December 5, 2022 • 54 mins
We’re joined by student loan repayment expert, Meagan McGuire! I don’t think there is anyone else we know who understands the intricacies of student loans more than Meagan. She’s been in the finance industry for more than 13 years and she has the bragging rights of being the first Certified Student Loan Professional in the state of Georgia back when we met several years ago. And the timing couldn’t be better to have an in depth conversation with Meagan as there have been so many changes, new laws, and guidelines in the student loan space- where are things with forgiveness, or what is the current status of the payment pause? We’re lucky to have Meagan answer those questions, plus many more today!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to How the Money. I'm Joel and I'm Matt
and today we're talking everything you need to know about
student loans right now with Megan McGuire. That's right. Megan
(00:28):
McGuire is a student loan expert and she's joining us
on the podcast today. UM. I don't think there's anyone
else we know who understands the ends and outs of
student loans more than Megan does. She has not only
been in the finance industry for more than thirteen years now,
but she's got the bragging rights of being the first
certified Student Loan Professional, the first CSLP in the state
(00:49):
of Georgia. Back when we met her several years ago.
She does a lot of work with student loan planner actually,
and I think we originally met at a brewery. We
we had a listener hang and she showed up and
introduce yourself. But the timing could not be any better
as there have been so many changes and things happening
the student loan space. Where are things with student loan forgiveness?
Where are things with the payment pause? We are excited
(01:12):
to talk about all of that and more today, Megan,
Thank you for joining us. Oh my goodness, thank you
guys for having me, and I feel like, of course,
as soon as I'm about to be introd, I have
my long guy out there with the blower outside. Leaf
flowers are a constant battle when it comes to a podcash. Gosh,
that's true, Megan. The first question we ask anybody who
(01:33):
comes on on the show any guessed, We want to
know what their craft beer equivalent is because Matt and
I we liked spending way too much money sometimes on
good beer, but we don't do it at the expense
of our savings and investments. So what's your splurted what's
your craft beer equivalent? I love I love this question,
and I love hearing everybody's answers too, So I would
(01:53):
say mine, mine truly is having dinner with my husband,
and it feels it feels so weird saying husband too,
because just recently A McGuire so congratulates lands, thank you.
But yeah, so we've that's always been something that me
and him have enjoyed doing together, like going and trying
new restaurants. We like a nice cocktail or two, pairing
(02:15):
wine with different foods. So that's that's one thing that
we we do. We do not do that every night,
because I do enjoy cooking, but a couple of times
a week, that's that's where some of our discretionarybody is
going towards. I love that. Something else I love actually
on your website, I saw that the in the Facts
about Megan, section number one mentions your entrepreneurial spirit that
(02:37):
you had from a very young age. Can you can
you talk through some of the different ventures that you
had as a as a young kid? Oh my gosh, yeah,
I'm thinking back on it, Like I really was like
a little entrepreneur, like really young. And I think it
started so my dad was in sales. He did electrical
sales for big companies, um, and it may have come
(02:58):
from him maybe coaching me a little bit as I
grew up. But I was also in Girl Scouts, so
I learned how to sell Girl Scout cookies and have
like a little cheer dance in front of Kroger to
like get people's attention. But I used to make like
little jewelry. I used to make little dolls. I would
I would sell them at all of our family gatherings.
(03:18):
I would have like a basket that I'd put my
products in that I've made and I'd go around all
my family members and I'd price it out for like
you know, a quarter a dollar or something, and I
was really proud of it, like going around and I'd
have like some spending money for the dollar store at
the end of the day. Is this a family reading
or is this Megan's Market? Right? Right? Yeah? It was
(03:41):
every every little like family gathering. It was like I
remember Easter for one one time, specifically, I was selling dolls, uh,
for the July I was selling these like red, white
and blue bracelets that I had made. Um. But I
really enjoyed it. Wasn't that I liked crafting necessarily, like
I think I was good at because my mom liked
to craft with us. But I really enjoyed the sale,
(04:04):
Like I liked making money and like having that to
go to. So but that was that was my entrepreneurial
spirit growing up. Well. One of the things I think
fact number seven on that list is one of my
favorites because you say that you're so passionate about about
what you do now that even if you won the lottery,
(04:24):
you'd still be doing it. And I think that is
the sign that you have found like the perfect job
for you and Matt and I feel the same way.
I think even if even if we won some sort
of gigantic some of money, we just like what we
do and and that's you know, not every day doesn't
mean every day is easy, but it's nice to have
a job that you're that passionate about. And student loans
are kind of that for you. And you are an
(04:46):
expert for sure on this front. And there's so much happening.
I feel like there's so much to talk about in
today's episode. I guess let's start maybe with kind of
the recent news that happened to the end of last week.
You know, what's the latest with student loan forgiveness. It
it looks like now it's going to be decided by
the highest court in Land, by the Supreme Court. But
can you kind of fill us in on where things
stand right now. It's been in limbo back and forth,
(05:08):
and now it's like still kind of in limbo. But
you know what's the latest? Yeah, yeah, my goodness. I
feel like if anyone who has student loans has probably
felt like they've been on a roller coaster over the
past couple couple of years. Now um on the brak
shut down. Yeah, so most recently, UM, we we originally
(05:33):
were getting excited about this one time cancelation that seemed
like it was coming through. They had announced that they
were going to forgive ten or twenty thousand of student
loans for federal borrowers. Ten if you didn't have PELL grants,
twenty if you did have PELL grants, and you had
to be under a income threshold. And they went as
far as putting the application up on student aid dot
(05:55):
gov and allowing people to submit applications, and it got
challenged lots of lawsuits. Um. Some they were able to
clear up, like allowing people to opt out of the
cancelation because maybe it created a tax liability and their state.
Others they you know. Uh So I think where we're
at right now is that it has been stopped or
(06:17):
shut down where they've totally taken the application off of
the website. It says something to the effect of, you know,
we're on on hold right now, tied up in court,
and it is it's going to the Supreme Court. So
the announcement that was made most recently was UM that
the Supreme Court is their planned to look at this
in the spring of and in response to the Texas
(06:42):
judge shutting down cancelation originally and it having to move
to Supreme Court. They had extended the Department of Education
had extended payments again as well, and it was kind
of like a I kind of think it's funny because
it's it's almost like they're challenging each other. But the
way in the past, we've had extensions that have said,
you know, payments are going to be extended until this date,
(07:04):
but this time they came back and said, okay, well,
payments are going to be extended sixty days after this
one time cancelation is approved or relief is awarded. So
it's almost like it's contingent on the court system allowing
for this one time cancelation for when payments are going
to kick back in. So that means there's no like
start date exactly. It will be sixty days after approval.
(07:27):
But Supreme Court has also stated or or what's what's
known right now is that cancelation cannot happen until the
Supreme Court makes a ruling. But I'll pause because I
knew I kind of brain dumped a lot of things
on you right there. I'd like a piece that apart
there definitely seems like there is a process, and I
mean it seems like is it next summer? I mean,
(07:48):
so when a decision is made, I guess like it
would be good to know how long student loan borrowers,
how long they might actually be in limbo before they
know something, because I think for a lot of folks
they're probably saying it's fine if payments resume. I just
want to know what the heck to do, and so
being in limbo, I think it's the most difficult spot. Um,
(08:08):
So what's the Yeah, what's the timeline? What's the time
frame that you think folks can expect. So let's say
they make Supreme Court makes decisions on this um, and
let's say they approve the one time cancelation in April.
Then by how they've extended payments again, it'll be sixty
days after April when payments resume. So April made June,
(08:30):
payments would kick in June. Um the longest they could
be extended for is so it says June, which sixty
days after June would put us at August thirty. So
payments could be kicking in in September. That's the longest
I think we could be in this payment freeze again,
but it could be maybe as early as May or June,
(08:52):
depending on how fast decisions are made once once they
start deciding in the Supreme Court. Basically, because of that,
borrows borrowers need to be prepared, like they don't. We
don't know when the Supreme Court ruling is going to
come out. It looks like probably late spring, early summer
sort of thing. And and we won't have payments resumed
for a couple of months after that even Still, but
you need to be prepared because we're not sure of
(09:15):
the exact timeline, right, and so we're the limbo continues.
I guess I have a question for you to the
Department of Education. They sound pretty confident in the messaging
that they're sending student long Barrows via email, that they're
using terminology like and I believe this is a direct
quote when we prevail in their communication. Yeah, I don't.
(09:36):
Is there confidence unfounded? I don't know. It feels like
maybe they might be doing a disservice to borrowers with
this wildly optimistic tone. M Yeah, I know. And I
was talking to one of my colleagues about this recently,
thinking like, yeah, they do sound optimistic, maybe they know
something that we don't know. And her response was, well,
the way I see it is they're making it sound
(09:58):
like they're going to do everything they and to allow
this to happen, and if it doesn't happen, it's not
on them. So they're in a way. I think the
other side of this is maybe they are really confident,
maybe they do think that this can get pushed through.
But maybe an alternative way to think about this, or
on the flip side, would be maybe they're not sure.
Of course they're not sure, No one's sure, um, but
(10:21):
maybe they're trying to cast some blame if it doesn't
work because they wanted it to happen. They did everything
they could, and if it doesn't, it's not their fault,
if that makes sense. Yeah. Political positioning. There's a lot
of that happening from all sides right now, a lot
of posturing. Okay, So Megan, so you've got a lot
of folks who work with you, you know, folks who
have hired you to put together a plan for them.
(10:43):
Like what are you telling those folks specifically what to
do with their money? Right? Like? Like where do you
suggest they those folks stick dollars that otherwise would have
gone to start paying their loans in January instead, What
are you telling them to do with that money? Yeah,
so it does depend on what your ultimate path is
going to be when it comes to your student loans.
If you're someone who's going towards forgiveness, either with public
(11:06):
service loan forgiveness or the income driven forgiveness path, this
payment extension is just more good news for you because
all of these months that we're in this forbearance environment
will count towards forgiveness for free. So there's no reason
to be making payments when we are we're already getting credit.
So for those folks who don't need to be making payments,
(11:27):
I'm telling folks, hey, you know, there's other things you
could be prioritizing, like paying down higher interest debt, making
sure emergency savings is topped off, um, maybe increasing how
much you're saving for you know, for one of your
goals coming up. Those are some of the more responsible
things that you could be doing. You could also, right, So,
(11:50):
I mean, you know, if those other things are are
in a good in good shape, then of course, you know,
treat yourself a little bit, maybe spend a little bit
more on on gifts this season or whatever is going
to make you happy, self care, personal care. You have
a little more time before payments kick in, but I
do highly, highly recommend making sure that you're preparing for
(12:10):
that payment to resume, because it has been so long
since payments have been around where people have gotten used
to not having that payment in the mix. And we've
had inflation, as y'all know, that has made cost of
living very, very different than maybe what it was three
years ago when you had the student loan payment. So
I am suggesting folks practice that payment by just you know,
(12:32):
taking that money that we know the payment will be,
either setting it aside towards one of those responsible financial
goals we talked about, or um, you know, putting it
towards something else, but just accounting for it so you're prepared.
I like you said, practice the payment. I think that
is like a perfect phrase, because that's what we've been
saying is like out of sight, out of mind means
(12:52):
you're going to be in for a shock of financial surprise.
You yeah, yeah, And like you said, Megan, let me
with inflation being higher, I think it's so easy for
folks to see those additional dollars that they would have
otherwise been able, like you said, maybe to do something
responsible with just get absorbed into their day to day spending,
in their month to month spending. It's not that there's
sitting on this giant pile of cash. They're just frittering
(13:14):
those dollars away. It's it's it's money that you know
isn't going to anything truly impactful for sure. I want
to know from a tax standpoint, how do these moves
affect tax planning for individuals, for couples with student loans.
Does the moratorium, the payment pause the potential for forgiveness,
but the lack thereof right now? How does that? Next month?
People are going to start getting tax documents in the
(13:37):
mail in their email, So how does this impact anybody's
tax status or tax like you know, what they owe
in taxes? H. Yeah, that's that's a great question. I
think one big way that taxes and and tax status
will impact people in this payment extension could potentially impact
people is along the same lines as what I was
(13:58):
mentioning before. If you're someone who's going going towards forgiveness,
you may be looking at filing taxes separately. From your spouse,
if your spouse doesn't have student loans, and or you're
trying to keep your payment off of just your own income.
Because income driven plans, they're dictated on income, and if
you're filing jointly, it's based off of the joint income.
(14:18):
If you're filing taxes married separately, depending on the plan,
you can keep that payment off of just your own income,
which is advantageous for people who are going towards forgiveness
because that can keep the payment lower. So how this
extension might complicate things but maybe create some opportunity is, um,
no one has been required to update income in a
(14:41):
very long time, and they won't before definitely before July one,
so no one's going to have to update their payments
change payments before then. Um, that could also be extended
because of this recent payment extension. So what that means
is next time people have to update income when when
they do that, it's going to link back to the
(15:02):
most recently filed tax return on file. So it's probably
gonna unless someone's extending taxes for some reason. So that
that makes you need to think about your tax situation.
For two, like, would it makes sense for you to
be filing separately to keep the payment off of your
own income or not where one those tax returns didn't
(15:27):
really come into play, so you may have been able
to file jointly and it not affect your your payment,
if that makes sense. Sure, Yeah, if if you do that,
you're you're lucky because you're able to take advantage of
those you're taking those benefits that were offered by filing jointly.
But now, like you said, hopefully, I mean looking forward,
I mean that is something that folks are gonna need
(15:48):
to take into accounts. How it is that you file
is going to have a massive impact on some of
those income based repayment plans. And speaking of those those
different forgiveness programs that are available for for folks out there,
we're gonna die more into that right after the break.
(16:11):
All right, we are back from the break, still talking
with Megan McGuire about everything you need to know about
student loans right now, because a lot of moving parts,
a lot going on, a lot of confusion for borrowers
right now, and maybe we want to talk about PSLF,
We want to talk about the new income based Repayment
Plan as well in a second, but I want to
ask you too. There's there's some folks who paid off
their student loans during the pandemic. They took the interest
(16:34):
freeze as a chance to say that I can make
more progress, and so some of them feel, I don't know,
maybe like that was the wrong move to do because
they might have lost out on forgiveness. But if you
did that during the pandemic, the rules stated the rules
that are now in limbo, that you would still be
able to get a refund on the amount you paid
off during that payment pause. But where do things stand
(16:56):
for people who are saying this is debt that I
want to be out of my life? Uh? Should they
be accelerating payments? Should be they be trying to pay
off their student loans altogether? Or don't? It feels like
it's hard to navigate, especially for how the money listeners
who are like I don't really like debt. I kind
of want to be done with my student loan debt
wise or not to pay it off? Yeah, so I
(17:17):
think it can be wise. If you're in that boat
where forgiveness is either just not attractive to you or
mathematically isn't going to make sense, then now is a
great time to be putting extra payments or just paying
towards the loans. I know you don't have to right now,
but if you are making payments, your dollars are going
further because you're not going up against interest as well,
(17:39):
it gives you a little bit of a bigger shovel
to start, you know, winding that down. So that's that's
definitely something you can do. The only thing I would
mention is just make sure that there's other h make
sure that other bigger priorities are taking care of first,
Like make sure you're paying down other higher interest debt first,
like credit cards, Like you shouldn't be accelerating your student
(18:00):
own payments right now. If you have interest rates on
some credit card debt, prioritize that first. Make sure maybe
you have some money in emergency savings because that's the
first line of defense against credit card debt. And then
if those two things are checked off, there's no other
financial priorities that that you need to be taking a
look at. Then definitely start to work down the balance
(18:22):
now if the one time cancelation does come through, because
that might be a question that people have as well.
You know, I don't want to pay it off um,
So what's good is if you do pay off enough
to where a portion of that would have been canceled
or forgiven, if this one time cancelation comes through, you
will get that back in a refund. So there's no
(18:45):
downside to be paying right now because if the one
time cancelation comes through, you'll you'll get that money back.
But maybe one other more crafty suggestion. High yield savings
accounts are looking really good right now. We're at like
three percent interest. So what I might suggest is maybe
put that money aside into a high old savings account
(19:06):
like what you would be dumping onto the student loans,
because you'll earn three percent until interest kicks back in
and before payments and interest are resuming, we'll know we'll
have a sixty day heads up. Take that money from
the high old savings plus the three percent that you earned,
dump it onto the loans at that time, and may
not be a ton of interest growth, but it'll be
(19:28):
better than zero percent. So those are some things better
than nothing. Like you said, it makes all the sense
in the world to practice those payments, and whether or
maybe you've already got a high high old savings account,
and even just creating a separate bucket or like a
separate sort of sinking fund where you are funneling those
payments into that just to kind of your market um
for the student loan payments as well. I think that
(19:49):
could be smart. But um, Megan, like, what's the latest
for folks who are in line to receive PSLF. Uh
it seems like those folks have made out like bandits. Honestly,
like all of those uh pause months being applied to
their their timeline, it seems like many folks are likely
to have a massive chunk of forbearance time count towards forgiveness.
(20:10):
So yeah, like what what what words of wisdom do
you have for those folks? Yeah? So PSLF is a
refreshes for those who are working in government or a
nonprofit setting. Uh so public service work, you're employed in
public service full time. There was a lot of news
about the PSLF waiver that expired October thirty one. It
(20:32):
was allowing people to go back and get a second
chance at getting payments to count that previously wouldn't have
counted because you had the wrong loans or weren't on
the right repayment plan. That has ended. There are certain
things that are actually being extended from that though through
the I d R waiver, and the I DR waiver
is actually how forbearances were being allowed to get counted
(20:55):
if they were over certain periods over twelve months of
consecutive for bearance or more or thirty six months or
more forbearance um on your account. Ever, so the I
d R waiver in the PSLF waiver together, that's how
people were getting a lot of credit for previously ineligible
payment periods. The I d R waivers still exists, so
(21:18):
people can still get credit for those forbearances if they
haven't submitted an employment certification form, so it's not too
late for people to go back and get prior credit
for PSLF. If maybe you missed out, you just have
to still be employed at an eligible employer. Now that's
one of the bigger differences, but PSLF I think there
(21:39):
are some positive changes to come as well. Um So
starting mid July one UH, they're going to start allowing
contractors in states like California and Texas to qualify for
PSLF if by state law they're not eligible for PSLF
because they're they have to be contracted through like a
(22:00):
partners group for example, like Kaiser Permanente is a great
example of this for physicians in Texas and California, where
state law says that they cannot be an employee of
the nonprofit hospital. They have to be hired through a
partners group which is not nonprofit. So those folks, even
though they're doing the same exact job as those you know,
(22:22):
doctors in a nonprofit hospital setting, they weren't able to
get PS LEFT because their employer, like who was on
their W two, wasn't the nonprofit. So those folks will
now start to be able to qualify starting July. And
then there's another, you know, a couple other like nuances
for things that's that they're going to be changing with
PS left. But that's probably one of the bigger ones, okay.
(22:46):
And one of the other things I'm kind of confused
about right now is the new income base plan that
was announced with the what the ten the track for
a tenure forgiveness eligibility for that previously was just folks
in public service who would be eligible for a tenure
forgiveness timeline, and it also reduced the amount that people
needed to pay on a monthly basis. I feel like
(23:08):
that hasn't received nearly as much attention as kind of
the ten K and forgiveness, But it's huge, right and
it seems like it could lower the payments substantially for
millions of folks moving forward, allowing them to achieve full
forgiveness a whole lot faster. So can you tell us
more about that and what the status of that new
IBr plane is right now? Yes, I'm really excited about
(23:28):
this as well. I agree with you. I think they're well.
I think there's not as much of attention on it
right now because is it it's a proposed plan at
this point that has to go through legislation, so it
can change. The proposed details though are exciting, Like if
they go through as is, there's a lot of opportunity
there and it may have people lean more towards forgiveness
(23:51):
that maybe otherwise wouldn't have. Maybe you were someone who
right now, with their current rules, make makes more sense
to pay the loans off, but with this new plan
it might lean us more towards considering forgiveness instead. So
that's that's really interesting. But in a nutshell, I think
you hit on some good points for undergraduate borrowers. Forgiveness
(24:13):
could be achieved and as short as ten years without
public service work, and the payments for undergraduate loans would
be could be as low as five percent of discretionary income.
If you're someone who has both undergraduate and graduate loans,
the graduate loans would still be it could be as
low as ten percent like the plans we have now,
(24:35):
but the poverty line deduction that goes into how they
calculate the income driven payment would be higher, which makes
the payment a little bit lower just across the board
for anybody who has federal student loans. And then the
other piece that's really exciting is there would be an
interest subsidy, a better interest subsidy. So, thinking about income
driven plans, if your balance is a lot more than
(24:58):
what your income is, your income driven payment of course
is meant to make the payment affordable, but it's probably
not touching principle and it may not even be covering
the interest cost per month. So that would mean that
your balance is growing over time, which would be a
terrifying thing if there wasn't forgiveness. But there is forgiveness
with any of these income driven plans after either twenty
(25:20):
or twenty five years. But one thing to know is
after forgiveness, whatever balance is forgiven, it can be taxable
to you in the future as income. So if your
balance is growing and growing and growing over time, it
does get forgiven. But if you have to pay taxes
on that big balance, you know that tax here, that
could be a hefty tax bill. So one of the
(25:42):
positive changes that might come with this new income driven
plan too is that it would not allow the balance
to grow, so it would stay at what the current
balance is, even if your payment wasn't enough to cover
the interest costs per month. So that means in the future,
if we do have to pay taxes unforgiven debt, it
would be a lower balance than what it maybe otherwise
(26:03):
would be. So that's one other big update. I mean,
that feels like it could be a game changer for
a ton of folks. So even if this, like the forgiveness,
gets the headlines, but if this new repayment plan actually
gets through, that could just completely revolutionize the people how
they feel and their financial responsibility towards those student loans.
But I guess you know what, what does that look
(26:23):
like moving forward? It's a proposal. How does that come
to fruition? And when will we know more, it does
have to work its way through legislation, which always takes
some time, but they I think we're going to see
some formal decisions on it by summer of three, so
as as you all can kind of tell, there's a
lot of things that we're going to have more information
(26:44):
about by summer of a lot that is up in
the air. Yeah, and hopefully we will have many updates
between now and then as more information comes to light.
But um, okay, Megan, so so talk to us about
refinancing student loans as well, because I feel, I guess
it seems like it's been kind of mostly a stupid
move for folks with federal student leans, at least over
(27:05):
the past few years. It's not something that you hear
a lot of folks talking about because why would you
want to refinance? Don't give up the bird in the
hands exactly. Uh So, Yeah, with the potential for forgiveness
still possible, is it still something that that most folks
should honestly does not even consider at this point right now?
It's it's tricky, yeah, because we we do have zero
(27:26):
percent interest for longer. Interest rates are also not great
right now because of inflation, so there's probably not. There's
not really any incentive for people to to be refinancing.
But I think the closer we get to when we
know payments are turning back on, and once people have
more clarity on what relief they have access to and
what they don't, next year will probably be a bigger
(27:49):
season for looking at refinancing. And this would only be
applicable for those that are committed to paying their loans
off because refinancing would privatize the loans, and the benefit
to doing that is it helps us reduce the interest
rate compared to what you have in the federal system.
It's really the only way you can reduce your interest rate.
But if you do that, you lose out on a
(28:10):
lot of the benefits federal and you can never get
back into federal loans. So it's kind of one of
those big decisions that you want to make sure you
have all the facts on hand before you pull the trigger. Exactly.
It's a permanent decision, so it's not a bad decision
for everybody. If I was talking to a room of
a hundred people, it's not probably not a bad decision
for everyone in the room. You just you have to
(28:31):
make sure it is the right plan for you, and
so that a way to maybe think about that is
when that time comes, if you are not eligible for PSLF,
if your balance is lower than maybe your income, if
the new income driven plan doesn't seem to be mathematically
beneficial to you too, where you get loans forgiven, and
(28:53):
if they don't come out with the one time cancelation,
or they do and it's already been applied. That those
kind of things, you'd want check those boxes off before
you go and look at refinancing. But I think if
if you're good on those topics and those you've done
the research on those things, then then maybe refinancing could
make sense when that time comes. Okay, are one other
(29:14):
interesting rule change that might help at least some folks
become more able to discharge their loans to not forgiveness,
but to discharge them altogether, is via new bankruptcy rules
that the Biden administration has implemented. So can you give
us more info on that. It looks like those just
went into effect, what a week, week and a half
ago something like that, So we haven't seen widespread discharging
(29:36):
of student loans via bankruptcy, but it seems like maybe
we might see that become more common in the future. Yeah.
So historically, to be able to discharge loans and bankruptcy court,
you had to prove that you would not be able
to provide for your family and carry a student loan payment,
and that was very difficult to do if you had
federal loans because your income driven payment could be as
(29:56):
low as zero depending on income. You had to prove
un do hardship, that's the term. So that has been relaxed.
There have been a couple of court cases over the
past couple of years that have really kind of cracked
this open where you know, student loans are also not
only lent lent for tuition. You can borrow cost of attendance.
(30:17):
Uh that that includes living, it can include transportation, food,
so it's not just tuition. And the reason why student
loans weren't really dischargeable in the past was because there
was such an iron clad rule that education, uh you know,
money for education or loans for education. We're we're just
it was not not an option to be discharged through
(30:40):
bankruptcy without that undue hardship, which was again really hard
to prove. But now that we know and it has
always been the case, that a lot of the loans
that you can borrow, the whole balance is not just
for tuition, could be for other things. That that's one
piece that's kind of cracked the door open. But I
think just laxing the rules with the Biden administration is
(31:02):
going to make bankruptcy an option for student loan debt
where otherwise it has not been. So it is an option,
it just might be a really difficult one when it
comes to your credit. So bankruptcy with student loans, that's
something you carefully want to consider with an attorney. You
want to make sure you have all the facts and
know how that would affect your situation and your finances
(31:24):
going forward. So you'd want to communicate that or chat
with an attorney about that before you make that decision. Okay,
all right, Yeah, that's good, good to know. But we've
got a few more questions we want to get to
about student loans, including maybe, just like some of the
other besides these big things we've tackled already, some of
the biggest concerns that student loan borrowers face. Will get
to that and more right after this. All right, we
(31:55):
are still here talking about student loans. Everything that you
wanted to know about student loans with Megan McGuire and Megan,
you know, like besides just the ambiguity of forgiveness and
payment pauses, I mean we've talked through just how we're
not going to know a lot of this information until
it's decided in the course or unless it goes through legislation,
but right now, like, what are the biggest student loan
concerns facing folks who you speak with right Like, so
(32:18):
the folks who who are hire you for your services,
what are some of the like maybe some of the
more practical issues that you are seeing them deal with
right now. Well, I think first and foremost is definitely
just kind of the decision fatigue or like knowing what's
applicable to them and what's not, because there's so much
out there right now about student loan forgiveness and new
(32:42):
repayment options and um, there's just a lot of info
to where it's hard to kind of filter yourself into
knowing what you should be paying attention to. So that's
that's been one. And then I think in inflation is
another piece of the puzzle, because I think that's something
that's going to affect people's finances in general, but with
(33:03):
student loans, inflation has impacted how much the cost of
attendance is going to be for people going to school.
Right now, dollars may not go as far as they
used to, and so the school itself, their cost of attendance,
how much they allow people to borrow, may not be
(33:23):
keeping up with inflation when it comes to um the
ability to borrow for for housing, for transportation, for eating,
you know, just the basic necessities to provide for yourself
while you're in school. But it's also affected interest rates,
which makes paying back student loans more expensive. So federal
rates right now are are much higher than where they were. Um,
(33:46):
they really took a nose dive. Interest rates for student
loans really went down federally and for for private refinancing.
But now we're back at like six seven per cent,
which that does make paying student loans back are expensive
for for folks. UM. So that's another maybe general reality.
I think PSLF was a huge topic for a while
(34:08):
with the waiver, but now that's really died down. So
it's just, you know, I think people are just trying
to figure out, Okay, what are my next steps and
the way I tell people to think about how they
should start putting together their plan is if if you're
someone whose balance is lower than your income, then you're
probably someone who needs to be paying the loans off
(34:28):
here coming up, and maybe you do that now. Maybe
you pay extra towards the loans now because we're at
zero percent, or maybe you use the high old savings
strategy we talked about. If you're someone who's balance is
much greater than your income than a lot of these
forgiveness opportunities with income driven repayment, they're going to be
really applicable to you. So we we know that income
(34:51):
driven plans provide forgiveness now after twenty or twenty five years,
So you'd want to figure out which plan that's available
today makes sense for you if you should be filing
taxes married or separate, and then if this new plan
comes about, might be better to jump to at that time.
But if you're going that forgiveness route, you'd want to
be paying as little as possible to maximize how much
(35:14):
you you can get forgiven. So those are ways that
you could kind of put yourself in a bucket for
what's coming up. Yeah, I like that rule of thumb
kind of that balanced to income. I think it's going
to help a lot of people make a more informed
decision when it comes to how they proceed with their
student loans, especially in this limbo time. I think it'll
just give a lot of folks, uh some context to
know where it is that they stand. You've got all
(35:36):
these rules changing, but at the end of the day,
if you know that cool, this is generally what I
should be doing, then I think that gives a lot
of folks what feels like maybe some solid ground. Still
it's felt it felt like they've just been walking trying
to navigate through quicksand shifting sand for sure. Yeah, and
I saw I saw some stats recently, and I'm sure
these are very familiar to you, but folks with student
(35:56):
loans are less likely to start a small business, They're
more likely to delay buying a home and having kids,
they have less money safe retirement in those early years.
So do you see that trend amongst the folks you're
consulting with as well? Like it seems like student loans
are holding people back from the normal milestones they would
be would have been achieving were they not to have those.
(36:17):
So I don't know, I'm just yeah, curious to hear
the people you talk with, how are they impacting those
student loans and the reality of having potentially tens or
of thousands of dollars in dead or more, How are
they impacting their life decisions? Absolutely, this is literally why
I wanted to to specialize in student loan planning because
(36:38):
when I was working with my financial coaching practice, I
kept seeing this where people were not saving for retirement,
they weren't starting the business that they wanted to do
when you know, when they were in college they thought
they were going to do. People living at home for longer,
or delaying marriage. I've literally seen that where people have
delayed getting married because of student loans. So that really
(37:02):
tugged on my heart strings because I felt like this
was just one big elephant in the room that people
had to deal with and it wasn't very clear or
it was just complicated, Like student loans are complicated, They're
the most complicated debt out there. And so what I
realized really quickly though, with with learning more about student
(37:22):
loan planning is that if you have the right plan
in place, then that gives you so much more. Not permission,
that's not the right word. But more clarity on what
that path is going to look like for you, which
frees up your mind to be thinking about other things.
And if we have the right plan in place too,
(37:42):
then that means we we know what the payments are
going to be. We know if we need to save
for a potential tax implication for loan forgiveness, other money
could be dedicated towards other things. And so what I
see a lot of times is before people have a plan,
that's absolutely true, people are delaying other financial decisions and
(38:02):
that's negatively hurting them in one way or another financially, mentally,
time wise, whatever the case. But after they have a plan,
a plan that really fits their specific circumstances, and they
feel comfortable with it, they understand how that works, that
really opens the floodgates to being able to move on
(38:23):
to make other financial decisions like being able to save
for that house purchase or being able to start that
business because they know how this will play out. So
that is the favorite part of my job, is like
cracking open that door that has been locked for so
long for people that that maybe didn't have a plan
for their loans and and being able to to watch
(38:46):
them like see that, you know, see see what's next.
That's exactly the ability for them to light up and
to realize that there is some hope, that there's some
light at the end of the tunnel. And just to
use like a biblical reference, it feels like that student
loans can be like a plank in your eye and
you can't see pass them to anything else that you
want to achieve, And it seems like, yeah, the right
plan can help you kind of take that plank out
so that people can see a little more clearly that
(39:08):
there are other options available, and so they PAIRDIGM introduce Megan,
like you're talking about, you know, life before you had
a plan to pay after student loans, in life after
you have a plan. Yes, well, I mean there's also
just the whole if you take if you zoom out
one more one more click, one more step, even before
you take on student loans. I think, I mean that
could that could also be just another way to approach
(39:30):
this entire problem. You know, this is another way of
cracking this nut, is not having to deal with a
nut in the first place. So I mean, like you're
obviously agreeing when it when it comes to helping folks
navigate this complicated system of student loans and helping them
to pay it off. But what tips do you have
for for high school students or maybe for parents of
high school of high schoolers when it comes to taking
(39:51):
out student loans in the first place, to to keep
those to a minimum. Yeah, yeah, so I think, Um,
there's a couple of tips and tricks. And I don't
know you've talked about some of these things too, But um,
saving early and often for for education for your kids,
I think that's that's helpful if if you're able to
that's that's the other piece of it is financial planning wise,
(40:13):
like you want to prioritize yourself and your own financial
well being before you start contributing to your kids. Um,
because you can take out loans for school, as we know,
but you know your scholarships. Yeah, and you could get scholarships,
but your financial well being, you being financially independent in
the future, it takes priority. But um, if you're able
(40:34):
to contribute early and often, do it. You know, open
an account nine or a U T M A or
a non retirement brokerage account. Start saving early because you
have time on your side when your kids are young
and maybe that's something you request from family. Like I've
seen this a lot lately, is where instead of toys
(40:55):
or gifts at Christmas, you ask for donations to to
the college, say beings account. That's one way from a
lump of coal and a contribution. Yeah, so that's that's
one way. But if you're at the point where we're
getting close to when we we need to be going
to school, and we're really just looking at trying to
reduce the costs as much as possible, we don't have
a lot saved, or maybe it's not enough going local.
(41:18):
Is out of school tuition is insane compared to in
state tuition rates, Like you could look at the statistics
on it, you can look at the math on it.
It's disturbing how much more expensive it is for an
out of school, out of state school for for a student.
So that's something to keep in mind when you're looking
at school choices. Scholarships are not something to sleep on.
(41:42):
Grant opportunities are not something to sleep on. Make that
your kid. The high school kids like part time job
over the summer, like applying literally, like do the math
if you get uh two thousand dollar scholarship for five
hours of work. That's a pretty good hourly pay rate,
you know, way better than you're going to give it
a fast food restaurant or the grocery store. Yeah, probably
(42:05):
a little bit more than you're gonna make selling bracelets
at the fourth Red of Life as well. So you know,
maybe you should have been applying to Grant Megan when
off the college. Yeah. Maybe, what other thought? I think
sometimes people don't think they could have a job while
in undergrad I know, graduate school it's a lot more
difficult for people to to work full time because that
(42:26):
is their job. But undergrad that's a great opportunity for
your kid or you to be getting into the workforce,
to be maybe even getting into an industry that you
think you want to go into, like working as a
receptionist at a dental office if you want to be
a dentist, or working in a sales and marketing office.
(42:47):
Like there are internships, there's lower in you know, entry
level jobs that you could be doing while you're in college.
They both give you clarity on what you want to
do for work post graduation and also give you some money.
Maybe there's also incentives that they have as part of
their employer benefits to keep you in school to get
(43:08):
your c p A. Or to get a degree specifically
for their you know, for that industry. So that's something
that I highly recommend. That's what I did when I went.
I went to Kennesaw State here in Georgia. I worked. Yeah,
it was a small school when I went. We didn't
have football yet, but they're they're on the up and up.
But I worked full time the four years I went
(43:29):
to undergrad. I did the books for a gym facility
in in the area, and that's where I learned that
I really liked numbers and doing you know, planning. And
it wasn't personal financial planning at the time, but that
job made me realize I didn't want to go into
corporate finance, that I wanted to do personal finance. So
that I think helped me pay for school, pay for
(43:52):
my living instead of having to borrow for living, and
um helped point me in the direction to my career.
I think that's rate advice. I think it's great, like
you said, from an income perspective, but also a lot
of people graduating, they're like, what do I do now?
Where do I go work now? And there's this crisis
of I don't know what career path I want to take,
(44:12):
but you know, having that job at least for a
couple of years while you're getting your degree can help
you make those connections and help you kind of figure
out what it is that you want to do moving forward.
You're not solely just like, Okay, now that I've got
my degree in hand, what do I do? You're figuring
that out along the way, And I think that's just
so helpful for young adults to go in that direction. Yeah,
(44:34):
that's a great point because I think we we did.
There was a period of time where the answer for
young adults was just go to school, get a degree,
you'll get a good job. Now that's changed a little bit.
You need to be a little more proactive about what
you're going to school for, what the game plan is
after graduation, and I think you know, part time employment,
(44:55):
even full time employment during school or internships over the
summer like that really help you get an idea for
what you actually want to do with your career. That's right. Yeah,
it's just about thinking ahead a little bit, having am
having a game plan? Yes, well, Megan, oftentimes when we
talk about financial planners, we kind of knock them a
little bit, because, to be honest, when it comes to investing,
(45:17):
it's not all that difficult for the most part, especially
early on in your your career. But you provide really
helpful guidance and what it is that you do, especially
for those who've that that that might have more complicated
student and situations. And so we want to give folks
a chance here to to learn more about you, Like
where can folks learn about the services that you are
offering individuals. Yeah, so I run my own practice, financial
(45:40):
Coach Megan, so you could go to my website financial
coach Megan dot com. I started in the financial planning industry,
like the traditional investment planning like comprehensive retirement planning world,
and I quickly realized that there was a section of
people that was not really being catered to, and that
was those that were, you know, post graduation, had a
(46:04):
lot of student loan debt, had pretty good income, but
really didn't have any or didn't know where to start
when it came to putting together a financial plan. And so,
you know, I wanted to help folks figure out how
to put together a budget, how to pay down student loans,
or how to pay down other debt, how to start
saving for retirement. Um So I don't focus on investment
(46:25):
management at all. I'm focusing on helping people build those
foundational pieces to their plan. And I really enjoy this space.
I think this helps people who you know, weren't really
taught this while growing up, or you know, don't really
I know that's probably not gonna be anybody on this podcast,
because people listening to this are definitely folks that seek
(46:46):
out information and learn how to do their own planning.
But yeah, I think I cater to people that really
just need that additional guidance to pull all those pieces together.
Um So that's the coaching space. So that's what I
would call it, finding actual coaching. And I think that's different, Like,
that's so much different, Matt, and I've said that many times.
Financial coaches are different than financial planners, and they're more
(47:07):
valuable for a huge section of our audience than financial
planners are. And we are glad you're out there. Thank
you so much for the advice that you bring, oftentimes
for free, and then people can also pay for it
too if they need more in depth and more personal guidance.
But we yeah, we love that you're out there helping
folks with the student loaning conundrum that continues to exist,
(47:27):
and uh, this summer, hopefully we'll have more information and
as as things move along, more information to provide people
to help them make a wise choice when it comes
to their student loans, because they're obviously, uh, massively impactful
to ever to a lot of people's personal finances. But Megan,
we hope you have a great holiday. Thanks so much
for joining us on the podcast today. Thank you. I'm
so honored. It was such a fun time. Alright, man,
(47:49):
what an awesome conversation here with Megan, an old friend
of ours who we've known since I think is when
we originally met her back in the day, but hopefully
right after she became a CSLP, and now she's like
all over the place. Just she's like the the lead Georgia.
I don't put so much in anything, and she does.
(48:10):
And amazing at how far she's come in the space.
And I'm very glad that we were able to speak
with her, because again, there there are so many moving
parts right now within the student loaned space, um, and
I think that's one of the things we learned is
that there is a whole lot that is up in
the air. But hopefully this conversation was able to provide
some relief to folks when it comes to knowing what
they should expect when it comes to student leans here
(48:30):
in the future. And actually, that'll be my big takeaway
is she actually gave a nice rule of thumb when
it came to whether or not you should be considering
paying off your student loans. So that would be the
case if you had a student loan balance that was
less than your annual income. But if you have a
balance that is higher than your annual income, that is
when you want to look at some of those income
based repayment or forgiveness plans. That's when you're gonna want
(48:53):
to count on these different programs in order to provide
you with some relief. And so hopefully that's just a
way that folks can do a little it away finding
right like, because right now it's like you're in the
sea and you just have no direction of where to
go and you need to compass or the stars or
something something to help you to figure out which which
direction to go. And that role thought might might not
fit out everybody's specific situation, but it at least gives
(49:15):
a lot of people a general map for like what
the next steps they needed to absolutely And so yeah,
I think that's I think it's great. You had a
big take away joll. Yeah. I think mine was when
when Megan talked about decision fatigue, and there's just with
all it feels like there's a change. There's a new
headline about student loans exhausting every day every week. It
(49:35):
is exhausting. It's overwhelming, and if you have student loans,
you're probably like, it feels like you're a pinball and
you don't know what to do because you're getting constantly
smacked around. You're not sure kind of what to think.
And that rule of thumb you gave is helpful. But
I also wanted to say that people need to be
patient because we're not going to know for a while,
and so there's no point in constantly hitting refresh on
(49:56):
Google News in order to see if there's been a
change made. You'll hear any changes or any massive upheavals,
or any student loan forgiveness news. You'll certainly hear it
here on How the Money. I'm sure you'll see it
elsewhere around the web as well. But to a certain extent,
there aren't massive moves for a lot of people to make.
There's planning you can do in advance, there's preparation that
you can start doing because student loan payments will eventually resume.
(50:19):
But I just want to say, patients, take a chill, bill, relax.
That's gonna help a lot of people in this scenario
because I know there's a lot of angst. There's a
lot of consternation around student loans, but that's not helping anybody.
So if you can kind of like take a breather,
stop checking out the headlines, and know that we will
know more at some point, but we're just not going
to know more next week exactly. Yeah, that I think
(50:39):
that will help some folks. Just take that anxiety, Uh,
take that anxiety down a peg or two totally. Yeah.
You need you need to be like the gnomes on
this bottle of beer that you're not enjoyed. There's so
this is a nice shoof, this is a Belgian dark
but on the label it's got these two gnomes. They
both got Santa hats on Christmas and they're just hanging
out around the fire. And so that's what we want
(50:59):
you to do. During especially during this this holiday season.
If you've got student lines, don't worry about it. It's
gonna take a while before we know what's next. But
we do want you to practice your standard responsible personal
finance habits, of course. But yeah, let's talk about this
beer jewel. Like I said, this is a Belgian dark
brewed with spices. It's got orange peel and time in it.
And I feel like I could totally pick up on
(51:20):
some of those like minerally earthy notes, like in particular
from the time. It kind of gave it like this
savory nous that I was able to enjoy, maybe more
so than I guess a lot of Belgians like that
is one of the aspects of those types of beers
is that their savory. It's almost like you're sitting down
to like a a stew or something, not like not
(51:40):
in viscosity or thickness, but just in the type of
flavor profile that that they're able to bring. Yeah, and
this one, in particular, it does have more of those
time notes. It makes it almost it kind of takes
me back to Thanksgiving a little bit, where you're got
this I don't know, it's it's like you're you're drinking
something that was brewed in a garden or something. Well,
there's nobody in the States or no brewing the States
(52:00):
that makes any beer that I've tasted that feels like
it's on the level of some of these Belgian beers.
And I'm not saying that there aren't beers that are
brewed by brewers here in the State. I think we
have we make the best craft beers in America, but
in the world, in the world. But there's something about
the way they make these beers, a style, the approach,
the craft. Yeah, and and even some of like the
Terawa that like can't be replicated, and so these a
(52:23):
beer like this that you can't find one. They're incredibly
unique in a Yeah, so you have to get the
Belgian briety if you want to try these flavors. And
so I love the uniqueness of this beer. It's got
like caramel e dark vibes. It's got some of those
like dark stone fruit vibes going on as well, And so, yeah,
I really like this beer. It's one of the first
Belgian beers I've ever had, but I haven't had it
(52:44):
in years. So it's kind of fun to to have
this one again. It's one of those o g original
Belgians that you have when you first get into craft beer,
at least in our case when we were visiting the
Brick Store, which is a Belgian beer bar here in Atlanta,
which is like renowned across the country. That's one of
the best beer body. If you're ever in Atlanta, you
definitely need to go by there and this place out
(53:05):
and and I will say, the picture and then the
flavor both make you feel like there's where I started
with the label because it was so colorful, but at
the same time so like warming. And what's the Danish
or the Norwegian hu huga whatever it is. Yeah, it's
that's got it's it's got to give you a dose
of that all the way. Yeah, but yeah, we'll make
sure to link to Megan's website in our show notes.
(53:26):
That way, if you are looking for more individualized custom
advice when it comes to your student loans, you know
how to reach her. But you can find that in
our show notes up on the website at how to
money dot com. And of course, anytime there is new
info about student loans, we will be sure to talk
about it on Friday flights or in our newsletters, which
you can sign up for at how to money dot
com slash newsletter. That's right, man, that's gonna do it
(53:49):
for this episode, Matt. Until next time, best Friends Out
and Best Friends Out bo
Welcome to How the Money. I'm Joel and I'm Matt
and today we're talking everything you need to know about
student loans right now with Megan McGuire. That's right. Megan
(00:28):
McGuire is a student loan expert and she's joining us
on the podcast today. UM. I don't think there's anyone
else we know who understands the ends and outs of
student loans more than Megan does. She has not only
been in the finance industry for more than thirteen years now,
but she's got the bragging rights of being the first
certified Student Loan Professional, the first CSLP in the state
(00:49):
of Georgia. Back when we met her several years ago.
She does a lot of work with student loan planner actually,
and I think we originally met at a brewery. We
we had a listener hang and she showed up and
introduce yourself. But the timing could not be any better
as there have been so many changes and things happening
the student loan space. Where are things with student loan forgiveness?
Where are things with the payment pause? We are excited
(01:12):
to talk about all of that and more today, Megan,
Thank you for joining us. Oh my goodness, thank you
guys for having me, and I feel like, of course,
as soon as I'm about to be introd, I have
my long guy out there with the blower outside. Leaf
flowers are a constant battle when it comes to a podcash. Gosh,
that's true, Megan. The first question we ask anybody who
(01:33):
comes on on the show any guessed, We want to
know what their craft beer equivalent is because Matt and
I we liked spending way too much money sometimes on
good beer, but we don't do it at the expense
of our savings and investments. So what's your splurted what's
your craft beer equivalent? I love I love this question,
and I love hearing everybody's answers too, So I would
(01:53):
say mine, mine truly is having dinner with my husband,
and it feels it feels so weird saying husband too,
because just recently A McGuire so congratulates lands, thank you.
But yeah, so we've that's always been something that me
and him have enjoyed doing together, like going and trying
new restaurants. We like a nice cocktail or two, pairing
(02:15):
wine with different foods. So that's that's one thing that
we we do. We do not do that every night,
because I do enjoy cooking, but a couple of times
a week, that's that's where some of our discretionarybody is
going towards. I love that. Something else I love actually
on your website, I saw that the in the Facts
about Megan, section number one mentions your entrepreneurial spirit that
(02:37):
you had from a very young age. Can you can
you talk through some of the different ventures that you
had as a as a young kid? Oh my gosh, yeah,
I'm thinking back on it, Like I really was like
a little entrepreneur, like really young. And I think it
started so my dad was in sales. He did electrical
sales for big companies, um, and it may have come
(02:58):
from him maybe coaching me a little bit as I
grew up. But I was also in Girl Scouts, so
I learned how to sell Girl Scout cookies and have
like a little cheer dance in front of Kroger to
like get people's attention. But I used to make like
little jewelry. I used to make little dolls. I would
I would sell them at all of our family gatherings.
(03:18):
I would have like a basket that I'd put my
products in that I've made and I'd go around all
my family members and I'd price it out for like
you know, a quarter a dollar or something, and I
was really proud of it, like going around and I'd
have like some spending money for the dollar store at
the end of the day. Is this a family reading
or is this Megan's Market? Right? Right? Yeah? It was
(03:41):
every every little like family gathering. It was like I
remember Easter for one one time, specifically, I was selling dolls, uh,
for the July I was selling these like red, white
and blue bracelets that I had made. Um. But I
really enjoyed it. Wasn't that I liked crafting necessarily, like
I think I was good at because my mom liked
to craft with us. But I really enjoyed the sale,
(04:04):
Like I liked making money and like having that to
go to. So but that was that was my entrepreneurial
spirit growing up. Well. One of the things I think
fact number seven on that list is one of my
favorites because you say that you're so passionate about about
what you do now that even if you won the lottery,
(04:24):
you'd still be doing it. And I think that is
the sign that you have found like the perfect job
for you and Matt and I feel the same way.
I think even if even if we won some sort
of gigantic some of money, we just like what we
do and and that's you know, not every day doesn't
mean every day is easy, but it's nice to have
a job that you're that passionate about. And student loans
are kind of that for you. And you are an
(04:46):
expert for sure on this front. And there's so much happening.
I feel like there's so much to talk about in
today's episode. I guess let's start maybe with kind of
the recent news that happened to the end of last week.
You know, what's the latest with student loan forgiveness. It
it looks like now it's going to be decided by
the highest court in Land, by the Supreme Court. But
can you kind of fill us in on where things
stand right now. It's been in limbo back and forth,
(05:08):
and now it's like still kind of in limbo. But
you know what's the latest? Yeah, yeah, my goodness. I
feel like if anyone who has student loans has probably
felt like they've been on a roller coaster over the
past couple couple of years. Now um on the brak
shut down. Yeah, so most recently, UM, we we originally
(05:33):
were getting excited about this one time cancelation that seemed
like it was coming through. They had announced that they
were going to forgive ten or twenty thousand of student
loans for federal borrowers. Ten if you didn't have PELL grants,
twenty if you did have PELL grants, and you had
to be under a income threshold. And they went as
far as putting the application up on student aid dot
(05:55):
gov and allowing people to submit applications, and it got
challenged lots of lawsuits. Um. Some they were able to
clear up, like allowing people to opt out of the
cancelation because maybe it created a tax liability and their state.
Others they you know. Uh So I think where we're
at right now is that it has been stopped or
(06:17):
shut down where they've totally taken the application off of
the website. It says something to the effect of, you know,
we're on on hold right now, tied up in court,
and it is it's going to the Supreme Court. So
the announcement that was made most recently was UM that
the Supreme Court is their planned to look at this
in the spring of and in response to the Texas
(06:42):
judge shutting down cancelation originally and it having to move
to Supreme Court. They had extended the Department of Education
had extended payments again as well, and it was kind
of like a I kind of think it's funny because
it's it's almost like they're challenging each other. But the
way in the past, we've had extensions that have said,
you know, payments are going to be extended until this date,
(07:04):
but this time they came back and said, okay, well,
payments are going to be extended sixty days after this
one time cancelation is approved or relief is awarded. So
it's almost like it's contingent on the court system allowing
for this one time cancelation for when payments are going
to kick back in. So that means there's no like
start date exactly. It will be sixty days after approval.
(07:27):
But Supreme Court has also stated or or what's what's
known right now is that cancelation cannot happen until the
Supreme Court makes a ruling. But I'll pause because I
knew I kind of brain dumped a lot of things
on you right there. I'd like a piece that apart
there definitely seems like there is a process, and I
mean it seems like is it next summer? I mean,
(07:48):
so when a decision is made, I guess like it
would be good to know how long student loan borrowers,
how long they might actually be in limbo before they
know something, because I think for a lot of folks
they're probably saying it's fine if payments resume. I just
want to know what the heck to do, and so
being in limbo, I think it's the most difficult spot. Um,
(08:08):
So what's the Yeah, what's the timeline? What's the time
frame that you think folks can expect. So let's say
they make Supreme Court makes decisions on this um, and
let's say they approve the one time cancelation in April.
Then by how they've extended payments again, it'll be sixty
days after April when payments resume. So April made June,
(08:30):
payments would kick in June. Um the longest they could
be extended for is so it says June, which sixty
days after June would put us at August thirty. So
payments could be kicking in in September. That's the longest
I think we could be in this payment freeze again,
but it could be maybe as early as May or June,
(08:52):
depending on how fast decisions are made once once they
start deciding in the Supreme Court. Basically, because of that,
borrows borrowers need to be prepared, like they don't. We
don't know when the Supreme Court ruling is going to
come out. It looks like probably late spring, early summer
sort of thing. And and we won't have payments resumed
for a couple of months after that even Still, but
you need to be prepared because we're not sure of
(09:15):
the exact timeline, right, and so we're the limbo continues.
I guess I have a question for you to the
Department of Education. They sound pretty confident in the messaging
that they're sending student long Barrows via email, that they're
using terminology like and I believe this is a direct
quote when we prevail in their communication. Yeah, I don't.
(09:36):
Is there confidence unfounded? I don't know. It feels like
maybe they might be doing a disservice to borrowers with
this wildly optimistic tone. M Yeah, I know. And I
was talking to one of my colleagues about this recently,
thinking like, yeah, they do sound optimistic, maybe they know
something that we don't know. And her response was, well,
the way I see it is they're making it sound
(09:58):
like they're going to do everything they and to allow
this to happen, and if it doesn't happen, it's not
on them. So they're in a way. I think the
other side of this is maybe they are really confident,
maybe they do think that this can get pushed through.
But maybe an alternative way to think about this, or
on the flip side, would be maybe they're not sure.
Of course they're not sure, No one's sure, um, but
(10:21):
maybe they're trying to cast some blame if it doesn't
work because they wanted it to happen. They did everything
they could, and if it doesn't, it's not their fault,
if that makes sense. Yeah. Political positioning. There's a lot
of that happening from all sides right now, a lot
of posturing. Okay, So Megan, so you've got a lot
of folks who work with you, you know, folks who
have hired you to put together a plan for them.
(10:43):
Like what are you telling those folks specifically what to
do with their money? Right? Like? Like where do you
suggest they those folks stick dollars that otherwise would have
gone to start paying their loans in January instead, What
are you telling them to do with that money? Yeah,
so it does depend on what your ultimate path is
going to be when it comes to your student loans.
If you're someone who's going towards forgiveness, either with public
(11:06):
service loan forgiveness or the income driven forgiveness path, this
payment extension is just more good news for you because
all of these months that we're in this forbearance environment
will count towards forgiveness for free. So there's no reason
to be making payments when we are we're already getting credit.
So for those folks who don't need to be making payments,
(11:27):
I'm telling folks, hey, you know, there's other things you
could be prioritizing, like paying down higher interest debt, making
sure emergency savings is topped off, um, maybe increasing how
much you're saving for you know, for one of your
goals coming up. Those are some of the more responsible
things that you could be doing. You could also, right, So,
(11:50):
I mean, you know, if those other things are are
in a good in good shape, then of course, you know,
treat yourself a little bit, maybe spend a little bit
more on on gifts this season or whatever is going
to make you happy, self care, personal care. You have
a little more time before payments kick in, but I
do highly, highly recommend making sure that you're preparing for
(12:10):
that payment to resume, because it has been so long
since payments have been around where people have gotten used
to not having that payment in the mix. And we've
had inflation, as y'all know, that has made cost of
living very, very different than maybe what it was three
years ago when you had the student loan payment. So
I am suggesting folks practice that payment by just you know,
(12:32):
taking that money that we know the payment will be,
either setting it aside towards one of those responsible financial
goals we talked about, or um, you know, putting it
towards something else, but just accounting for it so you're prepared.
I like you said, practice the payment. I think that
is like a perfect phrase, because that's what we've been
saying is like out of sight, out of mind means
(12:52):
you're going to be in for a shock of financial surprise.
You yeah, yeah, And like you said, Megan, let me
with inflation being higher, I think it's so easy for
folks to see those additional dollars that they would have
otherwise been able, like you said, maybe to do something
responsible with just get absorbed into their day to day spending,
in their month to month spending. It's not that there's
sitting on this giant pile of cash. They're just frittering
(13:14):
those dollars away. It's it's it's money that you know
isn't going to anything truly impactful for sure. I want
to know from a tax standpoint, how do these moves
affect tax planning for individuals, for couples with student loans.
Does the moratorium, the payment pause the potential for forgiveness,
but the lack thereof right now? How does that? Next month?
People are going to start getting tax documents in the
(13:37):
mail in their email, So how does this impact anybody's
tax status or tax like you know, what they owe
in taxes? H. Yeah, that's that's a great question. I
think one big way that taxes and and tax status
will impact people in this payment extension could potentially impact
people is along the same lines as what I was
(13:58):
mentioning before. If you're someone who's going going towards forgiveness,
you may be looking at filing taxes separately. From your spouse,
if your spouse doesn't have student loans, and or you're
trying to keep your payment off of just your own income.
Because income driven plans, they're dictated on income, and if
you're filing jointly, it's based off of the joint income.
(14:18):
If you're filing taxes married separately, depending on the plan,
you can keep that payment off of just your own income,
which is advantageous for people who are going towards forgiveness
because that can keep the payment lower. So how this
extension might complicate things but maybe create some opportunity is, um,
no one has been required to update income in a
(14:41):
very long time, and they won't before definitely before July one,
so no one's going to have to update their payments
change payments before then. Um, that could also be extended
because of this recent payment extension. So what that means
is next time people have to update income when when
they do that, it's going to link back to the
(15:02):
most recently filed tax return on file. So it's probably
gonna unless someone's extending taxes for some reason. So that
that makes you need to think about your tax situation.
For two, like, would it makes sense for you to
be filing separately to keep the payment off of your
own income or not where one those tax returns didn't
(15:27):
really come into play, so you may have been able
to file jointly and it not affect your your payment,
if that makes sense. Sure, Yeah, if if you do that,
you're you're lucky because you're able to take advantage of
those you're taking those benefits that were offered by filing jointly.
But now, like you said, hopefully, I mean looking forward,
I mean that is something that folks are gonna need
(15:48):
to take into accounts. How it is that you file
is going to have a massive impact on some of
those income based repayment plans. And speaking of those those
different forgiveness programs that are available for for folks out there,
we're gonna die more into that right after the break.
(16:11):
All right, we are back from the break, still talking
with Megan McGuire about everything you need to know about
student loans right now, because a lot of moving parts,
a lot going on, a lot of confusion for borrowers
right now, and maybe we want to talk about PSLF,
We want to talk about the new income based Repayment
Plan as well in a second, but I want to
ask you too. There's there's some folks who paid off
their student loans during the pandemic. They took the interest
(16:34):
freeze as a chance to say that I can make
more progress, and so some of them feel, I don't know,
maybe like that was the wrong move to do because
they might have lost out on forgiveness. But if you
did that during the pandemic, the rules stated the rules
that are now in limbo, that you would still be
able to get a refund on the amount you paid
off during that payment pause. But where do things stand
(16:56):
for people who are saying this is debt that I
want to be out of my life? Uh? Should they
be accelerating payments? Should be they be trying to pay
off their student loans altogether? Or don't? It feels like
it's hard to navigate, especially for how the money listeners
who are like I don't really like debt. I kind
of want to be done with my student loan debt
wise or not to pay it off? Yeah, so I
(17:17):
think it can be wise. If you're in that boat
where forgiveness is either just not attractive to you or
mathematically isn't going to make sense, then now is a
great time to be putting extra payments or just paying
towards the loans. I know you don't have to right now,
but if you are making payments, your dollars are going
further because you're not going up against interest as well,
(17:39):
it gives you a little bit of a bigger shovel
to start, you know, winding that down. So that's that's
definitely something you can do. The only thing I would
mention is just make sure that there's other h make
sure that other bigger priorities are taking care of first,
Like make sure you're paying down other higher interest debt first,
like credit cards, Like you shouldn't be accelerating your student
(18:00):
own payments right now. If you have interest rates on
some credit card debt, prioritize that first. Make sure maybe
you have some money in emergency savings because that's the
first line of defense against credit card debt. And then
if those two things are checked off, there's no other
financial priorities that that you need to be taking a
look at. Then definitely start to work down the balance
(18:22):
now if the one time cancelation does come through, because
that might be a question that people have as well.
You know, I don't want to pay it off um,
So what's good is if you do pay off enough
to where a portion of that would have been canceled
or forgiven, if this one time cancelation comes through, you
will get that back in a refund. So there's no
(18:45):
downside to be paying right now because if the one
time cancelation comes through, you'll you'll get that money back.
But maybe one other more crafty suggestion. High yield savings
accounts are looking really good right now. We're at like
three percent interest. So what I might suggest is maybe
put that money aside into a high old savings account
(19:06):
like what you would be dumping onto the student loans,
because you'll earn three percent until interest kicks back in
and before payments and interest are resuming, we'll know we'll
have a sixty day heads up. Take that money from
the high old savings plus the three percent that you earned,
dump it onto the loans at that time, and may
not be a ton of interest growth, but it'll be
(19:28):
better than zero percent. So those are some things better
than nothing. Like you said, it makes all the sense
in the world to practice those payments, and whether or
maybe you've already got a high high old savings account,
and even just creating a separate bucket or like a
separate sort of sinking fund where you are funneling those
payments into that just to kind of your market um
for the student loan payments as well. I think that
(19:49):
could be smart. But um, Megan, like, what's the latest
for folks who are in line to receive PSLF. Uh
it seems like those folks have made out like bandits. Honestly,
like all of those uh pause months being applied to
their their timeline, it seems like many folks are likely
to have a massive chunk of forbearance time count towards forgiveness.
(20:10):
So yeah, like what what what words of wisdom do
you have for those folks? Yeah? So PSLF is a
refreshes for those who are working in government or a
nonprofit setting. Uh so public service work, you're employed in
public service full time. There was a lot of news
about the PSLF waiver that expired October thirty one. It
(20:32):
was allowing people to go back and get a second
chance at getting payments to count that previously wouldn't have
counted because you had the wrong loans or weren't on
the right repayment plan. That has ended. There are certain
things that are actually being extended from that though through
the I d R waiver, and the I DR waiver
is actually how forbearances were being allowed to get counted
(20:55):
if they were over certain periods over twelve months of
consecutive for bearance or more or thirty six months or
more forbearance um on your account. Ever, so the I
d R waiver in the PSLF waiver together, that's how
people were getting a lot of credit for previously ineligible
payment periods. The I d R waivers still exists, so
(21:18):
people can still get credit for those forbearances if they
haven't submitted an employment certification form, so it's not too
late for people to go back and get prior credit
for PSLF. If maybe you missed out, you just have
to still be employed at an eligible employer. Now that's
one of the bigger differences, but PSLF I think there
(21:39):
are some positive changes to come as well. Um So
starting mid July one UH, they're going to start allowing
contractors in states like California and Texas to qualify for
PSLF if by state law they're not eligible for PSLF
because they're they have to be contracted through like a
(22:00):
partners group for example, like Kaiser Permanente is a great
example of this for physicians in Texas and California, where
state law says that they cannot be an employee of
the nonprofit hospital. They have to be hired through a
partners group which is not nonprofit. So those folks, even
though they're doing the same exact job as those you know,
(22:22):
doctors in a nonprofit hospital setting, they weren't able to
get PS LEFT because their employer, like who was on
their W two, wasn't the nonprofit. So those folks will
now start to be able to qualify starting July. And
then there's another, you know, a couple other like nuances
for things that's that they're going to be changing with
PS left. But that's probably one of the bigger ones, okay.
(22:46):
And one of the other things I'm kind of confused
about right now is the new income base plan that
was announced with the what the ten the track for
a tenure forgiveness eligibility for that previously was just folks
in public service who would be eligible for a tenure
forgiveness timeline, and it also reduced the amount that people
needed to pay on a monthly basis. I feel like
(23:08):
that hasn't received nearly as much attention as kind of
the ten K and forgiveness, But it's huge, right and
it seems like it could lower the payments substantially for
millions of folks moving forward, allowing them to achieve full
forgiveness a whole lot faster. So can you tell us
more about that and what the status of that new
IBr plane is right now? Yes, I'm really excited about
(23:28):
this as well. I agree with you. I think they're well.
I think there's not as much of attention on it
right now because is it it's a proposed plan at
this point that has to go through legislation, so it
can change. The proposed details though are exciting, Like if
they go through as is, there's a lot of opportunity
there and it may have people lean more towards forgiveness
(23:51):
that maybe otherwise wouldn't have. Maybe you were someone who
right now, with their current rules, make makes more sense
to pay the loans off, but with this new plan
it might lean us more towards considering forgiveness instead. So
that's that's really interesting. But in a nutshell, I think
you hit on some good points for undergraduate borrowers. Forgiveness
(24:13):
could be achieved and as short as ten years without
public service work, and the payments for undergraduate loans would
be could be as low as five percent of discretionary income.
If you're someone who has both undergraduate and graduate loans,
the graduate loans would still be it could be as
low as ten percent like the plans we have now,
(24:35):
but the poverty line deduction that goes into how they
calculate the income driven payment would be higher, which makes
the payment a little bit lower just across the board
for anybody who has federal student loans. And then the
other piece that's really exciting is there would be an
interest subsidy, a better interest subsidy. So, thinking about income
driven plans, if your balance is a lot more than
(24:58):
what your income is, your income driven payment of course
is meant to make the payment affordable, but it's probably
not touching principle and it may not even be covering
the interest cost per month. So that would mean that
your balance is growing over time, which would be a
terrifying thing if there wasn't forgiveness. But there is forgiveness
with any of these income driven plans after either twenty
(25:20):
or twenty five years. But one thing to know is
after forgiveness, whatever balance is forgiven, it can be taxable
to you in the future as income. So if your
balance is growing and growing and growing over time, it
does get forgiven. But if you have to pay taxes
on that big balance, you know that tax here, that
could be a hefty tax bill. So one of the
(25:42):
positive changes that might come with this new income driven
plan too is that it would not allow the balance
to grow, so it would stay at what the current
balance is, even if your payment wasn't enough to cover
the interest costs per month. So that means in the future,
if we do have to pay taxes unforgiven debt, it
would be a lower balance than what it maybe otherwise
(26:03):
would be. So that's one other big update. I mean,
that feels like it could be a game changer for
a ton of folks. So even if this, like the forgiveness,
gets the headlines, but if this new repayment plan actually
gets through, that could just completely revolutionize the people how
they feel and their financial responsibility towards those student loans.
But I guess you know what, what does that look
(26:23):
like moving forward? It's a proposal. How does that come
to fruition? And when will we know more, it does
have to work its way through legislation, which always takes
some time, but they I think we're going to see
some formal decisions on it by summer of three, so
as as you all can kind of tell, there's a
lot of things that we're going to have more information
(26:44):
about by summer of a lot that is up in
the air. Yeah, and hopefully we will have many updates
between now and then as more information comes to light.
But um, okay, Megan, so so talk to us about
refinancing student loans as well, because I feel, I guess
it seems like it's been kind of mostly a stupid
move for folks with federal student leans, at least over
(27:05):
the past few years. It's not something that you hear
a lot of folks talking about because why would you
want to refinance? Don't give up the bird in the
hands exactly. Uh So, Yeah, with the potential for forgiveness
still possible, is it still something that that most folks
should honestly does not even consider at this point right now?
It's it's tricky, yeah, because we we do have zero
(27:26):
percent interest for longer. Interest rates are also not great
right now because of inflation, so there's probably not. There's
not really any incentive for people to to be refinancing.
But I think the closer we get to when we
know payments are turning back on, and once people have
more clarity on what relief they have access to and
what they don't, next year will probably be a bigger
(27:49):
season for looking at refinancing. And this would only be
applicable for those that are committed to paying their loans
off because refinancing would privatize the loans, and the benefit
to doing that is it helps us reduce the interest
rate compared to what you have in the federal system.
It's really the only way you can reduce your interest rate.
But if you do that, you lose out on a
(28:10):
lot of the benefits federal and you can never get
back into federal loans. So it's kind of one of
those big decisions that you want to make sure you
have all the facts on hand before you pull the trigger. Exactly.
It's a permanent decision, so it's not a bad decision
for everybody. If I was talking to a room of
a hundred people, it's not probably not a bad decision
for everyone in the room. You just you have to
(28:31):
make sure it is the right plan for you, and
so that a way to maybe think about that is
when that time comes, if you are not eligible for PSLF,
if your balance is lower than maybe your income, if
the new income driven plan doesn't seem to be mathematically
beneficial to you too, where you get loans forgiven, and
(28:53):
if they don't come out with the one time cancelation,
or they do and it's already been applied. That those
kind of things, you'd want check those boxes off before
you go and look at refinancing. But I think if
if you're good on those topics and those you've done
the research on those things, then then maybe refinancing could
make sense when that time comes. Okay, are one other
(29:14):
interesting rule change that might help at least some folks
become more able to discharge their loans to not forgiveness,
but to discharge them altogether, is via new bankruptcy rules
that the Biden administration has implemented. So can you give
us more info on that. It looks like those just
went into effect, what a week, week and a half
ago something like that, So we haven't seen widespread discharging
(29:36):
of student loans via bankruptcy, but it seems like maybe
we might see that become more common in the future. Yeah.
So historically, to be able to discharge loans and bankruptcy court,
you had to prove that you would not be able
to provide for your family and carry a student loan payment,
and that was very difficult to do if you had
federal loans because your income driven payment could be as
(29:56):
low as zero depending on income. You had to prove
un do hardship, that's the term. So that has been relaxed.
There have been a couple of court cases over the
past couple of years that have really kind of cracked
this open where you know, student loans are also not
only lent lent for tuition. You can borrow cost of attendance.
(30:17):
Uh that that includes living, it can include transportation, food,
so it's not just tuition. And the reason why student
loans weren't really dischargeable in the past was because there
was such an iron clad rule that education, uh you know,
money for education or loans for education. We're we're just
it was not not an option to be discharged through
(30:40):
bankruptcy without that undue hardship, which was again really hard
to prove. But now that we know and it has
always been the case, that a lot of the loans
that you can borrow, the whole balance is not just
for tuition, could be for other things. That that's one
piece that's kind of cracked the door open. But I
think just laxing the rules with the Biden administration is
(31:02):
going to make bankruptcy an option for student loan debt
where otherwise it has not been. So it is an option,
it just might be a really difficult one when it
comes to your credit. So bankruptcy with student loans, that's
something you carefully want to consider with an attorney. You
want to make sure you have all the facts and
know how that would affect your situation and your finances
(31:24):
going forward. So you'd want to communicate that or chat
with an attorney about that before you make that decision. Okay,
all right, Yeah, that's good, good to know. But we've
got a few more questions we want to get to
about student loans, including maybe, just like some of the
other besides these big things we've tackled already, some of
the biggest concerns that student loan borrowers face. Will get
to that and more right after this. All right, we
(31:55):
are still here talking about student loans. Everything that you
wanted to know about student loans with Megan McGuire and Megan,
you know, like besides just the ambiguity of forgiveness and
payment pauses, I mean we've talked through just how we're
not going to know a lot of this information until
it's decided in the course or unless it goes through legislation,
but right now, like, what are the biggest student loan
concerns facing folks who you speak with right Like, so
(32:18):
the folks who who are hire you for your services,
what are some of the like maybe some of the
more practical issues that you are seeing them deal with
right now. Well, I think first and foremost is definitely
just kind of the decision fatigue or like knowing what's
applicable to them and what's not, because there's so much
out there right now about student loan forgiveness and new
(32:42):
repayment options and um, there's just a lot of info
to where it's hard to kind of filter yourself into
knowing what you should be paying attention to. So that's
that's been one. And then I think in inflation is
another piece of the puzzle, because I think that's something
that's going to affect people's finances in general, but with
(33:03):
student loans, inflation has impacted how much the cost of
attendance is going to be for people going to school.
Right now, dollars may not go as far as they
used to, and so the school itself, their cost of attendance,
how much they allow people to borrow, may not be
(33:23):
keeping up with inflation when it comes to um the
ability to borrow for for housing, for transportation, for eating,
you know, just the basic necessities to provide for yourself
while you're in school. But it's also affected interest rates,
which makes paying back student loans more expensive. So federal
rates right now are are much higher than where they were. Um,
(33:46):
they really took a nose dive. Interest rates for student
loans really went down federally and for for private refinancing.
But now we're back at like six seven per cent,
which that does make paying student loans back are expensive
for for folks. UM. So that's another maybe general reality.
I think PSLF was a huge topic for a while
(34:08):
with the waiver, but now that's really died down. So
it's just, you know, I think people are just trying
to figure out, Okay, what are my next steps and
the way I tell people to think about how they
should start putting together their plan is if if you're
someone whose balance is lower than your income, then you're
probably someone who needs to be paying the loans off
(34:28):
here coming up, and maybe you do that now. Maybe
you pay extra towards the loans now because we're at
zero percent, or maybe you use the high old savings
strategy we talked about. If you're someone who's balance is
much greater than your income than a lot of these
forgiveness opportunities with income driven repayment, they're going to be
really applicable to you. So we we know that income
(34:51):
driven plans provide forgiveness now after twenty or twenty five years,
So you'd want to figure out which plan that's available
today makes sense for you if you should be filing
taxes married or separate, and then if this new plan
comes about, might be better to jump to at that time.
But if you're going that forgiveness route, you'd want to
be paying as little as possible to maximize how much
(35:14):
you you can get forgiven. So those are ways that
you could kind of put yourself in a bucket for
what's coming up. Yeah, I like that rule of thumb
kind of that balanced to income. I think it's going
to help a lot of people make a more informed
decision when it comes to how they proceed with their
student loans, especially in this limbo time. I think it'll
just give a lot of folks, uh some context to
know where it is that they stand. You've got all
(35:36):
these rules changing, but at the end of the day,
if you know that cool, this is generally what I
should be doing, then I think that gives a lot
of folks what feels like maybe some solid ground. Still
it's felt it felt like they've just been walking trying
to navigate through quicksand shifting sand for sure. Yeah, and
I saw I saw some stats recently, and I'm sure
these are very familiar to you, but folks with student
(35:56):
loans are less likely to start a small business, They're
more likely to delay buying a home and having kids,
they have less money safe retirement in those early years.
So do you see that trend amongst the folks you're
consulting with as well? Like it seems like student loans
are holding people back from the normal milestones they would
be would have been achieving were they not to have those.
(36:17):
So I don't know, I'm just yeah, curious to hear
the people you talk with, how are they impacting those
student loans and the reality of having potentially tens or
of thousands of dollars in dead or more, How are
they impacting their life decisions? Absolutely, this is literally why
I wanted to to specialize in student loan planning because
(36:38):
when I was working with my financial coaching practice, I
kept seeing this where people were not saving for retirement,
they weren't starting the business that they wanted to do
when you know, when they were in college they thought
they were going to do. People living at home for longer,
or delaying marriage. I've literally seen that where people have
delayed getting married because of student loans. So that really
(37:02):
tugged on my heart strings because I felt like this
was just one big elephant in the room that people
had to deal with and it wasn't very clear or
it was just complicated, Like student loans are complicated, They're
the most complicated debt out there. And so what I
realized really quickly though, with with learning more about student
(37:22):
loan planning is that if you have the right plan
in place, then that gives you so much more. Not permission,
that's not the right word. But more clarity on what
that path is going to look like for you, which
frees up your mind to be thinking about other things.
And if we have the right plan in place too,
(37:42):
then that means we we know what the payments are
going to be. We know if we need to save
for a potential tax implication for loan forgiveness, other money
could be dedicated towards other things. And so what I
see a lot of times is before people have a plan,
that's absolutely true, people are delaying other financial decisions and
(38:02):
that's negatively hurting them in one way or another financially, mentally,
time wise, whatever the case. But after they have a plan,
a plan that really fits their specific circumstances, and they
feel comfortable with it, they understand how that works, that
really opens the floodgates to being able to move on
(38:23):
to make other financial decisions like being able to save
for that house purchase or being able to start that
business because they know how this will play out. So
that is the favorite part of my job, is like
cracking open that door that has been locked for so
long for people that that maybe didn't have a plan
for their loans and and being able to to watch
(38:46):
them like see that, you know, see see what's next.
That's exactly the ability for them to light up and
to realize that there is some hope, that there's some
light at the end of the tunnel. And just to
use like a biblical reference, it feels like that student
loans can be like a plank in your eye and
you can't see pass them to anything else that you
want to achieve, And it seems like, yeah, the right
plan can help you kind of take that plank out
so that people can see a little more clearly that
(39:08):
there are other options available, and so they PAIRDIGM introduce Megan,
like you're talking about, you know, life before you had
a plan to pay after student loans, in life after
you have a plan. Yes, well, I mean there's also
just the whole if you take if you zoom out
one more one more click, one more step, even before
you take on student loans. I think, I mean that
could that could also be just another way to approach
(39:30):
this entire problem. You know, this is another way of
cracking this nut, is not having to deal with a
nut in the first place. So I mean, like you're
obviously agreeing when it when it comes to helping folks
navigate this complicated system of student loans and helping them
to pay it off. But what tips do you have
for for high school students or maybe for parents of
high school of high schoolers when it comes to taking
(39:51):
out student loans in the first place, to to keep
those to a minimum. Yeah, yeah, so I think, Um,
there's a couple of tips and tricks. And I don't
know you've talked about some of these things too, But um,
saving early and often for for education for your kids,
I think that's that's helpful if if you're able to
that's that's the other piece of it is financial planning wise,
(40:13):
like you want to prioritize yourself and your own financial
well being before you start contributing to your kids. Um,
because you can take out loans for school, as we know,
but you know your scholarships. Yeah, and you could get scholarships,
but your financial well being, you being financially independent in
the future, it takes priority. But um, if you're able
(40:34):
to contribute early and often, do it. You know, open
an account nine or a U T M A or
a non retirement brokerage account. Start saving early because you
have time on your side when your kids are young
and maybe that's something you request from family. Like I've
seen this a lot lately, is where instead of toys
(40:55):
or gifts at Christmas, you ask for donations to to
the college, say beings account. That's one way from a
lump of coal and a contribution. Yeah, so that's that's
one way. But if you're at the point where we're
getting close to when we we need to be going
to school, and we're really just looking at trying to
reduce the costs as much as possible, we don't have
a lot saved, or maybe it's not enough going local.
(41:18):
Is out of school tuition is insane compared to in
state tuition rates, Like you could look at the statistics
on it, you can look at the math on it.
It's disturbing how much more expensive it is for an
out of school, out of state school for for a student.
So that's something to keep in mind when you're looking
at school choices. Scholarships are not something to sleep on.
(41:42):
Grant opportunities are not something to sleep on. Make that
your kid. The high school kids like part time job
over the summer, like applying literally, like do the math
if you get uh two thousand dollar scholarship for five
hours of work. That's a pretty good hourly pay rate,
you know, way better than you're going to give it
a fast food restaurant or the grocery store. Yeah, probably
(42:05):
a little bit more than you're gonna make selling bracelets
at the fourth Red of Life as well. So you know,
maybe you should have been applying to Grant Megan when
off the college. Yeah. Maybe, what other thought? I think
sometimes people don't think they could have a job while
in undergrad I know, graduate school it's a lot more
difficult for people to to work full time because that
(42:26):
is their job. But undergrad that's a great opportunity for
your kid or you to be getting into the workforce,
to be maybe even getting into an industry that you
think you want to go into, like working as a
receptionist at a dental office if you want to be
a dentist, or working in a sales and marketing office.
(42:47):
Like there are internships, there's lower in you know, entry
level jobs that you could be doing while you're in college.
They both give you clarity on what you want to
do for work post graduation and also give you some money.
Maybe there's also incentives that they have as part of
their employer benefits to keep you in school to get
(43:08):
your c p A. Or to get a degree specifically
for their you know, for that industry. So that's something
that I highly recommend. That's what I did when I went.
I went to Kennesaw State here in Georgia. I worked. Yeah,
it was a small school when I went. We didn't
have football yet, but they're they're on the up and up.
But I worked full time the four years I went
(43:29):
to undergrad. I did the books for a gym facility
in in the area, and that's where I learned that
I really liked numbers and doing you know, planning. And
it wasn't personal financial planning at the time, but that
job made me realize I didn't want to go into
corporate finance, that I wanted to do personal finance. So
that I think helped me pay for school, pay for
(43:52):
my living instead of having to borrow for living, and
um helped point me in the direction to my career.
I think that's rate advice. I think it's great, like
you said, from an income perspective, but also a lot
of people graduating, they're like, what do I do now?
Where do I go work now? And there's this crisis
of I don't know what career path I want to take,
(44:12):
but you know, having that job at least for a
couple of years while you're getting your degree can help
you make those connections and help you kind of figure
out what it is that you want to do moving forward.
You're not solely just like, Okay, now that I've got
my degree in hand, what do I do? You're figuring
that out along the way, And I think that's just
so helpful for young adults to go in that direction. Yeah,
(44:34):
that's a great point because I think we we did.
There was a period of time where the answer for
young adults was just go to school, get a degree,
you'll get a good job. Now that's changed a little bit.
You need to be a little more proactive about what
you're going to school for, what the game plan is
after graduation, and I think you know, part time employment,
(44:55):
even full time employment during school or internships over the
summer like that really help you get an idea for
what you actually want to do with your career. That's right. Yeah,
it's just about thinking ahead a little bit, having am
having a game plan? Yes, well, Megan, oftentimes when we
talk about financial planners, we kind of knock them a
little bit, because, to be honest, when it comes to investing,
(45:17):
it's not all that difficult for the most part, especially
early on in your your career. But you provide really
helpful guidance and what it is that you do, especially
for those who've that that that might have more complicated
student and situations. And so we want to give folks
a chance here to to learn more about you, Like
where can folks learn about the services that you are
offering individuals. Yeah, so I run my own practice, financial
(45:40):
Coach Megan, so you could go to my website financial
coach Megan dot com. I started in the financial planning industry,
like the traditional investment planning like comprehensive retirement planning world,
and I quickly realized that there was a section of
people that was not really being catered to, and that
was those that were, you know, post graduation, had a
(46:04):
lot of student loan debt, had pretty good income, but
really didn't have any or didn't know where to start
when it came to putting together a financial plan. And so,
you know, I wanted to help folks figure out how
to put together a budget, how to pay down student loans,
or how to pay down other debt, how to start
saving for retirement. Um So I don't focus on investment
(46:25):
management at all. I'm focusing on helping people build those
foundational pieces to their plan. And I really enjoy this space.
I think this helps people who you know, weren't really
taught this while growing up, or you know, don't really
I know that's probably not gonna be anybody on this podcast,
because people listening to this are definitely folks that seek
(46:46):
out information and learn how to do their own planning.
But yeah, I think I cater to people that really
just need that additional guidance to pull all those pieces together.
Um So that's the coaching space. So that's what I
would call it, finding actual coaching. And I think that's different, Like,
that's so much different, Matt, and I've said that many times.
Financial coaches are different than financial planners, and they're more
(47:07):
valuable for a huge section of our audience than financial
planners are. And we are glad you're out there. Thank
you so much for the advice that you bring, oftentimes
for free, and then people can also pay for it
too if they need more in depth and more personal guidance.
But we yeah, we love that you're out there helping
folks with the student loaning conundrum that continues to exist,
(47:27):
and uh, this summer, hopefully we'll have more information and
as as things move along, more information to provide people
to help them make a wise choice when it comes
to their student loans, because they're obviously, uh, massively impactful
to ever to a lot of people's personal finances. But Megan,
we hope you have a great holiday. Thanks so much
for joining us on the podcast today. Thank you. I'm
so honored. It was such a fun time. Alright, man,
(47:49):
what an awesome conversation here with Megan, an old friend
of ours who we've known since I think is when
we originally met her back in the day, but hopefully
right after she became a CSLP, and now she's like
all over the place. Just she's like the the lead Georgia.
I don't put so much in anything, and she does.
(48:10):
And amazing at how far she's come in the space.
And I'm very glad that we were able to speak
with her, because again, there there are so many moving
parts right now within the student loaned space, um, and
I think that's one of the things we learned is
that there is a whole lot that is up in
the air. But hopefully this conversation was able to provide
some relief to folks when it comes to knowing what
they should expect when it comes to student leans here
(48:30):
in the future. And actually, that'll be my big takeaway
is she actually gave a nice rule of thumb when
it came to whether or not you should be considering
paying off your student loans. So that would be the
case if you had a student loan balance that was
less than your annual income. But if you have a
balance that is higher than your annual income, that is
when you want to look at some of those income
based repayment or forgiveness plans. That's when you're gonna want
(48:53):
to count on these different programs in order to provide
you with some relief. And so hopefully that's just a
way that folks can do a little it away finding
right like, because right now it's like you're in the
sea and you just have no direction of where to
go and you need to compass or the stars or
something something to help you to figure out which which
direction to go. And that role thought might might not
fit out everybody's specific situation, but it at least gives
(49:15):
a lot of people a general map for like what
the next steps they needed to absolutely And so yeah,
I think that's I think it's great. You had a
big take away joll. Yeah. I think mine was when
when Megan talked about decision fatigue, and there's just with
all it feels like there's a change. There's a new
headline about student loans exhausting every day every week. It
(49:35):
is exhausting. It's overwhelming, and if you have student loans,
you're probably like, it feels like you're a pinball and
you don't know what to do because you're getting constantly
smacked around. You're not sure kind of what to think.
And that rule of thumb you gave is helpful. But
I also wanted to say that people need to be
patient because we're not going to know for a while,
and so there's no point in constantly hitting refresh on
(49:56):
Google News in order to see if there's been a
change made. You'll hear any changes or any massive upheavals,
or any student loan forgiveness news. You'll certainly hear it
here on How the Money. I'm sure you'll see it
elsewhere around the web as well. But to a certain extent,
there aren't massive moves for a lot of people to make.
There's planning you can do in advance, there's preparation that
you can start doing because student loan payments will eventually resume.
(50:19):
But I just want to say, patients, take a chill, bill, relax.
That's gonna help a lot of people in this scenario
because I know there's a lot of angst. There's a
lot of consternation around student loans, but that's not helping anybody.
So if you can kind of like take a breather,
stop checking out the headlines, and know that we will
know more at some point, but we're just not going
to know more next week exactly. Yeah, that I think
(50:39):
that will help some folks. Just take that anxiety, Uh,
take that anxiety down a peg or two totally. Yeah.
You need you need to be like the gnomes on
this bottle of beer that you're not enjoyed. There's so
this is a nice shoof, this is a Belgian dark
but on the label it's got these two gnomes. They
both got Santa hats on Christmas and they're just hanging
out around the fire. And so that's what we want
(50:59):
you to do. During especially during this this holiday season.
If you've got student lines, don't worry about it. It's
gonna take a while before we know what's next. But
we do want you to practice your standard responsible personal
finance habits, of course. But yeah, let's talk about this
beer jewel. Like I said, this is a Belgian dark
brewed with spices. It's got orange peel and time in it.
And I feel like I could totally pick up on
(51:20):
some of those like minerally earthy notes, like in particular
from the time. It kind of gave it like this
savory nous that I was able to enjoy, maybe more
so than I guess a lot of Belgians like that
is one of the aspects of those types of beers
is that their savory. It's almost like you're sitting down
to like a a stew or something, not like not
(51:40):
in viscosity or thickness, but just in the type of
flavor profile that that they're able to bring. Yeah, and
this one, in particular, it does have more of those
time notes. It makes it almost it kind of takes
me back to Thanksgiving a little bit, where you're got
this I don't know, it's it's like you're you're drinking
something that was brewed in a garden or something. Well,
there's nobody in the States or no brewing the States
(52:00):
that makes any beer that I've tasted that feels like
it's on the level of some of these Belgian beers.
And I'm not saying that there aren't beers that are
brewed by brewers here in the State. I think we
have we make the best craft beers in America, but
in the world, in the world. But there's something about
the way they make these beers, a style, the approach,
the craft. Yeah, and and even some of like the
Terawa that like can't be replicated, and so these a
(52:23):
beer like this that you can't find one. They're incredibly
unique in a Yeah, so you have to get the
Belgian briety if you want to try these flavors. And
so I love the uniqueness of this beer. It's got
like caramel e dark vibes. It's got some of those
like dark stone fruit vibes going on as well, And so, yeah,
I really like this beer. It's one of the first
Belgian beers I've ever had, but I haven't had it
(52:44):
in years. So it's kind of fun to to have
this one again. It's one of those o g original
Belgians that you have when you first get into craft beer,
at least in our case when we were visiting the
Brick Store, which is a Belgian beer bar here in Atlanta,
which is like renowned across the country. That's one of
the best beer body. If you're ever in Atlanta, you
definitely need to go by there and this place out
(53:05):
and and I will say, the picture and then the
flavor both make you feel like there's where I started
with the label because it was so colorful, but at
the same time so like warming. And what's the Danish
or the Norwegian hu huga whatever it is. Yeah, it's
that's got it's it's got to give you a dose
of that all the way. Yeah, but yeah, we'll make
sure to link to Megan's website in our show notes.
(53:26):
That way, if you are looking for more individualized custom
advice when it comes to your student loans, you know
how to reach her. But you can find that in
our show notes up on the website at how to
money dot com. And of course, anytime there is new
info about student loans, we will be sure to talk
about it on Friday flights or in our newsletters, which
you can sign up for at how to money dot
com slash newsletter. That's right, man, that's gonna do it
(53:49):
for this episode, Matt. Until next time, best Friends Out
and Best Friends Out bo
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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