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Welcome to Michelle is Money Hungry, a podcast that has real and empathetic conversations that often focus on the intersection of policy and the financial conversations we’re afraid to have. I’m your host, Michelle Jackson and this summer I’m having conversations all about the potential for student loan forgiveness and what will happen if we move forward with the policy and what happens if we don’t.
Listen to the Episode
Show Notes
Matt–Matt Lane I am a public sector attorney.
Michelle-Did you take out student loans for college and what was that experience like?
Matt-Yes, yes I did. Then I went to law school. If you go to law school in the US and took out a lot of loans and graduated with $250k in student loan debt.
Michelle-What’s been the experience living with that type of debt?
Matt-Because of the PSLF program I was able to take a more meaningful, lower paying job without stressing about the full-balance of my loans.
Michelle-Why did you feel like you should be working for the public good and how did you find out about it?
Matt-I went to law school with the idea of helping people. And seeing as an undergrad how many politicians have law degrees. In retrospect, a lot of those people are in politics because they made a lot of money. It was always my plan to go to law school and be involved in public service and that was my intent. When I was in law school the PSLF was talked about pretty regularly, the program began in 2007 without a lot of real guidance. Many of the students in my program had a lot debt and so there was a lot of conversation about
Michelle-What was your real life experience with the program?
Matt-It was frustrating. There were so many unnecessary hoops to jump through. We are focused on keeping people from gaming the system vs. accessing it. One example, Nelnet, Sallie Mae, Navient, Fed Loan and Fed Loan is leaving so they will be moved again. When I got to Sallie Mae I told them that I wanted to do PSLF, they looked at my collection of loans: Stafford, Plus, FFEL and they are all the same to me. It’s just different ways to qualify. Sallie Mae says, yes you’re on track, move to Navient you’re on track, Nelnet, then FedLoan this looks great except…3 of your loans don’t qualify. (FFEL) Family Federal Education Loan? To the consumer these loans are all the same.
Michelle-I figured it out Federal Family Educational Loan
Matt-They changed my loans to direct consolidation. Everything is the same except now everything is on track for forgiveness. The first 2/3rds are on track for forgiveness in 10 years. The other third is after 13 years of public service because I had the wrong format.
Michelle-How demoralizing was that to have it happen?
Matt-It was very, very frustrating. Eventually I just gave up. I just though whatever I’ll deal with this later. It’s not an option to take time off or do something different because I had those extra 3 years. Under the Biden Admin there’s an additional waiver rule but I haven’t been able to navigate it. It’s a very unnecessarily complex system.
Michelle-Was it complicated to change those loans? Did they just send you an email about the change?
Matt-I just signed a paper and they paid it off with a new direct consolidation loan.
Michelle-There’s a lot of emotion around SLF it seems like there’s a lot of confusion and politics impacting how people are viewing the potential of this happening. What’s your read about the emotion around this topic? You get a lot of Twitter vitriol. Is it fair for people to say “hey, I paid my loans!”
Matt-It is surprising to me how much emotion is involved in this topic for a lot of people. For people who have loans this could be life changing. For people who don’t have loans, this has no impact on them and those folks argued that their taxes or inflation may impact. The most common pushback I get is the fairness argument. I think the fairness argument focuses on the wrong groups of people. THey’re focusing on the wrong people. Two people who graduated, one saved lives like a student, the other person bought a car. But, that’s such a TINY, tiny part of the fairness argument. We created the Federal Student loan program to make the American dream accessible. But, with the rising costs we’re saying people who get the loans will be weighed down and delayed on buying a house, having a family and building equity. For some reason we miss that piece of the entire puzzle.
Michelle-Is it weird to you that the federal government is a key part of the problem? We’re told to go get an education. As an African-American woman we’re told “Go get an education, it will improve your lives.” I feel like we’ve been bamboozled. Especially for GenX and younger? If an undergrad degree is the equivalent of a high school diploma and you have to go to graduate school which is expensive, what are we supposed to do. You go to a for-profit and are pushed into predatory loans? What would you do if you were an advisor for the Federal government? What would you do differently? The big concern that a lot of my guests have brought up is how do we avoid where we are now?
Matt-I don’t have a good answer for you. It’s entirely unsustainable. I have two young kids and I’ve created 529s for them and I have no idea how to plan for the cost of college in 16 years. The system will eventually break.
Michelle-Are we there now?
Matt-Maybe we move more to Zoom college, because it’s less expensive. Maybe cheaper electronic options that lower the cost. Maybe it keeps going the way it’s going and wait for a Bernie Sanders situation. I think there are a lot of different routes it could take and I’m not confident about any of them.
Michelle-What are three policies you would recommend
Matt-I think a lot of these conversations around loan forgiveness are frustrating to me. If I’m advising the Department of Education there’s not a lot that they can do without Congress. And Congress is not going to do anything in the near future. People are saying we shouldn’t do forgiveness unless we do something to fix the underlying problems. That’s all great and right. But, right now the Department of Education under existing law has the power to forgive student loans 20USC1082a for the nerds. That gives the Secretary of Education the power to forgive loans. We need a new law. We need 60 votes. It’s not possible, it’s not in the realm of possibility at least in this decade.
Michelle-You’re not wrong. That was a downer Matt. My goal with this series is really to broaden the conversation around the policy. Let’s assume that the administration decides to move forward with this. It’s clear that the Administration won’t make people happy with student loan forgiveness. What amount makes sense? What’s the number that would move the needle for people especially given that most people had their loans on pause. There’s pressure really building before midterms.
Matt-I will start by saying that Elizabeth Warren has done more research on this more than anyone else. $50k you’re helping the people that you need to help and avoiding overreach for people like me. I think when you’re looking at the people who need the most help, it’s usually people who need smaller loan amounts. Went to school and didn’t graduate. Or, they graduated but their wages are smaller. The data shows that even Biden’s $10k will give the most help to people who need that help. Disproportionately helping Black borrowers vs. white borrowers. Something like $10k is not my preference, the higher the better. I don’t particularly care if we’re helping people who don’t need as much help. But, I do think that the data shows anything from $10-$50k
Michelle-Do you think that having the talking point that Black and Brown borrowers will be helped is hurting moving forward.
Matt-It’s hard to say on this, but it’s generally on every program in the US (race) impacts every policy. We’re a very racist country. Ronald Reagan and the Welfare Queen trope. Heather McGee’s book “The Sum of Us” is a great book that discusses. Support for public programs drops off if it’s shown that these programs will help Black and Brown neighbors and white voters will hurt themselves in order to keep benefits from helping Black and Brown neighbors. The liberal elite with their education and real Americans get their high school diplomas and work on the farm. There’s a lot of ways to rally against this along: race, class, etc.
Matt-Let’s imagine and you could address the issue of school affordability. What would you do? If we had a Congress that was passing bills, etc. What would you do?
Michelle-If I had unlimited power? I’m making all college free. We live in a country that we like to say is a meritocracy. But, it’s not. For the country’s GDP, innovation and development, we need to give everyone the space to reach their full potential. We need to have equal access to education. We can’t say everyone can get to this school but you start 10 steps back if you have parents without money. The only way to do that is to subsidize education. The entire loan system needs to be scrapped.
Michelle-There’s a very clear moment when schools got expensive. I don’t understand how Boomers are so disconnected from what’s going on.
Matt-Looking at inflation charts, looking at wages compared to education and healthcare costs over time is a joke. Wages have been stagnant for years. Education has gone through the roof. It’s wild. People will say “I paid my way through college” Ok grandpa! I graduated with $250k in student loan debt, what job could have I worked during law school to pay for that?
Michelle-France is such a great country, Norway is wonderful. The same people love these other countries and seem not to understand that these countries subsidize education. We don’t go anywhere. We don’t have passports. We don’t have time and the majority of Americans don’t have the time to experience other lived experiences. They seem to miss that they stuck it to themselves too.
Matt-We have this myth that anyone can make it in America. It’s not true. If you’re born poor as a white person in the US you have less opportunity to move up than someone born poor and white in Europe. This used to be true before but it’s not true anymore.
Michelle-I feel like we’re not going to solve this problem in this conversation. Could you talk about how you imagine your life is going to be when the loans are forgiven.
Matt-Especially during the pandemic, I have a lot of money saved up, I’m working towards financial independence and investing. I have a 2 year old and an infant. Daycares shut down and my wife and I were working full-time from home trying to take care of a 2 year old and an infant. We had the money were I could have walked away and taken care of the kids. But, I couldn’t because it was too risky to walk away when I was so close to getting my forgiveness. I wasn’t sure that I could get back into the field. I have $330k in loans. Yes, I’m looking forward to that not hanging over my head and locking me into a job. I like being able to take time off, not have to only work with a qualified employer. Having that flexibility because I won’t be locked into a narrow set of options.
Michelle-When does this happen?!
Matt-Back to the program being unnecessarily complicated. Under 45 I was told April 2023, June 2026. The Biden Administration changed this with a broader standard. Now, I have 5 different dates. Some in October 2022, December 2022, January 2023, February 2023 and 2026. I’m currently trying to get everything onto one track. It’s not an easy process to navigate.
Michelle-Having the bandwidth to do this seems like a lot. I delayed several things because of debt. One of the things I think about right now is that there is a bandwidth that people have and going back and forth with your lender is stressful because what if you fuck things up?
Matt-I’m sure we’re leaving people out of this because of the hoops we had to jump through.
Michelle-The past 2 years people have had their loans paused. Is there a financial argument that restarting the loans could mess people up financially?
Matt-I could say that the pause helped me a lot but I didn’t necessarily need the help. One of the things that we’re looking at with the pause potentially ending. You can kind of address the difficulties people are experiencing. We could forgive an amount and restart the remaining amounts owed. Have some level of blanket forgiveness. There will still be people who are struggling. Unemployment is low where people are working. On the other hand, having the doctors and lawyers start paying again will suck that money out of the economy. When I restart my loans I will be paying over $2k that I previously had access to (to spend elsewhere)
Michelle-You mentioned that you had Navient servicing your loans briefly. I feel like I haven’t had a chance to discuss the Navient forgiveness that will be happening.
Matt-I honestly don’t know a lot about the Navient forgiveness in general.I know that the Administration has been quietly doing targeted forgiveness for people who went to for-profit colleges or folks with disabilities.
Michelle-Why is it that the US government has been able to allocate money to all of these other things (auto bailout, Ukraine, Banks) why is it so hard to serve our own citizens when we help everyone else.
Matt-One Ukraine there’s still some bipartisanship on foreign policy. I think if you’re trying to expand access there’s no bipartisanship on the issue. One side is focused on this and even that side isn’t in consensus.
Michelle-How can we follow you?
Follow Matt
Matt-On Twitter at @MattLaneWrites
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