Summary
The conversation revolves around the topic of student loans and the impact they have on individuals’ lives. Crystal and Lanea discuss their personal experiences with student loans, including the emotional and financial aspects. They also touch on strategies for managing student loan debt, such as paying off high-interest loans first and investing in the stock market. The conversation highlights the challenges and frustrations of dealing with student loans, as well as the importance of considering alternative options for higher education.
Takeaways
- Taking out excessive student loans for lifestyle expenses can be costly in the long run.
- Studying abroad and the fear of debt can influence individuals’ attitudes towards student loans.
- Private student loans can have high interest rates, making repayment challenging.
- Income-based repayment plans, forbearances, and deferments are options for managing student loan payments.
- Investing in the stock market can be a strategy to earn more than the interest on student loans.
- The emotional and psychological impact of student loans should be considered when making repayment decisions.
- The student loan system can have long-term impacts on individuals’ financial futures.
- The availability of financial aid and scholarships can vary depending on changing regulations and circumstances.
- Considering alternative options for higher education, such as studying abroad or attending universities in other countries, can help reduce student loan debt.
- The decision to pursue public student loan forgiveness should be weighed against potential career opportunities and income potential.
Transcript
Crystal (00:00)
Hi, I’m Crystal, the founder of the Piggy Bank Patrol, a podcast that gets parents talking about money. Myself, along with my co -founder, Lanea are financial analysts and new parents. We want to empower parents to learn healthy money behaviors while breaking cycles and teach children about money.
As always, the piggy bank patrols content is intended for educational, informational, and entertainment purposes only, and is not to be taken as legal, financial investment, or tax advice of any kind.
Crystal (00:30)
Hey, Lanea Today we’re going to talk about student loan debt.
Lanea (00:34)
boy, can I add to this topic considering I have some or a lot.
Crystal (00:39)
Define a lot. I know the average with their undergraduate degree in about $25 ,000 worth of debt, but that statistic is pretty old from the last time I was working in the student loan world, so it might be even higher now.
Lanea (00:54)
So I have about 37 ,500, so I have quite a bit.
Crystal (01:00)
Yep, that’s definitely more.
Lanea (01:00)
I also went to school for quite a long time and it took me a couple tries finish. So there’s that.
Crystal (01:10)
How many years do you think it took? I know with mine it took like six years.
Lanea (01:15)
it was probably closer to six and a half
I didn’t do loans for the final semester, but for everything else, I ended up taking out loans. I just could not have done it otherwise. I also didn’t have a ton of parental support, which is understandable, but that certainly didn’t help the situation.
Crystal (01:26)
Mm -hmm.
Lanea (01:38)
my student loans impact my job search because I’m going for a public student loan forgiveness. I’m currently on the save plan. But they issued a stay saying that they’re in a forbearance and no payments will count.
Crystal (01:43)
Yes.
Lanea (01:52)
towards IDR forgiveness or public student loan forgiveness. mine’s income based. But we have to file taxes separately. And I recertified when I was on unpaid maternity leave.
Crystal (02:04)
I know on the save plan for us, last time I calculated it, we would pay more than if I was just on the regular. But I only have
6200 right now.
Lanea (02:17)
yeah, that’s not bad. and then we should also talk about… Like that’s pretty impressive.
Crystal (02:19)
Yeah, I only graduated with like, nine.
it’s because I worked as much as I could to pay everything off.
Lanea (02:28)
I worked but looking back, I definitely could have taken out less loans. part of it was to pay for, lifestyle stuff, which was just, dumb looking back and definitely cost a lot more. Not worth it at all.
Crystal (02:43)
Yeah.
All of mine stems from studying abroad in Canada and studying abroad in Japan, because I couldn’t work during those semesters. But also at the same time, my parents left me deathly afraid of debt. Like to the point that I would have starved to pay my tuition, then take out a loan. I cried signing the promissory notes.
Lanea (03:00)
Really?
my gosh, okay.
Crystal (03:12)
So, yeah, that was the thing.
But I think also, my first job besides working at Cabela selling guns was private student loans with Nelnet So I saw what happens when you take out too much in student loans and those students and co -borrowers, they were paying upwards of 30 % interest because their private loans.
Lanea (03:14)
Interesting.
Wow, See, I worked at Nelnet too, obviously. We bonded over that. But I worked on the federal side of it. So I’ve only ever known, almost unlimited options. And I actually worked in the extreme default. So these were student loans that were
over 180 days past due, but before 365, I think it was. once it goes into default, it leaves Nelnet. But before then, I worked with extreme past due ones and the goal was just to bring people current. Obviously, they wanted them on a better long term solution.
usually that was an income -based repayment plan, but forbearances and deferments are also available. So it was never about making them pay, it was just bringing them current.
Crystal (04:35)
Yeah, I worked with the auto dialer calling the past due private loans and it was not pretty. On the odd time that they did pick up, sometimes I was able to get them to negotiate a payment plan, but usually it just devolved into them crying. because there is like the private student loans don’t really have forbearance options. And if they do, they’re
Lanea (04:49)
Mm
Yeah.
Options? Yeah, there’s…
Crystal (05:01)
horrendous.
Lanea (05:03)
Yeah, yeah, I’ve, and all of my student loans are federal ones. I don’t have any private ones. Would take care of care of those first. But I spoke to so many people that had just extreme balances. I think one of them was over half a million. I don’t know how you even get to that amount, because I didn’t think that that was possible. But
Crystal (05:11)
Yeah.
Lanea (05:29)
they legitimately had half a million in student loans. lived overseas, so they had zero U .S. taxable income, and their plan was just to…
Crystal (05:41)
That sounds like my guy that I had that one time.
Lanea (05:45)
ride it out for 25 years.
Crystal (05:49)
Girl, if they had that much, they probably had private loans too. We were proudly talking to the same guy.
Lanea (05:54)
Probably.
What did you learn from about student loans from working at Nelnet?
Crystal (06:03)
So the main thing that stuck with me was to pay the interest while I was in school before the deferment went off because once it goes off, it gets tacked on to your overall balance and then you’re earning interest on the interest. That’s just another headache in itself. So I did everything I could to pay my loans down and pay off my highest loans. I think my highest one was seven something percent because I…
got in right before Obama took office and it kind of screwed me.
Because he lowered the interest rate, if I recall correctly, a month after I signed that promissory note.
Lanea (06:40)
think you’re right. A couple of mine are in the 6 % range.
Crystal (06:43)
Yeah
I definitely focus on the higher ones first. And now my highest one is 4 .2%. But I’m not working on paying them off. I’m just paying the bare minimum on a standard plan because I can earn more in the stock market on dividends alone.
Lanea (06:50)
I have some lower ones.
Crystal (07:10)
Like at the end of this month, I’m earning $600 in dividends to be dispersed and every single one of those dollars is going back into the market to get me more dividends.
Lanea (07:20)
Wow, what’s your profile like?
Crystal (07:24)
I mainly am heavily invested in real estate investment trusts. I have a bit of commodities like gold, but they don’t pay dividends.
Lanea (07:33)
Adam has one share of Baby Berkshire stock.
Crystal (07:37)
I have three.
Lanea (07:39)
Really?
Crystal (07:40)
I have the B stock, not the A stock.
Lanea (07:43)
think he has the B stock too, like he does not have an A.
I think he looked at it, was like 300 or it was a ridiculous amount, but he does not have that one.
Crystal (07:53)
- Yeah. Yeah.
Lanea (07:53)
says it’s 453. Okay. I don’t know which one he has, but I know that he has it because we went to Nebraska Furniture Mart during the got like 20 % off and it was amazing.
Crystal (08:07)
Yeah, to get off. you know, though a lot of businesses, because I’m in the back forums, they make fun of the Berkshire holders that come and ask for discounts during the meetings.
Lanea (08:21)
sure. Like, the only reason that we knew about it, we knew that they were in town, but we were trying to get a couch. And we didn’t know that they offered a discount during that period. It was just the timing of it just worked out perfectly. So yeah, we, and we only knew about it because the person in front of us, checked out, and Adam just asked them and he’s like, I have Berkshire stock discount me.
Crystal (08:35)
Nice.
Right?
Lanea (08:48)
plan right now is use your dividends to pay off your loans over time, right?
Crystal (08:55)
Kind of. I’m mostly just reinvesting it because my monthly payment is $77. Like that’s nothing in the grand scheme of making money. Yeah.
Lanea (09:03)
Mm hmm. Percentage wise, yeah.
Crystal (09:08)
Yeah, and like every time I get my dividends paid out, so like they’re paid on a quarterly basis, but I have different ones at different times. So I get some form of interest in dividends paid out to me every month.
Just the one $600 disbursement at the end of this month will earn me over $60 a year. So that’s basically one payment for this year taken care
Lanea (09:34)
Okay, yeah,
Crystal (09:35)
rather compound my 10 plus percent in dividends than pay off a 4 .2 % loan.
Lanea (09:44)
That’s a no brainer. Although for me, there’s so much that goes into it psychologically that I definitely fall into the emotional aspect of finance rather than the logical aspect of it. Because I had a loan on my vehicle. And it was only at
two and a half, maybe 2 .9%. It was well under 3%, but I paid it off. And I know I could have done better in the market, but just the thought of having that hanging over me, like my car payment, it was worth it to me to pay it off.
Crystal (10:24)
Right. I also just in general, I hate debt. But I don’t hate student loan debts, if that makes sense, because car payments don’t have a lot of deferral options. But if something were to happen, like I could probably get help with my student loans.
Lanea (10:39)
absolutely. I mean, you would qualify for a deferment right now if you wanted, you know, like if if you did it. Yeah.
Crystal (10:41)
So just having that backup.
yeah, yeah, I have never used any of my stuff. So I have a long time that I could use for it.
Lanea (10:54)
Well, my plan is I’m currently trying to go for public student loan forgiveness. I have seven years with the state that qualify for time wise. I only really need three to four in order to qualify. So that’s my plan.
But my situation has changed pretty significantly since I started because, you know, 10 years is a long time. So I’m not sure what the best route going forward is. But that’s kind of where I’m at right now. So I’m currently on. Well, I actually had to do a lot because my first round of loans were FF or FELP loans.
Crystal (11:42)
Yeah.
Lanea (11:42)
so they weren’t direct loans. So I had to consolidate them into direct loans. So that was part of it. And then even though I had my loans the entire time that I’ve worked for the state, I have not taken out any new student loans when I worked for the state, they still had different number of qualifying payments on them. And they should not have.
I have no idea why they did, but they had different number of qualifying payments. I had to consolidate them in order to get the lower number with the higher number in like a one time consolidation. So I’ve had to consolidate my loans multiple times, which is just super frustrating. And there’s literally no good reason for it. And they also
Crystal (12:23)
It’s…
It’s because of the servicer, because you got shafted on the servicer. You have like one of the worst ones. Yes.
Lanea (12:35)
Yeah, Moheela. Yeah, yeah. And my, though I was working full time, they put my student loans on an in -school deferment. They were not supposed to, and that time does not count as well. I might have a little bit more, but that’s kind of where we’re at at this point. And the election will play a part of it too, obviously.
Crystal (12:44)
Nice. Great.
Lanea (12:57)
depending on who is elected. I actually told Adam last night or a couple nights ago that if Trump is reelected that we will have to pay these student loans. we won’t have, there is no option at that point and it will cost us $37 ,000. So he’s aware.
Crystal (13:12)
Right.
That’s good. Yeah, I mean, he makes the majority of the money,
Lanea (13:23)
so, right now I’m on the safe plan, the spending on valuable education plan. But that’s also going through the courts right now. When I was on unpaid maternity leave, I recertified my income
At least that was one good thing about working for a company or the state that offers no leave.
I was able to recertify my student loans to zero dollar payments for a year. But we have to file our taxes married filing separately. So that will be interesting now that we have a baby, because you lose quite a few credits, you don’t have access to some credits. I’m not sure the tax implications on that end yet. That’s to be determined.
Crystal (14:10)
That’ll be interesting though
Lanea (14:11)
and it pretty explicitly tells you because I ran our taxes like both ways last year. But I think it’s a child tax credit that you that neither can claim the child tax married filing separate.
Crystal (14:25)
it’s not worth much right now anyway, so not losing out.
Lanea (14:27)
That’s fair. But because I’m on the save plan, and because it’s through the federal courts right now. on July 18, they the federal court issued a stay preventing the Department of Education from operating the save plan. as a result of that ruling, the Department of Ed put my loans into a forbearance.
So the forbearance right now, I’m not even sure what to do about it. I’m weighing my options, but the forbearance means that there’s no interest occurring on my account. However, the months that it’s in the forbearance, I’m not going to receive credit towards the public student loan forgiveness. So I basically have to work extra,
for the nonprofit or government, which really sucks because I mean, government and nonprofits do not pay as much as, know, private and yeah, contractors, private entities. I just really need to to weigh the options.
Crystal (15:24)
contractors.
Lanea (15:31)
After talking with Adam, I think we’re going to leave my loans as is because we could pay them off, but there’s just no point at this point because we’re trying to go for public student loan forgiveness.
but I mean, life could change. But it’s hard because when you’re job options and career options, for me, I have to account for, is this three, four years going to be worth 40 grand? know, it’s like I have to make at least 10 plus extra.
Crystal (15:47)
Right.
Lanea (16:08)
at a private place than I would over the state just to make it worth it for my student loans.
And that just sucks. Like, that’s the what I didn’t realize when I was, you know, a very young adult, like out of high school is just the long term impacts. And I should have like, yeah, and I should have it’s not an excuse. It’s just dang, like that is a lot to put on a kid.
Crystal (16:26)
The golden handcuffs. It’s a golden handcuffs.
Lanea (16:38)
And I don’t know how your family was, but mine was very much like you have to go to school. you have to get a degree. there was no other option. not going was not an option.
Crystal (16:52)
So I was the first person in my family to actually graduate with a higher education, like a bachelor’s degree. My parents, my mom got her GED when she was like 28. And my dad just, you know, rocking that high school delinquent, delinquency act of his youth. He took some computer classes in the 70s.
Lanea (17:00)
Mm
Crystal (17:20)
decided it made him stick to his stomach to look at those screens all day and called it quits. My older brother got kicked out of his unaccredited Christian school. And yeah, they were doing, it was a whole thing. It was a whole thing. But it was in like Pensacola, Florida. like party city.
Lanea (17:31)
Bye.
Yeah, yeah, yeah.
Crystal (17:42)
Christian University unaccredited plus the beach doesn’t end well, just saying.
Lanea (17:47)
Mm No, no, I can’t imagine that their graduation rate was great.
Crystal (17:52)
don’t think it is. It’s still a school though. I don’t remember the name of it, but it’s down there. Yeah, yeah. and my other older brother, I think he has an associate’s, but it’s like a technical degree. It’s not like an academic bachelor of science or it might be a music degree. I don’t remember. It’s something. I didn’t grow up with him, okay.
Lanea (17:57)
Wow, okay, all right.
My mom has her associates, my dad has just a high school degree, but it was definitely, there was just no other, options, which made it really difficult. Just hindsight being 2020, you know, I wouldn’t put that on
kid, but you want the best for your kids too and you know that was the way out and I think that there’s a lot more options now when it comes to avoiding student loan debt, but when you’re in the situation and it’s like you can get a loan to pay for it or not go when you’re under that much pressure. It just doesn’t feel like that there’s much option.
Crystal (19:01)
And you stayed in state for yours, right?
Lanea (19:04)
Yes.
Crystal (19:06)
Okay, because if you had gone out of state, that’s a whole, you would have had like a hundred thousand.
Lanea (19:10)
absolutely. Yeah, yeah. Yeah, I would have been in a much, much worse spot, It’s embarrassing to even bring Adam does not have any
he paid his off when he was in his early mid 20s or mid 20s too. So having to go into a relationship and be like, yeah, I’m working for the state because I have student loans.
Crystal (19:35)
student loans are like HPV.
Lanea (19:40)
They are.
Crystal (19:41)
You get them. Sometimes it clears up and you pay it off. Other times they get ya and you get cancer.
Lanea (19:49)
Well, I’m hoping not to get, I’m hoping the student loans don’t define my life, but you know, they’re there in the background. They’re more like a herpes outbreak. They like kind of come and go, like how much stress they really give you.
Crystal (19:56)
They don’t hang around. Yeah.
You forget about them while they’re deferred and then you get that letter saying it’s time to repay.
Lanea (20:10)
like, god damn it. Do you still have these?
Crystal (20:11)
And then you get that one letter because there’s, my God, the letters, the demand letters when you hit the 10 year mark and you haven’t taken out another one to wrap them up into a new P note. The demand letter is like, thank you for joining us. You now owe $104 ,000 on Tuesday the 5th. Please pay.
Lanea (20:36)
I didn’t realize say, or I, you know, forgot about that. Mine been on a payment like an income based repayment plan like pretty much the entire time. So I’ve never gotten a demand letter.
Crystal (20:40)
Yeah!
So even though I worked in the public sector, I never signed up for the public student loan forgiveness specifically because by the time I started I would have already paid off my student loans because I would have ended up with a demand letter like seven years in.
Lanea (21:05)
Okay, yeah, it just wasn’t worth it.
Crystal (21:08)
Yeah, plus it’s such a – like, I think it’s a small amount, so… Yeah.
Lanea (21:12)
it’s yeah, it’s a very small amount overall, in the grand scheme of life.
Crystal (21:18)
Exactly.
Lanea (21:18)
If you were in my shoes, what would you do?
Crystal (21:21)
So I would really weigh, like you said, the emotional aspect of it is big. And I get that it’s hard. And the dividend strategy doesn’t really work unless you build up an actual share holding, because it’s the amount of shares the dividend is paid X amount per shares that you hold. And I have like 60 ,000.
Lanea (21:42)
Mm -hmm.
Crystal (21:45)
in the market for that purpose. that’s what I did when the loans during COVID were suspended. I just bought every single thing. Yep, everything I could to make that money, because I knew someday it would pay me back. And as of the end of this month with that disbursement, I will have made
Lanea (21:56)
You saved your heart out.
Crystal (22:09)
$4 ,000 this year in doing nothing. that pays way more than what my student loans cost per month. Yes. Yep. But in your case, because you consolidated it’s not like you can just break them up into little chunks.
Lanea (22:13)
Yay!
Loans are, yeah.
I only consolidated the minimum amount so I do still have I think five of them so they’re not all in one I could break them up but I also have the liquidity where I could pay them off but it would hurt deeply
Crystal (22:47)
my opinion is if it bothers you psychologically,
Lanea (22:52)
these don’t. Just, I’m more…
not angry, but more pissed that they’re allowing kids to take out massive amounts of debt. it really doesn’t bug me on a very frequent basis. I get miffed about it like a couple times a year, but
I’m not unhappy enough with my job to or I’m not stressed enough about money because Adam makes more than I do. So he can kind of cover the household. it takes a lot of stress off of me where the loans are, you know, driving my financial future as much.
Crystal (23:32)
Yeah, I mean, I get that. I personally am really pissed off about the $4 ,000 that I had to take for my trip to Japan that I was forced to take to graduate with my international business degree, even though I’d already studied in Canada and transferred the credits because apparently Canada is not international.
Lanea (23:57)
that would annoy the hell out of me. God.
Crystal (23:59)
They have a study abroad program in Montreal, but apparently my study abroad didn’t count. But that’s not the whole point. The whole point is that was in 2017. Do you remember what happened in 2017? They changed the fucking deadline for the FAFSA.
Lanea (24:09)
Wow, okay.
Crystal (24:26)
and it made it so that used reused your tax forms. And I was in Japan at the time. I didn’t have time to call and I stayed up so late. I called the university financial office and was like, hey, you guys are certifying with the wrong like income. I made nothing in the prior year. And they’re like, you’re just going to have to prove it. Bring your stuff in person. I’m like, I’m not in the
Lanea (24:43)
Income.
Crystal (24:53)
country so I had to sign up for that.
Lanea (24:54)
I’m enrolled in your school, you know where I’m at!
Crystal (24:57)
Yeah, I had to just take it. should have had that covered in more Pell Grants, but they wouldn’t give me the Pell Grants because the date got changed and they used the prior year’s tax returns.
Lanea (25:14)
have just a tiny bit in Pell Grants. So I was so upset when the Supreme Court ruled against the student loan forgiveness because that would have knocked mine down to 17 from 37 to 17.
Crystal (25:30)
Right?
all of my school was predominantly funded by me working my ass off, paying the tuition, paying all my living expenses, everything, and then the government picked up the rest through the loans and the grants. I also had a bunch of scholarships too,
Lanea (25:50)
Yeah, there is something to be said.
My plan is really just to shut my eyes, close my ears, hope that… hope they go away. That’s really it.
Crystal (25:58)
Hope they go away.
majority of borrowers
Lanea (26:04)
But I’m at the point right now where I’m gonna have to like, I don’t know what I’m gonna do about my freaking payments because they’re going to be hundreds and hundreds of dollars a month.
Crystal (26:17)
Okay, but how much actually? have you had the estimates for them?
Lanea (26:22)
I and have not. They’re gonna be at least like 300 to 375 I would guess minimum to be on like a standard plan that would count for public student loan forgiveness.
Crystal (26:32)
So –
Lanea (26:40)
regardless, even if it’s 375, we can do it, it’s more but at that point,
Crystal (26:41)
at least, yeah.
Lanea (26:46)
I don’t know, at that point it’s more.
Crystal (26:47)
Put it
Lanea (26:47)
what are you going to do with Tristian when he’s 18, say he.
Crystal (26:52)
So Tristian is a tri -citizen. He’s not going to school in the US unless he pays for it. He’s going to go to Canada or somewhere in Europe because he’s also a French citizen.
Lanea (27:04)
All right, all right, that makes a lot more sense.
Crystal (27:07)
Yeah, marry smart guys. Don’t make it harder on yourself. Get a foreigner.
There’s plenty out there! There are more foreigners in the world than there are Americans.
Lanea (27:18)
That is true, yeah.
Crystal (27:20)
Haha!
Lanea (27:20)
Good point though, that’s a good plan.
Crystal (27:24)
I’m trying to think of homework for the audience.
Lanea (27:27)
don’t think we necessarily need to give homework to the audience.
Crystal (27:31)
Okay. So guys, this week’s homework is no homework. You’re free. Go be free. Go live.
Lanea (27:36)
Yay!
Lanea (27:38)
Thanks for listening to today’s episode. Please remember that finances and parenting is a complex balancing act. But remember, By learning and growing together, we can build a brighter future for ourselves and our families. If you have any questions or want to share your experience, reach out to us at YouTube, Instagram, or Spotify at Piggy Bank Patrol. We would love to hear from you.
Additionally, visit our website at thepiggybankpatrol.com for a host of resources. Until next time,
Sound Bites
“I definitely could have taken out less (student loans)… looking back.”
“I would have rather starved to pay my tuition, than take out the promissory notes.”