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Borrowed Future
Ep 9: Student Loans Are Back—Is the Crisis Worse Than Ever?
01:03:15
Student loan repayments and interest are getting turned back on. Forgiveness is at a standstill. Is there hope for you?
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- [00:08]
A
Is this thing still on? Oh, man. No one turned the mic off. It's been two years. Wow, this microphone is really dusty. You think that someone would have cleaned it in two years? I guess not. Okay. There, that's better. To kick things off, I wanted to get my finger back on the pulse, so I hit the streets to talk to people firsthand about their feelings and experiences with student loans. And in honor of the buddy system, I invited my friend and fellow Ramsey personality Eddie Cullen to join in on the fun.
- [00:47]
B
Do you have student loans?
- [00:49]
C
No. We did sponsor for quite some years.
- [00:53]
A
Sponsor. Do you guys have, like a rough amount of how much? It's been maybe 40 grand.
- [01:01]
B
That sounds about right. Yeah.
- [01:02]
C
I'd say 40, 50 grand.
- [01:04]
A
Are you guys paying off somebody else's.
- [01:05]
B
Student loans at this time?
- [01:06]
A
One child paid off the other one. I don't know.
- [01:09]
D
How many more years.
- [01:10]
A
Do you have student loans that you guys are paying for right now?
- [01:13]
B
For our kids, yes.
- [01:15]
A
Do you know how much those student loans are? Too much.
- [01:20]
B
A lot.
- [01:21]
A
Paying the minimum right now just to get by. A lot of politicians are out there. They're promising to forgive student loans partially or completely. Do you think it'll ever happen? No.
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E
No.
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A
Why?
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E
And if it does, we're gonna pay for it.
- [01:35]
A
Through taxes?
- [01:36]
E
Yeah, through taxes or some other way.
- [01:39]
A
Just this year you started going, all right, I need to put some extra on these student loans to get rid of them. Yeah, yeah. How long have you had them? No.
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F
A while.
- [01:47]
E
Probably seven years.
- [01:50]
A
Seven years. Is it fun to make the payment every month for seven years?
- [01:54]
E
No, it's not.
- [01:55]
A
So it comes out of your bank account. You're like, okay, there it goes. There's my life.
- [01:58]
F
It just.
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A
It's automatic pay. I don't even think about it. Was it worth it? Was it worth it? No, you would not do it again. I would not do it again. From Ramsey Network, I'm George Camel and this is Borrowed Future, a podcast series exploring the now $1.6 trillion stud loan debt crisis and the impact it's having on 45 million Americans. In this episode, we'll talk about the current landscape of the student loan debt crisis. Two years later, back in 2019, we launched the Borrowed Future podcast as an eight episode series. And your response was unbelievable. Millions of Downloads, thousands of 5 star reviews, and so many inspiring stories of people who have committed to avoiding student loan debt.
- [02:44]
D
And.
- [02:44]
A
And people fired up to pay off their loans and get it out of their life for good. So we're back after two years with a bonus episode to give you guys the latest on what's been going on and how it affects you. So what has been going on? Let's see, there was the global pandemic, people working from home, a toilet paper shortage, a murder, hornet invasion, a plethora of natural disasters, an insane presidential election, and maybe the craziest news of all. Ben Affleck and JLo got back together. Good for them. I'm glad they recovered from the 6% rating on Rotten Tomatoes for their movie Gigli. In second place, for craziest news, federal student loan payments were paused for one year and ten months to relieve borrowers during the global pandemic. But now payments are about to be turned back on.
- [03:29]
C
So for the last year and a half, soon to be approaching two, if you've had a loan held by the government, almost everyone who has a federal loan, you, your payments have been paused. And of course, this has been a really positive step. I've heard from people throughout the country who for the first time in their lives have a little bit of cash left over at the end of the month to pay off that extraordinarily high interest credit card or put it towards a down payment for their house or pay off their car loan. And I think it's been a window into what could have been, you know, what could have been if we didn't have this cross section of disastrous policies that have driven the student debt crisis. But that's coming to an end in a few short months.
- [04:25]
A
If you don't recognize that voice, that's Seth Frotman. He's the executive director of the Student Borrower Protection center in Washington, D.C. and he was also the former ombudsman for, for the Consumer Financial Protection Bureau. You've heard him throughout the Borrowed Future podcast series, and you can see him in our new feature film documentary, Borrowed How Student Loans Are Killing the American Dream. And even though our series ended, his work did not. He and his team have kept on fighting the good fight to protect student loan borrowers. And I caught up with him to see what he's been up to and what's been going on in the wild world of student loans. So it's been a full two years. Has the student loan crisis gotten any better? What are the changes that have happened?
- [05:08]
C
I wish I had a better answer for you, George. You know, when we talked last, we spent a lot of time talking about how there was a student debt crisis raging across America from coast to coast, big cities and small towns. And I don't want to start off too dire but that situation really, really continues. We've seen debt levels and debt loads continue to rise, the cost of school continue to grow, and hardworking families and students caught in the middle. Obviously the elephant in the room is of course, the fallout of the pandemic. And one of the things that I hope we get to talk about is how the steps that Washington has taken have obviously been net positive and we can talk about what those are. But a lot of the efforts have simply kicked the can down the road, put off solving problems, helping people till some future point. And that point is coming. But there hasn't been the real hard work to fix the tremendously broken student loan system. There's now well over $1.5 trillion in student loans, 9 million people in default. Another borrower defaulted every 26 seconds of every single day. And this is before the pandemic ever hit. And we know that so many people are just dealing with the fallout of this crisis. And that's where we find ourselves today. Student debt crisis only made worse by everything going on around us for the last couple years.
- [07:00]
A
Even with a raging pandemic and people who just felt a lot of rage about the pandemic. We see your comments on Facebook, Susan. When it came to student loans, things were supposed to get better. During the 2020 presidential election, Joe Biden made two big promises. To cancel $10,000 in student loan debt per borrower and to cancel debt for undergraduates from public colleges and Historically Black Colleges and universities and aka HBCUs.
- [07:27]
B
The legislation passed by the Democratic House calls for immediate $10,000 forgiveness of student loans. It should be done immediately. We have to make sure that you get the opportunity. That's why I'm going to eliminate a lot of your student debt. If you come from a family less than 125 grand and you went to a public university, I'm going to make sure that everybody in this generation gets $10,000 knocked off of their student debt as we try to get out of this God awful pandemic.
- [07:56]
A
Many of the 81 million people who voted for President Biden believe that he would be the answer to their student debt problems. But so far, he hasn't ponied up on these promises. And to that I say, come on, man.
- [08:08]
B
Come on, man. Come on, man. Come on, man.
- [08:11]
A
Come on, man. But for real, does Joe Biden actually have the power to wave a wand and forgive this debt like some sort of student loan wizard? I talked to Josh Mitchell, an economics reporter for the Wall Street Journal. He's lived and breathed this Student loan crisis for the last 12 years. His latest book, the Debt Trap, walks readers through the history of how student loans became a national catastrophe and uncovers scandals, scams, predatory actors, and government malpractice within the industry. So I wanted his take on the future of student loan forgiveness. So I want to talk about student loan forgiveness because it feels like it. Everyone's decided the student loan program is out of our control. We can't control tuition, but we can control these government policies to forgive large portions of borrowers debt. So when did student loan forgiveness kind of come onto the scene where they started going, hey, what if we could forgive this? But do you know who the first politician was to kind of advocate for this or get this off the ground?
- [09:07]
F
This started from activists about five or six years ago when there was another for profit college scandal and companies like Corinthian Colleges and ITT started to have a lot of problems. A lot of government investigations focused on them about whether they were deceiving students, how they were financially managed. A few of these big chains went bankrupt, and that left a lot of students on the hook for all of this debt, even though in a lot of cases they were deceived by their schools, or at least that's what they say happened. And so these activists said, okay, well this isn't fair. So they stumbled upon this obscure federal law that says, if you can prove to the satisfaction of the Education Department that you were illegally deceived by your school, you are entitled to have your debts canceled. And so once activists started telling them about this law, a lot of people started applying to the Education Department to get their loans canceled under this program. And I wrote about this, I think it was in 2015 when my story came out, and I basically said, thousands of students are petitioning the Education Department to get their loans forgiven under this decades old, obscure law. So that was like the first iteration that I had heard of of, you know, debt forgiveness efforts. And then from there, activist groups just really started to latch onto this concept. And then it was obviously you had Bernie Sanders and Elizabeth Warren talking about debt forgiveness in this latest Democratic primary. And as a concession to them and the left wing of the party, Joe Biden, once he was the clear frontrunner, he came out for debt forgiveness on a much smaller scale. So his current goal, according to his statements, is, you know, let's forgive $10,000 across the board. It was only in the past five years that debt forgiveness really became a thing.
- [10:55]
A
Yeah. And you can see why people are clamoring for it. I Mean, people feel like they got scammed, they got screwed, and so they're kind of unwilling to even grapple with the idea of paying this back when they feel like they got hoodwinked on this deal. And so, like, you're talking about, you know, Biden ran on this with his campaign promise, and so far, he hasn't kept that promise. We're seeing little inklings. You know, we just had one recently that was we had some debt forgiven for those who have disability. But why hasn't he gotten this thing through? And do you think he ever will?
- [11:28]
F
So in the final days of the Trump administration, lawyers who were political appointees within the administration reviewed this question of whether the executive branch actually has the legal authority to forgive student debt without any congressional action. And they concluded, no, the law does not permit the executive branch to just do wholesale debt cancellation on its own. That has to come from Congress. President Biden has said repeatedly that that is his own hunch, that this is not something he can do on his own. He said he wants Congress to do this, but that they're the ones that need to do it. So based on his own statements, and I can only go by what he said, he doesn't think he has the legal authority to do this on his own. Now, the White House has said that while the President doesn't think so, their own political appointees, lawyers within this administration are looking at this question. And so he has pushed Congress to act. Now, I do think, though, that he is a little uncomfortable, based on his statements, he is a little uncomfortable with the idea of forgiving huge amounts of student debt. Again, he said 10,000. Elizabeth Warren wants 50,000 across the board, people to the left of her saying, just cancel it all. And there is this big question that's really confronted the Democratic Party, which is, do people with student debt, are they well off or are they not? Would canceling student debt across the board be progressive or regressive? Would it help mostly well off households, or would it mostly help the down and out, the people who have been scammed? And is this a proper way to spend taxpayer money? That's really, in some ways, it's a tough question to get at. I can tell you that the data does show that in general, people who have student debt are generally college graduates. College graduates generally make more than people who never went to college. And so in that sense, if you look at the income distribution, canceling student debt across the board would be regressive, so to speak. But there are a lot of people who, you know, let's just look at this 10,000 threshold, which is not arbitrary. Most people who default on their loans counterintuitively owe less than $10,000. There was something like between 5 and 10,000. And the reason why is because a lot of them went to their local community college, they went to a certificate program, they went to a for profit college, and oftentimes they drop out. And so they're left with the worst of both worlds, where they have debt, but they don't have the college degree. And so they just don't have a way to get the job that would enable them to pay off the debt. And so $10,000 would, like, wipe out that whole class of people who are defaulting on their loans. Now argue in my book, there's a lot of other problems outside of that class of people that are affecting people who have 50,000, $100,000. But that's where President Biden's focus point has been. There just doesn't seem to be the votes in Congress to get that done, at least not as of now. Congress keeps on pointing to him, or at least the leaders of the Democratic Party, Chuck Schumer, Elizabeth Warren, they keep on pointing to him saying, you've got to do this. And Biden keeps on pointing to them and saying, no, you've got to do this. And so it's like this showdown between, you know, Congressional Democrats and the White House about who's gonna act.
- [14:36]
A
Wow. Such this vicious political cycle where it goes, no, you do it. No, you do it. Well, I can't do it. Well, you gotta do it.
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F
Right.
- [14:42]
A
Man, that's tough. And you talked about who's paying for this and you were talking about the taxpayers. And that brings me to this interesting question. A lot of people when it comes to student loan forgiveness, they say, you know, Josh, I paid down my $50,000 of debt, I sacrificed, I did whatever it took to get rid of that debt. And now you're wanting me to just forgive this guy's debt over here with my hard earned money. Do you think the idea of forgiveness is fair if the taxpayers are the ones paying for it?
- [15:09]
F
So I do think that there is a very valid point there of people who are saying, like, would this be the best use of money? I think the biggest obstacle to debt forgiveness is if you wipe out a trillion dollars. Now, the way the government just so freely hands out student loan money, we'll be back to 1.6 trillion within a few years. And so I do think this focus has been on this one time forgiveness at the expense of paying attention to the underlying causes of the rise in student debt. And it's kind of like how Washington works. You know, a lot of times they always just focus on incremental steps versus the big issue.
- [15:52]
A
Josh's comments made it clear that Washington is not exactly moving at breakneck speed when it comes to a solution. Forgiving one borrower's debt. Not a huge number, but collectively it's a big wait for the government and you, the taxpayer, to take on. Even if Biden followed through on his plan to forgive just $10,000 in student loan debt per borrower, it would cost $373 billion to make it happen all on the taxpayer's dime. That's a lot of dimes. Here's Seth Frotman's take. Well, we gotta talk about the new President, cuz that's something that has changed since we last spoke. So Biden campaigned on the promise of forgiving $10,000 for every person and making public college tuition free for all students and families that are earning 125 grand or less. So where does Biden stand on that campaign pledge today?
- [16:44]
C
So you framed it up right, that the President made significant and specific promises to try to help people not only avoid drowning in debt like prior generations, but also to provide specific help for those who have debt. And one of the most notable is this idea of wiping out $10,000 of debt for all those who hold it. And that's one where we're still waiting, where the President has announced that he's putting his top lawyers on the issue to analyze his ability and his authorities to do it. And you know, I've obviously looked at this and a whole lot of experts have as well, and they think it's clear that the President has the ability to take this step which can improve the lives of, of millions and millions of people. And again, this isn't some pie in the sky stuff. Congress has specifically given the Secretary of Education and the administration the ability to help people struggling under the weight of student loan debt. And I think it's hard to look at the situation that so many people find themselves in, so many of your listeners find themselves in and say that's not the case. So where we find ourselves is the President has made a commitment and we take him at his word that his top people are looking at it. But now is the time to provide a little bit of help for so many people out there in America who are struggling.
- [18:20]
A
I was talking to Josh Mitchell, who I know you're buddies with, author of the Debt trap. Wall Street Journal reporter who's been following this crisis for a long, long time. And we talked about this cycle of President Biden saying, hey, I'd love to do it, but I don't have the power. And then con, well, we're not gonna do it. You have the power. And it seems like it's going back and forth in this loop that's never ending. Is there actual law that says, here's who can do this and here's who has the power?
- [18:48]
C
So a couple things. So the number one thing that has cut through the thousands of conversations that I've had is people are so tired of the finger pointing or the blame game, or is this the President's fault or is this Congress's fault? The number one thing I hear is someone just needs to help that I have done everything that I was supposed to do, take on debt that I was told was going to provide me and my family access to a better life, only to find out that the very debt that I took on is the thing that is holding us back, that is crippling our financial future. And if there is one thing that I know is that the President and the Department of Education already has every tool that it needs to improve the lives of tens of millions of people. And the President has talked eloquently about how much he wants to help out public servants, said he wants to fix the public service loan forgiveness program and now's the time to do so. Individual borrowers, you know, whether that's in Toledo or Topeka, just want some help. I've heard it so many times, which is how could this have happened to me when I did everything that I was supposed to do? And I think the President has a chance to really just help those folks.
- [20:23]
A
Student loan forgiveness has been a hot topic for years. If you've listened to episode six of Borrowed Future, we unpacked the sad tale of the public service student loan forgiveness program created by Congress in 2007 to wipe out government backed student loan debt for those in public sectors. Here's how old George described how the program worked. Or is it Young George? It's an old clip, but an earlier time. I was two years younger. And yet history is old. Time is weird. Anyways, here I am, the old, younger me. The pitch. Spend 10 years working in public service, make payments every month for those 10 years and then the government will magically forgive your federal loans. Fast forward 10 years later to 2017. 30,000 borrowers applied for forgiveness and 96 people were forgiven. 96. That's less than 1%. Since 2017, the stats haven't gotten a whole lot better. According to NerdWallet's analysis of the Department of Education's data, the approval rate for student loan forgiveness now sits at a whopping 1.16%. But hey, give that 0.16% some credit. It's working hard. Now, if you think there's room for improvement, just like my third grade teacher did, you're right. So here's a sliver of good news. In October of 2021, President Biden announced changes to the federal student loan forgiveness program that would, quote, allow more sector workers, including members of the military, to seek a reprieve on their educational debts. According to the Department of Education, this policy would affect just over half a million borrowers and give them an extra two years of progress toward forgiveness. Part A While this news is encouraging, it's not exactly worthy of Champagne popping. With 45 million borrowers out there, that means only 1.2% will benefit from this, quote, reprieve. But to be fair, some progress is better than no progress. And while it's easy to point the finger at the government and make them the bad guy here, there are even badder guys in the student loan servicing industry that we need to reckon with. As more whistleblowers come forward, the dark underbelly of the student loan industry continues to be exposed. Trying to expose the bad guys and protect the borrowers is Seth Frotman. I asked him where we stand now with corruption in the industry. Talking about the Department of Education, the top loan servicer, the Pennsylvania Higher Education Assistance Agency, also known as Fedloan Servicing, they recently announced they would no longer continue to serve as that top loan servicer. So what does that mean for borrowers?
- [23:05]
C
The first thing is this is good news. I've been doing this for probably way too long and sometimes it's hard to still be outraged what you see. But the Pennsylvania Higher Education Assistance Authority, or fia, nearly daily continues to do stuff that is quite outrageous in terms of how much they have just let down working people in terms of their just complete incompetence when it comes to servicing student loans. Here is the company that has been at the center of every student loan scandal and I think as importantly, at the center of every broken program and protection that has harmed working families. This is the company that was in charge of implementing the specific program that was supposed to help teachers who are willing to give back to low income communities. They completely botched that program. This is the company that was tasked with implementing the Public Service Loan Forgiveness Program, which has a 98% denial rate. And so I think the first thing that's important is I think that this is good news. I think it's good news when a company that has caused so much pain and misery announces that it's getting out of the game. But I think the first thing people hopefully take away from this is this is hopefully a really positive step. I think the second thing for the 8 million plus borrowers who have this company is, you know, I hate to say this because people are busy and people are struggling is to just be really, really vigilant when it comes to your student loans. And a couple pieces of advice we've been giving is first and foremost, get on the company website, make sure your contact information is updated again, but then also download everything you can that they provide easily in terms of your prior payment histories, when you made payments, as much as you can off the website, and then also to pick up the phone and call the company and demand your full loan file. Sometimes this will be more than what's available online. You might actually have to battle to get it. But it's worthwhile to get that stuff, store it, because we've just seen how sometimes when there's these big transfers from one student loan company to the next, you know, stuff gets lost, accounts get bungled, and borrowers are often worse off for it. And again, this comes back to, you know, the final complaint. If you are having a hard time getting answers or getting a runaround, file a complaint. File a complaint with the Department of Education Student Loan Ombudsman or the cfpb. If you haven't gotten answers in the past and are worried about what's going to happen when your loan gets transferred, file another complaint. Because we're in a situation now where borrowers just really need to protect themselves because of the decades long incompetence of this company.
- [26:11]
A
January 31, 2022 is when they're going to say, hey, no more, it's time to pay back these loans. So what do borrowers need to be doing between now and in January 31, 2022 when the pause is over?
- [26:23]
C
I'm, I'm petrified, to be honest with you. We've been trying to research this and we can't find any example where someone tried to turn on nearly 40 million accounts overnight.
- [26:37]
A
Yeah, it sounds like people need to advocate for themselves and really be aware of their situation instead of kind of being a la la land going, well, I don't want to deal with it. I don't even want to sign in and look at the A number. You're saying. No, you gotta sign in. You gotta be proactive to make sure that you're not getting screwed.
- [26:53]
C
Yeah, I mean, it's hard to say, right? Cause people are. People are busy and, you know, people have a thousand other things to worry about besides their student loan. So I always hate being the one to tell you, here's one more thing, but here's one more thing for you to worry about and take action on. But if you have a loan from fia, now's the time to try to protect yourself.
- [27:15]
A
With the Department of Education getting more involved in stopping the bad guys, I can see why Seth is cautiously optimistic about the future of the industry. In fact, as we record this episode, one of the Department of Education's largest student loan servicers just announced they are getting out of the federal lending game. What company, you ask Navient, you might know them as Sallie Mae's cousin. Navient just reached a deal to transfer 5 million federal student loan accounts to another company called Maximus. That's not a scary name at all. So basically, 5.6 million people were involuntarily matched with a new lender. Kinda like Tinder, but you were forced to swipe, right? And they're not exactly marriage material. While Navient will no longer be dealing with federal student loans, they're not going anywhere. They're just refocusing their efforts on the mega profitable private lending and refinancing of loans, all without the congressional oversight they've had to deal with all these years. Let me put it this way, the bad guys no longer have parental supervision. And let me tell you, that scares me because even when dad and mom were watching, they didn't seem to care one bit. These shady companies don't have your best interest at heart. And they do it all while collecting lots of interest. Seth Frotman and Josh Mitchell have done an amazing job exposing the shadiness of these companies. But it's not just journalists and student loan watchdogs calling out the industry anymore. Countless others are coming forward with their stories. Among those is Lynn Cybulsky, a former employee of Navient's call center. She shared her story with David DeCicco, director of the feature film documentary Borrowed How Student Loans Are Killing the American Dream. So let's just start off with who you are and what you do.
- [29:00]
E
My name is Lynn Cybolski. I am a former employee of Nadian's Call center and currently I do volunteer work as a student financial aid professional.
- [29:09]
A
Can you tell me a little bit about how you got into the student financial world?
- [29:15]
E
When I began at Sallie Mae, I was doing very basic work, processing, filling out documents. There was no phone contact. There was barely any personal contact. And I worked my way up to what was called the customer advocate unit. And that was the department that handled anything really serious that got sent to Sallie Mae. So, for example, if it was sent to the CEO, if it was sent to executive management, if it was sent from a congressman, if it had a legal aspect to it, I was part of the department that handled those inquiries. So when people find out that you work in financial aid and they give you that joke, oh, hey, can you wipe out my student loans? The answer is, in my former role at Sallie Mae, yes, I was in the department that could have done that. So I had a lot of access and a lot of experience with different departments. Fast forward to 2012. I started working in Navient's call center. I had never had any contact with the call center in my prior role as Sallie Mae. And so I thought it was going to be a really easy, straightforward job that I would understand the rules, that I would perform well. I didn't really have any concerns about what I was taking on. And the longer I was there, I started to notice red flags. And they were different red flags than the type that everyone sees with their employer. I mean, everyone has something that they don't agree with with their employer. These were different types of red flags. These were situations where people were being asked to lie. People were not being given the right information that they needed. And in general, there was just this oppressive environment that wasn't really allowing the representatives to do the job that they were being paid to do.
- [30:59]
A
Okay, so you're giving a little bit of history of how you got into it.
- [31:02]
B
Kind of run the whole gamut.
- [31:03]
F
I have your favorite part of whichever.
- [31:06]
A
Job, whichever role it was.
- [31:08]
E
I think my favorite role is actually working with the students who have gone into default, as sad as that sounds. Mainly because at that point, when they're reaching out for help, they are really in a position where they can learn. They're in a position where they can better understand what they were up against in the first place. Often people are. By the time they've defaulted on their loans, they've dug themselves so deep into this hole of it's my fault. And that's what they hear from others around them. It's your fault. You did this wrong. You have to dig yourself out yourself, you that it's really hard for them to reach out. When they reach out and we start to talk about, well, hey, maybe you should have gotten more help from your servicer. Look at your contract. You're supposed to be getting this assistance and you're not. Well, what was your experience with the school? Maybe you didn't get enough information there. How realistic is this amount of money? Did you have this conversation with your parents or were they just kind of MIA on this? And when you start to look at everything together, people realize that their chances of getting through this system with a realistic amount or a low amount of debt and graduating with a credential that they can use is really not as high as they think.
- [32:21]
A
When you started your job there, how soon did you start to kind of pick up on some of these red flags?
- [32:27]
E
It wasn't until we got down to the call center floor and started taking calls that I started seeing the red flags. Up until then, it was just like any other training program I had been put through when the company was known as Sallie Mae. It was when I got on the call floor I realized how impossible it was to have these conversations within a scope of 7 minutes or even 10 minutes or 20 minutes to compare. When I was working with students who had defaulted on their debt to rehabilitate them, those appointments were typically between 45 minutes and an hour. So big time differential. When we got on the floor and I was talking to my coworkers over lunch and over breakfast, we were all talking about, how are you doing? And how are you managing? And a few of my co workers said that they had started hanging up when it was approaching the call limit time. The borrowers had so many questions, and there was just no way to answer all of those questions in a way that was satisfactory and maintain the numbers that we were maintaining. And so they would be on their call and then they would just press a button and go, oops, I accidentally hung up. And then it would just count as a disconnected call. And they were able to stay within their time frame.
- [33:49]
A
Some crazy stuff that you're talking about. What was the thing that kind of like pushed you over the edge as.
- [33:54]
B
Far as just like, all right, cool, I'm done.
- [33:57]
E
I think between being asked to lie to the customer about the time frame, that just showed me that this was not a company that was going to be interested in the expertise I had to offer. It wasn't going to be interested in any sort of problems that I would try to fix. It wasn't going to support me or my colleagues. And that just told me right then and there that the company had changed. Whatever changes happened between Sallie Mae and Navient, one of them was that the company just wasn't concerned with putting experienced, capable people where they can perform best.
- [34:40]
A
It's nice to know that customer service still exists, unless you're a student loan servicing company. Lynn Cybulsky isn't the only one calling out the shadiness and corruption within the industry. Josh Mitchell did some exclusive interviews with former Sallie Mae CEOs, and what he heard was upsetting, to say the least. Well, I want to talk about Sallie Mae. You interviewed Ed Fox and Alord. Both ran Sallie Mae at a time, and each contributed to it becoming this financial juggernaut that we know it today. Did they have much remorse for what they contributed to? What kind of things were they telling you in these interviews?
- [35:18]
F
It's fascinating that you asked that, because I asked them that a few times, and each time their response was really interesting. I interviewed each for hours and hours and hours, and.
- [35:28]
C
They were so sort.
- [35:30]
F
Of proud and eager to talk about how quickly they enabled Sallie Mae to grow over the years and how they were running this as this, like, ruthless business to really make the student loan market more efficient, which was really just intended to boost their own profits. But throughout our conversations, each of them were like such. They hold colleges in such disdain. I mean, utter disdain. Like, without me even asking them to tell me their opinions about colleges, they each would just be like, you have no idea how inefficient these colleges are. And they are lying. You know, they basically said, these schools are lying to students. They're deceiving their students. Ed Fox ended up leaving Sallie Mae as CEO to go become the business dean at Dartmouth in 1990. And so he was speaking from his experience of being a dean at Dartmouth. They both came away with this opinion, this really disdainful view of higher education, which is that colleges are just really spending money left and right with little regard for the interests of students. And so toward the end of my conversations with them, with both of them, I said, look, I notice a certain irony here. Your company, under your leadership, was the chief enabler of these schools to raise their prices. Like, you guys were providing the money to the banks so that students could get the money to give to the schools. And no one profited more off of this system. I mean, aside from the schools themselves. No one profited more from the system than, like, your company and you. I Mean, Al lord made like $300 million in just like the first five or six years of the 2000s, mainly because of skyrocketing tuition that was enabled by this loose lending. And each of them, in their own way, got, I would say, a little defensive when I asked that question, particularly Al Lord. He eventually said, look, of course I knew when I was CEO that tuition was getting out of control. And I'm paraphrasing him here, but this is roughly what he said. He goes, look, of course I knew, but it wasn't my job to pay attention to these broader societal problems or even to the broader problems of higher education. He goes, we did not consider ourselves higher education industry. We considered ourselves a financial business. And my duty, my obligation was to my shareholders. I mean, he felt this really intense obligation to serve his shareholders. And he was a very big shareholder of Sallie Mae. I asked Ted Fox the same thing, and I said, so reflecting on your time, do you have any regrets? And he goes, to the extent that I ran Sallie Mae as a business, I have absolutely no regrets. I'm very proud of how I ran this business. And I go, okay, but like, I think you're holding back on me here because, because you've been such a big critic of this higher education industry and you know full well that Sallie Mae was a huge part of this industry. And he goes, well, you didn't ask me that. He goes, if you're going to put it that way, this program was one big up.
- [38:32]
A
One of the reasons so many borrowers are still saddled with their student loan debt is because the rising cost of college hasn't slowed down. And you would think with so many students attending college remotely in the last 18 months, that it wouldn't cost as much. I mean, you're not staying in the dorms, eating the food, attending the events, sitting in lecture halls, enjoying the landscaping, hanging out in the quad or watching the sports games. And students are not happy about paying the price tag without the in person benefits. Numerous colleges and universities across the country have faced dissatisfied students, even Ivy League schools. According to an article from Forbes magazine, a law student and two master's degree candidates attending Harvard filed a class action lawsuit against Harvard seeking a partial tuition refund after Harvard moved classes online during the coronavirus pandemic. The students who filed that lawsuit claimed that it was unfair for Harvard to charge students full tuition for online classes because the online learning option Harvard offered is subpar in practically every aspect. Lack of facilities, lack of materials, lack of efficient classroom participation, and Lack of access to faculty. Students have been deprived of the opportunity for collaborative learning and in person dialogue, feedback and critique. The remote learning option is in no way equivalent to the in person education. End quote. That sounds like a pretty good argument to me. Well, it wasn't good enough. US District Judge Indira Talwani rejected the students claims stating that they had failed to show that Harvard had contractually promised they would receive in person instruction and access to on campus facilities during the spring 2020 semester. Even without the traditional experience, college costs are still going up. The average tuition and fees at private ranked colleges has climbed by about 1% for the 2021-2022 school year according to a a U.S. news annual survey. On top of that, the average price for both in state and out of state tuition and fees at Rank public schools has increased by around 1 to 2%. While focusing on the issues within the industry is important, it's crucial to remember that there are real people hurting on the other end of this mess. People like Dr. Justin McDaniel. He's an orthodontist near Jacksonville, Florida and he shared his heartbreaking story with David DeCicco, director of the Borrowed Future documentary. So growing up, what did you want.
- [40:58]
B
To be when you were getting older? From a pretty early age, I knew I wanted to be an orthodontist. When I was 10, I got hit in the mouth of the golf ball, broke my two front teeth and unfortunately I was the one that hit the golf ball. It came back and hit me right in the mouth. So, you know, I was kind of in and out of the dentist's office as a kid getting my teeth fixed. And it was just really interesting to me what they could do. So you go through the fellowship, that's a year long program and then you get accepted.
- [41:31]
F
You go through the four years.
- [41:32]
B
How much did you have in student loan debt? Yeah, so I think when I finished dental school I had probably somewhere around 400,000 in student loans. How much private school? What kind of tuition were you looking at? Yeah, so once I was in residency, the tuition was $95,000 a year. That number scare you at all? I mean, at that point I didn't have any other options. It was either you're not going to be an orthodontist or this is what you're going to do. I mean, I think it's ridiculous. Once you actually start looking at the numbers and running them out, it's tough. And I actually didn't do that until my loans were just shy of a million dollars. How do you Feel about that number. It's one thing to come out of residency and you know, I have $700,000 worth of debt or a million dollars worth of debt where there are options to come out of residency. And you actually got paid to work there. So yeah, I mean, it was scary, but at that point you're just like, whatever, man. I mean by that time I probably had, with all the interest and everything that I already had on my loans, I probably had 500 or $600,000. I'm like, sure, just throw it on there. When you graduated, what was the final.
- [42:51]
A
Account of debt that you had in two loans?
- [42:53]
B
Yeah, so I think once I graduated and looked at my student loans, I think I was somewhere around $980,000. But then every month it's going up $6,000. I could pay $10,000 thousand dollars a month and 6,000 of that's going to interest, have 4,000 going to principal, you know, I mean, how many years is that going to take you to pay off a million dollars? You got a lot of years ahead of you paying that. It's like what should have been one of the happiest times of my life. It's like, all right, well it's time to get to work. Like you don't get to enjoy it at this point. I mean, I enjoy every day working, but you know, I mean, I work 12 hour days right now, eight to eight. When you have this kind of debt or really any debt, like you, you feel that like it changes who you are and how you can behave. It changes your life. I mean, it prevents you from doing things. And here I am, 36, started my own practice, getting married, and then I have a million dollars in student loans. Can't go buy a house, can't go on a nice honeymoon with my wife. I got a million dollars in student loans.
- [44:18]
A
It's sad to hear stories like Justin's. Even with 45 million Americans burdened under the suffocating weight of student loans, many high schoolers are still unaware the cost of college and how they're gonna pay for it.
- [44:32]
B
Of course, growing up, your parents always.
- [44:33]
C
Tell you, you can do anything you want to do.
- [44:34]
B
You can do anything you put your mind to.
- [44:36]
F
Da da da.
- [44:36]
B
If you work hard in high school and you keep these good grades and you take these classes, you can go.
- [44:40]
C
Anywhere you want to go.
- [44:41]
B
Well, they don't tell you that there's.
- [44:43]
C
$180,000 price tag attached to it.
- [44:46]
A
Does the cost of school.
- [44:48]
C
Do you really look at that?
- [44:50]
A
Do you care about the Cost of school.
- [44:51]
E
Yes.
- [44:53]
A
You're listening to a conversation that financial expert Anthony o' Neill had with high school students featured in the Borrowed future document. All of the high schoolers that he talked to had high hopes for their futures. But with those hopes come doubts and fears.
- [45:09]
C
I think my biggest fear is finances. I think because life is expensive, every aspect of it, especially college. And that's definitely a huge piece of my future is college and, and trying to figure out the financial support behind.
- [45:29]
B
That is my biggest stressor right now.
- [45:33]
A
My thing is whenever you want to.
- [45:35]
C
Do something, you got to take the.
- [45:37]
A
Good and the bad with it.
- [45:38]
F
Yeah.
- [45:38]
C
So like my thing is if you want to be real successful, you might.
- [45:42]
A
Have to take on the debt, but you gonna work hard to get out of that debt. Yeah.
- [45:47]
G
And in life, like everything sucks. Everything has like a backdrop, Everything has a trade off. You're never gonna get the good, only you're just choosing what sucks less.
- [45:58]
A
That's true.
- [45:59]
C
Why is Duke your dream school?
- [46:01]
A
I've been to the campus.
- [46:03]
B
Duke.
- [46:03]
C
How much is Duke gonna run you yearly?
- [46:06]
A
About 75. Ooh my Lord. But I like, I like NCAT and that's a little cheaper.
- [46:13]
D
NCAT?
- [46:14]
B
A&T.
- [46:14]
A
McClant. Yeah. HBCU.
- [46:17]
D
Uh huh.
- [46:18]
A
What they gonna run? Around 20,000. That's a big drop.
- [46:26]
B
It's undergrad, so I'm still thinking about 50. Yeah.
- [46:31]
C
So why are you. Why is your number one choice Duke at $75,000, that's 300 grand.
- [46:39]
A
Yeah. No.
- [46:40]
C
For a degree.
- [46:41]
F
Yeah.
- [46:42]
A
We're in a society today where you can't just not go to college or like. Well, you can, but it can be a little rough.
- [46:50]
G
Like if it's just me, like I don't care, like I'll take the blow. But if it's like affecting my parents, like, no, like I will never, like, I will never like be that selfish. But like, if it's like me, like if I gotta deal with it, like give it to me, you know?
- [47:03]
A
So you would hold that burden for the rest of your life, paying off student loan hundreds and hundreds of dollars.
- [47:09]
F
Yeah.
- [47:09]
G
Like when you want something really bad, you gotta take all of it.
- [47:12]
A
My mom tells me all the time to do what makes me happy. If that means I wanna do underwater basket weaving, she'll support me 100%. But then I also have my dad, he tells me, look, you have to pick something. It has to be something that's high paying because you have to feed yourself, you know.
- [47:30]
G
But then like if you gonna go to somewhere, like in a specific area or. Or who has a type of prestige status, then yeah, you cannot buy that anywhere else. It's just how bad you want it and how serious you. Or it depends really. Because if you know you can make it work at a different school, do that. If you think that's your dream school, then you're gonna have to take some blows to get where you want to go.
- [47:54]
A
So most students are willing to do whatever it takes to attend their dream school and hopefully land their dream school career, regardless of how much debt it takes. It's a cultural norm, but normal has left 45 million Americans broke, hoping and waiting for relief and answers from a government that is clearly slow to deliver on that promise. At the end of our series, in episode eight, I shared that you can't wait for anyone, especially the government, to get you out of debt. That's up to you whether or not you understood the terms and conditions as an 18 year old when you signed or clicked for the free money. You can't keep waiting to take control of your life. You are in control of your future. You can begin a new chapter in your story, one in which you crush your student loan debt. And it won't be easy, but I know it'll be worth it. One of the most memorable stories we shared in the Borrowed Future series was from Josiah Poletta. He's the teacher who has $125,000 in debt and whose financial situation held him back from having kids, buying a house, and living the life he and his wife Courtney dreamed of. I checked back in with him two years later to find out how they're doing. Josiah, man, it's great to have you in person.
- [49:06]
D
It's great to be here. It's been awesome.
- [49:08]
A
Well, we're glad to have you. So it's been over two years since we talked. I spoke to you, I believe July 31, 2019 sounds probably right.
- [49:18]
D
That's crazy. Two years ago. Remember all that stuff that we talked about back then?
- [49:22]
B
Yeah.
- [49:23]
A
Yeah. Your story in Borrowed Future was just so memorable. The biggest moment I remember is when we did the math on your student loans and you told me how much you were paying a month and your interest rate. And I was like, let's see what that amounts to after 30 years. And your $120,000 loan was going to be $200,000 in payments if you just did it the normal way.
- [49:44]
F
Right.
- [49:45]
D
And I remember that being a moment that, like, even more so than what I already was, I already knew we needed to get out of debt and we had A mindset. And we were like, hey, we got to do this. And then doing the math adds a whole nother. Like, we need to get our butt in gear. We need to get going. So. So that was a good extra motivation right there to get going. You don't got time to waste.
- [50:06]
A
And you can't see it because it was audio, but on the video, I could see you sink your head into your hands in just utter disappointment and anger.
- [50:17]
D
And anytime you talk about student loans, except when you're paying them off, if you're talking about a student loan, that's kind of the initial reaction. I feel like a lot of America has that has student loans. It's. I can't believe everything that I just kind of got myself into. And they sink their heads a little bit. And the problem. Problem is sometimes it's just people just pay it along and it's a normal debt. Sometimes it's, we got to take care of this thing. And so I'm glad that we're in the take care of this thing. And hopefully a lot of other people start to get behind that motion and movement, too.
- [50:49]
A
Yeah. In those two years, a lot of people, you know, we've had over a million people listen to the podcast and great feedback of people wanting to avoid student loans. But in the actual grand scheme of the crisis, it's only really gotten worse. Right. We had some good things happen with the pausing, but that's not really fixing any problems as we turn this thing back on real soon. And everyone has to start making payments again.
- [51:11]
D
Absolutely. I mean, the thing that some people don't realize now is that you can still make payments. Like you're, You're. You're allowed to.
- [51:19]
B
It.
- [51:20]
D
It's not forbidden to, like, hey, we're on a pause, so no interest. Like, you're still allowed to make payments. We've been through some lower patches right now, obviously with, with pandemic and medical issues with our son and. But we're still making payments. We're not sitting back and waiting for, oh, it's. It's time to start again. Like, if anything, I'm just taking off interest right now. And so when that stuff kicks back in, it's a lower amount. The interest is going to collect. You attack it slowly and steadily, and you're going to be in a way better place. And four or five months from now, when it starts.
- [51:54]
A
Yeah. And you've been paying on these loans since 2015, and you had taken out 120,000. And when we talked, you said, hey, I'm barely making a dent in this thing because of the interest and minimum payments. So where are you at now from 2019? $120,000. What's the balance today?
- [52:11]
D
So after we had some other credit card issues and in a car too. And so $120,000. At this point we're actually down to 78, 000. I paid off all my credit cards. My wife is student loan debt free. My wife's car is paid off. And so we've actually paid off in terms of 156, 000 total. And now we're down to 98, 000.
- [52:35]
B
Wow.
- [52:36]
D
So a lot of those weren't necessarily student loans, but it was getting the process moving to get to the student loans and it's full focus right towards those loans that are left. So. So it's been a big mark that we've started moving towards and it's something that anybody can do. It's just, are you going to start doing it?
- [52:55]
A
So when we talked last, I got some quotes here. You were talking about the things that student loans have stopped you from doing and it stopped you from getting into a house. You said you were living in a tiny, tiny house. You said it was stopping you guys from starting a family. And quote, we don't want to bring a child up in this basically poverty stricken home. Things have changed for you. What's happened since then?
- [53:19]
D
Yeah, things have absolutely changed. Same small house. Same small house. My wife is not exactly fond of that house. But we've also decided that once we started paying off some bills, we decided maybe it's time to try to start having a family. And so we had a son and son's name is Matthias. And the hardest part that we've had with having a son was that we do feel at times like we can't buy him the things that we think he wants or that we think he needs. But we have great family that helps out with that. We haven't bought a whole lot of toys, but that's because our family is so on board with knowing what we're doing. But starting a family and how we've had to do it, like worrying about money, it's not something you want to do. You don't want to think like, can I supply and can I give this child everything he needs and everything he should ever want? Because that's what you want as a parent. You want to give them what it is that they want. Everything that they strive for. He's been great through it all. He's been great with making us feel like we're doing everything we can for him. And he. The love that you feel from a child, like, when they're happy, they're smiling and they just run to you like something. I never thought that I would get choked up over that thought, like. And it's just been a blessing. And now we realize even more how important it is to get out of debt, how important it is to take care of these student loans. Because I'm not trying to change my life anymore, per se. I'm trying to change my. My son's life. I'm trying to create a generational wealth part here where I'm trying to get him into a great situation where I can pay for his college if he decides to go to college and he can start doing the same for his kids and onward and on forth. And they keep going and going. And so I. I know now even more I have other people I'm doing this for. It's not just a personal issue anymore. It's a familial issue.
- [55:20]
A
I'm so happy for you guys. So what kind of sacrifices have you made and are making to get rid of these loans as fast as possible?
- [55:29]
D
The hardest part in terms of sacrifice that I feel like I made is time away from Courtney and now our son. I go donate plasma twice a week in the town nearby. It's about 30 minutes away twice a week for the last two and a half years. I drive there usually on Mondays and Thursdays, and donate, make anywhere between $20 to $100, sit there for a couple hours, let them take the plasma and drive back. So after having football practice ending at 6, get there, it's 6:45, 7. That process goes. Sometimes I'm not getting home till 9:15, 9:30. So son's already in bed, wife's already in the couch ready to go to bed. And I'm just now getting home. And so that's hard to accept, but at the same time, I realize if I'm not doing that, we're losing out on three to four hundred dollars a month. That's not quite taking care of rent. But that makes a big dent on that covers almost all those student loans that we now have. So not doing that is actually being a detriment to the family. So it's really tough when you get home and you're just kind of there thinking, like, I wonder what I missed today? And so that's the biggest struggle.
- [56:46]
A
So you're paying a few extra hundred dollars on that student loan payment every month to Try to knock it out.
- [56:50]
D
Early, correct our student. So when we talked back in July, it was we're probably looking at $50 to $100 extra dollars to put on a bill at the end of each month. Now we are up to 1,500, sometimes $2,000 technically free. That is not being paid on a bill. But now you put it back on a bill so that you can get that rid and get that out of your life even sooner.
- [57:12]
A
That's awesome. So you guys have come a long way. I'm just so honored to sit down and talk with you about your story and where you guys have been and where you're going. What are you excited about for the future?
- [57:22]
D
I'm excited to get student loans paid off and get them out of our lives forever. I'm a teacher, wife runs a daycare. We're not money making individuals. Like we don't just rake in this crazy amount of money. We make roughly 45 to $50,000 a year combined. Like we're not getting this huge shovel to get stuff out of, but we do it. You make it work. It's not as complicated it seems. It seems like it's a big hill to climb, but once you start going, it's there. And so the fact is just getting down and doing it and that's what we're going to keep doing. We're going to keep grinding away. My wife's pregnant right now with our second son. So we've been saving up a little bit of money for any, anything that needs to happen there medical wise. But as soon as we hit that, that mark that we need, we're getting right on it. Get ready to pay it off, create generational wealth and live life like no one else.
- [58:19]
A
Man, that's so awesome. I'm super pumped for you guys and I do love that part of your story because a lot of people listen or they want watch and they go, yeah, but that's not me. I don't make $100,000. So how am I going to pay off this debt? And you guys are such an inspirational story because you're proving it's not about income. It's about what sacrifice you're willing to make to get rid of this debt. And you have a large debt number even comparatively to the income. And so I think you've got such an inspiring story to help other people realize that it's possible for them.
- [58:47]
D
Well, I appreciate that.
- [58:49]
A
Talk to the audience for a second here for the people. People who maybe where you were a few years ago, where you just kind of felt dejected, felt like this is a mountain that's too big to climb. What do you say to those people now, being where you are today about their debt and about their student loans?
- [59:07]
D
Think of the life you're going to be able to have once that debt is gone. Think of all the experiences you can have and that, oh, I can't afford that trip now, but I'll go on this trip instead. You're just delaying the problem. You're delaying it. So when you hit that wall, what's going to define you is what you do. Do you fall and complain about it and say, who put that wall there? Or are you going to try to go full speed, blast through that wall and anything else that comes afterward. Having that mindset is going to get you above and beyond and take you past those hard times and take you past that middle ground where you're starting to feel comfortable and it's going to get you to that end goal. Arms raised above your head and ready to take on the world and realizing that you can do that debt free scream and that you're ready to take on the world and that you can do anything right now.
- [59:57]
A
It's hard to not be inspired after hearing Josiah's story. And if you want to see his story, we featured him and his wife in our new feature film documentary, Borrowed Future. So it's two years later and what have we learned? Well, nothing much has changed. A lot of promises were made that haven't been fulfilled. The industry hasn't changed its ways and is still filled with companies who profit off of students getting into debt. And 45 million Americans are still struggling under the weight of loans. The payments were paused, but they're still here waiting to be paid. You can kick the can down the road, but eventually you're still stuck kicking cans. Instead of living your life, you owe it to yourself to get out of debt so you can live your future life on your terms, not chained to the shackles of student loan debt. And we owe it to our kids to teach a different message. Take debt off the table. You and I have been on a journey with this podcast series and we just released a brand new documentary feature film called Borrowed How Student Loans are Killing the American Dream. In this documentary, you'll see inspiring stories of students who graduated debt free. You'll hear more in depth conversations with people like Josiah Pauletta and Justin McDaniel, and you can find out if those high schoolers ended up taking out student loans to go to college. Of course, we also feature experts like Seth Frotman and a whole bunch of others who help us uncover the dark side of the student loan industry. Borrowed Future is available now and we hope that it will empower you and your kids to go to college debt free and teach our students they do have a choice when it comes to their education and and their future. Watch our new documentary, Borrowed How Student Loans Are Killing the American Dream on Amazon Prime Video, Apple TV or Google Play. You've been listening to Borrowed Future. If you like what you've heard, do us a favor and rate us on Apple Podcasts. You can find more information@borrowedfuture.com or on your favorite podcast app. You can also tell us about your student loan experience by emailing story borrowedfuture.com Our show is produced by Chris Wright, Eric Cieslevich, David DeCicco, Eva Daniel, Kevin Weimer and associate produced by Amanda Rogers. Music has been curated by James Childs. Will Rutter is our engineer. Special thanks to Andy Barton, Chris Dean and Tom Booker for research and writing help. Blake Thompson is our Executive Producer. I'm George Camel and remember Student Loan Debt is a lot like the movie Geely Tara in every way. To be safe, I would stay away from both.