Lynnette Khalfani-Cox On July 1st Student Loan Rate, Income-Based Repayments, SAVE Program + More
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Speaker 1 (00:03):
What's up is Way with Angela Yee.
Speaker 2 (00:05):
I'm Angela Yee on a Wealth Wednesday, joined by my
partners Stacy Tisdale.
Speaker 3 (00:09):
Happy Wealth Wednesday's everybody. We are so excited and we
have some amazing information for you because of something that
happened recently. Everybody out there with student loans knows that
on July first, the government raised the federal student loan
rate to six point five to three percent from five
point five percent. That's the highest level in a decade
(00:33):
and this hurts a lot because Americans owe one point
seventy five trillion dollars in student loan debt. The average
person has about twenty eight, nine hundred and fifty dollars
in student loan debt, but Brown people have fifty two
thousand dollars worth of student loan debt. So we are
(00:53):
very It was an SOS kind of call to the
money coach Lynette Califani Cox, who is just one of
the greatest financial experts out there. She is the author
of Zero Debt for College Grads, New York Times bestseller,
been on more than a thousand TV shows, including Oprah Today,
(01:13):
Good Morning America, Way Up with Angela Ye, Way up
with Angelaye many times. You were here with us in
March when the pause, that three year pause on student
loan repayments was lifted. So what the heck's with these rates?
Speaker 4 (01:28):
Well, like you said, it's not good news at off
anybody who is deep in debt when it comes to
student loans, and it's really going to amount to people
paying thousand dollars more for higher education over the loan
repayment period. You mentioned, we're up to one point seven
(01:49):
trillion dollars or so in student loans, and we have
about forty three million Americans who have college debt. And
a lot of times people think that, you know, this
is just a millennial or maybe even a fifty problem,
but we know that that's not correct. We know that
gen xers, you know, like myself, at student loans, I
(02:12):
don't personally the send people in my age category who
are forty something and or fifty something. We know that
a lot of Baby boomers have student loans, and even
a lot of members of the Silent generation. So this
pike that we're seeing interest rates for federal student loans
(02:32):
up to six point five to three percent, yeah, it's
going to have long lasting ramification.
Speaker 2 (02:38):
You know, I compare this also to even if you're
looking at mortgage rates and interest rates on that you
know that one percent, a little more than one percent
makes a huge difference when it comes to how much
you end up paying.
Speaker 4 (02:51):
It really does, especially over decades of time. And the
reason I was saying before that people mistakenly think that
it's just a young person's problem is that it takes
the focus off of how long it is that people
really do wind up with student loans. And on average,
it takes people like twenty twenty plus years to repay
(03:15):
their college debt, and as Stacey met in a few
moments ago, for people of color, it takes even longer,
given that historically we have lower overall incomes to begin with,
less discretion in the income, and then we have more
debt that we wrack up because again, historically, our families
(03:38):
haven't had the adequate resources to be able to pay
for tishee, room and board, books and supply to you know,
put those bills out of pockets, and so we wind
up with more student debt to begin with, and then
we take longer to pay it off.
Speaker 3 (03:55):
Speaking of taking longer to pay it off, this has
never happened before. How people are responding to this? So,
as we've mentioned, the freeze on student loan payments that
came from the pandemic was lifted in March, but only
half of people have started repaying their loans. There's twenty,
(04:15):
like nineteen million people have just not done it.
Speaker 1 (04:19):
Yeah, they're and default of a delinquent.
Speaker 3 (04:21):
Yeah, why, that's just unprecedented. What do you think is
happening there?
Speaker 4 (04:28):
Well, I know unequivocally what's happening right there, those nineteen
million people. I can't say for every single one, of course,
but I'm saying by and large, they've not yet fifted
to this new reality where everything that happened pre pandemic
is like a lifetime ago compared to where we are now,
(04:51):
you know, four plus years later. So, before the pandemic hits,
it was one thing to have to deal with rent, groceries,
you know, credit cards, et cetera. But now everything is
so much more expensive. It's not just the student loan
debts that they're grappling with. They're grappling with higher rent
(05:12):
and or mortgage costs, higher debts overall, whether that's you know,
buy now, pay later loans, whether that's credit card debts,
whether that's auto loans. You know, the average credit card
right now is above twenty two percent interest. So when
you look at it, Experience came out with some data
(05:33):
that showed people who have student loans have bigger overall
debts to service. So on average, somebody who has student
loans pays about fifteen hundred dollars a month for all
of their debts and obligations, whereas people who don't have
student loans pay about eleven hundred a month. So even
(05:53):
that four hundred dollars you know, difference is very telling.
So this is part of the reason why those not
eighteen million people haven't been able to get back on
board and to pay those loans. It's because everything else
has gone up and their income has not kept caste
with the rate that we've seen on those student loans
(06:15):
going up. And you were mentioned numbers there, Stacey, about
you know, twenty eight thousand on average. That's correct when
we look at averages for some groups. But again those
numbers are bigger for people of color and for people
in certain age categories. Gen X. Again, my generation happens
(06:39):
to be the category of folks who have the biggest
student loan balance it somewhere around forty four almost forty
five thousand dollars. So this is a real issue that
people are going to have to kind of get acclimated to.
And I'm telling folks that they need to, you know,
get on to student Aid, the the Partment of Education's website,
(07:01):
start looking at their options for repayment, particularly trying to
get into some income based repayment plans. If you are
struggling to make ends meet.
Speaker 3 (07:17):
We definitely want to talk about income based repayments. But
just staying with the impact of these higher rates for
people not paying President Biden kind of did people a
solid You said, your interest is going to accrue, but
it's not going to go on your credit report if
until September, if you don't start paying these loans back.
(07:37):
Talk about the impact of that, and a lot of
talk about the upcoming election all over the place right now.
Talk to people about the difference in the student loan
debt situation under a Biden administration versus what's being proposed
by Trump administration.
Speaker 2 (07:54):
Right And I just want to say that's also important
because part of what Biden has been trying to do
with his administration is to get rid of student loan debt,
and that has definitely been pushed back on. Is he's
done a lot of workarounds, but some people also look
at it like he didn't keep his promises. So I
want to make sure that we discussed we like Stacy said, yeah,
what is really going on when it comes to what
(08:15):
could happen.
Speaker 1 (08:16):
And what the costed.
Speaker 4 (08:19):
Well, to be honest, I would really push back on
the concept that Biden has not kept his promise with
regard to providing student loan relief. This man been working hard.
I don't know what to try to push through student
loan forgiveness, cancelation, et cetera for tons of borrowers, and
(08:41):
he has, in fact canceled about one hundred and sixty
seven billion dollars for about four million people. When you
asked about the comparison between what life would be like
for borrowers under a Trump administration versus a Biden administration, well,
we already have the evidence of that. We already know
under Trump, they the entire GOP absolutely tried to restrict
(09:05):
student loan forgiveness and student loan debt cancelation. And we
remember how for you know, more than a year there
was arguments about whether or not folks should get student
loan forgiveness. When all those people who got PPP loan forgiveness,
they didn't say anything about that, but they put those
you know through for small businesses to you know, offer
(09:29):
relief on that end. So it's very clear that not
only has Biden tried to do loan forgiveness, which got
struck down by and large from the Supreme Court a
year ago. Then the Biden administration said, okay, well, I'm
going to use some other means to provide loan forgiveness,
(09:49):
and in a nutshell, this is the sixty second version
of it. They used thirty year old mechanisms through income
based repayments. They've been doing income for payments for thirty
plus years, and most observers, legal scholars, et cetera, said, okay, well,
they actually do have the right to do this because
it's under existing laws. Well, they pushed through this time
(10:14):
called SAVE, which replaced pay and repay. Pay was pay
as you earned, and then repay was revised pay as
you earned. So under the Saved program there's eight million
folks enrolled in the SAVE program. They basically knocked people's
student loan repayments in half. Because they did a lot
(10:35):
of tweaks to the to the formula, they protected more
of people's income, saying that if you had if your
income as much as two hundred and twenty five percent
of the federal poverty rates, you didn't have to pay
anything on your student loans. You could pay zero. In
other words, if you're single and you make fifteen dollars
(10:57):
an hour or thirty two thousand per year, your student
loan payments could be zero, and even zero qualifies as
a student loan repayment. So catch this, don't miss this part.
Even with a zero repayment, that counts towards student loan
(11:18):
forgiveness or cancelation. So people who had already been paying
for ten plus years, many of them received cancelation. Under SAVE,
they also cut the discretionary income. So under Pay and Repay,
it was percent of your discretionary income had to go
(11:41):
towards student loan repayments. Now, under SAVE, only five percent
of your discretionary income has to go towards student loans.
That's why it's been cut. In final two things, I'll
note and then I got a hop here you mentioned
that interest, interest is very, very important. We had so
many gen Zers and millennials out there, God bless them,
(12:03):
Thank the Lord for them, because they were noting properly.
So that how some people have been paying ten, fifteen,
twenty years and their loan balances have increased. It's because
all of that interest that gets capitalized or added to
people's student loan repayments. Well now under the Safe program,
(12:25):
which again is under attacked by the GOP, in which
I have no doubt that Trump would also fall in
line and say, yeah, y'all got to pay this back
as well. But under the Saved program, one of the
tweaks that they paid is that they took the interest,
the unpaid interest, and they said it does not accrue
as long as you make a payment, So that includes
(12:48):
the zero payment. So that's why people's loan balances are
now finally starting to actually go down as they should
if you've been making payments. So again I would give
a forceful thumbs up. I'm not pleased with everything that
Biden has done, but on this front, no, he absolutely
(13:10):
has kept his promise and is delivered on the on
the student loan front, he's he's facing tremendous opposition though,
and and over a dozen states led by GOP Republicans
of course, have attacked and now they're trying to come
after the stage plan too, okay, And I.
Speaker 1 (13:28):
Know you have to go.
Speaker 2 (13:28):
So where can people go to find out what they
qualify for? Just so they know where they can get
accurate information.
Speaker 4 (13:36):
Studentaid dot gov is a website through the Department of Education.
On my own website as well, which is askdomoney coach
dot com Free financial advice. I have a ton of
student loan articles on there that tell people about getting forgiveness,
loan cancelation, and about a variety of student loan repayment programs.
Speaker 3 (13:56):
Too excellent, So askthomoneycoach dot com YEP for incredible resources.
We have been talking about federal student loans. I know
a lot of you out there have private loans. Lynette
can give you great information about that and also follow
her on Instagram at at Lynette califani Cox. Thank you
so much for coming in and just shedding light on
(14:16):
all of this really.
Speaker 1 (14:17):
Important and really important information.
Speaker 4 (14:20):
Thank you guys so much. You know what I have
to Before I go, I just want to thank both
of you powerful women for consistently bringing financial literacy, financial education,
and financial empowerment to your audience. This is beyond a
valuable and much needed service that you're doing. You know,
it's business, but it's also a service, and I really
(14:42):
do applaud your efforts. For years and years, you guys
have been doing it, and I don't want you to
think that you for efforts have gone unknoted.
Speaker 1 (14:51):
Thank you so much much.
Speaker 2 (14:53):
And where infest to have credible people like yourself right
that are being represented in this space too, because we
want to make sure that everybody's getting top nuts information
from people who are credible, So thank you exactly.
Speaker 3 (15:06):
We're really focusing on experts and you are just have
been at the top of that list for so many
even back our Wall Street Journal days. Thank you so much.
This is such an important issue, and we stepped into
the election season, so we're going to be talking about
these things.
Speaker 1 (15:21):
Thanks so yeah, thank you.
Speaker 4 (15:23):
That's right, Thank you lady.
Speaker 2 (15:25):
All right, don't just pray for us, get out and
vote exactly, well,
What's up is Way with Angela Yee.
Speaker 2 (00:05):
I'm Angela Yee on a Wealth Wednesday, joined by my
partners Stacy Tisdale.
Speaker 3 (00:09):
Happy Wealth Wednesday's everybody. We are so excited and we
have some amazing information for you because of something that
happened recently. Everybody out there with student loans knows that
on July first, the government raised the federal student loan
rate to six point five to three percent from five
point five percent. That's the highest level in a decade
(00:33):
and this hurts a lot because Americans owe one point
seventy five trillion dollars in student loan debt. The average
person has about twenty eight, nine hundred and fifty dollars
in student loan debt, but Brown people have fifty two
thousand dollars worth of student loan debt. So we are
(00:53):
very It was an SOS kind of call to the
money coach Lynette Califani Cox, who is just one of
the greatest financial experts out there. She is the author
of Zero Debt for College Grads, New York Times bestseller,
been on more than a thousand TV shows, including Oprah Today,
(01:13):
Good Morning America, Way Up with Angela Ye, Way up
with Angelaye many times. You were here with us in
March when the pause, that three year pause on student
loan repayments was lifted. So what the heck's with these rates?
Speaker 4 (01:28):
Well, like you said, it's not good news at off
anybody who is deep in debt when it comes to
student loans, and it's really going to amount to people
paying thousand dollars more for higher education over the loan
repayment period. You mentioned, we're up to one point seven
(01:49):
trillion dollars or so in student loans, and we have
about forty three million Americans who have college debt. And
a lot of times people think that, you know, this
is just a millennial or maybe even a fifty problem,
but we know that that's not correct. We know that
gen xers, you know, like myself, at student loans, I
(02:12):
don't personally the send people in my age category who
are forty something and or fifty something. We know that
a lot of Baby boomers have student loans, and even
a lot of members of the Silent generation. So this
pike that we're seeing interest rates for federal student loans
(02:32):
up to six point five to three percent, yeah, it's
going to have long lasting ramification.
Speaker 2 (02:38):
You know, I compare this also to even if you're
looking at mortgage rates and interest rates on that you
know that one percent, a little more than one percent
makes a huge difference when it comes to how much
you end up paying.
Speaker 4 (02:51):
It really does, especially over decades of time. And the
reason I was saying before that people mistakenly think that
it's just a young person's problem is that it takes
the focus off of how long it is that people
really do wind up with student loans. And on average,
it takes people like twenty twenty plus years to repay
(03:15):
their college debt, and as Stacey met in a few
moments ago, for people of color, it takes even longer,
given that historically we have lower overall incomes to begin with,
less discretion in the income, and then we have more
debt that we wrack up because again, historically, our families
(03:38):
haven't had the adequate resources to be able to pay
for tishee, room and board, books and supply to you know,
put those bills out of pockets, and so we wind
up with more student debt to begin with, and then
we take longer to pay it off.
Speaker 3 (03:55):
Speaking of taking longer to pay it off, this has
never happened before. How people are responding to this? So,
as we've mentioned, the freeze on student loan payments that
came from the pandemic was lifted in March, but only
half of people have started repaying their loans. There's twenty,
(04:15):
like nineteen million people have just not done it.
Speaker 1 (04:19):
Yeah, they're and default of a delinquent.
Speaker 3 (04:21):
Yeah, why, that's just unprecedented. What do you think is
happening there?
Speaker 4 (04:28):
Well, I know unequivocally what's happening right there, those nineteen
million people. I can't say for every single one, of course,
but I'm saying by and large, they've not yet fifted
to this new reality where everything that happened pre pandemic
is like a lifetime ago compared to where we are now,
(04:51):
you know, four plus years later. So, before the pandemic hits,
it was one thing to have to deal with rent, groceries,
you know, credit cards, et cetera. But now everything is
so much more expensive. It's not just the student loan
debts that they're grappling with. They're grappling with higher rent
(05:12):
and or mortgage costs, higher debts overall, whether that's you know,
buy now, pay later loans, whether that's credit card debts,
whether that's auto loans. You know, the average credit card
right now is above twenty two percent interest. So when
you look at it, Experience came out with some data
(05:33):
that showed people who have student loans have bigger overall
debts to service. So on average, somebody who has student
loans pays about fifteen hundred dollars a month for all
of their debts and obligations, whereas people who don't have
student loans pay about eleven hundred a month. So even
(05:53):
that four hundred dollars you know, difference is very telling.
So this is part of the reason why those not
eighteen million people haven't been able to get back on
board and to pay those loans. It's because everything else
has gone up and their income has not kept caste
with the rate that we've seen on those student loans
(06:15):
going up. And you were mentioned numbers there, Stacey, about
you know, twenty eight thousand on average. That's correct when
we look at averages for some groups. But again those
numbers are bigger for people of color and for people
in certain age categories. Gen X. Again, my generation happens
(06:39):
to be the category of folks who have the biggest
student loan balance it somewhere around forty four almost forty
five thousand dollars. So this is a real issue that
people are going to have to kind of get acclimated to.
And I'm telling folks that they need to, you know,
get on to student Aid, the the Partment of Education's website,
(07:01):
start looking at their options for repayment, particularly trying to
get into some income based repayment plans. If you are
struggling to make ends meet.
Speaker 3 (07:17):
We definitely want to talk about income based repayments. But
just staying with the impact of these higher rates for
people not paying President Biden kind of did people a
solid You said, your interest is going to accrue, but
it's not going to go on your credit report if
until September, if you don't start paying these loans back.
(07:37):
Talk about the impact of that, and a lot of
talk about the upcoming election all over the place right now.
Talk to people about the difference in the student loan
debt situation under a Biden administration versus what's being proposed
by Trump administration.
Speaker 2 (07:54):
Right And I just want to say that's also important
because part of what Biden has been trying to do
with his administration is to get rid of student loan debt,
and that has definitely been pushed back on. Is he's
done a lot of workarounds, but some people also look
at it like he didn't keep his promises. So I
want to make sure that we discussed we like Stacy said, yeah,
what is really going on when it comes to what
(08:15):
could happen.
Speaker 1 (08:16):
And what the costed.
Speaker 4 (08:19):
Well, to be honest, I would really push back on
the concept that Biden has not kept his promise with
regard to providing student loan relief. This man been working hard.
I don't know what to try to push through student
loan forgiveness, cancelation, et cetera for tons of borrowers, and
(08:41):
he has, in fact canceled about one hundred and sixty
seven billion dollars for about four million people. When you
asked about the comparison between what life would be like
for borrowers under a Trump administration versus a Biden administration, well,
we already have the evidence of that. We already know
under Trump, they the entire GOP absolutely tried to restrict
(09:05):
student loan forgiveness and student loan debt cancelation. And we
remember how for you know, more than a year there
was arguments about whether or not folks should get student
loan forgiveness. When all those people who got PPP loan forgiveness,
they didn't say anything about that, but they put those
you know through for small businesses to you know, offer
(09:29):
relief on that end. So it's very clear that not
only has Biden tried to do loan forgiveness, which got
struck down by and large from the Supreme Court a
year ago. Then the Biden administration said, okay, well, I'm
going to use some other means to provide loan forgiveness,
(09:49):
and in a nutshell, this is the sixty second version
of it. They used thirty year old mechanisms through income
based repayments. They've been doing income for payments for thirty
plus years, and most observers, legal scholars, et cetera, said, okay, well,
they actually do have the right to do this because
it's under existing laws. Well, they pushed through this time
(10:14):
called SAVE, which replaced pay and repay. Pay was pay
as you earned, and then repay was revised pay as
you earned. So under the Saved program there's eight million
folks enrolled in the SAVE program. They basically knocked people's
student loan repayments in half. Because they did a lot
(10:35):
of tweaks to the to the formula, they protected more
of people's income, saying that if you had if your
income as much as two hundred and twenty five percent
of the federal poverty rates, you didn't have to pay
anything on your student loans. You could pay zero. In
other words, if you're single and you make fifteen dollars
(10:57):
an hour or thirty two thousand per year, your student
loan payments could be zero, and even zero qualifies as
a student loan repayment. So catch this, don't miss this part.
Even with a zero repayment, that counts towards student loan
(11:18):
forgiveness or cancelation. So people who had already been paying
for ten plus years, many of them received cancelation. Under SAVE,
they also cut the discretionary income. So under Pay and Repay,
it was percent of your discretionary income had to go
(11:41):
towards student loan repayments. Now, under SAVE, only five percent
of your discretionary income has to go towards student loans.
That's why it's been cut. In final two things, I'll
note and then I got a hop here you mentioned
that interest, interest is very, very important. We had so
many gen Zers and millennials out there, God bless them,
(12:03):
Thank the Lord for them, because they were noting properly.
So that how some people have been paying ten, fifteen,
twenty years and their loan balances have increased. It's because
all of that interest that gets capitalized or added to
people's student loan repayments. Well now under the Safe program,
(12:25):
which again is under attacked by the GOP, in which
I have no doubt that Trump would also fall in
line and say, yeah, y'all got to pay this back
as well. But under the Saved program, one of the
tweaks that they paid is that they took the interest,
the unpaid interest, and they said it does not accrue
as long as you make a payment, So that includes
(12:48):
the zero payment. So that's why people's loan balances are
now finally starting to actually go down as they should
if you've been making payments. So again I would give
a forceful thumbs up. I'm not pleased with everything that
Biden has done, but on this front, no, he absolutely
(13:10):
has kept his promise and is delivered on the on
the student loan front, he's he's facing tremendous opposition though,
and and over a dozen states led by GOP Republicans
of course, have attacked and now they're trying to come
after the stage plan too, okay, And I.
Speaker 1 (13:28):
Know you have to go.
Speaker 2 (13:28):
So where can people go to find out what they
qualify for? Just so they know where they can get
accurate information.
Speaker 4 (13:36):
Studentaid dot gov is a website through the Department of Education.
On my own website as well, which is askdomoney coach
dot com Free financial advice. I have a ton of
student loan articles on there that tell people about getting forgiveness,
loan cancelation, and about a variety of student loan repayment programs.
Speaker 3 (13:56):
Too excellent, So askthomoneycoach dot com YEP for incredible resources.
We have been talking about federal student loans. I know
a lot of you out there have private loans. Lynette
can give you great information about that and also follow
her on Instagram at at Lynette califani Cox. Thank you
so much for coming in and just shedding light on
(14:16):
all of this really.
Speaker 1 (14:17):
Important and really important information.
Speaker 4 (14:20):
Thank you guys so much. You know what I have
to Before I go, I just want to thank both
of you powerful women for consistently bringing financial literacy, financial education,
and financial empowerment to your audience. This is beyond a
valuable and much needed service that you're doing. You know,
it's business, but it's also a service, and I really
(14:42):
do applaud your efforts. For years and years, you guys
have been doing it, and I don't want you to
think that you for efforts have gone unknoted.
Speaker 1 (14:51):
Thank you so much much.
Speaker 2 (14:53):
And where infest to have credible people like yourself right
that are being represented in this space too, because we
want to make sure that everybody's getting top nuts information
from people who are credible, So thank you exactly.
Speaker 3 (15:06):
We're really focusing on experts and you are just have
been at the top of that list for so many
even back our Wall Street Journal days. Thank you so much.
This is such an important issue, and we stepped into
the election season, so we're going to be talking about
these things.
Speaker 1 (15:21):
Thanks so yeah, thank you.
Speaker 4 (15:23):
That's right, Thank you lady.
Speaker 2 (15:25):
All right, don't just pray for us, get out and
vote exactly, well,
Way Up With Angela Yee News
Host
Angela Yee
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