Latest / Financial Survival Network / Student Loan Repayment Restarts Now: Are You Ready? - Paul Oster #6154

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Student Loan Repayment Restarts Now: Are You Ready? - Paul Oster #6154 · Financial Survival Network

• 0:00
  Speaker 1: The problem right now is that they've actually frozen the
• 0:04
  Speaker 1: IDR programs, which is the income repayment program directly based
• 0:10
  Speaker 1: on your income. Right. So that's a good thing. If
• 0:13
  Speaker 1: you were making more money four or five years ago
• 0:15
  Speaker 1: and you're to pay it was one hundred dollars, you're
• 0:17
  Speaker 1: making less money today, they might knock your payment down
• 0:20
  Speaker 1: to fifty dollars.
• 0:21
  Speaker 2: You're listening to Carrie Let's's Financial Survival Network where you
• 0:24
  Speaker 2: get valuable information. You just can't find anywhere else to
• 0:29
  Speaker 2: thrive in today's trying times. You need the Financial Survival
• 0:33
  Speaker 2: Network now more than ever. Go to Financial Survivalnetwork dot
• 0:37
  Speaker 2: com and get your free newsletter and gift. Financial Survival
• 0:42
  Speaker 2: Network now more than ever.
• 0:48
  Speaker 4: And welcome.
• 0:49
  Speaker 3: You are listening to the Financial Survival Network. I'm your host,
• 0:52
  Speaker 3: Carrie Lets.
• 0:53
  Speaker 4: Well. Are the walls now tumbling down? That's the question.
• 0:57
  Speaker 3: If there is a theme song my next guest, thing
• 1:00
  Speaker 3: that should be it for today? Paul Austerbetter Qualified dot com. Paul,
• 1:05
  Speaker 3: so you're the credit expert. Two things fifty basis point
• 1:09
  Speaker 3: cut in the Fed funds rate and a new student
• 1:15
  Speaker 3: loan rules on forbearance.
• 1:17
  Speaker 4: Does it matter?
• 1:18
  Speaker 3: Is it too late? Does anybody really care. What do
• 1:21
  Speaker 3: you think, how do you think it's affecting your clients?
• 1:23
  Speaker 3: And you have a lot of them who will be
• 1:25
  Speaker 3: affected by it.
• 1:26
  Speaker 1: Yeah, So unfortunately, you know, this first cut is not
• 1:30
  Speaker 1: going to you know, even make a dent for the
• 1:33
  Speaker 1: average consumer. A lot of people were hoping that they
• 1:37
  Speaker 1: would directly impact mortgage interest rates, which is really you know,
• 1:42
  Speaker 1: has had the housing market kind of paralyzed for a
• 1:45
  Speaker 1: couple of years here, but it's indirectly tied to the
• 1:49
  Speaker 1: mortgage industrate. Most banks had already had it baked in
• 1:53
  Speaker 1: expecting that fifty point basis cut, so those are unchanged.
• 1:58
  Speaker 1: What it does start, that is our credit card interest
• 2:02
  Speaker 1: rate will drop a little bit. That's always a good
• 2:05
  Speaker 1: thing I tell people all the time. Even though the
• 2:11
  Speaker 1: interest rate drops and your payment the minimum ountd may drop,
• 2:15
  Speaker 1: you should continue to make the higher payments, even if
• 2:19
  Speaker 1: it's only a couple of bucks more.
• 2:21
  Speaker 4: That is how you're going to accelerate getting out of debt.
• 2:25
  Speaker 1: So if you kind of just follow this thing down,
• 2:28
  Speaker 1: hopefully they make at least one more rate cut before
• 2:30
  Speaker 1: the end of the year, your credit card interest rates
• 2:33
  Speaker 1: will drop again, your minimum payments will drop again, but
• 2:36
  Speaker 1: if you can afford to keep making those higher payments,
• 2:40
  Speaker 1: it's kind of an easy way to just start to
• 2:43
  Speaker 1: pay down your principal balances. So certainly a good thing.
• 2:48
  Speaker 1: Hopefully the trend continues in a downward motion. The FED
• 2:53
  Speaker 1: certainly seems to be pointing in that direction, so that's
• 2:58
  Speaker 1: that's always a good thing.
• 3:00
  Speaker 3: Well, it definitely looks like rates are coming down more,
• 3:02
  Speaker 3: the dollar is going down, right, all these things that
• 3:05
  Speaker 3: are having what's a good rule of thumb for ever,
• 3:09
  Speaker 3: Let's just say, if rates come down half a point,
• 3:12
  Speaker 3: maybe you should up your payments to match the rate cut.
• 3:16
  Speaker 4: Yeah, that's exactly right.
• 3:18
  Speaker 1: Just look at what your existing payment was, you know,
• 3:21
  Speaker 1: the last couple of billing cycles, and just try and
• 3:25
  Speaker 1: maintain those payments. Look, if you're struggling to make those
• 3:29
  Speaker 1: payments in the first place, you might want to reach
• 3:32
  Speaker 1: out to a credit management company, a credit counseling company,
• 3:36
  Speaker 1: and try and get into a credit management program where
• 3:40
  Speaker 1: these companies leverage the credit card companies, the creditors by
• 3:46
  Speaker 1: having pools and lots of people where they say, hey, listen,
• 3:50
  Speaker 1: Paul Auster can no longer afford to make these minimum payments.
• 3:54
  Speaker 1: We have to maybe lowers interest rate to zero. Obviously,
• 3:59
  Speaker 1: the cards are frozen and sometimes canceled during these types
• 4:04
  Speaker 1: of programs, But again, the overall goal was.
• 4:07
  Speaker 4: To get out of credit card debt.
• 4:08
  Speaker 1: Even though the rates came down a little bit, the
• 4:11
  Speaker 1: average is still close to twenty percent, and people on
• 4:15
  Speaker 1: the higher end of the spectrum were paying close to
• 4:17
  Speaker 1: thirty percent interest on that debt. It's really really difficult
• 4:23
  Speaker 1: to pay off debt at thirty percent interest.
• 4:26
  Speaker 3: Right, I see your point. I see your point, Like
• 4:30
  Speaker 3: you can never get out from under that. So what
• 4:33
  Speaker 3: is when you've got these carrying all these balances, what
• 4:36
  Speaker 3: is the best way to pay them down in the
• 4:39
  Speaker 3: systematic fashion that gives you the most benefit.
• 4:43
  Speaker 4: How do you do that?
• 4:44
  Speaker 1: So there's a couple of different options, the two most popular.
• 4:48
  Speaker 1: One is called the avalanche, where you're focusing on one
• 4:52
  Speaker 1: credit card with the highest interest rate at a time.
• 4:56
  Speaker 1: So if you have an extra fifty bucks a month,
• 4:58
  Speaker 1: you don't split that between two or three cards and
• 5:02
  Speaker 1: pay them all down. It's actually a psychological thing. It
• 5:05
  Speaker 1: makes people feel great, I paid you know, I paid
• 5:07
  Speaker 1: down three or four cards more than the.
• 5:10
  Speaker 4: Minimum payment that was due.
• 5:11
  Speaker 1: Mathematically speaking, the best way to do this is to
• 5:15
  Speaker 1: take that entire fifty dollars apply it towards the card
• 5:18
  Speaker 1: with the highest interest rate until that's paid off. So obviously,
• 5:23
  Speaker 1: hopefully you're not continuing to add onto the balances while
• 5:27
  Speaker 1: you're trying to pay them down. It's kind of counterproductive.
• 5:30
  Speaker 1: The other way is called the snowball method, where you're
• 5:33
  Speaker 1: going to try and roll up the accounts with the
• 5:37
  Speaker 1: lowest balances and get them out of the way. It's
• 5:41
  Speaker 1: a great psychological win for people to have a card
• 5:45
  Speaker 1: paid off in full. Obviously you need to put that
• 5:48
  Speaker 1: card away so you do not use it anymore. Both
• 5:52
  Speaker 1: of those will work, okay. The idea is that you're
• 5:55
  Speaker 1: making the minimum payments on all the other cards, focus
• 5:58
  Speaker 1: on one, whether it's the lowest balance or the highest
• 6:01
  Speaker 1: interest rate, and then you move on to the next card.
• 6:05
  Speaker 1: Do not open any new cards, do not pose any
• 6:09
  Speaker 1: of those cards. Believe it or not, posing a credit
• 6:12
  Speaker 1: card can have a serious negative impact on forty five
• 6:16
  Speaker 1: percent of your overall credit score. It's the combination of
• 6:22
  Speaker 1: your utilization ratio, which is the difference between your balances
• 6:26
  Speaker 1: and credit limits, and your credit history. So unfortunately, the
• 6:30
  Speaker 1: moment that you close a credit card, You've now lost
• 6:33
  Speaker 1: all of the credit history associated with that card, so
• 6:38
  Speaker 1: you're gonna it'll it could skew all of the averages
• 6:41
  Speaker 1: for the other cards, and you will now have lost
• 6:44
  Speaker 1: whatever available credit you had on that card. So the
• 6:48
  Speaker 1: idea for the utilization ratio is to keep that number
• 6:52
  Speaker 1: thirty percent or below. So if you have a balance
• 6:56
  Speaker 1: of if you have a credit limit of one thousand dollars,
• 7:00
  Speaker 1: you would never want the balance on that card to
• 7:03
  Speaker 1: be above thirty percent. The other option, and this is
• 7:07
  Speaker 1: still a really good option, but it comes with a
• 7:09
  Speaker 1: tremendous amount of trepidation and hesitation because if you use
• 7:15
  Speaker 1: a zero percent balance transfer option, it will work.
• 7:20
  Speaker 4: Right. We were talking before.
• 7:22
  Speaker 1: It how difficult it is to pay off debt at
• 7:24
  Speaker 1: thirty percent. So they're giving you the option to put
• 7:28
  Speaker 1: it to transfer a balance to a new card and
• 7:31
  Speaker 1: pay it off at zero percent. The problem is, if
• 7:35
  Speaker 1: you haven't figured this thing out mathematically, if you do
• 7:38
  Speaker 1: not pay it off in eighteen twenty four months, you
• 7:42
  Speaker 1: will now have cost yourself that much more money because
• 7:46
  Speaker 1: you paid a transfer fee somewhere between two and five
• 7:50
  Speaker 1: percent and it hit with all of the deferred interest
• 7:55
  Speaker 1: so it's really like you know, credit card sabotage. You
• 7:59
  Speaker 1: do not want to sell babetize yourself. So if you're
• 8:02
  Speaker 1: going to do a zero percent trader, just make sure
• 8:05
  Speaker 1: mathematically and somewhat confidently that you're going to be able
• 8:08
  Speaker 1: to pay off the balance in that timeframe.
• 8:11
  Speaker 3: Yeah, okay, so you've got to have a planned most importantly, right,
• 8:15
  Speaker 3: you got to have a yep.
• 8:16
  Speaker 4: Yeah.
• 8:17
  Speaker 1: And then for these you know, for the younger people
• 8:19
  Speaker 1: and sometimes older people. You know, September thirtieth, it will
• 8:24
  Speaker 1: be a really tough day for thirty million.
• 8:27
  Speaker 4: Student loan borrowers. Thirty million.
• 8:30
  Speaker 1: And the problem is that we have been somewhat foddled
• 8:34
  Speaker 1: for the past four years. They've used defferments, they've used
• 8:40
  Speaker 1: for bearances, they've used this ramp up period, and that
• 8:43
  Speaker 1: was all a good thing during the pandemic. But we
• 8:46
  Speaker 1: need to get back to business here. We need to
• 8:49
  Speaker 1: get back to people being held accountable for the monies
• 8:52
  Speaker 1: that they borrowed. And you have to come up with
• 8:54
  Speaker 1: a payment plan. So unfortunately, if you've waited it and
• 8:57
  Speaker 1: you haven't gone to studentaid dot gov. By the way,
• 9:01
  Speaker 1: there's only one website, and one website only that barers
• 9:06
  Speaker 1: should or have to go to studenta dot gov. Don't
• 9:11
  Speaker 1: answer solicitations via text message, social media, phone calls, commercials.
• 9:18
  Speaker 4: Go to studenta dot gov and.
• 9:19
  Speaker 1: You will be able to figure out a plan that
• 9:21
  Speaker 1: can help you pay off your student will. The problem
• 9:24
  Speaker 1: right now is that they've actually frozen the IDR programs,
• 9:29
  Speaker 1: which is the income repayment program directly based on your income.
• 9:35
  Speaker 4: Right So that's a good thing.
• 9:36
  Speaker 1: If you were making more money four or five years
• 9:38
  Speaker 1: ago and you're to paint it was one hundred dollars,
• 9:40
  Speaker 1: you're making less money today, they might knock your payment
• 9:43
  Speaker 1: down to fifty dollars twenty five dollars. But again, right now,
• 9:47
  Speaker 1: those programs have actually been frozen until they figure out.
• 9:52
  Speaker 1: There's all sorts of Unfortunately, this has become a political
• 9:56
  Speaker 1: hot potato football. It's getting kicked back and forth. The
• 9:59
  Speaker 1: bar ers are left holding the bag, so to speak.
• 10:02
  Speaker 1: So no one understands rially what's going on. But there
• 10:05
  Speaker 1: have been some actual Supreme Court injunctions, and this is
• 10:10
  Speaker 1: you know, this is a matter of the courts at
• 10:12
  Speaker 1: this point in time, so we have to wait to
• 10:14
  Speaker 1: see how those are going to play out. But in
• 10:17
  Speaker 1: the interim, it is imperative if you have a student
• 10:20
  Speaker 1: loan and you anticipate struggling making these payments coming September thirtieth,
• 10:27
  Speaker 1: you have to take some prow active steps right now.
• 10:32
  Speaker 1: Don't wait, because if everybody tries to do it at once,
• 10:35
  Speaker 1: it's just not going to be as beneficial for the
• 10:39
  Speaker 1: people that get involved earlier, sooner than later. So be proactive.
• 10:43
  Speaker 1: Go to studentate dot gov. Figure out what you're going
• 10:47
  Speaker 1: to be able to, you know, be qualified for and
• 10:51
  Speaker 1: approve for as of September thirtieth, and this might be
• 10:54
  Speaker 1: the biggest piece of what's going to happen. If you
• 10:57
  Speaker 1: miss a payment now fourth September thirtieth, most of the
• 11:02
  Speaker 1: time they were not reporting it to the credit buros.
• 11:06
  Speaker 1: Really okay, after September thirtieth, if you go thirty days late,
• 11:10
  Speaker 1: which means you have a payment due today twenty six,
• 11:14
  Speaker 1: if you paid a couple of days, they're now reinstating
• 11:17
  Speaker 1: late fees, by the way, but that's not a thirty
• 11:20
  Speaker 1: day late payment. That won't get reported to the credit buros.
• 11:23
  Speaker 1: If I sailed to make the payment before October twenty six,
• 11:28
  Speaker 1: that's a thirty day lay payment. Then that can easily
• 11:31
  Speaker 1: drop your scores fifty to one hundred points, which then
• 11:35
  Speaker 1: in turn costs you more money for every other financial transaction.
• 11:39
  Speaker 3: Wow, that's amazing. Yeah, well, I'm glad that we had
• 11:43
  Speaker 3: you on here to clarify that because that could be
• 11:45
  Speaker 3: a real bad mistake. And then try to get it
• 11:48
  Speaker 3: off your report once it's reported by the federal government.
• 11:52
  Speaker 3: That's probably like the hardest one to get off.
• 11:54
  Speaker 4: Huh Yeah.
• 11:55
  Speaker 1: I mean, especially if they're federal student loans, they're excluded
• 11:59
  Speaker 1: from banks. There's no way out from under paying back
• 12:04
  Speaker 1: those student loves. If they're private, you have a little
• 12:07
  Speaker 1: bit more wiggle room, but they're gonna you know, they're
• 12:10
  Speaker 1: coming after the barers and saying listen, you've had plenty
• 12:14
  Speaker 1: of time to figure this out.
• 12:16
  Speaker 4: You know.
• 12:18
  Speaker 1: Yeah, Well, the pause started back in March of twenty twenty,
• 12:21
  Speaker 1: believe it or not. It's just amazing here, you know,
• 12:23
  Speaker 1: here we are four years later, so people and I
• 12:26
  Speaker 1: sympathize with them. I empathize with them. I feel bad
• 12:29
  Speaker 1: for them. But you borrow the money, and now you've
• 12:32
  Speaker 1: had four years to try and figure out how you're
• 12:36
  Speaker 1: going to start making those monthly payments. So it started
• 12:41
  Speaker 1: back it's been going on for almost a year now.
• 12:44
  Speaker 1: They reinstated it back in September October of twenty three,
• 12:48
  Speaker 1: but there was a ramp up period. There were still
• 12:50
  Speaker 1: some built in flexibilities where they weren't keenalizing the bar
• 12:56
  Speaker 1: wars that all goes away on the thirtieth. I hate
• 13:00
  Speaker 1: to be the doom sayer. I hate to be the
• 13:02
  Speaker 1: bear of bad news, but it's really imperative that you know,
• 13:07
  Speaker 1: your listeners and viewers understand what's going to happen on
• 13:11
  Speaker 1: the thirties.
• 13:12
  Speaker 4: Yep, yep, yep.
• 13:13
  Speaker 3: And like you said, they had four years to figure
• 13:17
  Speaker 3: this thing out. It should have been enough time. The
• 13:20
  Speaker 3: interest that they haven't paid that continued to build up
• 13:24
  Speaker 3: on these loans. They owe this right, so the balance
• 13:27
  Speaker 3: just gotten higher.
• 13:28
  Speaker 1: Absolutely, absolutely, And there's lots of other things that are
• 13:32
  Speaker 1: going to change.
• 13:33
  Speaker 4: But you know, we could talk about it for days.
• 13:35
  Speaker 1: That's why I always direct people to go to studentaid
• 13:39
  Speaker 1: dot gov. Start plugging your information in there. You know
• 13:43
  Speaker 1: a lot of students don't even realize what kind of
• 13:46
  Speaker 1: loan they have. There are different binds of products loans,
• 13:53
  Speaker 1: and but most barbers don't even understand what kind of
• 13:56
  Speaker 1: financing and loans that they took out. So figure that
• 13:59
  Speaker 1: out first and foremost, be very proactive with the servicer,
• 14:04
  Speaker 1: which might not be the bank who owned you the money.
• 14:07
  Speaker 1: There are big, big, big servicers out there. If you
• 14:10
  Speaker 1: think of Sallymay dot com they're one of the biggest.
• 14:14
  Speaker 1: For sure, you have to reach out to them. They
• 14:18
  Speaker 1: can help you figure this out also, but you're much
• 14:21
  Speaker 1: better off going to studentaid dot gov.
• 14:24
  Speaker 4: Got it, studentad dot gov.
• 14:26
  Speaker 3: That's the go to place you want to be and
• 14:31
  Speaker 3: better Qualified if you've got questions or need information or
• 14:37
  Speaker 3: need some assistance managing your managing your credit and your
• 14:43
  Speaker 3: credit score. Right, it's one and the same and right
• 14:47
  Speaker 3: better qualified dot com. Is there a phone number that
• 14:50
  Speaker 3: can call you at?
• 14:52
  Speaker 4: Yeah, well, Carrie, because there is, and I'll give the
• 14:55
  Speaker 4: phone number out.
• 14:56
  Speaker 1: But more importantly, because most people don't want to call anybody,
• 15:00
  Speaker 1: so we have a texting platform and now is a
• 15:03
  Speaker 1: really good time to contact us. Because we launched our
• 15:09
  Speaker 1: artificial intelligence, our AI driven credit reporting service about a
• 15:15
  Speaker 1: year and a half ago. This thing is it's a
• 15:19
  Speaker 1: work of art. You know, I've been doing this for
• 15:21
  Speaker 1: twenty years. This is by far the greatest thing we've
• 15:24
  Speaker 1: done for our clients because well, kind of what you
• 15:27
  Speaker 1: were saying before, it's all tied together. And the reason
• 15:31
  Speaker 1: that people are in the position or in if they
• 15:34
  Speaker 1: have lower credit scores, if they have credit card debt,
• 15:37
  Speaker 1: is because they didn't kind of have a plan. They
• 15:40
  Speaker 1: have no idea how much gas is left in the tank.
• 15:43
  Speaker 1: They have no idea. They basically limit a crisis mode
• 15:46
  Speaker 1: every thirty days. So you have to be able to
• 15:48
  Speaker 1: plug all this stuff in and you can do that
• 15:51
  Speaker 1: with our We call it BI Better Intelligence, but it's
• 15:55
  Speaker 1: an AI driven credit report that can tell you check
• 15:59
  Speaker 1: this out. We have paydown dates. It will tell you
• 16:02
  Speaker 1: in the in the billing cycle, the exact amount, the
• 16:06
  Speaker 1: exact day on what credit card you should pay to
• 16:10
  Speaker 1: get the highness jumps in your credit scores. That's really
• 16:14
  Speaker 1: really important when you're talking about financing a new card,
• 16:18
  Speaker 1: buying for any type of financing. There's not another credit
• 16:21
  Speaker 1: report in the world that does it, by the way,
• 16:23
  Speaker 1: so that paydown date is really really important for us
• 16:27
  Speaker 1: and our and our clients. And the other thing is
• 16:30
  Speaker 1: that all of the creditors are plugged into this now
• 16:33
  Speaker 1: and we can communicate with your creditors directly. And electronically,
• 16:39
  Speaker 1: so we're getting results within days as opposed to waiting,
• 16:45
  Speaker 1: uh you know, weeks and months for the for the
• 16:47
  Speaker 1: credit bureaus, which are terrible right by the way, so
• 16:52
  Speaker 1: we don't have to wait for them anymore. We're going
• 16:54
  Speaker 1: directly to the creditors through this electronic dispute portal, and
• 16:58
  Speaker 1: it really has changed the way time and the turnaround time.
• 17:02
  Speaker 1: It's it's in days. So if you're gonna you're gonna
• 17:05
  Speaker 1: send a text message to the number for zero six
• 17:08
  Speaker 1: nine one, send a text message to the number for
• 17:11
  Speaker 1: zero six nine one, and your message is BI like AI,
• 17:16
  Speaker 1: but ours is better intelligence. So your message is BI
• 17:20
  Speaker 1: and text at the four zero six nine one. The
• 17:22
  Speaker 1: consultation and analysis is absolutely free. I can't stress that
• 17:27
  Speaker 1: it up. Okay, sounds great. Hey, got a question for
• 17:31
  Speaker 1: Paul or myself, Just shoot me an email KL at
• 17:34
  Speaker 1: Carrie Lets dot com. And the link to all site is.
• 17:38
  Speaker 3: In the show notes to this interview on Financial Survival
• 17:41
  Speaker 3: Network dot com. Just click it take your right to
• 17:43
  Speaker 3: a site you could get started. And while you're there,
• 17:46
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• 17:48
  Speaker 3: pleasure and we will talk to you again real soon
• 17:51
  Speaker 3: Thanks having back on Kerry, Thanks.
• 17:53
  Speaker 2: For listening to Carrie Lets's Financial Survival Network, your solution
• 17:57
  Speaker 2: to today's trying times. For the latest, go to Financial
• 18:01
  Speaker 2: Survivalnetwork dot com. Financial Survival Network now more than ever,