The Clark Howard Podcast - Episode Summary: May 21, 2025 Episode Title: The Airline Recession / Student Loan Repayment
Clark Howard delivers a comprehensive and engaging episode on May 21, 2025, addressing critical financial topics impacting listeners, including the current recession within the airline industry and the resurgence of student loan repayments. Additionally, Clark provides valuable advice on travel-related financial decisions and responds to listener inquiries with practical solutions. This summary encapsulates the key discussions, insights, and conclusions from the episode.
1. Airline Industry Recession
Overview: Clark Howard opens the episode by discussing the emerging recession within the airline and broader travel industry. He outlines how different sectors of the industry are being affected and the implications for consumers.
Key Points:
-
Disparity Among Airlines:
- Cruise Lines vs. Airlines: Unlike airlines, cruise lines have surprisingly maintained strong bookings.
- Corporate vs. Leisure Travelers: Full-fare airlines (e.g., American, United, Delta) are experiencing declines in corporate bookings due to economic uncertainty, leading to reduced discretionary business travel. Conversely, deep discounted and leisure-oriented airlines are seeing a drop in bookings from leisure travelers.
- JetBlue's Struggles: As a premium leisure airline, JetBlue is particularly affected because its strategy of charging higher prices is less viable when leisure travelers reduce spending.
-
Operational Cutbacks:
- Service Reductions: Airlines are announcing or planning service cuts, including parking planes and reducing flights on traditionally low-demand days (Tuesdays, Wednesdays, Saturdays).
Notable Quote:
"JetBlue [...] are really hurting for certain right now because they tend to try to get a higher price from leisure travelers who are saying no go right now."
— Clark Howard [02:45]
Advice to Listeners:
- Monitoring Flight Schedules: Travelers with bookings over a month out should continually check flight status to avoid unexpected schedule changes, especially when booking through third-party sites which may not communicate changes promptly.
- Capitalizing on Airfare Sales: Current airfare sales are favorable due to excess seating. Clark advises taking advantage of these deals before airlines reduce their schedules further.
Notable Quote:
"The airfare sales going on right now, domestic and international, have been really, really good of late."
— Clark Howard [05:30]
2. Travel Financial Advice
a. Refundable vs. Non-Refundable Bookings
Listener Question: Spencer from Illinois inquires about choosing between refundable and non-refundable travel options, seeking guidance on when to opt for each to maximize savings without incurring penalties.
Clark's Response:
- Airfare: Prefers non-refundable tickets, as he frequently travels and can easily use flight credits without significant financial loss.
- Hotels and Car Rentals: Recommends refundable options when booking well in advance due to the increasing difficulty and penalties associated with changes. For last-minute bookings, non-refundable deals may offer better savings due to reduced likelihood of trip cancellations.
Notable Quote:
"If you're booking significantly in advance, do not, do not, do not book a non refundable hotel or a prepaid car rental."
— Clark Howard [08:52]
b. International SIM Cards
**Caller Yvonne from Florida seeks advice on affordable and reliable SIM card options for international cruise travel, referencing a negative experience with Verizon's travel pass.
Clark's Response:
- Alternative Solutions: Suggests switching to Google Fi for cost-effective international data and texting, or purchasing local eSIMs upon arrival to avoid exorbitant fees.
- Avoiding Carrier Pitfalls: Highlights the high costs associated with major carriers like Verizon when traveling abroad.
Notable Quote:
"Buy a local SIM is the smart way to go if you're going to stay for a long trip on one of our overpriced carriers."
— Clark Howard [13:22]
c. Travel Credit Cards and Flight Deals
**Listener Tina from an unspecified location asks about choosing the Chase Sapphire travel card versus other travel cards for a Mediterranean cruise, including concerns about annual fees and flight deals.
Clark's Response:
- Chase Sapphire Preferred: Recommends it as a balanced option for occasional travelers, offering valuable sign-up bonuses and travel rewards without high annual fees.
- Chase Sapphire Reserve: Mentioned as a higher-tier option with more perks but significantly higher annual fees.
- Flight Deal Insights: Advises leveraging low fall fares from major hubs like New York and utilizing services like Going.com (formerly Scott's Cheap Flights) for ongoing fare alerts.
Notable Quote:
"The Chase Sapphire Preferred is a great compromise card for people who travel not all the time but want a travel oriented card."
— Clark Howard [14:45]
3. Student Loan Repayment Crisis
Overview: Clark transitions to the pressing issue of student loan repayment, emphasizing the severe consequences for those in default and offering actionable advice to mitigate financial distress.
Key Points:
- End of Payment Holiday: Following the expiration of COVID-19 relief measures, federal student loan collections have intensified, targeting over 5-6 million individuals in default.
- Consequences of Default:
- Seizure of Benefits: Social Security benefits can be garnished by up to 15%, and tax refunds may be entirely seized.
- Wage Garnishment: Partial income seizures from employers are imminent, with notices expected to start arriving in late June or July.
- Urgent Action Required:
- Contact Default Resolution Group: Encourages proactive communication with the Department of Education’s Default Resolution Group to negotiate repayment plans.
- Rehabilitation Strategies: Advises moving out of default status to avoid harsher penalties and regain access to repayment flexibility.
- Awareness of Existing Programs: Highlights that existing congressional loan forgiveness plans remain available, unlike those implemented via executive orders.
Notable Quote:
"There are teeth here, real teeth. Coming after you."
— Clark Howard [25:00]
Advice to Listeners:
- Immediate Action: Do not wait for official notices; reach out to the Default Resolution Group promptly to discuss repayment options.
- Explore Repayment Plans: Investigate available repayment plans that align with financial capabilities to prevent further financial deterioration.
4. Listener Questions and Responses
a. Financial Aid and SAI Strategies
**Caller Sarah from Massachusetts asks about organizations claiming to increase families' Student Aid Index (SAI) for better financial aid, questioning their legitimacy and effectiveness.
Clark's Response:
- Legitimacy Concerns: Warns against non-professional organizations promoting financial aid enhancement, urging verification through credible sources like the National Association of Student Financial Aid Administrators (NASFAA) or university financial aid offices.
- Navigating SAI Changes: Explains the new Student Aid Index (SAI) system resulting from FAFSA revisions, which has led to increased interest in expert financial counseling.
Notable Quote:
"You need to make sure you're getting a real one. And this is more art than science. But take your time and don't just respond to some online solicitation."
— Clark Howard [28:05]
b. Investment Advisory Fees
**Caller Neil from North Carolina expresses concern over potentially excessive fees with his current brokerage firm, seeking reassurance or advice on whether to switch to one of Clark’s recommended "three children" firms (e.g., Vanguard, Fidelity, Schwab).
Clark's Response:
- Fee Comparison: Acknowledges that while the current firm is not detrimental, it likely charges considerably higher fees compared to Vanguard.
- Impact on Returns: Highlights that higher fees erode investment returns over time, recommending considering a switch to lower-cost firms for better financial growth.
- Maintaining Relationships: Recognizes the value of long-term relationships with advisors but emphasizes the financial benefits of reducing fees.
Notable Quote:
"The problem is your returns over time will be lower because the expenses of having them handle your money are so much higher."
— Clark Howard [30:12]
c. Managing Multiple Credit Cards
**Callers Keith and Georgia inquire about the impact of holding multiple credit cards on their credit score and whether they should keep or cancel older accounts to optimize rewards without harming their credit.
Clark's Response:
- Credit Score Considerations: Advises keeping the credit cards open to maintain a healthy credit mix and higher available credit, which positively influences credit scores.
- Optimizing Rewards: Encourages continuing to use the cards strategically to maximize fuel rewards, especially since gas prices are predicted to decrease.
Notable Quote:
"The more the merrier" in terms of maintaining open credit lines for a better credit score.
— Clark Howard [32:29]
5. Conclusion and Final Advice
Clark Howard wraps up the episode by reiterating the importance of staying informed and proactive in managing personal finances. He encourages listeners to subscribe to his free daily newsletters for ongoing financial tips and empowerment strategies.
Final Takeaways:
- Monitor Industry Trends: Keep an eye on economic shifts, especially in volatile sectors like airlines, to make informed financial decisions.
- Proactive Financial Management: Whether dealing with student loans, travel plans, or investments, taking prompt and informed actions can prevent financial setbacks.
- Leverage Expert Resources: Utilize credible sources and trusted financial tools to navigate complex financial landscapes effectively.
Join the Conversation: Listeners are encouraged to submit their questions at www.clark.com/askclark and engage with Clark Howard's community for personalized financial advice.
This summary provides a detailed overview of the key topics discussed in the May 21, 2025 episode of The Clark Howard Podcast. For the full episode and more insights, tune in to Clark's show at clark.com.