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How to Keep Them From Taking Your Money — Part Two with The Student Loan Doctor · The Breakfast Club

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  Speaker 1: Today on Front page, Part two with the Student loan Doctor,
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  Speaker 1: how to keep the government from taking your money and
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  Speaker 1: how to avoid default.
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  Speaker 2: That has to be clarified by July first as well,
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  Speaker 2: where they'll start garnishing your income and your tax returns.
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  Speaker 1: And the new borrowing caps on parent plus loans. Every
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  Speaker 1: parent needs to hear.
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  Speaker 2: But typically many black families and middle class families have
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  Speaker 2: to utilize parent plus loans to close the gap for
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  Speaker 2: their students.
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  Speaker 1: It's Monday, June twenty second from the Black Effects Podcast Network.
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  Speaker 1: I'm Nini Brown. This is Front Page. Stay with me
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  Speaker 1: on Friday. In part one of my conversations with the
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  Speaker 1: Student Loan Doctor Sonya Lewis, we broke down the major
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  Speaker 1: student loan changes taking effect on July first, the repayment
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  Speaker 1: plans are disappearing, the new plans replacing them, and what
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  Speaker 1: borrowers need to know before the rules changed. If you
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  Speaker 1: missed that conversation, go back and listen to part one
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  Speaker 1: first on Friday, because today we're talking about what happens
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  Speaker 1: when you can't pay. We're talking about wage garnishment, tax
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  Speaker 1: refund seizures, and reductions to Social Security benefits. The federal
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  Speaker 1: government has powerful tools to collect on defaulted student loans,
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  Speaker 1: and for millions of borowers already struggling to keep up,
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  Speaker 1: understanding those rules could mean the difference between staying afloat
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  Speaker 1: and falling further behind. So how do you avoid default
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  Speaker 1: before it happens? What should you do if you're already
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  Speaker 1: in default? And what new limits on parent plus loans
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  Speaker 1: could change how families pay for college. Sonya Lewis has
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  Speaker 1: the answers. Here's part two of my conversation with the
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  Speaker 1: student loan doctor. So if you were someone and you
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  Speaker 1: were listening to this right now, give them the first
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  Speaker 1: three steps. What do they need to do right now?
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  Speaker 2: At extra step, take a deep breast, let's start there,
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  Speaker 2: because this is a and then I would go to
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  Speaker 2: do the aid doc Gov. I would log in and
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  Speaker 2: I would just make sure that on my dashboard it
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  Speaker 2: doesn't say that you're in default, because if if you're
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  Speaker 2: in default, it'll be like a red banner that comes
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  Speaker 2: up and say your loan is defaulted. But that has
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  Speaker 2: to be clarified by July first as well, or they'll
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  Speaker 2: start garnishing your income and your tax returns. So we
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  Speaker 2: want to make sure you're not in default. Okay, now
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  Speaker 2: that you're not in default, you want to get your
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  Speaker 2: loan details and it will tell you a plan your
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  Speaker 2: In most people, it will stay saved a lot of people.
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  Speaker 2: About seven eight million people got moved there automatically. The
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  Speaker 2: latest updates showed that less than a million have moved
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  Speaker 2: themselves out. So this is a lot of people that
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  Speaker 2: are going to need to manually do an income driven
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  Speaker 2: repayment application under the long repayment tap that we just
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  Speaker 2: spoke about.
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  Speaker 1: You got me with default. So how does a person
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  Speaker 1: find out if they are in default? Because I know
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  Speaker 1: a few months ago we were talking and we were saying,
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  Speaker 1: if you have you know, the Trump administration was about
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  Speaker 1: to start up default. They were going to garnish your
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  Speaker 1: wages and I can't kind of pause on that. So
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  Speaker 1: are you saying as of July first, that is back
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  Speaker 1: on as well.
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  Speaker 2: Yeah. So here's the thing about default loans. This is
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  Speaker 2: a chance for people to clean them up before July
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  Speaker 2: first by going through rehabilitation. Sometimes they can use consolidation.
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  Speaker 2: I don't speak about consolidation a lot because yes, it's
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  Speaker 2: a quick fix, but it gives you a permanent record
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  Speaker 2: on your credit report and your still lone report for
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  Speaker 2: up to seven years, and it just really would jam
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  Speaker 2: you up. So you want to go through what we
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  Speaker 2: call rehabilitation. That's where you have to make nine payments
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  Speaker 2: out of ten, so nine consecutive monthly payments on time
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  Speaker 2: with the greed upon payment that you are going to
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  Speaker 2: express through a worksheet that asks you about your income
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  Speaker 2: and expenses. So anyway, when you submit this worksheet over now,
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  Speaker 2: it's the collection agency job to say okay, based off
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  Speaker 2: of what you say you earned and then what you
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  Speaker 2: say your expenses are, it is then your job to say,
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  Speaker 2: hmm okay. Their job excuse me to say, hmm, mem
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  Speaker 2: it looks like she's only able to afford a fifty
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  Speaker 2: dollars payment, and you want to get the payment to
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  Speaker 2: be as low as possible, as low as it can
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  Speaker 2: go down to as low as five dollars. The reason
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  Speaker 2: why I'm explaining this is because what happens is me
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  Speaker 2: me people get really encouraged like I'm taking control of
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  Speaker 2: my loans. But all of that money that's being paid,
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  Speaker 2: even that five dollars payment, is going to the collection
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  Speaker 2: agency as an interest, never to your student loans. So
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  Speaker 2: we're not trying to be superheroes here and make these
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  Speaker 2: huge payments over nine months. We want a nice, affordable
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  Speaker 2: payment so you can get out of default. And then me, me,
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  Speaker 2: I don't care if people need to be anal and
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  Speaker 2: set two reminders on the day that the payment is
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  Speaker 2: due and one payment before because if you miss a payment,
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  Speaker 2: you have one time to mess up with this. You
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  Speaker 2: are in death. Lee in default. Now me me, people
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  Speaker 2: are in an indefinite default. And indefinite default means you're
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  Speaker 2: not purchasing a home. You're going to have bad credit.
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  Speaker 2: It's going to affect even if you want to purchase
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  Speaker 2: a house. Like these things really do impack you long term. Okay,
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  Speaker 2: let me pause here. That's a lot.
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  Speaker 1: That is a lot. That's a lot. You know, we've
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  Speaker 1: got a lot of information unpacked there. I want to
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  Speaker 1: ask you too about parents, because I know a lot
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  Speaker 1: of parents take out loans trying to help their kids
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  Speaker 1: go to school. How are these parents going to be
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  Speaker 1: impacted by these changes now?
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  Speaker 2: So parents are it's crazy. There's another two groups graduate
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  Speaker 2: barbers and parents that the parent plus crisis I'd say
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  Speaker 2: no one is talking about. So, you know, particularly many
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  Speaker 2: black families and middle class families have to utilize parent
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  Speaker 2: plus loans to close the gap for their students. And
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  Speaker 2: with this administration, it's becoming so tight that when I
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  Speaker 2: tell you me and me, school planning before going to
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  Speaker 2: a COECH is going to have to be almost like
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  Speaker 2: a sit down webinar or in person seminar at high
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  Speaker 2: schools because of the lack of funding that will now
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  Speaker 2: be available. So this is going to really impact parents
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  Speaker 2: that are going into their middle age. They're now going
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  Speaker 2: to not be able to borrow as much for their
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  Speaker 2: students as they would have hoped to have borrowed to
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  Speaker 2: help close the gap on that. So when we talk
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  Speaker 2: about parents, let's just go back a bit. The biggest
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  Speaker 2: change for parents is going to be that the borrowing
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  Speaker 2: limits have significantly changed for new parent borrowers. It used
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  Speaker 2: to be an unlimited amount that a parent could borrow
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  Speaker 2: for their child's education, but now it's down to sixty
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  Speaker 2: thousand per child, and there's so much that they can
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  Speaker 2: borrow each year now. The reason why this is really
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  Speaker 2: impactful is because when we already think about the aggregate
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  Speaker 2: loan limits that a student can receive, you and I
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  Speaker 2: don't have it right in front of you, but I
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  Speaker 2: think it's like close to thirty thousand. And then you
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  Speaker 2: say a parent can pay can take up to sixty. Well,
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  Speaker 2: as long as we can keep a college education in
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  Speaker 2: that window, we should be okay. And we're talking about
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  Speaker 2: through all degrees, Mimi, a bachelor's, a master's, and a doctoral.
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  Speaker 2: The problem here, Mimi, is there something called the sticky middle. Yeah.
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  Speaker 2: The sticky middle is when a parent doesn't make enough
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  Speaker 2: money to cash pay for their child to go to school,
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  Speaker 2: but they also make enough to not receive full grants.
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  Speaker 2: So this person that's in the sticky middle is relying
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  Speaker 2: on something like a parent plus loan to fund their
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  Speaker 2: child's education. Does that make sense? Yep?
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  Speaker 1: Yep.
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  Speaker 2: Then the last thing for parents that already have student loans,
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  Speaker 2: they're going to need to go into studenta dot UV
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  Speaker 2: and see if that loan is what's called a parent
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  Speaker 2: plus consolidated loan. And the reason that's important is because
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  Speaker 2: if that parent plus is not a parent plus consolidated
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  Speaker 2: loan before July first, they're not able to get an
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  Speaker 2: affordable repayment under an ICR plan, which will turn into
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  Speaker 2: an IBr plan. All people need to know, Mini, is
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  Speaker 2: is my parent plus loan if they're done with their
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  Speaker 2: child being in school, is it consolidated. If it's not,
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  Speaker 2: I'm going to encourage them to call their lender to
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  Speaker 2: be sure to inquire if they need to consolidate their
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  Speaker 2: loan Before Your Life First.
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  Speaker 1: Tomorrow, in Part three, we bring it all together because
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  Speaker 1: these changes aren't just affecting students. They're affecting parents, grandparents,
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  Speaker 1: and anyone helping a loved one pay for college. So
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  Speaker 1: if you have a student loan debt, if your child
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  Speaker 1: has student loan debt, or if you've ever co signed
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  Speaker 1: for someone else's education, Jamorrow's episode is for you, and
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  Speaker 1: if today's conversation helps you share it, send Part one
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  Speaker 1: and Part two to someone who needs to hear this
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  Speaker 1: information before the rules change, because information is power, and
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  Speaker 1: sometimes taking care of each other starts with making sure
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  Speaker 1: your nobody is blindsided. I'm Mimi Brown. That's your front page.
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  Speaker 1: This podcast was brought to you by The Black Effect
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  Speaker 1: Podcast Network. M