Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
So from the everything Old Is New Again files, the
Trump administration has restarted collections of federal student loan debt.
And there's just a lot to talk about here, and
I am not an expert, so that rather than giving
you the overly worthy introduction that I usually do, I
just want to go right to my guest, Brian Walsh,
(00:21):
who is head of advice and planning for so Far.
That's SOFI, a pretty big company doing all kinds of
online banking, and we're going to talk about the resumption
of student loans. So, Brian, thanks, so thanks for spending
time with me. I appreciate it.
Speaker 2 (00:37):
Yeah, thanks for having me today.
Speaker 1 (00:38):
So I'll ask you two things and then you can
answer to them in either order you want. So one
is just maybe elaborate a little bit on something you
said to me before we got started, how what the
administration is doing is really just sort of turning back
to how things used to be. And then tell us
what the federal government is doing right now for people
who have student loans that are that are in default,
(01:02):
which should not be confused with having been forgiven. Those
are different things. But student loans that are in default,
what's happening?
Speaker 2 (01:08):
Yeah, so I guess on the first point, kind of
going back to twenty twenty when COVID first hit, the
federal government paused payments and interest on student loans that
got extended, extended, extended all the way through late twenty
twenty three, and then they basically said, hey, you need
to start making payments on these loans again. Along the way,
(01:29):
forgiveness was talked about, it didn't happen, And so going
on a year and a half now, federal student loan
borrowers should have been making payments. If they have not been,
they're in default. So if you haven't made a payment
in more than three hundred and sixty days, it's in default.
And then as of yesterday, basically the last piece of
(01:49):
getting back to the pre COVID student loan days is
that if you're in default on a federal student loan,
the government has I guess extra recourse powers to get
that money back compared to private lenders. So for example,
they can tap into tax refunds, government payments like Social Security,
and potentially garnish your wages to get back the money
(02:11):
that you owe from missing your payments.
Speaker 1 (02:15):
These days, are all or almost all student loans or
the debt outstanding on student loans, is that all owed
to the federal government or there is there still a
significant part of private student loan lending like there used
to be before Obamacare kind of nationalized the industry.
Speaker 2 (02:33):
Yeah, so there's still a good amount of private student
loan debt. And really why that happens is there's going
to be limits to how much you can borrow from
the federal government for student loans. And with the cost
of college these days, and even going back to fifteen
years ago when I was in school, you borrow the
maximum amount you can with federal loans, and college is
expensive enough where you still have a gap, and that's
(02:55):
where private loans come into play. So most people that
we work with have a make sure private and federal
student loans, and.
Speaker 1 (03:02):
The policy changes that we're talking about today only apply
to the federal side, right.
Speaker 2 (03:07):
Correct, Private student loans those payments, I mean some companies
pausing for a month or so, or you know, hardship
for parents and things like that, but generally speaking, private
borrowers have been paying on private loans this entire time.
It's just the federal loans that had the pause and
then they had the delaying collections, and now we're back
to involuntary collections.
Speaker 1 (03:26):
One quick follow up or clarification on something you said
a moment ago. You talked about there being limits on
student loans, and it's been so long since I've been
in college and I was fortunate enough not to have
to borrow money. But is it correct that there are
limits for how much you can borrow for undergrad but
no limits for grad school? Is that right?
Speaker 2 (03:48):
Yeah, there's gonna be like overall limits. The limits for
grad school are much higher than undergrad So generally speaking,
like from a federal loan perspective, for the most part,
we see like freshman year, it starts I think around
six seven grand a year and they will gradually increase,
and then once you get to grad school you can
borrow much more. But private loans definitely play a bigger
(04:08):
role in grad school and then especially at more expensive schools,
just because you know, five six seven grand a year
doesn't really go that far with expensive schools.
Speaker 1 (04:19):
Yeah, So if you're talking about at least just on
the federal side, and somebody is saying they have three
hundred thousand dollars in federal student loan debt, that means
they went to grad school.
Speaker 2 (04:31):
Yeah, it could mean they went to grad school, or
it could also mean that the parent took out loans
because you also have for federal student loans, you also
have parent plus loans, so parents can take out more
on top of the student limits. So we see a mixture.
But generally speaking, when you're talking two hundred and fifty
three hundred thousand dollars of student loan debt period, you're
(04:52):
talking about grad school.
Speaker 1 (04:53):
We're talking with Brian Walsh from so FI their website
Sofi dot com, Soofi dot com. So well on about
two minutes left, So let's jump in right now and
just focus for those people who have not been paying
on their student loans and now suddenly the federal government is,
you know, going back to what the policy should have
been all the way along, like you better pay down
(05:14):
your debt or else. Some people are saying they didn't know,
they didn't get the letter, they didn't know this was common.
They've had hits to their credit reports. So just what
are the top few pieces of advice in ninety seconds
or so to people who have federal student loans and
maybe haven't been paying on them.
Speaker 2 (05:32):
Yeah, so either you recently got an email or should
be getting one shortly from the government, and it'll outline
options that you have, so you can go to, you know,
contact the Default Resolution Group talk through those options. You
can roll in income driven repayment, so it's going to
cap your payments to a certain percentage your income. Like
let's say you know you don't have a job right now,
or maybe your income is low compared to your balances.
(05:55):
You could even look at maybe extended repayment where you
stretch out your payment from the standard ten years to
twenty plus years. So there are definitely options to make
your payments fit if you're not paying them right now.
It's just about proactively figuring that out rather than letting
involuntary collection kind of take its course.
Speaker 1 (06:14):
Are all those programs you talked about to potentially help
someone manage the cash flow? Are all those that are
things available directly from the federal government or does that
involve getting a private entity involved to then you borrow
money from a private bank on different terms from the
Feds or something.
Speaker 2 (06:31):
Yeah, that's all through the federal government, where I mean,
you have plenty of benefits for federal student loans grinned
you could use, you know, private lender to refinance loans.
It's just if you're in default, whether or not, that's
an option generally speaking, getting ahead of it. Where you're
in good standing, it's a good opportunity to potentially lower
your interest rate, lower your payment through refinancing if it
(06:51):
all works out.
Speaker 1 (06:52):
That's Brian Walls from so Far. He's head of advice
and Planning there so fi dot com. Brian, thanks for
the great conversation, Super useful for lots of listeners. I
appreciate it.
Speaker 2 (07:03):
Awesome.
Speaker 1 (07:04):
Thanks for having all right glad to do it.
So from the everything Old Is New Again files, the
Trump administration has restarted collections of federal student loan debt.
And there's just a lot to talk about here, and
I am not an expert, so that rather than giving
you the overly worthy introduction that I usually do, I
just want to go right to my guest, Brian Walsh,
(00:21):
who is head of advice and planning for so Far.
That's SOFI, a pretty big company doing all kinds of
online banking, and we're going to talk about the resumption
of student loans. So, Brian, thanks, so thanks for spending
time with me. I appreciate it.
Speaker 2 (00:37):
Yeah, thanks for having me today.
Speaker 1 (00:38):
So I'll ask you two things and then you can
answer to them in either order you want. So one
is just maybe elaborate a little bit on something you
said to me before we got started, how what the
administration is doing is really just sort of turning back
to how things used to be. And then tell us
what the federal government is doing right now for people
who have student loans that are that are in default,
(01:02):
which should not be confused with having been forgiven. Those
are different things. But student loans that are in default,
what's happening?
Speaker 2 (01:08):
Yeah, so I guess on the first point, kind of
going back to twenty twenty when COVID first hit, the
federal government paused payments and interest on student loans that
got extended, extended, extended all the way through late twenty
twenty three, and then they basically said, hey, you need
to start making payments on these loans again. Along the way,
(01:29):
forgiveness was talked about, it didn't happen, And so going
on a year and a half now, federal student loan
borrowers should have been making payments. If they have not been,
they're in default. So if you haven't made a payment
in more than three hundred and sixty days, it's in default.
And then as of yesterday, basically the last piece of
(01:49):
getting back to the pre COVID student loan days is
that if you're in default on a federal student loan,
the government has I guess extra recourse powers to get
that money back compared to private lenders. So for example,
they can tap into tax refunds, government payments like Social Security,
and potentially garnish your wages to get back the money
(02:11):
that you owe from missing your payments.
Speaker 1 (02:15):
These days, are all or almost all student loans or
the debt outstanding on student loans, is that all owed
to the federal government or there is there still a
significant part of private student loan lending like there used
to be before Obamacare kind of nationalized the industry.
Speaker 2 (02:33):
Yeah, so there's still a good amount of private student
loan debt. And really why that happens is there's going
to be limits to how much you can borrow from
the federal government for student loans. And with the cost
of college these days, and even going back to fifteen
years ago when I was in school, you borrow the
maximum amount you can with federal loans, and college is
expensive enough where you still have a gap, and that's
(02:55):
where private loans come into play. So most people that
we work with have a make sure private and federal
student loans, and.
Speaker 1 (03:02):
The policy changes that we're talking about today only apply
to the federal side, right.
Speaker 2 (03:07):
Correct, Private student loans those payments, I mean some companies
pausing for a month or so, or you know, hardship
for parents and things like that, but generally speaking, private
borrowers have been paying on private loans this entire time.
It's just the federal loans that had the pause and
then they had the delaying collections, and now we're back
to involuntary collections.
Speaker 1 (03:26):
One quick follow up or clarification on something you said
a moment ago. You talked about there being limits on
student loans, and it's been so long since I've been
in college and I was fortunate enough not to have
to borrow money. But is it correct that there are
limits for how much you can borrow for undergrad but
no limits for grad school? Is that right?
Speaker 2 (03:48):
Yeah, there's gonna be like overall limits. The limits for
grad school are much higher than undergrad So generally speaking,
like from a federal loan perspective, for the most part,
we see like freshman year, it starts I think around
six seven grand a year and they will gradually increase,
and then once you get to grad school you can
borrow much more. But private loans definitely play a bigger
(04:08):
role in grad school and then especially at more expensive schools,
just because you know, five six seven grand a year
doesn't really go that far with expensive schools.
Speaker 1 (04:19):
Yeah, So if you're talking about at least just on
the federal side, and somebody is saying they have three
hundred thousand dollars in federal student loan debt, that means
they went to grad school.
Speaker 2 (04:31):
Yeah, it could mean they went to grad school, or
it could also mean that the parent took out loans
because you also have for federal student loans, you also
have parent plus loans, so parents can take out more
on top of the student limits. So we see a mixture.
But generally speaking, when you're talking two hundred and fifty
three hundred thousand dollars of student loan debt period, you're
(04:52):
talking about grad school.
Speaker 1 (04:53):
We're talking with Brian Walsh from so FI their website
Sofi dot com, Soofi dot com. So well on about
two minutes left, So let's jump in right now and
just focus for those people who have not been paying
on their student loans and now suddenly the federal government is,
you know, going back to what the policy should have
been all the way along, like you better pay down
(05:14):
your debt or else. Some people are saying they didn't know,
they didn't get the letter, they didn't know this was common.
They've had hits to their credit reports. So just what
are the top few pieces of advice in ninety seconds
or so to people who have federal student loans and
maybe haven't been paying on them.
Speaker 2 (05:32):
Yeah, so either you recently got an email or should
be getting one shortly from the government, and it'll outline
options that you have, so you can go to, you know,
contact the Default Resolution Group talk through those options. You
can roll in income driven repayment, so it's going to
cap your payments to a certain percentage your income. Like
let's say you know you don't have a job right now,
or maybe your income is low compared to your balances.
(05:55):
You could even look at maybe extended repayment where you
stretch out your payment from the standard ten years to
twenty plus years. So there are definitely options to make
your payments fit if you're not paying them right now.
It's just about proactively figuring that out rather than letting
involuntary collection kind of take its course.
Speaker 1 (06:14):
Are all those programs you talked about to potentially help
someone manage the cash flow? Are all those that are
things available directly from the federal government or does that
involve getting a private entity involved to then you borrow
money from a private bank on different terms from the
Feds or something.
Speaker 2 (06:31):
Yeah, that's all through the federal government, where I mean,
you have plenty of benefits for federal student loans grinned
you could use, you know, private lender to refinance loans.
It's just if you're in default, whether or not, that's
an option generally speaking, getting ahead of it. Where you're
in good standing, it's a good opportunity to potentially lower
your interest rate, lower your payment through refinancing if it
(06:51):
all works out.
Speaker 1 (06:52):
That's Brian Walls from so Far. He's head of advice
and Planning there so fi dot com. Brian, thanks for
the great conversation, Super useful for lots of listeners. I
appreciate it.
Speaker 2 (07:03):
Awesome.
Speaker 1 (07:04):
Thanks for having all right glad to do it.
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