41:32.720,0:41:36.079
just make it sound like you can

0:41:34.160,0:41:38.240
get people to go there and unfortunately

0:41:36.079,0:41:39.280
that seems to be a very political

0:41:38.240,0:41:41.119
approach to this

0:41:39.280,0:41:42.720
is i mean biden talked a lot about

0:41:41.119,0:41:43.920
student debt when he was running and he

0:41:42.720,0:41:45.200
talked about how he’s going to try to

0:41:43.920,0:41:47.040
forgive a lot of it and

0:41:45.200,0:41:49.040
that has you know there’s no movement on

0:41:47.040,0:41:51.520
that so it definitely works and people

0:41:49.040,0:41:53.680
beat that up well and he did sign

0:41:51.520,0:41:55.200
legislation a few weeks back where he

0:41:53.680,0:41:56.480
he forgave something like 10 million

0:41:55.200,0:41:57.280
dollars yeah that’s my student debt

0:41:56.480,0:42:00.839
about that

0:41:57.280,0:42:03.040
10 million dollars 1.7 trillion 1.7

0:42:00.839,0:42:06.079
trillion that’s like

0:42:03.040,0:42:07.359
finding pocket change in the couch

0:42:06.079,0:42:09.119
if you wanted to be optimistic you could

0:42:07.359,0:42:10.640
say maybe that’s a start or if you want

0:42:09.119,0:42:11.040
to be cynical you could say that he did

0:42:10.640,0:42:12.640
that

0:42:11.040,0:42:14.240
to get points you know just to look good

0:42:12.640,0:42:14.880
and that’s that’s really i mean that was

0:42:14.240,0:42:16.400
almost done

0:42:14.880,0:42:18.480
that was political theater is what that

0:42:16.400,0:42:19.839
was because i can almost guarantee that

0:42:18.480,0:42:21.920
the 10 million that he

0:42:19.839,0:42:24.960
forgave they probably had 15 million

0:42:21.920,0:42:26.720
more in applications behind that yeah

0:42:24.960,0:42:28.400
so you’re not solving any of the

0:42:26.720,0:42:29.440
problems with with this political

0:42:28.400,0:42:31.280
theater

0:42:29.440,0:42:33.040
and really one of the biggest problems

0:42:31.280,0:42:34.000
that you’re gonna you’re gonna run into

0:42:33.040,0:42:35.920
is that

0:42:34.000,0:42:38.240
it’s the investors that you have to

0:42:35.920,0:42:39.520
please yeah is there a reason for them

0:42:38.240,0:42:39.839
to fix this problem i don’t think there

0:42:39.520,0:42:41.440
is

0:42:39.839,0:42:43.200
they’re making money hand over fist and

0:42:41.440,0:42:45.760
that’s exactly it until

0:42:43.200,0:42:47.520
you have a reason as an investor because

0:42:45.760,0:42:51.440
what happens is all the student debt

0:42:47.520,0:42:53.359
gets bought up by investors because

0:42:51.440,0:42:54.640
they know right now that it’s going to

0:42:53.359,0:42:57.680
get paid back

0:42:54.640,0:42:58.640
so it’s it’s a good uh risk for them to

0:42:57.680,0:43:00.480
take

0:42:58.640,0:43:01.680
as soon as a federal government comes in

0:43:00.480,0:43:02.640
and decides they’re gonna wave their

0:43:01.680,0:43:05.440
magic wand

0:43:02.640,0:43:07.359
and make the debt go away all that

0:43:05.440,0:43:09.359
investment money that’s out there that’s

0:43:07.359,0:43:10.240
buying up the debt now is gonna go away

0:43:09.359,0:43:12.880
and you’re gonna

0:43:10.240,0:43:14.800
crash the economy yeah and i don’t think

0:43:12.880,0:43:17.440
a lot of people realize that

0:43:14.800,0:43:19.200
so much of our economy is driven on debt

0:43:17.440,0:43:22.240
the fact that our

0:43:19.200,0:43:23.359
national debt is what it is you know if

0:43:22.240,0:43:26.800
you make the debt

0:43:23.359,0:43:29.839
go away the people that invest in that

0:43:26.800,0:43:31.119
debt are going to go away that’s what

0:43:29.839,0:43:32.640
didn’t that happen with the mortgage

0:43:31.119,0:43:33.520
crisis like that was all based off of

0:43:32.640,0:43:35.200
people’s debt and

0:43:33.520,0:43:36.319
who owned that debt and then when things

0:43:35.200,0:43:37.680
started to go under because people

0:43:36.319,0:43:39.680
couldn’t pay that money back

0:43:37.680,0:43:41.760
everything right like domino effect fell

0:43:39.680,0:43:43.359
right like people look at debt and think

0:43:41.760,0:43:45.200
oh well no one should be in debt debt

0:43:43.359,0:43:48.240
should go away

0:43:45.200,0:43:48.560
well debt is like a commodity that’s

0:43:48.240,0:43:50.880
like

0:43:48.560,0:43:52.079
gold okay so if somebody owes a hundred

0:43:50.880,0:43:54.240
thousand dollars

0:43:52.079,0:43:56.000
somebody else is willing to invest in

0:43:54.240,0:43:57.520
that because they know that that hundred

0:43:56.000,0:43:58.640
thousand dollars is going to have a set

0:43:57.520,0:44:01.440
return

0:43:58.640,0:44:03.040
on interest rate so i’ll give you a

0:44:01.440,0:44:05.440
hundred thousand dollars today

0:44:03.040,0:44:06.400
if you’re going to give me 120 000 a

0:44:05.440,0:44:08.240
year from now

0:44:06.400,0:44:09.920
because it’s a good it’s a good wager

0:44:08.240,0:44:12.800
yeah but if you

0:44:09.920,0:44:13.200
just make those debt go that debt go

0:44:12.800,0:44:14.800
away

0:44:13.200,0:44:16.480
breaks the whole system right it breaks

0:44:14.800,0:44:17.359
the entire system and i think that’s the

0:44:16.480,0:44:19.520
issue too because

0:44:17.359,0:44:20.720
debt has a negative connotation but in

0:44:19.520,0:44:23.280
reality it’s

0:44:20.720,0:44:25.280
necessary at this point essentially debt

0:44:23.280,0:44:26.319
drives the economy more than cash does

0:44:25.280,0:44:28.000
and the first thing the federal

0:44:26.319,0:44:29.680
government wants to do is put more cash

0:44:28.000,0:44:31.200
on the market when the economy gets

0:44:29.680,0:44:32.800
banned and that’s the last thing you

0:44:31.200,0:44:33.920
want to do because it drives inflation

0:44:32.800,0:44:36.640
up

0:44:33.920,0:44:38.880
what you need is you need to have debt

0:44:36.640,0:44:39.599
controlled in a regulated manner to make

0:44:38.880,0:44:42.160
sure

0:44:39.599,0:44:42.960
it’s a guaranteed return and give people

0:44:42.160,0:44:45.520
the option

0:44:42.960,0:44:46.240
to refinance things like their student

0:44:45.520,0:44:47.280
loans sure

0:44:46.240,0:44:48.560
and give people a little bit more

0:44:47.280,0:44:49.280
autonomy when it comes to these

0:44:48.560,0:44:50.720
extremely

0:44:49.280,0:44:52.000
i said it before with the predatory

0:44:50.720,0:44:53.040
practices that they’re already doing

0:44:52.000,0:44:54.720
sure have been doing

0:44:53.040,0:44:56.400
and what’s happening here is your debt

0:44:54.720,0:44:59.520
is getting too high

0:44:56.400,0:45:00.560
and it’s the debt itself is originating

0:44:59.520,0:45:02.880
from people

0:45:00.560,0:45:04.400
who don’t have the means to pay it back

0:45:02.880,0:45:08.160
so therefore the risk

0:45:04.400,0:45:10.079
to that debt goes up significantly which

0:45:08.160,0:45:11.520
a lot of investors want to shy away from

0:45:10.079,0:45:13.440
because they want to return

0:45:11.520,0:45:15.599
could we see something like the the

0:45:13.440,0:45:17.280
financial crisis in 2008 where

0:45:15.599,0:45:18.560
it’s all these people that are have gone

0:45:17.280,0:45:19.119
to college and have taken out loans but

0:45:18.560,0:45:20.240
have

0:45:19.119,0:45:22.000
once they’re out of college have no

0:45:20.240,0:45:23.359
means to pay that back you absolutely

0:45:22.000,0:45:24.640
could you figure it doesn’t matter what

0:45:23.359,0:45:26.400
your debt is if it’s more than ten

0:45:24.640,0:45:27.839
thousand dollars you can legally file

0:45:26.400,0:45:29.839
for bankruptcy

0:45:27.839,0:45:31.040
so if every student out there who owes

0:45:29.839,0:45:33.680
more than ten thousand dollars

0:45:31.040,0:45:35.680
files for bankruptcy all those investors

0:45:33.680,0:45:37.280
who invested in that debt are out their

0:45:35.680,0:45:39.680
money

0:45:37.280,0:45:40.480
sounds like a bubble that’s exactly what

0:45:39.680,0:45:44.720
it is

0:45:40.480,0:45:46.640
and and this is why politicians are so

0:45:44.720,0:45:47.839
hesitant to just come in and try to make

0:45:46.640,0:45:48.640
the problem go away because they

0:45:47.839,0:45:50.319
understand that

0:45:48.640,0:45:52.560
it drives the economy what’s riding on

0:45:50.319,0:45:55.599
it yeah so

0:45:52.560,0:45:56.720
it’s it’s a very difficult situation and

0:45:55.599,0:45:59.839
the future of it’s

0:45:56.720,0:46:01.200
pretty bleak looking um

0:45:59.839,0:46:03.119
as with i was going to say that’s why

0:46:01.200,0:46:03.760
it’s on the show most things with this

0:46:03.119,0:46:05.920
show

0:46:03.760,0:46:07.520
the future is pretty bleak looking but

0:46:05.920,0:46:10.160
but i’m sure we’ll survive just become

0:46:07.520,0:46:12.400
an electrician you’ll be fine

0:46:10.160,0:46:16.319
vocational you may lose a few fingers

0:46:12.400,0:46:18.319
but vocational school is not a bad thing

0:46:16.319,0:46:20.079
so let’s take our last break we’ll come

0:46:18.319,0:46:29.839
back and and we’ll take a look at what

0:46:20.079,0:46:29.839
the future does look like

0:46:30.319,0:46:34.720
insights into entertainment a podcast

0:46:32.720,0:46:36.810
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0:46:34.720,0:46:38.319
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[Music]

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0:46:48.319,0:46:54.000
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0:47:20.480,0:47:26.480
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0:47:27.310,0:47:32.150
[Music]

0:47:32.400,0:47:37.119
welcome back to insights into tomorrow

0:47:34.880,0:47:38.000
we are talking student debt i’m going to

0:47:37.119,0:47:40.319
take a look at

0:47:38.000,0:47:41.920
what the future of student debt holds

0:47:40.319,0:47:45.760
for us

0:47:41.920,0:47:48.079
so according to onlinecolleges.net

0:47:45.760,0:47:50.640
the silver lining in all this is that

0:47:48.079,0:47:53.280
policymakers college administrators

0:47:50.640,0:47:55.599
borrowers parents students and

0:47:53.280,0:47:58.319
prospective college enrollees

0:47:55.599,0:48:00.800
are at least aware of the problem and

0:47:58.319,0:48:02.400
many are proposing solutions so

0:48:00.800,0:48:04.000
nobody’s pretending that we don’t have a

0:48:02.400,0:48:07.280
problem here which

0:48:04.000,0:48:08.960
i guess is a silver lining i i think

0:48:07.280,0:48:10.400
it’s kind of hard to ignore the problem

0:48:08.960,0:48:13.599
so point seven trillion dollars

0:48:10.400,0:48:15.280
yeah i mean okay pink elephant in the

0:48:13.599,0:48:18.640
room at least we’re talking about it

0:48:15.280,0:48:20.400
um one popular route is to issue

0:48:18.640,0:48:22.640
the traditional four-year college in

0:48:20.400,0:48:23.200
favor of vocational certificate programs

0:48:22.640,0:48:24.559
which

0:48:23.200,0:48:26.960
you know we joked about here but it’s a

0:48:24.559,0:48:29.280
legitimate route to go

0:48:26.960,0:48:31.359
in 2012 manufacturers reported that as

0:48:29.280,0:48:31.680
many as six hundred thousand jobs went

0:48:31.359,0:48:35.040
to

0:48:31.680,0:48:37.440
unf went unfulfilled because workers

0:48:35.040,0:48:39.760
lacked vocational skills

0:48:37.440,0:48:41.040
my father used to joke around trying to

0:48:39.760,0:48:44.640
encourage us to go

0:48:41.040,0:48:46.480
to college which my father was not a

0:48:44.640,0:48:48.160
very particularly

0:48:46.480,0:48:49.760
encouraging individual he wouldn’t make

0:48:48.160,0:48:51.200
a motivational speaker

0:48:49.760,0:48:53.040
he would tell us well the world always

0:48:51.200,0:48:56.160
needs ditch diggers

0:48:53.040,0:48:56.960
thanks dad appreciate that they don’t

0:48:56.160,0:48:59.200
have debt

0:48:56.960,0:49:00.960
maybe not no they don’t have any income

0:48:59.200,0:49:03.839
either but

0:49:00.960,0:49:05.520
uh they say go on to say in fact uh a

0:49:03.839,0:49:08.240
recent report noted that

0:49:05.520,0:49:10.640
29 million jobs in the u.s that require

0:49:08.240,0:49:13.599
vocational skills but do not

0:49:10.640,0:49:14.400
require a bachelor’s degree and most

0:49:13.599,0:49:18.559
award an

0:49:14.400,0:49:21.760
annual salary of 35 000 or more now

0:49:18.559,0:49:23.119
i don’t know if 35 000 is above or below

0:49:21.760,0:49:26.240
the poverty line i know

0:49:23.119,0:49:28.160
35 000 is pretty low

0:49:26.240,0:49:30.319
uh hourly i don’t know i think that’s

0:49:28.160,0:49:33.599
probably about 15 which is

0:49:30.319,0:49:34.160
what people are trying to get for a

0:49:33.599,0:49:36.160
minimum

0:49:34.160,0:49:39.359
wage and minimum wage is traditionally

0:49:36.160,0:49:41.200
always below the poverty line

0:49:39.359,0:49:42.960
they say some solutions look to change

0:49:41.200,0:49:44.319
the terms of the loans themselves which

0:49:42.960,0:49:46.480
we’ve talked about

0:49:44.319,0:49:48.319
in addition to locking in low interest

0:49:46.480,0:49:50.960
rates on federal student loans some

0:49:48.319,0:49:53.359
lawmakers are seeking to add provisions

0:49:50.960,0:49:56.160
such as debt forgiveness for those who

0:49:53.359,0:49:58.160
have made payments for a period of time

0:49:56.160,0:49:59.680
as well as suspension of interest

0:49:58.160,0:50:01.119
accrual during times of high

0:49:59.680,0:50:03.119
unemployment

0:50:01.119,0:50:05.359
another idea put forward would allow

0:50:03.119,0:50:07.680
borrowers with student loan debt to

0:50:05.359,0:50:09.440
refinance at lower fixed interest rates

0:50:07.680,0:50:12.559
in the same way people refinance their

0:50:09.440,0:50:14.480
mortgages which we also talked about

0:50:12.559,0:50:17.440
this would result in a savings estimate

0:50:14.480,0:50:20.800
of the 14.5 billion dollars for

0:50:17.440,0:50:23.760
borrowers in the first year alone

0:50:20.800,0:50:25.520
sounds like a no-brainer let’s do it

0:50:23.760,0:50:26.160
well they say many don’t realize that

0:50:25.520,0:50:29.440
wall street

0:50:26.160,0:50:30.880
and thus lots of people with 401k invest

0:50:29.440,0:50:34.720
in student loans

0:50:30.880,0:50:36.720
to the tune of 291 billion dollars

0:50:34.720,0:50:40.319
additionally the department of education

0:50:36.720,0:50:42.880
owns another 600 billion in student loan

0:50:40.319,0:50:44.640
and the doe generate a profit of nearly

0:50:42.880,0:50:48.400
51 billion from these

0:50:44.640,0:50:50.640
funds uh way back in 2013 which is how

0:50:48.400,0:50:53.119
old this study was

0:50:50.640,0:50:55.119
so with so many powerful interests

0:50:53.119,0:50:55.520
standing to lose by transferring this

0:50:55.119,0:50:58.720
money

0:50:55.520,0:51:01.119
back to borrowers it’s unlikely the bill

0:50:58.720,0:51:02.880
a bill like this will ever pass yeah and

0:51:01.119,0:51:04.800
i’m sure perhaps you listening at home

0:51:02.880,0:51:06.400
have come to this conclusion no one has

0:51:04.800,0:51:07.520
a clear idea of what the future holds

0:51:06.400,0:51:09.520
for education borrowers

0:51:07.520,0:51:11.359
but all agree that solutions are needed

0:51:09.520,0:51:12.800
to ameliorate the student debt crisis

0:51:11.359,0:51:14.880
there’s a problem and we should do

0:51:12.800,0:51:16.800
something about it whatever

0:51:14.880,0:51:18.240
more experts forecasting a burst of the

0:51:16.800,0:51:18.720
student debt bubble like we just talked

0:51:18.240,0:51:20.319
about

0:51:18.720,0:51:21.920
perhaps lenders and investors will have

0:51:20.319,0:51:23.200
some incentive to work proactively with

0:51:21.920,0:51:25.520
borrowers to make student

0:51:23.200,0:51:27.119
loan repayment easier in any event until

0:51:25.520,0:51:28.480
we act our young people will continue to

0:51:27.119,0:51:31.520
face more and more debt

0:51:28.480,0:51:33.760
on an annual basis i am the young people

0:51:31.520,0:51:35.200
and more and more doing it every year

0:51:33.760,0:51:36.079
sadly the bottom line is that student

0:51:35.200,0:51:38.079
loan debt is a

0:51:36.079,0:51:39.359
big business and that is i think the

0:51:38.079,0:51:40.880
core of the issue here

0:51:39.359,0:51:42.480
uh the people that are profiting from it

0:51:40.880,0:51:44.160
at the expense of the younger generation

0:51:42.480,0:51:45.760
of college students are also the ones

0:51:44.160,0:51:46.640
being asked to make changes to solve the

0:51:45.760,0:51:48.079
problem

0:51:46.640,0:51:49.839
so why would they change something if

0:51:48.079,0:51:51.119
they’re making a bunch of money from it

0:51:49.839,0:51:53.200
however it’s a problem that those

0:51:51.119,0:51:54.480
investors created to their benefit

0:51:53.200,0:51:55.920
as a result they aren’t particularly

0:51:54.480,0:51:57.200
motivated to take money out of their own

0:51:55.920,0:51:59.200
pockets and give it back to the

0:51:57.200,0:52:00.400
debt-laden students or the future of

0:51:59.200,0:52:02.400
this country

0:52:00.400,0:52:03.760
and that really is the bottom line is

0:52:02.400,0:52:05.839
it’s the people that need the changes

0:52:03.760,0:52:07.440
the ones that are making the money

0:52:05.839,0:52:09.119
it’s almost like when you try to change

0:52:07.440,0:52:10.720
politics for the better the people that

0:52:09.119,0:52:12.319
need the change in politics or the

0:52:10.720,0:52:14.079
politicians themselves

0:52:12.319,0:52:16.640
and they’re never going to do anything

0:52:14.079,0:52:18.800
that that bites them in the hand that

0:52:16.640,0:52:20.640
they feed themselves yeah i think the

0:52:18.800,0:52:20.960
only the only real way you’re going to

0:52:20.640,0:52:22.960
see

0:52:20.960,0:52:24.800
change is if people would stop going to

0:52:22.960,0:52:25.280
college because then those debt numbers

0:52:24.800,0:52:26.640
wouldn’t

0:52:25.280,0:52:28.160
you know go up as high but i don’t think

0:52:26.640,0:52:29.760
that’s ever going to happen well what

0:52:28.160,0:52:30.880
you’d really see changing is if people

0:52:29.760,0:52:32.240
stopped paying their debt

0:52:30.880,0:52:33.920
and they found oh yeah they filed

0:52:32.240,0:52:35.440
bankruptcy and then

0:52:33.920,0:52:37.440
these people that are investing with

0:52:35.440,0:52:38.960
their 401k and everything else

0:52:37.440,0:52:40.880
and it’s it’s interesting they point out

0:52:38.960,0:52:42.800
401k so it’s not

0:52:40.880,0:52:44.480
just these high-powered bankers that are

0:52:42.800,0:52:46.400
making money off of it

0:52:44.480,0:52:48.720
you’re people don’t realize where their

0:52:46.400,0:52:51.920
401k investments go

0:52:48.720,0:52:54.480
and it goes into funds that that

0:52:51.920,0:52:55.680
pick up these debts so like if you have

0:52:54.480,0:52:56.960
a 401k

0:52:55.680,0:52:58.720
and you have a child that’s going to

0:52:56.960,0:53:00.160
college could you theoretically be

0:52:58.720,0:53:01.200
making money off of their debt

0:53:00.160,0:53:03.599
absolutely which you could also be

0:53:01.200,0:53:04.960
co-signed too that’s right but but it’s

0:53:03.599,0:53:06.400
one of those things where it’s you’re

0:53:04.960,0:53:09.760
six degrees removed from it

0:53:06.400,0:53:13.280
so you invest in a mutual in a fund

0:53:09.760,0:53:15.040
that fund has maybe bonds that it invest

0:53:13.280,0:53:16.880
in and those bonds are then

0:53:15.040,0:53:18.240
being forwarded over to a bank or

0:53:16.880,0:53:20.400
purchased from a bank

0:53:18.240,0:53:21.520
and that bank is doing the the student

0:53:20.400,0:53:23.280
loan so

0:53:21.520,0:53:26.079
you’re pretty far removed if you’re a

0:53:23.280,0:53:27.680
401k contributor

0:53:26.079,0:53:29.680
but yeah you’re contributing to that

0:53:27.680,0:53:33.280
problem so

0:53:29.680,0:53:36.400
i kind of equate this almost to

0:53:33.280,0:53:38.559
the um

0:53:36.400,0:53:39.839
the issue that we have in this country

0:53:38.559,0:53:42.880
with

0:53:39.839,0:53:44.160
medical insurance and health care you

0:53:42.880,0:53:46.960
know everyone says oh

0:53:44.160,0:53:48.640
we need to have free health care well no

0:53:46.960,0:53:50.800
you don’t need free health care what you

0:53:48.640,0:53:53.599
need is affordable

0:53:50.800,0:53:55.280
medical care yeah you know you look at

0:53:53.599,0:53:57.599
these other countries that have kind of

0:53:55.280,0:53:59.359
socialist programs like canada and the

0:53:57.599,0:54:01.440
uk and stuff

0:53:59.359,0:54:03.680
they don’t get free health insurance

0:54:01.440,0:54:05.680
they get free health care

0:54:03.680,0:54:08.079
and the problem that we have here is we

0:54:05.680,0:54:10.160
want to tackle the insurance problem

0:54:08.079,0:54:11.760
when nobody’s looking at the expense

0:54:10.160,0:54:13.839
problem you know it shouldn’t

0:54:11.760,0:54:14.960
i shouldn’t walk into an er and get an

0:54:13.839,0:54:16.960
aspirin

0:54:14.960,0:54:18.400
and have that aspirin cost five hundred

0:54:16.960,0:54:19.440
dollars and then expect the insurance

0:54:18.400,0:54:21.599
company to pay for it

0:54:19.440,0:54:23.119
and it’s the same thing here it’s we’re

0:54:21.599,0:54:24.640
looking at the debt issue but it’s more

0:54:23.119,0:54:25.440
of why is the cost so high in the first

0:54:24.640,0:54:28.319
place of college

0:54:25.440,0:54:29.200
exactly why has the cost gone up to the

0:54:28.319,0:54:33.119
point

0:54:29.200,0:54:35.200
that they can’t justify that increase

0:54:33.119,0:54:37.680
you’re not paying higher salaries to

0:54:35.200,0:54:40.400
your professors to justify it

0:54:37.680,0:54:42.640
you’re not buying new campuses or

0:54:40.400,0:54:45.839
facilities or technology

0:54:42.640,0:54:47.760
like they need the schools the colleges

0:54:45.839,0:54:50.400
need to justify

0:54:47.760,0:54:53.359
the increase in tuition and until they

0:54:50.400,0:54:56.079
can justify that on paper

0:54:53.359,0:54:57.359
there’s no reason to pay it and that’s

0:54:56.079,0:54:58.799
what the government should be targeting

0:54:57.359,0:55:00.640
the government should be worrying about

0:54:58.799,0:55:02.640
student debt because if you control the

0:55:00.640,0:55:05.839
cost of college and

0:55:02.640,0:55:07.200
the overcharging of it and the

0:55:05.839,0:55:10.319
profiteering

0:55:07.200,0:55:12.880
in colleges that will automatically

0:55:10.319,0:55:14.960
control your student debt

0:55:12.880,0:55:16.240
but on the other hand at the same time

0:55:14.960,0:55:18.400
you also have to make sure that your

0:55:16.240,0:55:19.599
student debt is treated as fairly as all

0:55:18.400,0:55:20.799
your other debt is

0:55:19.599,0:55:22.720
yeah by giving people the option to

0:55:20.799,0:55:24.640
refinance and things like that exactly

0:55:22.720,0:55:27.119
tying it to a prime rate

0:55:24.640,0:55:28.400
tying it to a maximum amount of interest

0:55:27.119,0:55:30.880
that can be earned on it

0:55:28.400,0:55:32.640
so if you apply the rules evenly across

0:55:30.880,0:55:34.000
the board for debt

0:55:32.640,0:55:35.920
that would solve a good portion of the

0:55:34.000,0:55:39.200
problem if you

0:55:35.920,0:55:42.799
solve the problem of why student tuition

0:55:39.200,0:55:44.400
and housing like the the the uh

0:55:42.799,0:55:46.240
room that you were housing in the dorm

0:55:44.400,0:55:48.319
that you were housing in there

0:55:46.240,0:55:49.520
you were probably paying three times

0:55:48.319,0:55:51.200
what you would have paid if you were a

0:55:49.520,0:55:51.760
private citizen renting an apartment

0:55:51.200,0:55:53.520
like that

0:55:51.760,0:55:55.040
i mean i like i didn’t have a roommate

0:55:53.520,0:55:57.760
so it was just me but it was

0:55:55.040,0:55:58.960
one room and that was it with a bathroom

0:55:57.760,0:56:00.640
so it’s not like it was like you know

0:55:58.960,0:56:03.280
well it was a shared bathroom too

0:56:00.640,0:56:04.880
yeah so and the amount that you were

0:56:03.280,0:56:06.799
paying you probably could have got a two

0:56:04.880,0:56:10.640
or three bedroom apartment

0:56:06.799,0:56:13.520
yourself at a local apartment complex

0:56:10.640,0:56:15.280
so those costs have to be controlled and

0:56:13.520,0:56:17.200
until that happens there’s no point even

0:56:15.280,0:56:20.480
trying to tackle the debt issue

0:56:17.200,0:56:24.079
exactly so anyway i i you know

0:56:20.480,0:56:25.040
it’s as much as we are doom and gloom

0:56:24.079,0:56:27.119
at the end we actually had some

0:56:25.040,0:56:29.520
solutions this time we did and and i

0:56:27.119,0:56:31.599
think some of these

0:56:29.520,0:56:33.440
the problem actually i i think that the

0:56:31.599,0:56:34.799
reason we did is the problem literally

0:56:33.440,0:56:36.720
is so big

0:56:34.799,0:56:39.280
you can’t help but start throwing

0:56:36.720,0:56:41.200
solutions out and have some of them work

0:56:39.280,0:56:42.640
um we’re not going to solve all the

0:56:41.200,0:56:45.280
problems but i think if people stop

0:56:42.640,0:56:48.480
trying to rip off our students and

0:56:45.280,0:56:50.640
you know is our students are the future

0:56:48.480,0:56:51.839
and if they’re so laden with debt one

0:56:50.640,0:56:53.040
they’re either not going to go to

0:56:51.839,0:56:54.559
college you’re not going to be able to

0:56:53.040,0:56:55.119
fill the jobs we have and you’re going

0:56:54.559,0:56:56.799
to

0:56:55.119,0:56:58.480
you’re going to become a third class

0:56:56.799,0:57:00.480
country here because we don’t have

0:56:58.480,0:57:03.520
educated people that

0:57:00.480,0:57:04.960
can fill the jobs that we need or you’re

0:57:03.520,0:57:06.319
going to have people that are so laden

0:57:04.960,0:57:08.160
with that everyone’s going to declare

0:57:06.319,0:57:09.359
bankruptcy and crash the economy i was

0:57:08.160,0:57:10.240
going to say that was our solution we

0:57:09.359,0:57:12.240
just tell everybody to declare

0:57:10.240,0:57:13.359
bankruptcy and tank the economy right i

0:57:12.240,0:57:14.960
mean that’s the

0:57:13.359,0:57:16.640
you know then you let the government

0:57:14.960,0:57:19.119
deal with the consequences of that

0:57:16.640,0:57:20.480
when the economy crashes so and then

0:57:19.119,0:57:21.040
would they have to buy us out there you

0:57:20.480,0:57:24.240
go

0:57:21.040,0:57:26.079
well there you go see see so anyway

0:57:24.240,0:57:29.440
that’s our show for today

0:57:26.079,0:57:30.880
um i appreciate everyone listening and

0:57:29.440,0:57:33.040
watching

0:57:30.880,0:57:34.640
i would also invite folks once again to

0:57:33.040,0:57:37.839
subscribe to the podcast you can get

0:57:34.640,0:57:40.799
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0:57:37.839,0:57:41.760
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0:57:40.799,0:57:44.559
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0:57:44.559,0:57:48.240
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0:57:46.720,0:57:51.760
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0:57:48.240,0:57:53.359
i would also invite folks to email us

0:57:51.760,0:57:55.359
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0:57:53.359,0:57:57.520
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0:57:55.359,0:57:59.599
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0:57:57.520,0:58:01.200
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0:57:59.599,0:58:03.920
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0:58:01.200,0:58:04.640
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0:58:03.920,0:58:07.200
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0:58:04.640,0:58:10.319
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0:58:07.200,0:58:12.640
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0:58:10.319,0:58:14.079
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0:58:12.640,0:58:15.839
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0:58:14.079,0:58:17.040
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0:58:15.839,0:58:19.200
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0:58:19.200,0:58:24.319
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0:58:24.319,0:58:27.920
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0:58:28.119,0:58:31.680
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0:58:30.079,0:58:37.839
and i think that’s it another one of the

0:58:31.680,0:58:37.839
books bye

0:59:02.839,0:59:05.839
so

0:59:09.280,0:59:11.359
you

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