Student Loan Shakeup w/ Travis Hornsby #977

Summary

Podcast Summary: How to Money – Episode #977: "Student Loan Shakeup" with Travis Hornsby

Release Date: April 30, 2025

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Introduction

In episode #977 of "How to Money", hosts Joel and Matt delve into the pressing issue of student loans amidst recent policy changes. Joined by Travis Hornsby, the founder and CEO of Student Loan Planner, the discussion centers on the imminent student loan repayment mandates, the political dynamics influencing these changes, and practical strategies for borrowers navigating this financial upheaval.

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The Current Student Loan Landscape

Travis Hornsby sets the stage by highlighting the impending shift in student loan repayment plans. With the US Education Secretary signaling that borrowers with federal loans must commence repayments by May 5th, nearly 2 million borrowers face transitioning into repayment plans, with collections resuming for loans in default.

Notable Quote:

“Student loans are pressing, but they don't have to be depressing. Right? And so for how to Money listeners, it doesn't have to be that way.”
— Travis Hornsby ([03:18])

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Political Shifts and Their Impact

The conversation explores how student loan policies have transitioned from bipartisan concerns to predominantly partisan issues. Travis explains that historically nonpartisan, student loans have become a Democratic stronghold, especially with the Biden administration's Save Plan, which offered more generous repayment terms to garner progressive support.

Notable Quote:

“Student loan forgiveness is not dead. It's just not going to be offered on steroids anymore.”
— Travis Hornsby ([07:32])

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Potential Defaults and Economic Consequences

Travis projects that 10 to 15 million borrowers might default once repayment resumes, exacerbating economic strain through wage garnishments and tax refund intercepts. He underscores the severity of the situation by comparing it to pre-COVID default rates, suggesting a substantial increase in financial distress for borrowers.

Notable Quote:

“That could be 10 to 15 million people that will end up in default, which will be really, really bad.”
— Travis Hornsby ([09:40])

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Practical Strategies for Borrowers

Travis offers actionable advice for borrowers:

1. Understand Eligibility: Differentiate between what is mandated by law versus executive actions.
2. Income-Driven Repayment Plans: Utilize plans that cap payments based on income, potentially lowering monthly obligations.
3. Tax Filing Status: For married couples, filing separately can significantly reduce repayment amounts by excluding spousal income.
4. Early Recertification: Borrowers experiencing temporary income drops (e.g., maternity leave) should recertify their income to adjust payments accordingly.

Notable Quotes:

“If you have less debt than what you earned every year, you probably need to pay it back.”
— Travis Hornsby ([21:18])

“You might as well give them less by voluntarily turning it over instead of involuntarily turning over and also wrecking your credit.”
— Travis Hornsby ([27:46])

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Bankruptcy and Loan Discharge

Addressing the possibility of discharging student loans through bankruptcy, Travis clarifies that it remains exceptionally challenging. He emphasizes that bankruptcy should not be relied upon as a primary strategy for managing federal student debt.

Notable Quote:

“Generally speaking, no. It's very difficult to get your student loans discharged in bankruptcy.”
— Travis Hornsby ([25:14])

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Refinancing and Future Considerations

Travis discusses the pros and cons of refinancing federal student loans into private loans. He advises borrowers to weigh the benefits of lower interest rates against the loss of federal protections, especially considering potential future policy shifts based on election outcomes.

Notable Quote:

“If you have 100,000 of income, you have 50,000 of student loans, what you could do is do a selective refinancing.”
— Travis Hornsby ([27:58])

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Impact on Higher Education Institutions

The episode shifts focus to how changes in student loan policies affect universities. Travis highlights that institutions with lucrative Parent PLUS Loan programs, especially those with prominent athletic programs, may face financial strain if loan limits are capped. This could lead to reduced funding for faculties, sports, and possibly the closure of regional schools unable to sustain operations without excessive borrowing.

Notable Quote:

“There's the dirty little secret in higher that a lot of the big name schools that have very popular football teams earn a lot of money from the Parent Plus loan program right now.”
— Travis Hornsby ([52:53])

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Political Implications and Future Legislation

Travis assesses the likelihood of upcoming legislative changes, noting that while the House may push through stringent modifications, the Senate's swing votes could temper these efforts. He remains cautiously optimistic that major reforms aiming to dismantle existing forgiveness programs face significant hurdles.

Notable Quote:

“It has to pass, not just the House but also the Senate. And if you look at the Senate, there are basically four Republican swing votes right now.”
— Travis Hornsby ([40:56])

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Conclusion and Key Takeaways

Joel and Matt wrap up the episode by summarizing vital strategies for borrowers:

• Recertify Income Regularly: Ensure that repayment plans accurately reflect current income to minimize payments.
• Evaluate Refinancing Options: Carefully consider the trade-offs between federal and private loan benefits.
• Stay Informed on Legislation: Monitor political developments to anticipate and prepare for policy changes.
• Seek Professional Advice: Utilize resources like Student Loan Planner for personalized assistance.

Notable Quote:

“If you have more debt than your income, you should go for forgiveness.”
— Travis Hornsby ([37:44])

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Additional Resources

Travis encourages listeners to visit studentloanplanner.com/howtomoney for personalized plans and discounts tailored for How to Money listeners. He also directs them to studentaid.gov/idr for managing income-driven repayment plans.

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Final Thoughts

This episode of "How to Money" provides a comprehensive analysis of the evolving student loan landscape, blending policy insights with practical financial strategies. Travis Hornsby's expertise offers listeners a beacon of clarity amidst the complexities of federal student debt management.

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Note: Timestamps correspond to the podcast transcript and highlight the timing of significant quotes and discussions.

Transcript

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[Travis Hornsby]

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[Matt]

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[Joel]

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[Travis Hornsby]

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[Joel]

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[Matt]

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[Travis Hornsby]

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[Matt]

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[Joel]

Welcome to how to Money. I'm Joel.

[Matt]

I'm Matt.

[Joel]

Today we're talking about the Student loan shakeup with Travis Horns.

[Matt]

Indeed, Joel. This is a more pressing, a more urgent interview episode, which we don't typically get to do because normally it's like a book tour and we're diving into the book. It's like, do we talk to him now or do we talk to him in like two months? Typically, it doesn't matter, but that is not the case. Giving our topic of conversation today because according to the new US Education Secretary, it is time for student borrowers with federal loans to begin making payments. The clock is ticking, and May 5th is the date that nearly 2 million borrowers are going to be moved into repayment plans and collections will begin for loans that are in default. This is a massive shakeup from what borrowers have experienced over the past five years, and luckily we're joined by founder and CEO of Student Loan planner Travis Hornsby to parse out all the details. And Travis is very qualified to talk about this. He has consulted on several billion dollars of student debt, which is mind boggling. He's a CFP. He's retired at the age of 25 before starting student Loan Planner. I don't even know if we'll have time to get to that. But he is the man to turn to in response to all of the latest student loan changes that we are about to experience. And so, Travis Hornsby, thank you so much for coming on how to Money.

[Travis Hornsby]

Absolutely. You know, student loans are pressing, but they don't have to be depressing. Right? And so for how to Money listeners, it doesn't have to be that way. So I'm excited about it today.

[Joel]

Glad you're here to bring the optimism, my friend. First question we got to ask you, we ask everybody, is what do you like to splurge on? And I know you're smart, being smart with your money. You retired at 25, you know what you're doing, but you still splurge every now and again. What is it that you're throwing big bucks at that most people might think is a little weird?

[Travis Hornsby]

So spiritually, I'm like a seven or eight year old boy, right? So I'm going to say telescopes and cargo electric bicycles. So those are my two. Right now I'm really into astronomy. I've got a group of astronomy bros and we hang out out on the weekends just like, you know, compete over who can get the best picture of Jupiter. And it's kind of, kind of funny. Listen to some people that there's like a group of like astronomy dads that just like hang out and look at the stars. But it's a great way to get perspective. Haha. You know, you see like, oh my gosh, this nebula is like, you know, a trillion miles away and you know, you know, like a billion Earths could fit inside it. And oh, maybe my problems aren't as bad. So I kind of really enjoy it for that reason. And then same kind of thing for bicycles. Like there's all these awesome electric bikes. I like cargo ones because I can throw my kids in them and strap them down and they're too young to bike on their own. And so it's just kind of a cool way that I can turn something that's a chore like dropping kids off at school and make it fun, right? So I get to take them to daycare and preschool and like the, the electric cargo bike and be one of those you know, cool Harley dads, except it's an electric bicycle.

[Joel]

That's at least how we envision ourselves. Travis. I don't know if it's. I don't know if that's how other people see us, but, oh, yeah, you.

[Travis Hornsby]

Know, definitely, I get some, like, oh, that guy. You know, I mean, I definitely. There's some definitely views like that. But you know what? I feel like a Harley dad. And, you know, another dad got one. So we're talking about getting leather, you know, jackets made, Right. We're going to make a biker gang, but it's like, you know, an electric cargo. Biker gang. Yeah. So it's, you know, it's definitely, you know, student loans. Right. You know, a weird person's attracted to doing them. So I'm just, you know, showing people my honest self.

[Joel]

All right, let's talk student loans. Let's get into it, because I'm curious, first off, Travis, to think about or to understand how you're thinking about the kind of whiplash effect of approaches towards student loans. The last administration, there was this incredibly generous spirit towards people who had student loans that seems to have evaporated. Now we're encountering, I don't know, almost maybe a hostile vibe. How do you think about that change and how should student loan borrowers be feeling?

[Travis Hornsby]

So, I mean, I've done this since the Obama administration, right. And so I've definitely seen a lot of different attitudes on student loans over time. I would say that what's kind of happened over time with the change in the political landscape is more and more educated voters have more drifted towards the Democratic Party in terms of higher education levels, predict more of a Democratic lean than it used to, especially if you think about the Republican Party during the Mitt Romney era in 2012. And so what's happened is student loans have sort of drifted from this kind of nonpartisan issue to being more of a partisan issue. Right. So if we think about, like, what happened during the Biden administration, Biden was, you know, sort of the choice of the Democratic Party because they didn't have an alternative they could coalesce around. Right. And President Biden wanted to unify the support of the progressive base. And so he viewed student loans as, like this very easy policy area to go big on and to try to go really big on to maintain that political support to run for that second term. Right. And in the first term of President Trump. You know, one thing that I would say for people that are just, like, really terrified about their student loans, really worried about what the administration is going to do is it's important to have the perspective of the fact that the Trump administration was the one that started the student loan pause and paused collections on student loans in the first place. Right. So there's definitely some, some negative things that are going to happen to some borrowers financially due to the new policies of the new administration. I don't want to minimize that, but I do want to say that everybody would need to have a very balanced view of what's going to happen with student loans in the next like few years. Right. So I would just say, like at a high level, student loan forgiveness is not dead. It's just not going to be offered on steroids anymore.

[Matt]

One of the changes that seems like it's going to take place is transitioning student loans, like towards the Small Business Administration. Looks like they're going to run that. It seems like a massive potential paperwork nightmare, I guess. What do you foresee being some of the problems with that transition?

[Travis Hornsby]

Well, I mean, they've fired half of the Department of Education. Right. And there's one person put it in a court deposition that there was six they left when they got fired. There was 16,000 borrower complaints that were in her queue that she had not answered yet.

[Joel]

Oh my gosh.

[Travis Hornsby]

So it's so basically just wasn't working.

[Joel]

Fast enough is what you're saying.

[Travis Hornsby]

Yeah, it's her fault. Right. So the thing is, so the new administration is sort of testing the boundaries to see what the courts will say is legal and what's not legal. Right. And the way I would interpret this is they're saying they're going to move it over to Small Business Administration. I am not convinced that they can do that. The Secretary of Education has mentioned a whole lot in the statute and they can say that they're going to move it over there. They can try to move it over there potentially with their big budget reconciliation bill. And maybe that's what they intend to do is try to pass it in Congress. Right. To make it legal. Or maybe they just plan to try to move it over there. Right. But what a borrower needs to be concerned about is what's happened since the Obama administration is presidents have in the inaction of Congress taken more and more of a policy making role in student loans by issuing executive actions. So a lot of the things that have happened this past several years have been the White House just making press releases about things they're just gonna do. Right. And what the Trump administration is doing is rolling back pretty much anything that the Biden administration did via executive action that's not written in the statute. So what means is if a borrower understands what kind of loans they have and what their guaranteed benefits are in the statute of the law, the borrower can make a plan for their future. And the confusion is coming from all these things that have been promised the executive action that don't have the safety of being a law. And borrowers just don't know how to plan. So that's a big part of what we're doing right now is educating borrowers around what are they guaranteed with in the law and what are they not guaranteed in the law. And then that can help somebody figure out, do I, should I pay these back? Like, when? Like, should I go for forgiveness? Like, what should I do?

[Joel]

I feel like the the most recent news was the op ed that was written by the Department of Education secretary. And it seemed like she issued kind of a clear line of demarcation. And that May 5th date stuck out in my mind as a really important one. What is the fallout going to be from, you know, based on her pronouncement, what she's said about the resumption of student loan payments. Like we've obviously had. Student loan payments are supposed to be being made right now, except for some folks who are in limbo on the safe plan. Right. I don't know. It gets all confusing to me, like, where are we at right now? Do people need to be paying and how worried should they be if they're not paying?

[Travis Hornsby]

So there's all kinds of complex issues going on with this, with different types of borrower populations. Right. So to craft this for your listeners, what would you guess would be the average balance of like, you know, and how to money listener would you guess? Like in terms of the size?

[Matt]

I'd say 12,000, doll.

[Joel]

I would say more than that because what the average student loan balance of the average American is upper 30s.

[Travis Hornsby]

Yeah. Which is like an undergrad balance.

[Matt]

Oh, yeah.

[Joel]

I would say maybe something close to that.

[Travis Hornsby]

I'm sure it's a range. Right. So I'm sure a lot of your listeners have 30K. And then I'm sure a lot of your listeners have a lot more than that. There's probably a long tail of people, right. That, oh, you know, high five figures, low six figures, even mid six figures. So what I would say is, you know, since the COVID pause and made in March 2020, the Department of Ed has essentially turned off the vast collections apparatus of student loans and caused no consequences to borrowers at all for not caring about them. And what does that mean? Like before the COVID pause, something like 13% of all borrowers were in default and a lot of borrowers were in forbearance, which was, you know, not as damaging as a default on their record, but still meant they weren't paying anything. And so if we think about 13% default rate, that roughly translates to about 5 million people that would be struggling to make payments at any given time, just at a baseline. And so your average person has 30,000 in student debt. Like they'd have to pay about 300amonth on average to pay their loans off completely. Right. And the Biden administration came out with a plan called the Save Plan that basically allowed most of those borrowers to pay maybe like zero to a hundred dollars a month. So it was making their payment far more affordable. Right. So a lot of those listeners have just either not had to worry about making payments because they just completely ignored them and they weren't having their credit scores dinged, or they were signing up for this save income based payment plan and they were paying a very low percent of their income, like 5% of your income, but only after you make the first 30 or 40,000. That's like kind of simplifying things a little bit. But in general that's what the formula was. And the courts are saying, hey, hold up, this Save Plan is not legal because Biden tried to cancel student debt, right? Tried to cancel 10 to 20,000 of all debt for all Americans. And the Supreme Court said, hey, no, no way, Jose. And then the response to that was, let's create an income driven plan that's so generous. It's basically kind of like the same thing.

[Joel]

It's like forgiveness light.

[Travis Hornsby]

Exactly. It was plan B, right. And so they came out with plan B and it was about to go into law in July 2024. And at the last second, a bunch of Republican led states sued and blocked it. And so Since June of 2024, about 8 or 9 million borrowers that did sign up for the Save Plan out of the 40 million or so total have been on ice and just frozen in place not knowing what they should do. So that's like 8 or 9 million people. So that's a lot of your listeners are going to be on the Save Plan for variance. They're going to know what that is. Right. And they have not been allowed to switch out of that, which is maddening. So they're saying we're turning on all collections in early May, but at the same token they fired half the staff and there's nobody to process these income driven repayment applications. And they're not allowing people that want to get out of this paused frozen payment situation to get onto something. So are those people going to be hurt negatively? I don't think so, by and large because Department of Ed knows that these people haven't been allowed out of this forbearance. And so those folks are going to have more time than early May. There are people though that have not made payments for years that have been in default like before COVID even, and they are going to start having their wages garnished, their benefits garnished and their tax refunds garnished. So probably the single biggest impact for folks who are more economically disadvantaged or vulnerable is going to be those tax refund intercepts. So that is not going to happen this year because most of those refunds have already gone out. But what often happens is people kind of really especially lower income Americans depend upon those, you know, two, three, $4,000 tax refunds to be able to pay their bills. Right. So next tax season when people go and file in like Febr March, we've had years worth of, you know, not collecting, you know, intercepts and wage garnishments and things like that. And that's going to get turned on in May. And so people will notice it right away. I mean, people that have not paid attention to their loans for years are going to start having their wages sapped at like 15% of income on average. So it's, it's definitely not going to be good. But I would say that. And there's a baseline of 13% of people being in default even before COVID Right. So the measuring, how bad will it be? I think, you know, you probably need to look at like that baseline to say, you know, if it's 5 million people, that's kind of a normal environment for student loan default collections. And if it's way more than that, which actually I think it will be way more than that once all of the protections end because you do have people who are not certified on a current income for their tax returns and people that are in this, 8 million people that are in this forbearance, it's not actually a default yet, but it will be when they have to get told to go get on a payment plan. So it could be, I think it could be 10 to 15 million people that will end up in default, which will be really, really bad.

[Matt]

We're kind of transitioning from talking about the policy to kind Of, I guess, practical steps that folks can take. And when folks aren't able to make these payments, I mean, they're going to see damage done to, let's say, their credit score. Do you have any recommendations for folks when it comes to just practical steps that they can take when they aren't able to afford making these payments as they do resume?

[Travis Hornsby]

Absolutely. So, I mean, I think the first thing is to figure out what are you eligible for. Remember I said what is in the statute versus what's in executive action? So are you a new borrower as of July 2014? In other words, did you have an existing student loan balance, you know, on July 2014 or before? And if you did, the thing you're eligible for in the law is something called old income based repayment. That's 15% of your income and you get 150% of the poverty line to earn money on before they take that 15%. So for most people, that's about 20 grand. For a family of one, for a family, you know, of four, maybe it's more like 40 grand. And so they let you earn that much first before they take 15%, but everything above that, they're going to take 15%. And within that there's ways that you can pay less. Right. So if you're a married borrower and you are the only person on your household with loans, a lot of people are going to need to look at changing how they file their taxes. So people tend to file their taxes joint because that's just the default that most married couples do. A lot of married couples could switch to married filing separate instead, and they could drastically lower their student loan payments because then it's 15% of just their income instead of everybody's income.

[Joel]

Wasn't that a blip though, too, like a week or two ago where there was, there was something issued about Mary filing jointly. And hey, if you file separately, we're still going to treat you the same way. But then they had to redact that.

[Travis Hornsby]

Yes. So the I, along with some other people brought this to the attention publicly of a lot of people urgently because it was a major, major deal. If they were going to interpret things this way. The reason is, is if you know what the statute Sundays, which after 10 years of doing this, we do. It says in the law that married borrowers do have the right to file separate and exclude their spousal income. So it's in the law, it's not an executive action. But when the acting undersecretary of Education made this pronouncement in a reply to a lawsuit. It came out of nowhere because in the same reply they affirmed something called the PS Left buyback program, which is a Biden era program that's kind of generous to borrowers. So it made no sense that they're ignoring, you know, a major part of the student loan statutes while also affirming something that's an executive action. So I raised that issue on X and other places and said, what gives here, right? And it turns out, guys, that they just literally made an honest mistake. Which is, which is, which is. And the reason why we know this is because within literally two or three days they came out with a corrective statement saying, what we meant to say was that we will include your spouse and your family size no matter how you file your taxes, not that we would include your spouse's income in your payment calculation, regardless of how you file your taxes. So that's actually a positive for borrowers because instead of a deduction based on a poverty line of three, if you're married with two kids, now you get a deduction based on a family size of four. And you know, the Biden administration had actually changed the rules in a negative way to exclude your spouse from your family size if you filed separately.

[Matt]

So it's like an additional child tax credit.

[Travis Hornsby]

It is. And the reason is because that's how the regs were pre Covid and that's because the court struck down or you know, is put on ice the, the save plan rule. That income based plan that Biden did, he also put in a ton of changes to regulations around IDR plans. And the courts don't want to fool with figuring out what they're going to pause and not pause, so they just pause the whole thing. And in some kind of hilarious ways, it's actually positive benefit to some borrowers because some of those rules from pre Covid were actually better than the ones the Biden administration came out with.

[Joel]

Interesting.

[Travis Hornsby]

So, so, you know, so, so the thing is, is like the ability to file separate is affirmed, actually, which is great news. And most borrowers that listen to this, especially if they're younger, will have taken out their first student loan as of July 2014 or after. And what that means is you actually qualify to pay 10% of your income instead of 15. And if you're in the private sector, it's 20 years till forgiveness instead of 25. And that's written into the statute. So might we see some major legislation come out of Congress soon from the House Republicans and Senate Republicans that might Try to modify some of that. It is possible, but it's also likely that they would grandfather in existing borrowers under current law. And even if they did make changes, those changes would probably be temporary in nature because of the legislative maneuver they're going to have to use to pass their bill with the limited majorities they have. So I would say this, here's a quick way that a borrower can get a handle on their situation. If you have less debt than what you earned every year, you probably need to pay it back. And there's a lot of flexibility you have in terms of how much you can pay. You can get on an extended or graduated plan. If you can't afford to pay the standard plan, you can consolidate your loans with the government and put them on a longer term repayment plan, you know, amortization schedule. But you probably do need to pay it back. If you have two times what you earn every year or more, so you have debt that's twice your income or more, you need to go for forgiveness. The only question is how? And you can optimize that and do a better job of paying a lot less. And if you're somewhere in between, if you're one to two times debt of what you make every year, then the answer to what should you do with your loans is it depends. And you need to kind of have a careful analysis of, you know, what are your goals, what are your dreams, you know, what are you, what are you willing to do, you know, in terms of sacrifices to make to pay off loans versus not pay off loans. And you can still do a bunch of stuff to lower your payments. So most people's payments are not as low as they qualify for because they're not taking advantage of all the loopholes that exist.

[Matt]

Sure, yeah. And being able to take advantage of those loopholes depends on understanding and knowing what the law is. And like you pointed out, it seems like there are more mistakes that are being made these days where stuff's just kind of getting tossed out there. But I don't know, at least there was a corrective statement.

[Travis Hornsby]

Yeah. Positive glass half full, right?

[Matt]

Yeah, yeah. Little silver lining to the shake up. And I love how you're getting to more of these practical tips and pieces of advice. Travis, we're going to get some more of that, including whether, just, I guess the likelihood of whether someone should even consider discharging student loans through something like bankruptcy, how that's changed. We'll get to that and more right after this. This episode is brought to you by Navy Federal credit union. They know just how fast your life moves. You have bills to pay, mouths to feed and not a lot of free time. That's why they created an all in one banking experience that lets you keep on banking on.

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[Joel]

All right, we're back. Still talking with Travis Hornsby, talking about student loans and the shakeup that's happening in the first, you know, six months of the Trump administration and how that impacts you as someone who has student loans. One of the things, Travis, that happened during, under the Biden administration was essentially looser rules about discharging student loans through bankruptcy. And for as long as I've been alive and been thinking about these things, student loans through bankruptcy, like getting them discharged was impossible. And then the Biden administration said, hey, we, we want to make it a little bit easier for people to pull that off. They had to be able to prove what, basically that they were unable to pay these student loan back, student loans back, and that they wouldn't be able to. How has that changed in the first four months of the Trump administration? Can people still, is that still a way that people can get rid of their student loans altogether?

[Travis Hornsby]

Generally speaking, no. It's very difficult to get your student loans discharged in bankruptcy. I would, I would like to give kind of a quick rule for people to think about. Student loans. Like student loan policy tends to get driven by terrible and horrific headlines. So let me give you an example of this. Right? So in the first Trump administration, there was a headline that a Michigan man who was a combat veteran of Iraq and Afghanistan suffered a traumatic brain injury when IED exploded and had a couple hundred thousand of student loans, right, From a graduate degree that he did pre combat tours. The balance was considered taxable income as a result of his disability discharge. And so the IRS and the state of Michigan sent him a nearly six figure tax bill for his forgiven student loans. This is a guy who served our country, literally suffered a brain injury and they gave him a huge tax bill. And what the Trump administration did in the Tax Cuts and Jobs act is made discharge due to disability tax free. When I say that, I don't say that to say that the Trump administration is going to be super generous to people and change bankruptcy laws in a way that most borrowers would really get excited about. Right. What I'm saying though is if you have 10 to 15 million people going to student loan default, like could happen, right? Like we're talking about on this show, if that were to happen, the headlines would be so horrific, the problems in the housing market, in other economic markets would be so bad that they would have to confront what do we do with student loan default? Because right now they made the rules based off of this, like undue hardship standard, which is extremely difficult standard to meet to actually get your loans discharged. And most people, they think, well, if I just stop making payments It'll go away. No, that doesn't happen. Because what happens when we have collections turned on, which we're going to have that in early May, is the government just takes 15% of your income anyway. And so what I tell people that are, you know, don't want to make student loan payments or struggling to, is, hey, you might be able to pay 10% instead of 15% of your income if you qualify for new IBR, for example. And you won't wreck your credit because if the government's going to take 15% through wage garnishments and tax refunds, they are going to get their money. Right. There's no doubt they're going to get their money. So you might as well give them less by voluntarily turning it over instead of involuntarily turning over and also wrecking your credit. So for bankruptcy, the only scenarios I think where bankruptcy is something that could be considered is maybe on private student loans, but only with the assistance of, you know, a very educated student loan attorney that understands the consumer laws in your state because they're all different on things like statute of limitations and burden of proof and things like that.

[Matt]

Yeah, I guess. On that note, what other factors should folks consider if they're like, okay, maybe, you know, maybe now's a good time to refinance out of a federal student loan. Maybe I should consider private student loans. What are some other considerations there?

[Travis Hornsby]

You know, the Trump administration here is not going to last forever. Right? Jokes, jokes on SNL aside, right? Like he, he will be done after the second term. And the question is, is will a Republican win in 2028 or will a Democrat win in 2028? What I would bet is if a Democratic wins in 2028, the Federal Student loan benefits are going to increase and if a Republican wins, they will stay the same or decrease. Right. That's generally a good bet. And so if you are what I would call a marginal refinancing candidate, like you have five and a half percent federal loans and you might get a 5% from refinancing, you know what, federal protections are worth something. And so if you're only benefiting by like half a percent lower rate, it might be kind of a good idea to kind of just keep it federal, make your minimum payments, you know, see what happens the next three years or so. Three and a half years, Right. And then if you are just a slam dunk refinancing case, what is that? First off, a lot of people are getting zero percent interest on the save plan forbearance and you want to benefit on that until you're completely done with that. Right. So if you're getting zero percent, get all your zero percent you possibly can. And when that ends, you'll have a decision to make. And the decision might be depending on when you borrow your loans because the interest rates of the loans are all different depending on what year you borrowed. So if you borrowed and your interest rate is like 8 or 9% and you can get 5% the private market. Remember that test I said earlier of do you earn more money than you than you have in student loans? So if you have 100,000 of income, you have 50,000 of student loans. What you could do is do a selective refinancing. You could say, okay, anything above a 5%, I'm going to convert that to a private loan at a lower interest rate. And anything that's, you know, three to five, I'm just going to keep it on the federal market. So people have a lot of choices in how they tackle this. Right? They could refinance the whole thing. They could do it with the federal government, which doesn't change the interest rate, but it does change some of the terms sometimes in your favor. Right. Like things like stretching out the payment terms. So for example, if you have over 60,000 in federal student loans, if you quote, unquote, refinance with the government, then your payment required payment goes from like a 10 year schedule to a 30 year schedule. And so that could be really beneficial for somebody who has a bunch of credit card debt who's struggling to make their payments and they can't make the ten year payment. Well, what if you can convert a ten year payment to a thirty year payment schedule? You'll have to pay a lot less and you'll get more breathing room. Right. So there's all kinds of levers that you can pull. And the key thing is just to know, when do you pull which lever and why.

[Joel]

Yeah, I've heard you also make the suggestion that people think about changing jobs or taking a work break in order to like reduce that student loan payment, bring the payment down. I guess maybe it's not. It's easier said than done for a lot of people who are like, I need a paycheck, Travis, but thank you. So how do you think some people though can implement that strategy in order to reduce their student loan payments? And when might that be worth it?

[Travis Hornsby]

Well, I mean, so for example, you do not have to report when your payment, when your income goes up, except at like regularly scheduled intervals. So they're going to tell you, hey, it's time to recertify your income. So we can calculate your income based payment of what you should pay every month on your loans. Right. But what they do allow you to do is if your income goes down, you can request an early [e-mail] and I'll give you an example of this. We had a client who was on a maternity leave and the first six weeks were paid and then the other six weeks were unpaid. And during those latter six weeks she was not getting a taxable income. So what I suggested to her is go to studentaid.govidr and click on recalculate my payment and state the truth, which is that at the moment she did, that she did not have a taxable income that was coming in. Right. During the six weeks window that she did not have a taxable income coming in. That was a true statement. And so she was able to recalculate her payment to a much lower number. So if you're in between jobs for a couple months, if you are doing a, you know, a sabbatical from your job, if you're doing what I did when I was in my twenties, traveling the world, taking a break from work, it is within your rights to go to your student loan website, studentaid.govidr and get your payment recalculated to a much, much lower number.

[Joel]

How long does it last? Like, so she goes back to work and then her payment doesn't go up.

[Travis Hornsby]

Right.

[Joel]

When she goes back day one. Right.

[Travis Hornsby]

Well, it depends.

[Matt]

The key is what Travis said you said regular intervals. What are those intervals?

[Travis Hornsby]

Yeah, it depends on the person. So what happens is most people when they graduate, graduate in the spring and you have a six month grace period if you don't do anything otherwise. So most people, if they do nothing, are going into a. Like they graduate in June, six months after that is like November or December. That's when they get their first payment due. And so for that person, their recertification date for their income based payment plan is going to be November, December, every year at the same time. Right. So if she's on this maternity leave, she might get the point at which she recalculated her payment until her next recertification date with low payments. And then what would happen is when she goes to recalculate her new payment, what she could do is to say, well, you know, is my current income lower or higher than my last tax return? If it's higher than my last tax return, Then she wants to use her last tax return to recertify her income at her next recertification date when she has to report her income for calculating her IBR payment. Right. So, for example, let's say, you know, she's making 120k a year, you know, and let's say she has to recertify every year in December or something. So if she has this, you know, unpaid maternity leave, she recalculates her payment to basically zero. And then her next, you know, let's say her next recertification date, she's back to making 120k a year. Well, since she had a maternity leave where she was making nothing, maybe her prior year tax return is showing 100k of income. So she'd rather use that to recertify her income instead because it's going to give her a lower payment.

[Joel]

Gotcha.

[Travis Hornsby]

So that's kind of what I mean about just knowing what are you allowed to do based off of the rules and the laws and, you know, that's why most people pay too much, is because they're not taking advantage of what they're able to do legally.

[Matt]

Sure. I think some folks might even call them like loopholes. But no, this is just truly what the law states. And so to put a fine point on it, it is an annual recertification. Because I thought I saw something about enrollment in these IBR plans not requiring recertification every single year.

[Travis Hornsby]

Well, so they have pushed out recertification dates every few months, four years. So one thing we talk about, the turning on the payments and collections aspect of student loans. Again, the Trump administration, not the Biden administration, has just pushed out IDR recertification dates to no earlier than February 2026. So the Biden administration started doing this by pushing out IDR recertification dates basically every few months because they wanted payments to be low, especially before key election dates. And they also didn't have the capacity in the servicers to recalculate what people even owed, which is. That's kind of terrible, isn't it? Like, in terms of just, you know, an embarrassing operational failure that the servicers cannot even calculate what people owe because they don't have the staff, they don't have the rules given to them by Department of Ed.

[Matt]

You don't have the infrastructure in place to be able to handle exactly figuring out what the new payments are going to be.

[Travis Hornsby]

And so even the Trump administration, which is making this big public spectacle of, you know, we're going to make people pay what they owe. Well, they have pushed off recertification. I've seen some borrowers with a required recertification date of January 2027. And these are people in some cases who last recertified their income with their 2018 tax return in 2019. And then Covid happened March 2020, and then people got paused on their requirements to recertify. So I'm not, I don't want to get, like, in trouble sharing too much here, but we have people making six figures that are perfectly willing to pay, you know, 2,000amonth in their student loans that they're supposed to, that are getting credit for forgiveness programs, but are still paying based off of when they just graduated school. And they're paying $200 a month, right? So. And the Trump administration is saying we don't mind extending those $200 a month payments to January 2027 for some people. So this is like, yeah, it's crazy.

[Joel]

From a personal finance standpoint. I'm curious, like, what are you telling clients who come to you? Because, hey, right now the getting has been good. You've had payments deferred or you have had an artificially low payment. And are you suggesting bulk up those reserves because this might not last forever. How do you help people think about the fact that payments could go up and they already are going up for some people. And to be prepared for that while maybe you have a pretty solid deal right now?

[Travis Hornsby]

Well, I mean, I think that, you know, people have different level of economic security and I just want to kind of acknowledge that, right? Like, so, for example, if my taxes go way up, right? I'm going to, you know, make a comment, hashtag, check my privilege here, right? But you know, if taxes go way up, maybe I'm cool with my thousand dollars telescope for a while. Do you know what I mean?

[Joel]

You're not upgrading quite yet.

[Travis Hornsby]

Maybe, maybe I'm putting off the fully loaded, you know, like, you know, computer tracking the comets or whatever. You know what I mean? Like, so, so and so maybe for like a middle class person, this might mean, you know, okay, I'm gonna drive my Camry for a while before upgrading to the newer model, right? Or something like that. Now, for people at the lower end of the economic spectrum, they don't have those, those privileges, right? And so the good news is if somebody knows their rights under the student loan rules, if you truly are making not a lot of income, you should be able to qualify for a $0 payment, like, or very close to it, because you just have to get onto the income based, repayment plan. And so many people don't even know that they could benefit from that. Like so many people don't still do not know that they can sign up for that. Like you know, 8 million or 9 million people signed up for the save plan. The awkward truth about that though is actually maybe like 20 million people could have benefited from it, but only 8 or 9 million people signed up. Right. So you're more economically struggling folks. The government cannot auto enroll people into ibr. They're not allowed to. So maybe all these people were clairvoyant.

[Joel]

And they knew that it wasn't going to last.

[Travis Hornsby]

I don't know. Maybe that's what it was. Yeah, but no, I think a lot of it as people like to, I mean money is very stressful, particularly for people who are, who do not have access to the same income that middle and upper middle income families have. Right. And so a lot of people just take the maybe if I ignore it, it'll go away approach. And the problem with that thinking is it's absolutely not true because the government can seize your wages and tax refunds.

[Matt]

Again, I've heard you mention the term partial financial hardship. Is that something that folks should, Is that what you're talking about here or is that like a completely different term?

[Travis Hornsby]

Well, partial financial hardship doesn't mean what it sounds like. So partial financial hardship sounds like you're struggling in reality. What it is is do you have a payment that's lower than the standard tenure for your loan amount? So for example, somebody could have a $40,000 income and $20,000 of student loans and not have a partial financial hardship because their payment calculated on the income based repayment plan is higher than what they'd have to pay if they paid $200 a month to pay their 20k off in 10 years. So that person with 40k income, 20k of loans, might not have a partial financial hardship. Meanwhile, a doctor who has 400,000 of student loans with 200,000 of income might have a partial financial hardship because their income based repayment is lower than 4,000amonth, which is what they would have to pay to pay it off in 10 years. Right. So what that means is that, you know, in general what I said about the greater than two times your income and debt, you know, basically all those people should go for forgiveness. Like if you're not going for forgiveness, you're probably just hurting yourself financially. And what I said during the Biden administration is basically if you have more debt than your income at all, like if your debt to Income ratio is more than one to one. You should go for forgiveness. During the Biden administration, You know, the problem is, is with the less generous rules the Trump administration is rolling out, forgiveness is still very much a thing, but it's not a thing for as many people, which is why I'm saying, well, now it's really more like 2 to 1 debt to income ratio. Go for forgiveness. And if you're in this one to two times, you know, your income in debt, student debt, then, then it's, then I'd say it depends. Right? It depends on your, your plans for your career, your family goals, your, your expected income growth. Right. Your, your risk tolerance for, you know, do you want to wait it out a little bit policy wise? And you know, for people who have less student debt than their income, there's still strategies, there's still approaches to pay less, there's still ways to have a better situation. You know, some people even could still benefit from forgiveness if you're very low income and that ratio applies to you. But, you know, it just, you know, it depends is the mushy mouthed answer.

[Joel]

Yeah, no, no, but that's really helpful kind of lines of demarcation there. I'm curious too. You're, you've talked about the clawing back of forgiveness. People who have gotten forgiveness, they're not going to get unforgiven. Right. And that, that would be illegal. But are you worried about the PSLF program and maybe some sort of rug pull? I know people who are in that and who are, let's say, seven, eight years along and they're worried. They're like, is something going to happen before I get to that point where forgiveness is reached? Because, like, I'm committed at this point.

[Travis Hornsby]

Well, I mean, I like to think in terms of probabilities. Right. I was an econ and stats major. Makes me weird. But, you know, that's what I like to think of in terms of giving people advice because there's probabilities that are 50, 50 and there's ones that are like 10% chance. Right. And so with PSLF, the biggest rug pull that can happen is there's a bill right now in the House to take away nonprofit status from hospitals and make them for profits. So that would be a way that you could take away PSLF through a backdoor for at least half the people that currently qualify for it. Right. And should you be worried about that? Like, what I would tell people that are in that boat is no. And the reason is it has to pass, not just the House but also the Senate. And if you look at the Senate, there are basically four Republican swing votes right now in my mind. There's Murkowski and Collins in Alaska and Maine. There's Mitch McConnell who's been voting against the administration and a lot of things now that he's not the Republican leader. And there's Thom Tillis in North Carolina and he's kind of like the swing boat. So if you think about somebody like him, I live in North Carolina, imagine Duke and UNC going from not for profit to for profit and them having to do a bunch of layoffs and he's got a competitive reelection in 2026. Is he going to vote for that? I would bet not. I would bet that the Senate modifies and makes less aggressive a lot of the House GOP's proposals for things like this. And I would not worry about that until we actually see the text of the bill move along and pass, you know, a committee, for example. So I think that people are really worried about what the House and Senate are going to do because they do have unified control of D.C. right. And they will pass some kind of big bill that's going to have a lot of stuff in it because they have to because the Trump tax cuts expire at the end of 2025. So that is a guarantee that you will see a bill and there will be something related to student loans in it. The question is how much will be in it and how much will borrowers have to worry about when they find, you know, when the text is battled over and finally published, could you see.

[Matt]

A situation where it's at least forward looking and a lot of folks get to get grandfathered into the previous PSLF or I'm sorry, with a hospital nonprofit.

[Travis Hornsby]

Designation, I think that it will be and I think that, you know, the people, the only people that have to worry about forgiveness being clawed back is people that were not actually eligible for it. And I know that might sound ridiculous, but what I mean by that is there are, there's no auditing a PSLF really at all. And so there are some employers that have been approved for PSLF that I know based on the rules, do not qualify. And I've seen borrowers that have been mistakenly given credit for years of payments that should not basically there's no cop on the beat. There's none, no zero. So like a lot of, there's a lot of scams, there's a lot of fraudulent activity going on there. And you know, if somebody, in my opinion, for example, goes and starts a fake nonprofit and has been approved for, you know, PSLF based on starting a fake nonprofit. If they get approved and forgiven, like, it might work out. It's kind of like lying on your taxes, right? Like, if you say, you know, I'd made no income and like, they never audit you, well, you got away with it, right? And if there's very little auditing that's happening at the irs, then maybe, maybe some people decide, well, that's worth taking the chance on. Right. We don't give that type of advice. We say, what are the rules? What are the things you can do within the rules? And you know, I would not be shocked. I told people I would not be shocked if we did see some kind of like, you know, Operation Varsity Blues, right, Where they went after the famous actors, right, like the ones on Desperate Housewives, whatever, right. That were getting their kids in with for water polo to like, fancy schools.

[Matt]

Sure.

[Travis Hornsby]

I think that you might see something like that that's like going after the very worst offenses for student loan, like, stuff, right? Like, for example, there was a case pre pandemic where there was a group that was telling borrowers to list a family size of 93 so that they would have such a large family size, they'd qualify for a $0 payment. And like, and the funny thing is they put out a report like, February 2020 saying, like, hey, maybe someone at department of Ed should ask, is it possible to have a family size of 93 in the. Only if you're a rabbit, you know, like on the online form. And then of course, Covid happened a month later and nobody ever followed up on it. So I mean, I think that there will be a little bit of like a return of like, what are the. What are the craziest things about the pseudo loan system that probably shouldn't be the case the way they are? And like, you know, and frankly, like, even the daily podcast had this recent episode on, you know, student loan forgiveness dead. And they even talked about, you know, maybe we shouldn't have unlimited student loan borrowing. Right. Like, maybe student loan borrowing should not be unlimited that you can take out like 800,000 for school across, like five children with no limit on your borrowing, which is currently the rule. Right. If you want to send six kids to the most expensive private schools in the country, you can take out a million dollars of parent plus loans currently, and there's no limit on that.

[Joel]

All right, I want to ask you more about that and about incentives of student loans moving forward and kind of how that impacts the universities as well. We'll get to some questions on that with Travis right after.

[Matt]

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[Matt]

We'Re back from the break again, speaking with Travis Hornsby about student loans, what it is folks should be doing now that they have them, actually. So let's turn the tables a little bit. Travis, what about folks who don't have student loans yet? Because you released this list of the careers where folks tend to incur the most student loan debts and orthodontists, turns out they have it the worst. How do you think about the trade off of taking on massive amounts of student loan debt versus the potential for higher pay down the road?

[Travis Hornsby]

I remember one of the orthodontist cases that I talked about with the Wall Street Journal back in the day. They did a story on one of the first borrowers to pass the million dollars of student loans, Mark. And that was like I think 2018, 2019. And that's because the borrowing is unlimited. Right. And so if you're, if you're not yet in a program, what I would be laser focused on is what does Congress put out for their bill this summer or early fall for the reconciliation bill, which is going to pass in a party line vote? And what that bill will say is it will either say like as of a certain date, loans are capped and you can't borrow more than X amount, or it might not make any changes. Or it might say if you're enrolled in a program as of a certain date, you get to borrow whatever you need to finish the program. Right. And so if I was somebody that's looking at a graduate degree program, I would make really sure that I looked at what that bill says because it might make the difference of you being able to finish your, you know, medical school, dental school program or not. Right. And so pay attention to what Congress does this summer and fall to see what changes they make to the student loan system. But by and large, I would say under the current student loan system, you should always go get another degree, another educational pursuit. If you don't mind a 10% income tax. And what I mean by that is, let's say that it's a struggle to get a job initially. Is it worth it or not? Well, income driven repayment is basically a 10% income tax. There's more complexity to it than that. But you're losing 10% of your income to pay back the government for 20 years on average. People doing the public service thing, it's 10 years, some people it's 25. But you know, 10 to 25 years, you're losing 10% of your income. So what I like to tell people is, okay, if you stop at being a nurse and you're making 60k a year and you have zero debt, are you better or worse off than if you go get, you know, a nurse practitioner job and you're making 120k a year, but you're losing 10% of your income to an income based repayment plan? We'll take away 10% of 120 grand and you're still making just over six figures. And so that income gap is worth it, you know, compared to sticking to just your bachelor's degree. So in general, get your bachelor's degree if you can. And if you want to go to a graduate program, I would just suggest that it be a valuable program of some kind where you're going to make at least 10% more than you would make if you just stopped at your current educational level. And even if you wouldn't make that earnings gap, if you would enjoy that job a lot more than what you're currently doing, it's still worth doing under the current rules. And so I would just think that if the rules change or there's more caps on borrowing and people actually have to think, well, what if I actually had to pay this back directly? Then the math would change. But the math doesn't change until the rules change.

[Joel]

How do you think the government's approach to student loans, to the federal student loan program, will change the future of universities, how they price their education and how much borrowers are willing to take on? Like if the program becomes less generous. Right. As interest rates have already gone up, of course, since when I was in school and since five years ago. So when people have to make those trade offs when they're thinking through, well, how Much debt should I take on? Even though I can essentially take on ridiculous amounts, Are we going to have just better incentives in place that will actually produce some secondary benefits like reducing the cost of education overall? Do you see that in the future?

[Travis Hornsby]

Well, so the problem there's the dirty little secret in higher that a lot of the big name schools that have very popular football teams earn a lot of money from the parent plus loan program right now. And so any big school with a big football program that has a lot of out of state students, what they'll often do is go market like maybe for example, like a University of Alabama might go market in Illinois to get them to come down and pay out of state tuition. Maybe those families don't have the money to just cut the 25k a year, whatever it is to go. And so those families might load up on parent plus loans because they're unlimited. And then the university's making a bunch of extra money compared to what they make on in state students. Right. And so there's this big incentive currently for the schools to bring in all these out of state students and you know, have parent plus loans be the thing they offer to people and the schools are able to spend more money on a lot of different things because of that. Right. Like faculty, bigger stadiums, nil deals, whatever. Right.

[Joel]

And the parents just don't know how big of an albatross it's going to be around their neck for decades to come.

[Travis Hornsby]

Exactly. And so, but, and so there's been some loopholes too to manage that problem for parents as well. So like parents that have lots of parent plus loans, like, because you know, up till now there's been a lot of strategies you can do. But that's kind of an aside. The issue with universities is the big name universities are going to be fine. They're just going to have to make cuts. So maybe you have to cut back on some faculty and some programs. Maybe you can't do, you know, the athletic expansion you planned on doing if they were to lose access to the parent plus loan program. Now there's other schools that are more kind of like, like marginal schools that might not have the big football name brand. Right. That are more just, maybe they're serving a lot more just like middle class families. It might be more regional schools. Some of those schools would absolutely have to close if they capped loans. It's just the reality. A lot of these schools are in swing districts in swing states. And so the question is, is a lot of these proposals, you know, make sense on paper? Until you think about, well, what does it mean if you close down a bunch of regional schools in Pennsylvania? How popular are you going to be in the next presidential election in some of these swing districts? Right. So I think that from a political standpoint, there's some checks on what they're going to be able to do in terms of changes to the system. But, you know, I mean, if you think about it, just a common sense, it probably does not make sense to let universities charge whatever the heck they want for higher ed. Like, that's probably a really dumb idea. Like, that changed in 2006, and they did it to try to expand access. But the problem is they made it a blank check. They just said, hey, universities, go do whatever you want. There's no limits on what you can borrow for graduate programs. You could just, just charge whatever you want. And so what happened is the number of pharmacy schools, for example, more than tripled.

[Joel]

Wow.

[Travis Hornsby]

So within literally like a few years, you had triple the number of pharmacy schools. So pharmacy school went from a thing that was like a 35% acceptance rate to like a 95% acceptance rate. And so a lot of incomes and graduate programs have actually like been very flat or even declined. And there's a big oversupply because the universities just thought, oh, look, a great new revenue source. We can just go open another school, right? So there probably is a big contraction in the number of graduate programs and the number of universities. That needs to happen just in terms of like a balancing. But the problem is that also means real pain. Like people will lose their jobs. Like, you know, and so that's just a question of, do you want to take that pain? You know, how much pain do you want to cause? Do you want to make it a little bit softer by having the loan limits be a lot higher? Do you want to increase Pell Grants so lower income students can still attend university? So there's all kinds of policy trade offs that. And that's why the easier decision is just, let's go punt the football right? When you don't know what to do, let's just, yeah, income recertification in 2027. How about that? You know, Exactly. So that's what's been happening.

[Joel]

And that's, hey, let's do the same thing with Social Security too, Travis.

[Travis Hornsby]

Why not? But that's the easier thing to do. And so politicians, you know, in my experience with student loans, always choose the easier thing to do unless they're forced to make a change. Like you get the headline of the, you know, Afghanistan veteran with the traumatic brain injury. They got the six figure tax bill and then they say, oh, you know, maybe we need to change the laws, maybe these are dumb laws, but it takes that kind of, you know, level of an event to make a change.

[Matt]

I'm surprised at the amount of politics that has gone into our conversation today given the fact that we're talking about student loans. So to that note, and the fact that it does seem like politicians are punting the ball, do you see a world where it makes sense for the federal government to get out of backing student loans? I mean like this all started with our desire to what back in the 60s to compete with like Russia and the space race and all that and shoring up the ability for the US to be competitive from that standpoint. But like, are we past that? Does it make sense to open this up more up to the, to the, to the free market as, as opposed to the government, which tends to react more slowly to some of the changes that need to happen?

[Travis Hornsby]

Well, a lot of people are asking that question and the policy problem to that is how do you extract the government from $1.6 trillion? So that's a really big problem, right? Like do you just have an auction and you just sell all the loans? Well, a lot of these benefits of those loans have already been promised like income based repayment. Does A, you know, J.P. morgan and Goldman Sachs want to take on a bunch of debt? They want that people can pay 10% of their income and never pay the balance off. So you know, there's all kinds of problems with how do you get, exit the existing, you know, commitment that's been made. And then the other problem is like, you know, for the future, if you do, you know, the old system was essentially like the government would kind of COVID the losses on the loan portfolio and private lenders would make the loans and make the interest income. And that system worked like okay for a while, but then they decided, well, we want to expand access. And so pendulum in politics swings, right? So I think we're in the, in the zone of like the pendulum swinging more towards hey, let's do less, let's do fewer loans, let's make it, you know, more on the borrower to pay them back. And you know, I think that the devil's in the details with student loans though. Like, you know, it's real easy to say, hey, get the government out of the student loan business, but there are so many problems that the government would have to figure it would be almost like saying, let's get the government out of Social Security. Well, oops, how do you do that? You know what I mean?

[Joel]

Yeah, no, for sure. Travis, this has been super helpful. I think a lot of our listeners are going to get a lot of value from this conversation. Thank you for joining us. And your videos, by the way, your video updates have been incredibly helpful too. I've been following them as I'm trying to kind of figure out what's going on with student loans in the day to day, which is kind of sad that we have to be pay attention to it that much. But how, how can how to money listeners find out more about you and what you're up to?

[Travis Hornsby]

Well, I mean, actually the best way is to get the, the discount for how to money listeners if they, if they need a custom plan. And I would say this is probably more in the, you know, you owe maybe over $50,000 or you owe maybe even six figures. If that's you. If you go to studentloanplanner.com howtomoney so that's going to get you a discount of $100 off a custom student loan plan. If you think you need that right now. Who needs that? You know, you have a lot of student loan confusion. You have a significant balance. Generally speaking, probably 90% of the time we're going to save a sort of a projected mid five figure balance for the average client, which is about a 200k average balance. So for a few hundred dollars, the high likelihood we'll save that much money is generally really worth it. You can, you know, check our reviews by looking at Student Loan Planner reviews in Google and see that we really do have a huge impact on people's lives. And then if you cannot, if some listener says, you know, that's great, I cannot afford, you know, a few hundred dollars even with the $100 off how to money listener discount. Then just like the Student Loan Planner podcast, we have a free podcast where we answer a lot of people's questions and go over like what people need to know. And so that's the free way. And then of course our studentloanplanner.com website's got a lot of free content too. So but you know, if they want, they want the $100 how to money discount, it's just again, student loanplanner.com howtomoney that's right, man.

[Matt]

Yeah, we're trying to help folks to avoid that student loan confusion and y'all are doing that on all the fronts. Travis Hornsby, thank you so much for joining us today.

[Travis Hornsby]

Thanks for having me.

[Joel]

All right, Matt, great convo with Travis. I can't say that I'm enthusiastic about the state of student loans these days, but I'm less worried after talking to him.

[Matt]

Yeah, it makes total sense. The more, you know. And the star is streaking across the sky, you see it. That, of course, Travis would be able to see because he's got the right.

[Joel]

Telescope to be able to see. That's a good point. And the more that. Yeah, like, there's more control that we have in our hands than. I guess I was under the impression.

[Matt]

I will say I was disheartened that so much of the future of student loans comes down to who's gonna be in the White House. And so my big takeaway is gonna be we just need to figure out who's gonna be elected to office, and then you'll know what to do in four years. Just read the tea leaves, you'll be fine.

[Travis Hornsby]

Exactly.

[Matt]

What's so hard about doing that? No. Okay.

[Joel]

So I think American politics. So easy to predict that.

[Matt]

No, I do think my big takeaway is going to be to consider recertifying your income. In particular, if you are on an income based student loan repayment plan. Because the. And he mentioned this URL a couple times. I'm gonna do it again because I think it sounds like a fantastic resource. Studentaid.govidr. the IDR stands for Income Driven Repayment. And this is especially true if you've seen your income drop recently. The ability. You're not fibbing. You're. You're telling the truth. Your income has gone down and your repayment should reflect that. And I've got a feeling there are fewer folks doing that. Or it's something that's kind of. It's. It's automated. Right. Like, it's automatic.

[Joel]

It's.

[Matt]

They're not really thinking about it. They're like, oh, I've done that before. But no, this is something you can revisit. It's almost like reshopping your insurance rates.

[Joel]

Yeah, that.

[Matt]

Your insurance coverage, the ability to do that and save money every single month, especially if you've seen your income go down, I think is a fantastic takeaway for folks who might. Maybe they're even, like, overwhelmed with everything that we talked through with Travis, and they're like, okay, well, that's at least one thing that I can do.

[Joel]

100%. Yeah. Even the maternity leave thing, I was like, oh, wait, you can.

[Matt]

Yep.

[Joel]

Do that. If that. And apparently, according to the rules, you can. Which I think is Heartening. There's a lot of situations that, where that could apply, I think, to somebody whose income has gone down or gone away for a little bit.

[Matt]

But how about, how about for you? What was your big takeaway?

[Joel]

I really liked kind of how he talked about the pros and cons of getting a secondary degree and how to think about the financial consequence essentially is like a flat 10% tax on your income. And I think I can be just a really easy then back of envelope math to figure out, well, is it going to be worth it taking this debt into my life or not? Like, how much more am I going to make? And then when I take the 10% off of that increase, well, is, is it worth the time, the energy and is the joy I'm going to get from switching careers going to be worth all the effort that it takes and the debt that I've got to take on my back? So I think that's just at least when we have a lot of listeners who are kind of in that period in their lives with like, do I change careers? And if so, how do I think through the financial consequences, do I go.

[Matt]

Get that MBA and do I get student loans for that or do I take on some special graduate degree?

[Joel]

That's a, that's like a simple math equation. That can, I think at least, at least be helpful as you're kind of trying to figure that out.

[Matt]

Yeah. Especially if you are looking to take on additional debt. But the beer, Joel, that you and I enjoyed during this episode, and this is one of those Burial beers. So it's got the long name and it reads Only calling Hours. Pull me back to these Midwestern roots. It's kind of hard to read. I'm pretty sure that's what it says. This is a West coast style IPA by Burial Collab with Hot Butcher. What do you think?

[Joel]

Two of the greatest breweries in the world at this moment. I would say so. And this beer reflected that.

[Matt]

It was so good.

[Joel]

This, to me didn't feel like a traditional West Coast. It was like, like juicier, less abrasive than a lot of them are. And that's what I would expect from these two guys trying to create a West coast together.

[Matt]

It's like so good.

[Joel]

It's a West Coast. It's up my alley.

[Matt]

It's not a West Coast, Joel. It's a Midwest coast. Just like this.

[Joel]

There's no coast on the, in the Midwest, Matt.

[Matt]

Just like the.

[Joel]

Unless we're talking about like the shores of Lake Michigan.

[Matt]

Yeah, Michigan's where It's at man. Also home to many fantastic breweries. But, yeah, this. This was amazing. And I'm going to shout out the label, too, because I've never seen. It's funny. So before we hit record, you said, oh, kind of looks like a Bon Iver album cover. And I guess the snow. Is that what you were thinking of for some reason?

[Joel]

It was. I was thinking blood bank and the kind of frigid cover it's kind of.

[Matt]

Got in the fridge. It's got. It looks cold. Yeah. It's funny you mentioned blood bank, because so in printing, I know this from my advertising days, there's a thing called spot color, and it's a. You know, you get the specific pantone code because you wanted. Want to use a very specific color. And it looks like they used a spot color. And it makes this label, this artwork look so premium. Specifically, it's on the red, and it looks like it's just glowing. And that's how they've used it. It's like the sign. It says Limby's Liquor. I don't know what that is. And then they got the red glow coming out of the windows a little bit. And it makes it look like truly that this can is glowing in my hand. I almost want to set it over here next to our Aldi Food market winter item that listeners sent our way because it. It's got the similar Hylga, which I figured you could appreciate.

[Joel]

Yeah, well. And I think I am particularly drawn to dope can art and this. And Varel makes some great stuff, but this is like one of my favorites of their.

[Matt]

Well, normally it's a bit more gothic. It's like, it's a bit more metal. And this just. I don't know. The vibes of this are off the charts.

[Joel]

Yeah, for sure.

[Matt]

Very thoughtful as well as the beer.

[Joel]

Very thoughtful art.

[Matt]

So good. But that'll be it. Oh, not quite. Let's remention the URL that he mentioned for how to money listeners to get the $100 off studentloanplanner.com how to money. If you've got a more complicated student loan situation going on, you want to take it to another level other than just recertifying your income. You're like, no, no, no. I really want to knock this thing out, really figure out how to pay as little as possible.

[Joel]

Talk to the experts. That's what Travis and his team are.

[Matt]

So, you know.

[Joel]

All right, buddy. Until next time, best friends out best.

[Matt]

Joel. We've all got different tasks in life that we enjoy doing. For me, that would be closing out the books on our family's personal finances every month.

[Travis Hornsby]

Nerd.

[Matt]

But then there are some chores that are more of a pain, and for me, that would be grocery shopping, something I try and avoid if at all possible.

[Joel]

Well, that's where Walmart steps in, because their subscriptions help you to stay stocked on the items you use most, whether that's milk and eggs or kitty litter and cleaning supplies. Find everything you need for your home at Walmart, in stores, online and in the app.

[Travis Hornsby]

In a world of economic uncertainty and.

[Matt]

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[Travis Hornsby]

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[Matt]

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[Travis Hornsby]

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[Travis Hornsby]

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[Travis Hornsby]

Podcasts, or wherever you get your podcast.