The Student Loan Conspiracy

Higher education offers millions of people the opportunity to pursue their dreams and make meaningful contributions to civilization -- but it often doesn't come cheap. At $1.5 trillion, the student loan debt in the United States alone is worth more than the value of Facebook and Microsoft combined. So how did we get here? Why do so many people believe the government and private financial interests have conspired to put people under the thumb of life-long, crippling debt? And, perhaps most disturbingly, what will happen if the debt bubble bursts?

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Episode Transcript

Speaker 1 (00:00):
From UFOs to psychic powers and government conspiracies. History is
riddled with unexplained events. You can turn back now or
learn the stuff they don't want you to know. M

(00:24):
welcome back to the show. My name is Matt, my
name is Noel. They call me Ben. We are joined
with our super producer Paul Mission controlled decade. Most importantly,
you are you, You are here, and that makes this
stuff they don't want you to know. A bit of
a depressing episode, to be completely honest, they had a
little a little bit of a dark Night of the

(00:44):
Soul Doween some of this research. But on a positive note,
it reminded me of my college days, and I wanted
to ask you guys, just generally speaking, did you have
a good time in college? No? No, I kind of
had like a really boring I stayed in my hometown
college experience, so I just sort of continued life as

(01:05):
I knew it in high school in many ways. And
then after college, I kind of had a college experience
when I wasn't actually in college, and I moved to Athens, Georgia.
A lot of my friends had gone to ug A.
I ended up going through a lot of like house
shows and house parties. But it was just after my
college experience. It was a little removed. It was kind
of interesting, actually, I sort of like it. What about

(01:25):
you met I had a wonderful college experience, met my wife,
met my some of my closest friends, started a company,
got hired here. Yeah, all of that occurred while I
was in college. So believe for you man, that's right,
that's the actual college who was a little boring. You
know a lot of people end up saying something along

(01:47):
those lines. You will find and this may be your
experience as well, folks, You'll find that, um. Many people
see the uh financial or career benefits of college as
equal to, or in some cases less important than the
social benefits such as, you know, meeting your significant other,

(02:10):
making lifelong friends, um. And you know, the social aspects.
We are a very tribal species. The social aspects are
inherently tied up in any institution. One of the big
benefits of a fraternity is going to be I mean,
I'm sure there's a nicer word for nepotism, but that
I mean, that's what it is. It's a social network,

(02:30):
right right. So we hope that if you went to college,
or if you are in college or you're planning to
go to college, that you have a great time. We
also hope that you're very careful. Uh. For much of
recent US history, graduating college has been seen as one
of those key prerequisites to later success in adulthood. And

(02:52):
you'll read statistics that argue something like something along the
lines of a bachelor's degree is over the lifespan of
of the person who holds the degree, it's worth several
million dollars in terms of how it um how it
enhances their ability to earn money over time, overtime, overtime.

(03:14):
That's the that's that's the first asterisk here. Uh. But
while that's true, While it's true that the average lifetime
earnings of people with a degree has tended to be
about seventy higher than that of people with a high
school diploma or less, that doesn't tell the entire story. Sure,

(03:35):
there does appear to be a tangible financial benefit, but
that's at first blush, that's an a cursory glance. What
we also find is that we live in a society,
and this is something we talked about previously on our tour.
We live in a society where a lot of people
were convinced that to have any worth or value as

(03:59):
an into visual in this our current age, they had
to go to college, even if they got a degree
that they didn't really care about, even if they got
a degree that wasn't particularly applicable to their later interest
in life. They just had to jump through this social
hoop to be a person worth knowing or acknowledging as

(04:19):
a person. And that is fundamentally first disclaimer, I know
a monologue in you here, but that is fundamentally not true.
Trade jobs right now will make as much, if not
way more money for the person who is employed in
that position. Then you know a job that we would

(04:41):
consider maybe more high end, So the person who works
in an h v a C job for instance, maybe
pulling in bank and you might not have any idea so,
or driving trucks or driving trucks right, or working in manufacturing.
These are fundamentally um these are fundamentally crucial jobs to

(05:02):
the American economy. Not to mention, I mean just like
working in like high end restaurants is on the wait staff,
I mean you can pull in crazy amounts of tips
a night, more and more, you know, I mean you
don't have to go to school for that at all.
I mean, again, we're not saying don't go to school.
There is a disparity in this like myth that sort

(05:23):
of pushed this American dream, which is usually the case
with American dream type ideals, that there are lots of
ways to skin a financial cat. That's right. But if
you do want to get in the upper echelons and
find yourself in that one that point oh one percent,
make yourself a podcast. No, definitely, please don't do that

(05:46):
unless your name is Ira. But then let's see, I
would say you have to have a college degree to
make that kind of leap to those like heights most likely,
except for with the exception of maybe a handful of
people that have ever gotten that through investing in through
family funding. Oh sure, sure. By if by family funding

(06:07):
you mean inheritance, then that is that is clearly, I mean,
that is the primary avenue for one percent hood. It's
not the game is broken, the great the game is
more broken than Monopoly, which is probably the most famous
of broken games. But before we get all gloom and

(06:27):
doom about it, let's let's get let's get straight to
the heart of the matter. There does appear to be
this tangible financial benefit. It is your choice whether you
decide to go to college. And I think what we're
saying here at the offset is that you should not
feel like you have to that just try to think

(06:51):
very clearly and carefully through the process because it is
a big decision, you know, and debt is uh much
like a tattoo. It can stay with you for the
rest of your life and it's very difficult to remove.
That comes for us, all right, And that brings us
to today's question. Is there a student loan conspiracy or

(07:17):
to phrase it a different way, what the hell is
going on with student loans in this country? That I
don't think that's an unfair question. I don't think so
at all. Let's start with what exactly a student loan is. Well,
it's right in the name. It's a loan. Somebody, some
institution is going to give you a large chunk of
cash so that you can, specifically, in this case, use

(07:40):
it to pay for tuition, for books, for housing, student housing,
for food, for whatever you need in order to get
through your college experience. And that money is often going
to be distributed in some degree, in a lump some
kind of fashion, so that some goes straight to your
cool or your institution of learning, and then some other

(08:03):
portion goes to you, and it's up to you as
an individual to parse that out and budget that out.
And a lot of us when we're in college, we
end up spending that on really cool adventures instead of
you know, instead of school books. But those books are
a racket all their own. That's a different podcast. Oh

(08:24):
my gosh, three for a textbook. That sounds right, but
you can sell it back for thirty five the end
of the term to the same place that sold it
to you. It's like my DVD investments. Oh my god,
I tried. I recently was like, I'm going to get
rid of the clutter, and I haven't watched these DVDs
in years, So I boxed them all up, took them

(08:46):
with high hopes to a second hand book place. You
go to a booknook. I went to booknook. They handed
back almost of them to me and offered me about
ten dollars in store credit for the ones that they
wanted store credit. Yeah, it was. It was pretty embarrassing.
Did you take it? Yeah? I mean, like literally, only
one of like five things out of like several hundred

(09:07):
and they're still in the back of my hunt of it. Well,
much like you know, these student loan companies offer everyone
these these loans, but unlike your DVDs, these loans are
very enticing because a lot of times they have low
interest rates, at least comparatively to other loans that you
might get three to seven Yeah, that's really nice. And

(09:28):
also you have a grace period, like if you see
one of those credit cards that says, you know, you
don't have to pay anything for twelve months or something,
or zero percent a p RNs for a year, Yeah,
and then and then and then get another one of
those zero percent offers that. Yeah, but for real, that's
that's why these loans. Perhaps at least one of the

(09:50):
reasons these loans are so enticing because of that interest
rate in the pretty long grace period. Well, and because
it goes to a good cause, right it is further
your education. Education is widely agreed. I want to be
careful about how I say this, because some people might object.
Education is widely agreed to be a public good. We

(10:11):
can all agree that depending on the type of education
we're talking about, knowing things like engineering, math, literacy, that
that sort of stuff. These these things are just matters
of fact rather than opinion. The more people who are
aware of these things, the more people who are competent
in these disciplines, the better society will tend to be.

(10:35):
It's true, we can't I mean, everybody, the world is
not going to automatically be perfect if everybody gets a
chance to study trigonometry. But that is a positive factor.
You know, learning is knowledge is power. It wouldn't hurt anything,
except for maybe everybody would be a little more bothered

(10:56):
by simple things that require co plex trigonots trigonometry that
I just don't understand. Also, yeah, okay, trigonometry may not
be the best example. But it is true that these
these loans are for good cause. They have a grace period,
typically sometime after an education is completed, so while you

(11:17):
are a student past a certain threshold of course hours,
you will not have to pay this loan. Not all
student loans are the same. Some are federally funded by
these United States of America, some are private, and some
are designed specifically like pell grants to help financially needy students.
And those aren't really loans, that's money that is given

(11:40):
to you. Uh. Some offer protection for borrowers, and then,
of course interest rates that should be below market. And
when the federal government issues these loans, they offer low
fixed interest rates and that makes them more attractive in
contrast to private loans that may have a variable rate

(12:00):
of some sort. So we don't have to get too
far in the weeds on the different types of loans
other than to establish the primary categories that differentiate student
loans from any other kind of loan you would get.
They're not a mortgage, they're not a car note, et cetera.
These have private public lenders. They have qualification requirements right Um,

(12:22):
the primary one being that you can't get a student
loan unless you're going to be a student, right Uh.
They have a lower interest rates, and they have flexibility
on their payment schedules and their timelines. You said that
these were enticing, Matt, You're absolutely right. Tons of people
have student loans. There are more than forty four million

(12:46):
borrowers and people who have a student loan with some
outfit uh in the country as we speak now. Yeah,
and they had to in many ways. These people were
forced into this because in the decade between two thousand
six and two thousand sixteen, the overall cost of college
rose sixty three, and that increased student loan debt by
four times. The student loan debt now is at around

(13:11):
one point five Get ready for this trillion? Uh? Okay,
with a T like t BOS and TLC. I can't
calculate it. My trigonometry skills are not up to par
as they should be. Can you take Trigg? I did?
I took Advanced Trigg, but I had no idea. I

(13:32):
I kind of muddled my way through algebra, man, I
had to get I was not good with math. Is
not my strong student much. I've got the gift of gab.
So it's tough to think of one point five trillion.
It's it's distressingly difficult for most of us to comprehend, uh,
to really comprehend what a billion is, you know what

(13:53):
I mean. So one way that could be helpful to
to get our our heads around what one point five
trillion is is to compare it to other things. Um,
Facebook is worth five d forty one point five billion,
ish Microsoft seven hundred fifty point six billion. These are ballparking.

(14:16):
That means that the American student loan debt is worth
more than those two entities. Put together, it's about five
one billion, more than all the credit card debt in
this country combined. Whoa, it's it's big money. That's so big,
so big that it's like ephemeral, made up money. Like
I don't know, it just seems unquantifiably huge to me. Like,

(14:38):
I mean, I get that it is in fact, by
its very nature quantifiable, but it just seems like g
d P kind of money. Yeah, I mean it's bunkers
total total US debt kind of money back in the day,
and now that's just ridiculous. But yeah, I see what
you're saying. That's that's wow. Well what's the um? What's
like the average amount that each person is like carrying

(14:59):
around of UM? For people in the class of sixteen,
for instance, the average student would would graduate with thirty
seven thousand, one seventy two dollars in student loan debt.
Just to offer a counterpoint, I was lucky and that
I had Hope scholarship, which is a Georgia thing. I
think probably Matt did as well. All probably we're all

(15:21):
pumping our fists here. Um. I did still take out
a couple of student loans, but it was to pay
for like equipment that I wanted for my studies. I
was doing film work and I wanted like a nice
computer and all of that, and just ways to supplement
my income while I was in school, even though I worked,
but it was like a crappy job at a music store.
But so I don't have that much student loan debt,
but it is the one that I pay attention to

(15:43):
the least because of the fact that the interest rates
so low and it takes them so long to actually
come after you and call you and be like, hey,
you forgot to pay your your loan. And it's not
that I can't afford to pay it. I just kind
of forget and I need to set it up on
like an auto draft. But I think that a lot
of people are in that boat because it's not as
um urgent feeling. Sometimes unless you're not paying at all,

(16:05):
then they'll start trying to take out, you know, what's
the word, garnish your wages or there's definitely recourse that
they can take, but it hasn't been that big of
a deal to me. So for background, for anyone who
hasn't heard of this, who is outside of Georgia where
a podcast is based, Hope is a state level a
state level college attendance assistance program financial assistance program for

(16:28):
college based on people's grade point average, based on the
originally based on the revenue for the Georgia Lottery program,
which was great press for the lottery here. Other states
have similar things, and similar to the Hope Scholarship. Those
things are increasingly in a lot of situations. They're increasingly

(16:49):
endangered by legislation, so we don't know how long they're
going to be around. But they did some great stuff
for college students we personally in It is my opinion.
I hope those kind of things continue. But the most
important point about those kinds of programs is they typically
do not give you a full ride. You can have
Hope Scholarship, you will still need money for supplies. You'll

(17:10):
probably still need money for textbooks. You will still need
to find a place to live. You know what I mean. Um,
but something is better than nothing, right. Still, these loans
remain popular among the class of Congratulations to everyone who
graduated college last year. Yeah, this is a massive achievement

(17:31):
and I wish you the best in your coming adventures.
Let us know what your experience is like without having
ever met I can say that if you're listening now,
there is an overwhelming likelihood that you also took out
student loans sometime before you graduated. In six of you did.

(17:53):
And everyone who graduated, if we take you, if we
take everyone, is one big group. That was an average
debt of twenty nine thousand, eight hundred dollars, including both
private and federal, and fourteen percent of the parents of
people who graduated in took out an average of thirty

(18:15):
five thousand, six hundred dollars in federal parent plus loans.
I know this is this is a lot of money
on the table, but what price can you put on
your future? So in many ways, this large agglomeration of
debt has altered American society. Multiple generations now are far

(18:39):
less likely to successfully purchase a home or start a
family around the same time their parents, their grandparents, other
predecessors did. It's simply not the reality anymore. Um that
someone can get out of college, get an entry level
job and then payoff, buy a car and pay it
off in a few years, and and buy a house.

(19:01):
That doesn't happen anymore, especially in certain cities. Is real
estate just goes bonkers? You know, like Atlanta, the way
it's being gentrified and stuff. You can't find a house
around here for under two d seventy thousand dollars for
like a starter home and anything like Below that, it's
going to be like a massive fixer upper, which is
like scary in and of itself, and then couldn't quickly
become two hundred and seventy dollars total worth of work.

(19:24):
So instead, what people will end up doing when bedeviled
by these inescapable loans is they'll say, Okay, I have
to push off this one milestone to like can figure
a way out of this hole or at least to
get it to a more manageable place. Yeah, that's what
my wife did. It was not a good idea. So

(19:47):
is this a case of pure mistake pure misstep? Is
this a comedy of errors on the part of economists
um the people in charge of deciding how much wish
and should cost the federal government? Private lenders would be
college students, continuing college students, people who are returning students.

(20:08):
Is accidental mismanagement on any one particular person's part or
is there something else at play? We'll get to that
after a quick sponsor break yes there is. Here's where
it gets crazy totally. Arguably, yes, arguably this is UH

(20:33):
something purposeful um, but maybe not maybe not a grand conspiracy,
but maybe several different groups of motivated UH stakeholders. Sure,
I always gonna see very greedy institutions, but no, it's
I mean, it's true. They are stakeholders rights that see

(20:56):
you as a money battery. Yes, yes, there's a money
battery that they don't ever have to throw away until
you die. So the first student loans, if you want
to look at a quick timeline of this, we can
just run through the super quickly. First student loans in
US were offered exclusively two kids at Harvard way back
in eighteen forty, and there were no public loans until

(21:18):
the twentieth century, and the U. S Department of Education
was founded in what was that eighteen sixty seven. They
didn't give out federal student loans until the passage of
something called Title four of the Higher Education Actor h
e A in nineteen sixty five. So in the two

(21:40):
decades before the institution of federally guaranteed student loans, the
US experienced a significant increase in college attendance, thanks in
large part to the passage of the nineteen forty four
g I bell Um and fulfilling the need, this need
for affordable higher education. The g I bell actually subsidized
or in highly paid for the cost of college education

(22:02):
for nearly half of Americans returning for World War two um.
And you have to remember this was a time where
this was not an option. So this was like a
big deal and was also a large percentage of our
of of you know, able bodied men that were going
off to war and then coming back and getting this benefit.
So since its inception, the program has remained popular over
the years. And it's true a lot of people nowadays

(22:23):
that it is a choice to join the military do
so because of those g I Bill benefits, which is
a slippery slope when you think about it, it really is,
or they re up, you know, I mean, there's a
whole whole thing behind it. So by nineteen seventies six
or nineteen seventies seven, all undergraduate students became eligible for
something we mentioned earlier, Pell grants. And these two popular programs,

(22:47):
the g I Bill and the PELL grant, increased college
attendance rates because people who previously would never have had
a chance to obtain the financial support to go to college. Um,
they finally had doors that were closed to them. Open.
Good thing, right, American dream. Right. However, not all of

(23:12):
this assistance has been beneficial. The problems with student loans
started to show up way back in the nineteen eighties.
Oh yeah, roughly six. That's a when basically we as
a country realized that we had incurred around ten billion
dollars in student loans. And if you think about nineteen

(23:33):
eight six dollars ten billion is like saying a trillion dollars.
At least it's close if you say that today. Um So,
in that same year, more than a quarter of students borrowed,
and they they owed more than ten thousand dollars if
you look at them, you know, per person as an average,
more than ten thousand dollars in student loan debt. Um. Wow,

(23:54):
that would be nice. Just ten thousand dollars. I wish
it was the eighties again, ten thousand dollars six is
uh the equivalent of two almost twenty three thousand dollars.
Still take it? Still take it? Yeah, it's still a deal. Huh.
So by the nineteen nineties, student loan debt really began

(24:17):
to skyrocket. In ninety three, the average debt of a
bachelor's degree, the average debt burden was about nine thousand bucks.
Five years from then it was fifteen thousand, and then
my two thousand and three it jumped to seventeen and
a half thousand. Let's not forget this happens in lock
step with what's called wage stagnation. Wage stagnation is when

(24:42):
someone says, you know, well, the minimum wage is this right?
Or I pay I've I've paid every employee for the
past twenty years thirty two thousand dollars twenty eight thousand
dollars whatever to do this job. Never mind that everything
else is becoming more expensive, right, never mind that that

(25:03):
every single one of those twenty eight thousand dollars, individually
and collectively buys less than it did before. And it's
it's a complex argument, but that's the gist, right, the
cost of If the cost of living increases, then the
demands on an individual budget increase, and if the wage stagnates,

(25:25):
there's just there's less and less pie to slice. Yeah,
that's a that's a really good way of looking at it.
An unfortunate reality. Um, so you got that wage wage stagnation.
But then you've also got this cultural thing that's happening
in the US at the same time, or at least
roughly in the same time, where college is seen as
an absolute necessity to become successful. Do you want to

(25:48):
be an upstanding person? Do you want to be worth
something in this country to society? Go to college. It
doesn't matter what you study. No, no, of course not.
Also pledge if you if you can. Yeah, underwater basket
weaving if you want to get that. Is underwater basket
weaving like a physical fitness elective. No, it's it's the

(26:10):
euphemism for someone taking a useless elective. Oh there you go,
So I like it. Yeah, my drum instructor used to
do that. They'll also called the Mickey Mouse courses. Yeah,
I never heard underwater basket weaving. I love them. I
want to take that course. It's probably pretty tough, and
you think about it and you have to It's probably
like film, you have to buy a lot of equipment.

(26:31):
I imagine what I'm thinking about this too much. I
mean you surely you'd have to at least rent some
scuba stuff if you're gonna not anyway, No, no, no no,
no more tangents. I guess like, does your body have
to be underwater? Do you just have to put the
basket underwater? Unclear? Unclear. They're probably multiple levels. There's like
a one on one and one anyway, let us know

(26:51):
if you have experience with underwater basket weaving. At the
same time, though, at the same time that wages are
not increased, cost of living is increasing, College is becoming
seen as a necessity. The cost of just going to college,
just the tuition is increasing precipitously. It's like, now not

(27:12):
only do you have to go here, but it's way
more expensive than any of the other times before you
were alive the people went and this this puts us
in a real bind as a society. We have to
start asking ourselves who profits now the colleges and universities

(27:34):
that would be first on the list, right. There are
nonprofit colleges, and there are profit colleges which could be
the subject of their own show. The for profit colleges,
the University of Phoenix is and stuff like that. We
can probably do a different episode about those, especially the
unaccredited ones which are frankly robbing students blind and going

(27:56):
to court over it. But the institutions that we would
all like to consider more legitimate also have their fingers
in the pie. Colleges have been caught raising costs and
blaming the increase on various outside uncontrollable economic pressures. You
know what I mean, Like our president of the college

(28:16):
needs to get paid a lot more millions. Yeah right, yeah,
Or we have, um, we have desperately needed infrastructure, uh,
infrastructure maintenance that we have to conduct, right Like ours
is an old and storied institution, and the bridges and
the walls won't fix themselves. That asbestos is not going

(28:39):
to magically lead. I'm making that last one up, but
you know what I mean there. It's the argument that
we have to maintain and upkeep the institution exactly makes
sense and would make more sense if it was true.
It turns out in multiple cases that while these colleges
are claiming they need to increase tuition primarily for these

(29:02):
maintenance costs or like staff requirements, pensions, et cetera, what
it turns out that they've been doing They've been squirreling
away massive cash reserves outside of endowments. I believe it
was West Virginia got caught doing this and Their defense
was that, uh, other schools do it. Oh yeah, of course,

(29:23):
so it's it's dangerous. And of course Wall Street investors
are in on the game. They're in on the game
because if you, if you want to profit from this
kind of financial sphere, this financial market, one thing that's
really going to stick out to you is that student

(29:45):
loan debt, unlike many other kinds of debt, cannot be discharged.
Discharged means, you know, let's say, just pick a random
coworker of hours, not one of us. So I don't
want to pick on us, Ramsey don't, so he leave Ramsey.
So our super producer, Ramsey Yunt, who is a fantastic

(30:06):
guy who produces, uh produces movie Crush and I think
works on Committed as well. Right, Ramsey Young, Let's say
things get weird, Uh, he gets he gets too deep
in the underwater basket weaving industry, and he asked to,
for one reason or another, declare bankruptcy. Statistically speaking, in

(30:28):
this country, one of the the main reason we declare
bankruptcy is if something went wrong medically, we're just coming
up with different episodes left and right. So let's say
this unfortunate thing happens to Ramsey and he has bankruptcy.
He gets various debts discharged, credit card debt, consolidated discharged,

(30:49):
mortgage solidated discharge. Let's say loses his house and he
has to move to a rental or something. Um car
no, no no, you know, let's see cars were possessed boom.
So he gets a fresh start, and he keeps his
nose clean and maintains good financial hygiene. Then eventually he
will recover from this, except for his student loans, which

(31:10):
will almost never go away. There is a myth that
says student loans never go away during bankruptcy. That's not true.
It's just virtually true. It's very very difficult, Like on
the order of student loans are going to stay with
you if you go bankrupt. Yeah, i'd say generally what
I've seen happen as they get deferred just for a
time period and then they just come right back yep, yep.

(31:32):
Or this may not be the way it works in bankruptcy.
They may enter forbearance, which is like the ugly cousin,
the ugly meaner cousin of defirmaim. So, of course investors
are going to be in this game because it's a
debt that will always need to be paid, and in

(31:53):
some cases it's a debt to pay on the way
it's paid. In some cases it is a debt that
follows p goal for decades or the entirety of their lives.
There are people who have retired who are sixty five
plus and still are paying their student loans. This is true. Yeah,
there are people in my immediate family that are in

(32:14):
that book. And it's not discharged, right, it's not. It's
not changed. And in some cases we have people who
are um who are paying entirely on the interest or
the fees of their loans rather than the principle UM.
There's a great anecdote in The Rolling Stone about a
lady named Veronica Martysh. She's a sixty eight year old

(32:37):
veteran at the time of writing. She served in the
Armed Forces during Vietnam. She's a grandmother. She's had a
clean record her entire life, and she considers herself a patriot.
But student loans ruined her life. In nine she took
out an eight thousand dollars student loan through Sally may Uh,
and then five years later, after some people eide and

(33:00):
her family, she fell behind under payments she and heered
alone rehab program, and with feast and interests, that original
eight thousand dollar loan ballooned into twenty seven thousand dollars.
She has this woman to the date of that article,
which was relatively recently, she has paid more than sixty

(33:20):
three thousand dollars to date and is nowhere near getting
rid of the principle from eight thousand just to just
to reiterate, from eight thousand dollars to sixty three thousand
dollars paid. Oh yeah, um yeah, that is that is terrible,

(33:42):
and that is not an uncommon thing. Unfortunately, even if
you took out loans in the early two thousand's, the
ballooning factor and trying to pay down the principle while
furiously paying off all of that interest. I think we
can all, uh, we can all we all know what
that's like. Yeah, and I mean again, I'm not trying

(34:03):
to be flipping about it, but um I mine has
not shrunk very much at all, even though I didn't
take out a ton It's like maybe like ten tho
dollars and like that was what I took out to
begin with, maybe even less. It's not that far away
from where it was when I started hitting like their
late two thousands or you know, around two thousand four.
Uh So, yeah, it's something that even if you don't

(34:25):
notice it, it's definitely not doing you any favors. And
you are paying into the system by not paying it off,
you know. But I can't imagine her situation. That's it's heartbreak.
It's heartbreaking. And of course, as we have encountered in
so many other episodes or so many other subjects, so

(34:47):
many other stories, whatever the federal government is involved in,
a problem occurs, everybody in the government says her rumph,
he rumph, he rumph. Something must be done. Row, let's
let's figure out what's going on here. Do they say
that that's how everybody whispers in Congress. No, it's library rules.

(35:11):
We will tell you what the government thinks about this
and what their involvement is after a word from our sponsor.
So yes, Uncle Sammy boy, the Feds, big brother, Sam
the Sham, the United States of America, Sam the Sham,

(35:34):
great band, by the way, great performer. The federal government
is the biggest lender of American student loans. This makes sense.
For years and years and years, a lot of this
money was managed by private banks and loan companies like
Sally May, who I have often referred to as my
real long term girlfriends. Only now it's not even Sally

(35:57):
May anymore. We'll get to that in a second. Congress
cut out the middleman of their lending fees, and Sally
May spun off its servicing arm into Bump Bannada, the
publicly traded company Navy, which is a weird name for
a girlfriend, but just the same. There she is, she's
she's actually gendered. Navigant is gender neutral. Yeah, it's twenty nineteen,
that's right, So uh, Navigant's not too far from sally Me,

(36:21):
though they're led by former exects from sally Me, and
the company describes itself as a leading provider of asset
management and business processing solutions, I know, for education, healthcare,
and government clients. But it's best known on the on
these mean financial streets as being one of the very

(36:42):
lucky companies that one coveted federal contracts to make sure
students repay their loans. And that's where the trouble begins.
Why are these coveted, you might ask? Navian is the
primary point of contact or the service or for more
student loans in the United States than any other company
handling twelve million borrower is and three hundred billion in debt.

(37:03):
So surely there's money to be made with those kind
of figures. Yeah, and the company really really made it big,
at least under the Obama administration, not necessarily that the
administration anything to do with it. But while during that
time they just they flourished. Let's say, um, It's stock
rose sharply after the election of Donald Trump, which is nice.

(37:25):
That occurred not that long ago, and a lot of
other companies saw a big spike there. But Navian also
has a ton of complaints. They've got more complaints than
any other borrower, any other servicer, and this is according
to a Fusion analysis of data over a course of years. Right, right,
So these complaints have a running theme. The theme is

(37:49):
that the company Naviens, has failed to live up to
the terms of its contracts and that it illegally harasses consumers.
I'm sure we all have friends and maybe some personal experience,
uh not to call anybody out where where in navant
uh stalks you right from random numbers from random numbers? Seriously? Um,

(38:09):
But Navian says in their defense that most of the
most of the anger that they're getting from consumers, and
those they say consumers, not former students. It's like, what
do we We already did an episode of that, right,
you know that citizens became consumers. We've touched on that
different show, but we've we've touched on that in multiple

(38:30):
episodes of this show. It's scary. It's scary if you
are over twenty five. That happened while you were alive,
and if you're old enough to have seen it, it's
it's spooky. How how we used to say citizen and
now we say consumer. So gross Man, but Navian says,

(38:50):
in Navian's case, to be fair, these are consumers. It's
a publicly traded company. So Navian says that most of
the problems that people are plaining about come from the
structural issues surrounding college finance, like terms of the loans
and that they say is up to the federal government
and then private banks. We don't make the rules, they say,

(39:13):
we just we're just doing our job filling the contract.
So the complaints are not about our customer service. They're
complaining about the wrong thing. They should be complaining about
the banks and the fetes we didn't make the product,
We're just the customer service. In sixteen, they received twenty
three complaints per one thousand people borrowers. See. I feel

(39:33):
like words like consumer and borrowers are trying to distance
us from the fact that these are people talking about
the borrowers as little people that live in the walls,
and I never saw that was anything. They're just little guys.
They have like a whole city in the walls and
they're like quarters or something. Yeah, they've done a big borrow. Okay,
that makes sense. Is there a mayor like bubble Dooonry
or something, bubble Dooontry. I forgot So that number twenty

(39:58):
three complaints per hundred thousand is more than twice that
of their nearest competitor from Navant was named as a
defendant in five hundred and thirties separate distinct federal lawsuits,
which actually seems a little bit low to my ear. Well, yeah,
how are you going to afford to help file a lawsuit?

(40:19):
That's okay? Yep, I mean really there there should probably
be more. But they they do make a salient point
when they say, you know, Navant as an organization is
not capable of making the federal government change its interest
rates for you. They can't really do that. They can, however,

(40:43):
lobby and they do and then and they don't lobby
in your best interest. So we when we go into
the world of conspiratorial will cover up thinking. With student loans,
one of the things we run into is an interesting argument.
I don't know if you guys heard this before. I
had never really thought about it this way. Their critics

(41:04):
will argue that the practice of indebting people for going
to college has become a form of indentured servitude, primarily
because it's so difficult to discharge the loan and it
makes you um much more likely to get hooked on
a paycheck to paycheck lifestyle. Yeah, I I you know,

(41:24):
I hate to give my opinion here too much, but
I could totally see that argument, not necessarily as being true,
but at least ringing very very true of all of
the different loans that we take out over the course
of an um I guess an average middle class American
lifestyle just just the sheer number of loans that we
take out that are large enough that cause us to

(41:46):
be paying them for decades, I mean easily decades. Everything
from you know, your house to your car depending on
what you buy. Well too, I mean not I mentioned
the helicopter pad you have to have installed on your
hands still paying. You had to get it, like legally
you have to get the pad, which I think is malarkey. Well, no,
And and and to your point, man, I mean, these are

(42:07):
a lot of things too that are similarly to the
American dream of college. They're pushed on people to the
to the point where they feel like if they don't
do it, if they don't sign the paperwork, they don't
get into that space, they are less than and they
will be seen as less than, whether it's status wise
or whether it means they won't be able to get
that job or don't be taken seriously for that you know,
meteoric rise in position that they plan to plot. You know,

(42:29):
that means they did a good job at life. That's
a thing, you know. I mean, the whole idea of
buying a house has its own drawbacks and issues involved,
you know, inherent in it. Oh absolutely. And And to
your point then that you're saying earlier, the of all
of these loans, the student loan is probably could ben,
I would consider it to be the most nefarious because

(42:49):
it is so difficult to discharge. Um, it's the one
it's that one hook that sticks in you even if
you clear bankruptcy. Right, Yeah, totally. And so this at
this point we can see why that argument exists. One
of the questions we have to ask is indentured servitude
to whom? Who are who are you serving in this?

(43:10):
In this situation, the argument will usually be something along
the lines of, well, we're making sure that people are
too busy, scared, and anxious to rise up against the
status quo. It's kind of like an occupy argument if
you remember the occupied protests from few years back. So
it's not it's not specific. But while that is a

(43:34):
maybe more of a fringe accusation, it also has it
also reminds us of the argument that, um, the prison
system replaced the system of chattel slavery, which has some
other very depressing and very compelling points to it, you
know what I mean? Um at this In this case,

(43:54):
what we can see, however, is a clear financial incent
to for this system, which is predatory in some ways
to continue. Now, is it is it predatory to let
people borrow money from school for schooling, for education and
expect them to pay it back. Absolutely not. Is it

(44:16):
predatory to change the laws and move the goal post
while these people are already attempting to pay this thing back. Yes,
I would argue that is very much predatory. And there
are you know, things in place, little by little that
are allowing some people to get quote unquote forgiven for
some of these loans, especially when it comes to taking
out loans for some of these for profit colleges that

(44:38):
have been wrapped up in so much litigation. I believe
there is actually a system where you have to be
notified that you're eligible. But if you went in to
debt to go to one of these for profit colleges
and then they kind of did a fly by night
move and disappeared and you were left on the hook,
there are ways to get forgiven for that debt. But overall,

(44:59):
it's a lot of people making some kind of rash
decisions at a time when they feel compelled to do so.
Maybe they're not thinking of the full implications of is
this degree going to make me enough money to actually
pay back this debt? And then there's this vicious cycle,
right Yeah, Honestly, what what would benefit most people entering

(45:19):
college now or considering it is all right, we need
like you guys remember the DARE program, which absolutely did
not work. Right, We talked about this before. Yeah, dare
dare to give a kid some hope. So there have
been a ton of p s as with things like

(45:40):
this is your brain on drugs? Or you know, if
you look at someone once you will get in STD
Abstinence is the only way all those kinds of things.
I found them hilarious. They did. Uh. They were probably
well intentioned, but they did not work in the way
that the people who created them wish they would. He
could use some heavy handed alarmist P says about the

(46:03):
student loan industry for kids who are juniors or seniors
in high school or even uh, I don't know, even
early high school. I would say, just so as soon
as you get in that environment you're thinking about it
and you can bring something to your parents. Yeah, I
don't know. I would. I would that we also need
more um we also need more mandatory financial awareness classes

(46:26):
and people should just have to take a budget class
in high school. Why is that it makes no sense?
So many things they make you take that are such
a waste of time, like that would really set a foundation. Yeah,
they expect your parents to teach you, but so many
people's parents are bad at money, right, right, what's the
incentive to teach it? Though? That's where the question gets tricky.
Are you saying that it's almost like systematic that we

(46:47):
keep people in the dark about smart financial decisions and
the powers that be can reap the benefits. I'm just
saying it seems like an easy win to say, Hey,
let's teach people basic budgeting, home economic X man eighth grade.
Y'all didn't get that underwater basket weaving sixth grade? I mean,
you're Matt. You might be laughing now, but I'm telling you,

(47:09):
if you catch this guy with some straw in a pool,
I don't doubt it. Oh I'm I am out of control.
It's it's a beautiful thing to watch, and it's cool.
You know, it's even better than underwater basket weaving. Synchronize
underwater basket weaving when you have a whole group of
people doing it, I don't know, it creeps in sync,
which is what the boy band is named after. Right,

(47:31):
That's how they all missed. So is this is this
a bubble? This is one of the big concerns. I
mean not underwater basket weaving your boy bands. I think
K pop is here to stay. Also, but is this
student owned situation of bubble? The answer for a lot
of people is going to be yes. But the answer

(47:51):
for a lot of people is going to be new.
What we we should explain what we mean when we
say a bubble in terms of economics. So's a guy
named Brent goldfar But, professor of Business at the University
of Maryland. It's an author of a book called Bubbles
and Crashes, The Boom and Bust of Technological Innovation, and
he says the best way to think of a bubble
and financial terms is to think about a stock that

(48:14):
people keep buying mostly because other people are buying the
same thing. It's a herd movement. And then Vice wrote
a pretty solid article about this, and they said the
best known examples of recent bubbles would be the mortgage crisis,
the homes that people live in in the US. So

(48:36):
what happened is at least two different sets of people
started thinking the price of something housing in this case,
was just going to keep going up. So people kept
buying property for inflated prices, and people kept lending the
money to do so. Right, eventually the center cannot hold,
like Chanua Cheb says, and so the the another bubble

(48:59):
would be the style the dot com stock bubble in
the two thousand's, right, and they were very different, but
they shared one thing, the mass runaway delusion about how
much something, about how much people thought something was worth
versus how much it was actually worth. And the problem

(49:20):
here is that people say people feel like companies like
Navigant and Wall Street investors and colleges and universities are
accelerating this bubble because people are saying, well, college education
is worth so much over the span of my life,
that I should go to college, even if it costs

(49:43):
twice what it did when my parents went right on.
And of course we do have to mention that scholarships
are great. Get a scholarship if you can write yeah,
just yet, And one of my relatives said it this way.
They're like, no, you have to toil away like a

(50:03):
like a slave in high school so that you can
enjoy your life later. Okay, it was tough love, but
they were right. So now we're in a situation where
some economists worry that we will reach a point where
we have generations of people who can never afford a home,

(50:27):
um are having a very difficult time raising children, let
alone saving for retirement. That's a pipe dream at this point.
And eventually they may reach a breaking point and just
like the scene in that r M music video during
the traffic jam, everybody hurts, people might just get out
of their cars and walk away. In this situation, they

(50:47):
may just stop paying their loans and say screw the
credit rateate This system is not real rage against the machine.
Bulls on parade eat the rich, and thing is I
I know plenty of people who again, like I feel
like a jerk, but I pay my bills. But sometimes
I let the student loan one kind of lapse because

(51:08):
it don't really haven't really given me an incentive to
not do so. I never really get charged late payments.
It's not that big of a deal if I forget
to pay occasionally and just have to get a couple
of annoying phone calls. But I know people that have
gone years without paying. And if more people start acting
like that, that's when the bubble burst happens, right then. Yeah, Yeah,

(51:30):
it's it's something that takes cooperation from all sides, and
some people have gone so far as to uh leave
the US entirely and start, I kid you, not an
entirely different life in a foreign country. I would refer

(51:50):
to Vice again. They have an excellent article on this
by Alexander Cogan Debt Dodgers, the Americans have moved to
Europe and what a wall and their student loans, and
you can find various stories of people who moved to
Europe and maybe some other countries because they felt like
they had no choice. Uh, they had no way to
get a decent job that would allow them to pay

(52:12):
back the loan. Uh. And now it's a shame that
we're not we're not going to be able to end
this with a nice bow or ribbon, a nice pat answer. Well,
and it's because it never ends. And it's because of
this thing called forbearance. That's what it is. I'm telling you,
that's why this doesn't end. This is one of the
primary reasons that this whole thing seems to be uh

(52:33):
an issue. So forbearance. We mentioned it as the meaner
cousin of deference. But if you really think about this,
and this is exactly what my wife did, and that's
why I'm going to be paying student loans for the
rest of my life, probably even though I didn't take
any Uh, it's because she had. She went into forbearance
with her student loans at one point, and rather than

(52:55):
just the money the loan being on freeze and you
don't have to pay anything, the inter continues to to
accumulate as you're not making any payments for whatever the
allotted period of time is. It can be a year,
it'll be six months, um. It just depends. And then
that interest it's not like it's not like it goes away,
it gets added to the principle of the loans. Is

(53:15):
that the same thing as having a loan that's in rehabilitation,
like rehabilitating alone. That's a term that I've heard thrown
around as well when you I don't think it is.
But there is something where when you just straight up
don't pay your loan and then you start having conversations
with the lender to get back on track. They assess
what how much you can actually afford to pay, and
it can be quite a little amount of money, but

(53:37):
just getting back on track to paying that loan, but
you're never going to pay it off. They just want
something from you, you know. Yeah, And that's the thing
with we're parents, because as you're adding to that principle, know,
you're talking about how hard it is to pay off
your principle because you are paying such a large percentage
of interest with every payment. UH. It's terrifying that there

(53:59):
are so many humans that are stuck in this kind
of deal, in this cycle because they were either told
that forbearance would be a good idea for them, or
it would be a band aid basically to fix your
current financial situation where you can't afford to pay your
student loan payment, um. But and then then it wraps
you up for the next thirty years. According to statements

(54:22):
by former loan servicing employees, forbearance was one of the
go to ways to process a call. UH. They were
instructed to keep calls under seven minutes seven minutes or
less if they could in the easiest way to do
that was to tell somebody about the the joys of forbearance.
It is a short term band aid with long term

(54:45):
ramifications now not be it for their part and other
private loan services are doing pretty well in this environment
since their executive given around seventy grand to the company's
Political Action Committee or PACK, which pumped money into different
different campaigns on the state level to try to prevent

(55:12):
UH some some states from tackling the debt crisis. UH.
They've spent more than ten point one million dollars lobbying Congress.
UH four point two million of that spending alone came
from came since. So that means that navians lobbying is
increasing in step with the bubble. All of the stakes

(55:34):
are getting higher. There's more and more and more money
and people involved, and more and more children's futures. I mean,
that's cliche, but it's true. So where does this leave
us now? Now, let's be honest. There are a lot
of people who will say this is an issue of
personal responsibility. You make your bed, you sleep in it,

(55:58):
And there is something to that, right, but it is
it is um disingenuous at best to say that these
people are given full awareness of what they are agreeing
to do. That's why, That's why in any experiment you
hear the phrase informed consent rather than consent. And this

(56:22):
this is an important difference. And maybe it's not a
one on one comparison, but it's still a pretty good one.
Student loans began as a means of allowing less privileged
Americans to chase previously unobtainable parts of the American dream.
And now, regardless of how you feel about individual cases,
on a national level, this has become a paralyzing generational problem.

(56:47):
What happens when no one can pay the debt? What
happens when no one can buy a house? Are we
going to get to that point? I mean that's dystopian,
that's alarmist, but it is distantly in the cards. Luckily. Now,
if you're listening and you're underwater and student loan or
someone you care about is, you can find counseling for

(57:07):
student loans. There are numerous counseling services. Go with a
nonprofit one or a government sponsored one. Just because some
might be scams. Some loan consolidation things are scams. I'm
sure you've met someone who has received one of those
weird notices or maybe you received one where they will,
you know, send you junk mail these guys to look official.

(57:28):
It's all yeah, it's all about due diligence. Like seriously,
get online, find out what people are saying about whatever
company it is, or whatever group or government, governmental organization
before you do anything. And like you said, no, there
are forgiveness programs, right. Um. Two are two that may
be of great interest to some of us, the Teacher
Student Loan Forgiveness Program and Public Service Loan Forgiveness Program,

(57:51):
which means if you work in a qualified job for
a number of years, poof your your loan has disappeared. Um.
But the problem here is that not everyone can take
these sorts of jobs for one reason or another. Right. Uh.
Then the big thing on the table, off and on
again all the time is student loan refinancing. But what

(58:12):
is that? So let's let's put it like this. What
if borrowers could reduce their interest rates? Um? This is
the question that proponents of refinancing are asking. Um. And
in this case, technically, they'd be able to pay back
their loans on time, improving their own credit and financial
well being while supporting the integrity and sustainability of the

(58:32):
federal loan program. Seems like a win win. Yet refinancing
is incredibly expensive. The Congressional Budget Office estimated the Senator
Elizabeth Warren's refinancing plan would cost just shy of sixty
billion dollars over a three year period or twice the
annual costs of the federal pell grant program, So it's expensive. Also,

(58:53):
the way it would work out, the savings on that
refinancing wouldn't be that much on an individual level, and
it wouldn't. It would help people who are already capable
of paying loans more than when it help people who
are already defaulted or having difficulty. You know, it's the
same as like refinancing your house right at a better rate.

(59:15):
You technically are able to pay it quicker because you're
not getting eaten alive by high interest in ladies and
things like that, exactly. And right now, I believe there
is a federal case going forward. A judge ordered the
Department of Education to implement a student loan forgiveness rule.

(59:36):
UM that that meets to I think it's what you
were talking about. It meets you have to meet a
couple of different requirements, and it's in it's in reaction
to those, um, those really sketchy schools that closed down
right and left left their students high and dry. So
there is hope, there's always an action you can take.

(59:56):
But the next time, the next time someone tells you
that millennials or insert generation here, uh is wasting their
money on avocado toast or whatever. Many of good though
it is, it is and it's not that expensive. You
make it at home. Just so the next time someone

(01:00:20):
spews that kind of stuff, just remember that a lot
of these people are probably scraping by and it's not
it's not out of laziness that people aren't, you know,
buying houses or having two point five kids. It's a
matter of survival for a lot of people. That's right. Okay, Um,

(01:00:43):
do you have a student loan story that you want
to tell us that won't make us all uh feel
just absolutely terrible or maybe one of those that you
just want to share to get it off your chest. Yeah,
Do you have something that's like a p s A
fellow listeners about student loans? Do you have an inspiring
student loans story with a happy ending? And do you
want to deliver it in your own voice with the
potential of it actually ending up on an episode of

(01:01:05):
the show Give us a call. We are one eight
three three s T d W y t K. As
the chorus of voices tells your ears the acronym of
our show, call that number and don't forget there's a
three minute cut off, so either try to get your
story in type three or be prepared to do a
part two. Tight three is preferable. It really is okay,

(01:01:29):
So if you guys don't want to do that, you
can find us in most places on social media. We
are at conspiracy Stuff on Instagram. We are at conspiracy
Stuff show. Oh yeah, and if you want to see
some of my various misadventures before I get disappeared, I'm
at them Boland. I am at Embryonic Inside if you
want to see cute kid and kitty picks and maybe
some modular synth nursery. Yeah, and I am at one

(01:01:50):
eight seven to two four one one just rolls off
the tongue. You can also find us, and more importantly,
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to name one of us by name to get in,
or just say something really clever. Let's just know that
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(01:02:11):
of the four of us chuckles, you're probably at If
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at how stuff works dot com.