Podcast Summary: How to Money – “Student Loan Chaos Explained w/ Stanley Tate” (#1094)
Date: January 28, 2026
Host: Joel of How to Money
Guest: Stanley Tate (Student Loan Attorney)
Overview
In this episode of "How to Money," Joel invites renowned student loan attorney Stanley Tate to demystify the complex and ever-changing world of student loans in the United States. The conversation focuses on the tumultuous policy landscape, major repayment changes, default consequences, the reality of bankruptcy discharge, and practical strategies for borrowers. Stanley brings a calm, clear-headed perspective to a topic fraught with fear, confusion, and misunderstood advice—encouraging listener empowerment over panic.
Key Discussion Points & Insights
The Current State of Student Loans (02:25)
- Whiplash for Borrowers: Stanley explains that since COVID (March 2020), federal student loan policies have rapidly shifted, with pauses, forgiveness programs, and subsequent rollbacks. Despite recent turbulence, he argues, “Actually, much is the same for you moving forward, broadly speaking.” (04:24)
- Forgiveness Programs: Despite dramatic headlines, core federal forgiveness programs remain—Public Service Loan Forgiveness (PSLF) and 20–25 year income-driven repayment (IDR) forgiveness.
Wage Garnishment & Political Calculations (04:37)
- Default and Consequence: Borrowers in default had three-plus years and multiple programs (Fresh Start, On-Ramp) to return to good standing; with notice of resumed wage garnishments, panic increased. (05:13)
- Paused Garnishment Notices: Stanley suspects the decision to pause garnishments is “a political calculation...this administration is struggling with affordability concerns. Taking people’s paychecks before the midterms would look bad.” (06:53)
Memorable Quote:
“Stopping wage garnishments isn’t a technology thing. It’s a bad look for affordability, especially before the midterms.”
— Stanley Tate (06:53)
The Myth of a “Broken System” (07:36)
- On ‘System Fixes’: Stanley believes the term “broken student loan system” is more about political posturing than technical barriers, saying, “We built a very complex product that has needed tweaks...is cracked under its own weight.” (08:20)
Steps for Borrowers in Default (09:19)
- Stanley’s advice: Don’t avoid the issue. Check your loans on studentaid.gov, see if you can afford payments to get out of default. If not, calculate your options: can you manage wage garnishment? If that’s not viable, consider bankruptcy.
Memorable Quote:
“If you run all the analysis and you can’t afford to get out of default or even garnishment, then it’s a tougher conversation—maybe bankruptcy is a workable solution.”
— Stanley Tate (10:55)
Discharging Student Loans in Bankruptcy (11:02)
- What’s Changed: The law remains largely the same; student loans can be discharged for “undue hardship.” The Biden administration’s new attestation process, however, has resulted in a much higher success rate for qualifying borrowers (87% per NYT report).
- Who Qualifies: Not just for the destitute—factors include age, duration in default, and income-to-debt ratio. “If you just graduated and file bankruptcy a year later, that’s not going to cut it. But if you’re in your late 60s, fixed income, had your loans for 20 years…that’s a good candidate.” (14:00–15:00)
- DIY or Hire Help? Stanley likens it to building a backyard fence: it’s possible to do yourself, but mistakes can be costly. (16:02)
Repayment Plans: SAVE, RAP, and Strategic Choices (18:12)
- SAVE Plan Ending, RAP Coming: With the SAVE plan being phased out and the new RAP (Repayment Assistance Plan) upcoming, borrowers should run the numbers with existing plans (IBR, PAYE, etc.).
- RAP Plan Innovations: Principal reduction feature ($50/month), but with a 30-year forgiveness timeline instead of 20-25 years. “That five extra years could be really costly...not just financially, but emotionally.” (21:40)
- Strategic Advice: For most, the lowest payment isn’t always best. Assess income-to-debt ratio—if it’s above 1.25:1, forgiveness may be more realistic than repayment. (25:53)
Memorable Quote:
“You can’t really ride two horses at the same time—the lowest payment and pay it off fast. If you need a lower payment, you’re really on a forgiveness path.”
— Stanley Tate (33:58)
Borrowing Caps and the Future of Private Loans (27:10)
- New Federal Caps: Designed to limit taxpayer risk but may create new issues for those already mid-way in education funding.
- Private Loans’ “Resurgence”: Caps may force more borrowers to turn to private loans—good for lenders, often perilous for borrowers. Expect subprime rates to soar in coming years (29:05–29:53).
Memorable Quote:
“Private student loan lobbyists got their money over the last couple years.”
— Stanley Tate (28:59)
Emotional Drivers in Loan Decisions (24:29)
- Stanley notes many parents borrow against reason out of emotion—wanting to give each child the same opportunity—often to their own long-term detriment. (24:29–25:27)
Misinformation & Social Media (37:13)
- TikTok and Instagram are rife with “forgiveness loophole” myths. Stanley clarifies: “There are literally four main paths toward relief...there aren’t any loopholes.” (37:20)
- Annual assessment is key: “Am I on a forgiveness path or a pay-it-off path?”
The Future of the Education Department (38:37)
- Despite rumors of its demise, the Department is still processing loans, though weakened. Future transfers of loan oversight to the Treasury or SBA are possible but not imminent. Service quality may degrade, but borrower obligations remain unchanged. (38:47)
Stanley’s Parting Wisdom (40:15)
- Live your life first: Stanley urges borrowers not to sacrifice relationships or opportunities out of fear. “Live your best freaking life possible despite student loans. We will find a way to tackle them—but don’t let them rule your life.” (40:19–41:28)
Memorable Quote:
“I see far too many people stop living life because the thought of this debt hanging around forever freaks them out...live your best freaking life possible despite student loans.”
— Stanley Tate (40:19, edited for podcast-appropriate language)
Timestamps for Key Segments
- [02:25] – Current state of student loans: macro perspective
- [04:37] – Default & wage garnishment: what’s really going on
- [09:19] – Steps for borrowers in default
- [11:02] – Discharging student loans in bankruptcy: new realities
- [18:12] – Changes to repayment plans: SAVE ending, RAP upcoming
- [21:40] – RAP plan details and pros/cons
- [24:29] – Emotional, not just financial, drivers of loan decisions
- [25:53] – Strategy: Pay it off vs. forgiveness path
- [27:10] – New lifetime borrowing cap: impact and tradeoffs
- [29:05] – Private student loan resurgence—risks and hard truths
- [33:58] – Misinformation and the “two horses” mistake
- [38:47] – Status and future of the Education Department
- [40:15] – Stanley’s parting advice: live your life, not your debt
Tone & Style Notes
- Stanley Tate is practical, direct, and empathetic, offering neither false hope nor fatalism.
- He leverages humor and vivid analogies (DIY fence, etc.) to demystify complexity.
- Overarching message: Know your numbers, pick a strategy, avoid emotional traps, and don’t fall for social-media “hacks.”
Concluding Takeaways
- Pick a student loan strategy that fits your real life, reevaluate yearly, and don’t let fear or misinformation drive your financial choices.
- Don’t let loans dictate your happiness or prevent you from pursuing life’s milestones.
- The system remains complicated and volatile, but credible guidance and careful planning can help you navigate it.
Links:
For anyone facing student loan decisions, this episode delivers both clarification and calm—amidst the ‘chaos’.