The student loan crisis is intensifying as collections restart on defaulted loans, causing credit scores to plummet for millions of borrowers with far-reaching economic consequences. Senator Elizabeth Warren criticizes the move while former Education Secretary Linda McMahon defends it as restoring accountability, highlighting the tension between personal responsibility and systemic challenges in America's student loan system.
• 8.4% of student loan balances moved into serious delinquency in Q1 2025
• Damaged credit scores affect ability to secure housing, jobs, and reasonable interest rates
• Nearly 2 million borrowers have pending applications for income-driven repayment plans
• Biden's SAVE plan remains blocked in court
• Wage garnishments and benefit seizures set to resume this summer
• Nearly half of employers run credit checks during hiring processes
• Regular credit report monitoring is essential for financial health
• Free credit reports available annually from each major credit bureau
• Credit utilization should be kept below 30% to maintain good scores
• Credit freezes add protection against identity theft
• Using unique passwords and two-factor authentication helps secure financial information
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Episode Transcript
You are listening to the.
Speaker 2 (00:01):
People.
Speaker 1 (00:01):
Station on GreatDayRadiocom.
Hey everyone, welcome to theStudent Loan Crisis, a financial
talk podcast.
I'm MDJ Mikey D and with me isDJ DeMarie.
If you are enlisting from ourInstagram or TikTok channels to
hear the full discussion, pleasevisit GreatDayRadiocom.
Speaker 2 (00:19):
Thanks for having me, Mikey.
I rarely discuss politics.
However, this one is a hottopic right now, especially with
Senator Elizabeth Warrenraising concerns about the
economic impact of restartingcollections on defaulted student
loans.
Speaker 1 (00:34):
Absolutely DJD, and millions of borrowers have
already seen their credit scoresdrop since reporting for
defaults resumed last fall.
Warren says this will hurttheir ability to buy a home or
even look for a new job.
I know many conservatives sayso.
What it is about personalresponsibility, and to some
extent I agree.
Let's jump right into thisdiscussion.
Speaker 2 (00:51):
You're right, that's a huge deal because, let's be
real, a damaged credit score islike a financial scarlet letter
it follows you everywhere.
Speaker 1 (01:00):
Exactly.
Warren's not holding back.
She's calling out the Trumpadministration for pushing
millions of borrowers over afinancial cliff and get this
8.4% of student loan balancesmoved into serious delinquency
in the first quarter of 2025.
Here's my take.
When COVID-19 happened, manypeople lost their jobs in those
few years, especially in therestaurant and hospitality
(01:21):
industries.
Many, even today, has not beenable to recover.
So while it's easy to arguepersonal responsibility, many
millions of hardworking folkscannot get above water.
Djd, what are your thoughts?
Speaker 2 (01:31):
That's wild, and it's not just about the numbers.
We're talking about real peoplehere, like Isabella Marie, a
42-year-old borrower who'sfrustrated with the lack of
transparency and what she callsfalse promises from the
government.
What is interesting is, backduring COVID, the government
agencies were giving out paymentprotection loans to many
(01:53):
business owners.
However, many of themfraudulently capitalized on them
for personal use and never paidtheir employees.
In fact, many of thosebusinesses closed shop, leaving
their employees sucking windwith debt, such as paying their
student loans.
The government never held manyof them accountable for their
actions.
It is like Trump rewarding Elonwith government contracts for
(02:16):
billions of dollars.
Speaker 1 (02:19):
Yeah, she said she's willing to pay back what she
borrowed, but the way it's beinghandled is just unfair.
I agree, when you are fightingto land a job or getting minimum
for your work, even if it istwo jobs, it is a challenge.
And let's not forget the risingcost of goods such as groceries
.
Speaker 2 (02:34):
But you know, Linda McMahon, Trump's education
secretary, is defending the move.
She says restarting collectionsrestores accountability to the
student loan system.
However, as it stand, thecurrent administration has laid
off millions from variousgovernment agencies and many
local jobs.
Who support governmentcontracts now have to follow the
(02:55):
trend and lay off workers thatare non-government agencies.
Speaker 1 (02:59):
It is about accountability.
Come on, DJD.
These borrowers have beenthrough enough garnishing wages
and federal benefits.
That's just kicking people whenthey're down.
When I think about it, thiswill affect disabled veterans
and those who were sold on theidea that going back to school
to get back into the job marketis the way to go, just to get
laid off a few short years laterafter COVID.
(03:19):
Just awesome.
That's how we take care of good, hardworking Americans.
Speaker 2 (03:24):
I hear you, mikey, but McMahon's argument is that
borrowing money and failing topay it back isn't a victimless
offense.
There's got to be some level ofresponsibility, right.
Speaker 1 (03:35):
Sure, but what about the nearly 2 million borrowers
with pending applications forincome-driven repayment plans?
And let's not forget, biden'ssave plan is still blocked in
court.
It's a mess.
Speaker 2 (03:45):
No doubt, and with wage and benefit garnishments
set to resume this summer, a lotof folks are going to be caught
off guard.
They've had years of relief andnow, bam, it's back to reality.
However, as pointed out, manynow are out of work and the job
market is overcrowded, with lessjobs available for certain
industries.
Speaker 1 (04:04):
It is a harsh reality indeed.
Djd, it is one that could havelong-term consequences for
millions of Americans.
Indeed, djd, it is one thatcould have long-term
consequences for millions ofAmericans.
Speaker 2 (04:10):
So, what's the solution here?
Because clearly the currentsystem isn't working for
everyone.
Speaker 1 (04:16):
Everyone's pushing for more transparency and better
repayment options, but untilthen, borrowers are stuck
between a rock and a hard place.
Speaker 2 (04:23):
And let's not forget the ripple effect A lower credit
score means higher interestrates, rejected mortgages and
even lost job opportunities.
Speaker 1 (04:36):
Nearly half of employers run credit checks.
Remember that when you applyfor a job.
It's a vicious cycle indeed,and one that's going to take
more than a Band-Aid to fix.
Speaker 2 (04:41):
All right, folks, that's all the time we have for
this episode.
Thanks for tuning in toGreatDayRadiocom, your financial
talk podcast.
Stay tuned as we will discussmaking the most of your credit
report.
If you are on our Instagram orTikTok channels, I do encourage
you to visit GreatDayRadiocom tolisten to the full version of
this podcast episode.
(05:01):
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Thank you for being a fan andsharing the love.
Speaker 1 (05:15):
Please remember, if you're affected by this, you're
not alone.
Stay informed and keep fightingfor change.
We'll talk with you next time.
Peace.
See you later, my party peeps.
You are listening to the bestpodcast from the USA to the UK
on greatdayradiocom.
Hi everyone, welcome back tosegment two of the Financial
Insights podcast, the episodewhere we break down the
(05:37):
essentials of financialwell-being and good financial
planning.
I'm DJ Mikey D and we justspoke about the student loan
crisis.
I have my ever-amazing DJDeemery, who will be sharing
some financial strategies andtips to improve your lives.
Speaker 2 (05:50):
Hey everyone, welcome back For this episode.
We're tackling a dual topicepisode making the most of your
credit report and protectingyourself from identity theft.
Speaker 1 (06:00):
Two incredibly important topics that frequently
go hand in hand, DJD.
Let's start by diving into thecredit report.
Why is it so critical for us tounderstand our credit reports?
Speaker 2 (06:10):
Great question, Mikey .
The credit report is like ourfinancial report card.
It not only affects our abilityto secure loans and credit, but
can also impact rentalapplications and even job
opportunities.
Speaker 1 (06:22):
Indeed, it is the same point you made in our last
segment.
It's important for ourlisteners to know that they can
access their credit reports forfree once a year from each of
the three major credit bureausExperian, transunion, equifax.
Speaker 2 (06:35):
That's right, which means you can stagger these
reports and check your creditthree times a year without cost.
When you do check, make sure toverify all the details are
accurate.
Speaker 1 (06:46):
Exactly DJD.
Errors on your report can loweryour credit score.
If you find discrepancies, it'scrucial to dispute them right
away with the Bureau involved.
Speaker 2 (06:55):
Now let's talk about optimizing your credit report.
Mikey, what would you say aresome quick wins for our
listeners?
Speaker 1 (07:02):
Good question.
The first thing is insuringtimely payments.
Late payments can have asignificant impact on your
credit score.
Setting up automatic paymentscan help manage this.
Plus, with the recent proposalunder the Trump administration,
what many banks and credit cardcompanies will be allowed to
charge a substantial amount oflate fees?
Good advice.
Speaker 2 (07:21):
And keeping your credit utilization low, ideally
below 30%, is another way toboost your score.
This means managing how muchcredit you're using in relation
to your limit.
Speaker 1 (07:31):
Yes, indeed, and don't forget, the length of your
credit history also matters.
So try to keep older creditaccounts open to show a longer
credit history.
Speaker 2 (07:39):
Now onto the second part of our topic in this
segment identity theft.
It's become more common in ourdigital world, but there are
steps you can take to protectyourself.
Speaker 1 (07:49):
Monitoring your credit report is one key step.
It's one of the best tools forearly detection of identity
theft, because unusual activityshows up there.
Speaker 2 (07:56):
Absolutely, and consider adding an extra layer
of security with a credit freeze.
It's free and restricts accessto your credit report, making it
harder for thieves to open newaccounts under your name.
Speaker 1 (08:09):
Another great tip is to use unique passwords and
enable two-factor authenticationwherever possible.
It sounds simple, but it'seffective.
Speaker 2 (08:16):
Yes, indeed, Mikey.
And lastly, be careful aboutsharing personal information
online and on public Wi-Finetworks where data can be
intercepted.
Speaker 1 (08:25):
Well, that's a wrap on today's episode.
Speaker 2 (08:27):
By understanding your credit report and taking steps
to protect your identity, youcan secure not only your
financial health but your peaceof mind as well.
Thanks for joining us on thisFinancial Insight Podcast.
Check back in as we willdiscuss vehicle financing and
understanding how it works.
Don't forget to subscribe formore tips and discussions on
managing your financial life atgreatdayradiocom.
(08:50):
Thank you for tuning in andsharing the love.
Speaker 1 (08:53):
You are listening to the People Station on
greatdayradiocom.
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