144: Our Thoughts on Student Loan Forgiveness

Welcome to The Invested Dads Podcast. Simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb, and Austin Wilson.

Austin Wilson:
All right. Hey, hey, hey. Welcome back to The Invested Dads Podcast. The podcast where we take you on a journey to better your financial future. I am Austin Wilson, Research Analyst at Hixon Zuercher Capital Management.

Josh Robb:
And I am Josh Robb, Director of Wealth Management of Hixon Zuercher Capital Management.

Josh Robb:
Austin, how can people help us grow this podcast?

Austin Wilson:
First of all, we would love it if you’d subscribe if you’re not subscribed already so whatever podcast player you are using to listen to us, so that you get notified every Thursday to your device. Also, we would love it if you would visit our website and sign up for our weekly newsletter to get what the episode’s about, some notes about it, and then link directly right there to listen.

 

[0:57] – Current Student Loan Statistics

Austin Wilson:
So today, Josh, we are going to be talking about the news that came out on August 24th, 2022, that the Biden administration had announced a student loan relief plan.

Josh Robb:
Okay.

Austin Wilson:
So, that was big news.

Josh Robb:
Big news.

Austin Wilson:
It was talked about all over the place.

Josh Robb:
I think it trended on Twitter.

Austin Wilson:
Oh, it for sure trended on Twitter and it’s a fiery topic.

Josh Robb:
Yes.

Austin Wilson:
Let’s just say it’s polarizing, as most things are. We will definitely have some time for some opinions, but we are going to try and come at this from a balanced approach. Giving you, first of all, the facts of what was released, because it’s extremely high level, also, at this point.

Josh Robb:
Yes.

Austin Wilson:
And preliminary.

Austin Wilson:
So, we can’t get into the weeds too much. Let’s talk about some stats.

Josh Robb:
Okay.

Austin Wilson:
I’m a numbers guy. Do you know that?

Josh Robb:
You’re a numbers guy.

Austin Wilson:
I got, really, all of this information straight from the Whitehouse.gov briefing.

Josh Robb:
Okay. So that’s probably pulled from good sources there.

Austin Wilson:
Yes. So I have a link in the show notes to this release, which has all of the information we’re going to be talking about today, aside from our opinions.

Austin Wilson:
So, here we go, stats.

Josh Robb:
Yes.

Austin Wilson:
Approximately 45 million students or former students, I guess, hold approximately 1.6 trillion in student loans in the United States. Now yes, you heard that right. That was not a B. That was a T. 1.6 trillion in student loans. What do those numbers make you feel?

Josh Robb:
I mean, it’s hard to comprehend a trillion dollars. So, that’s a lot of debt for education.

Austin Wilson:
That is, I mean, that’s a lot of debt. So according to the article, in nearly one third of borrowers have student loans, but no degree. So, this means they went to college, they weren’t able to finish college for whatever reason, and they still have the debt incurred that they paid for it with.

Austin Wilson:
So, that is another pillar of what we’re going to discuss a little bit later is what that looks like. But nearly one third there.

Austin Wilson:
Approximately 16% of borrowers are in default on student loan payments. And this was a statistic that confused me a little bit, only because, for the last two and a half years, there has been no required payments on federal student loans anyway because of pandemic relief and all of that. So, maybe this is stuff that has occurred, I’m assuming, prior to that.

Josh Robb:
My guess is, if you were in default and then you got a moratorium on your payment, you’re still in default because nothing’s changed.

Josh Robb:
But yes, you’re right, it probably hasn’t increased at all.

Austin Wilson:
It was before. You were already late.

Josh Robb:
Yeah. And I guess there’s no motivation to pay during that time for anybody really, in general. So, I saw in Forbes article, which I can link in the show notes as well, 30% of those people have been in default for over five years.

Austin Wilson:
Wow.

Josh Robb:
So of that group, 30%…

Austin Wilson:
I have a feeling that would do some bad things to your credit score.

Josh Robb:
You would think.

Austin Wilson:
Another note, just the fact that the current administration that put this release out and this plan ran on in 2020, really, that they were going to try to address student loans in some way, shape or form and provide some form of relief, whether that be forgiveness or whatever. This is being reiterated as a campaign promise fulfilled.

Josh Robb:
Yep.

 

[4:00] – Part 1 of The Student Loan Forgiveness Plan

Austin Wilson:
So, this is a three-part plan. Number one, the Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education. So, these are federal student loans.

Josh Robb:
Yep.

Austin Wilson:
And up to $10,000 in debt cancellation to non-Pell grant recipients.

Josh Robb:
And Pell Grant are for the lower income.

Austin Wilson:
Lower income.

Josh Robb:
You qualify for that with lower income. So you get an extra $10,000…

Austin Wilson:
Correct.

Josh Robb:
… if you’re in that category.

Austin Wilson:
Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for married couples. And in conjunction with this part one, the pause on federal student loan repayments will be extended one final time.

Josh Robb:
They kind of said that.

Austin Wilson:
Yeah.

Josh Robb:
Okay.

Austin Wilson:
To the end of the year. Twelve thirty-one is when that will be ending. It says in the release that borrowers should expect to resume student loan payments for federal student loans in January, 2023.

Josh Robb:
And I want to say, I do appreciate that because there is so much uncertainty, because as they extended these throughout the last two years, they did kind of wait to the end to decide what they were going to do.

Austin Wilson:
Right.

Josh Robb:
To be able to say, now, you have six months here.

Austin Wilson:
And then you better be better prepared…

Josh Robb:
Five months to think about it. Just be ready.

Austin Wilson:
Yeah.

Josh Robb:
Well I do appreciate that piece of it.

Austin Wilson:
It is forewarning, it’s not just like boom.

Josh Robb:
We decided not to renew it. Now everybody start right now.

Austin Wilson:
Exactly.

Austin Wilson:
But this is… I mean, if you look at over the last two and a half years or whatever, it’s been renewed or extended probably like three or four times.

Josh Robb:
Yeah.

Austin Wilson:
So this is the final one.

 

[5:34] – Part 2 of The Student Loan Forgiveness Plan

Austin Wilson:
Number two. So, second piece of this discussion is, and I’m going to pretty much quote from what we’re talking about here. In an effort to cut monthly payment amounts for undergrad loans, the Department of Education is proposing a new income driven repayment system that protects more low-income borrowers from making any payments and caps monthly payments for undergraduate loans at 5% of a borrower’s discretionary income, which is half of the rate that borrowers must pay now under most existing plans.

Also, there’s amendments for the public service loan forgiveness, or PSLF program, by proposing a rule that borrowers who have worked at a nonprofit in the military or in federal state, tribal or local government receive an appropriate credit towards loan forgiveness. Trying to bring down payments towards matching income a little bit and ensuring the fact that borrowers in nonprofits, essentially, get some credit.

Josh Robb:
And that was a program that’s been around where, if you graduated and you had to went into certain sectors… So if your teacher in certain districts that qualify after 10 years, you had your remaining balance forgiven, as long as you make payments along the way or whatever.

Austin Wilson:
Yes.

Josh Robb:
So they’re amending and adjusting this program for that.

Austin Wilson:
Yep.

 

[6:48] – Part 3 of The Student Loan Forgiveness Plan

Austin Wilson:
And the third and final component of this discussion, again, it’s really a discussion at this point, these are proposals in a lot of ways, is that the President has said he will continue to fight to double the maximum Pell Grant and make community college free. The administration will also work with colleges to “keep prices reasonable”. So, there’s really not a lot of details on this and some discussion was that there would essentially be a list published every year so that prospective students could look…

Josh Robb:
Costs?

Austin Wilson:
Yeah, find what colleges increase their costs crazy over a year, or a given year, or whatever, so that it would incentivize universities to keep their increases down. That’s kind of what we’re thinking. They can’t, necessarily, in a lot of instances be, nope, you can’t charge that. But they’re going to make it more visible, I think, so that people don’t want to go to those crazy pricey ones.

Josh Robb:
Okay.

Austin Wilson:
So those are the three parts of this plan. There are some other statistics that were also noted in this release.

 

[7:47] – How This Plan Could Affect Borrowers Statistically

Austin Wilson:
First, that it could cancel the full remaining balance for roughly 20 million borrowers.

Josh Robb:
So, I tried to do the math there from earlier where you said 1.6 trillion dollars, 45 million students. So it was about $35,000 average if you just provide those numbers.

Austin Wilson:
Sure.

Josh Robb:
So, that would make sense that of a group of that, if that’s the average, if there’s people that are below that average and 10,000 or 20, they’re getting completely wiped out. Okay.

Austin Wilson:
Yep.

Austin Wilson:
It is also estimated that among borrowers who are no longer in school, so that’s like the group you’re looking at, nearly 90% of relief dollars will go to those earning less than $75,000 a year.

Austin Wilson:
So 90% of the dollars are going to go towards those earning less than $75,000 a year, which is significantly under the cap of $100,000.

Josh Robb:
I was just thinking how they figure that out. That’s an interesting stat.

Austin Wilson:
Well I’m sure they know, based on taxes, probably the estimated earnings of…

Josh Robb:
And the amount owed.

Austin Wilson:
… people who hold student loans. So, I’m assuming a lot of these are going to be very high level assumptions also, at this point, because it’s not really certain how it’s going to work.

Josh Robb:
And this is really only for undergrad, right? Because for master’s degrees and stuff, you don’t get the subsidized federal loans.

Austin Wilson:
And another statistic is the Department of Education estimates that among borrowers who are eligible for relief, 21% are 25 years and under, so about a fifth. 44% percent are ages 26 through 39. More than a third of borrowers are 40 and up, including, this is the part that was crazy to me, five percent of student loan holders, I guess borrowers, are senior citizens.

Josh Robb:
Wow.

Austin Wilson:
So like…

Josh Robb:
So you’re 60.

Austin Wilson:
And you have student loans.

Josh Robb:
And you’ve been out for 40 years, let’s say, and you’re still paying your student loans.

Austin Wilson:
Yeah.

Josh Robb:
Now I guess you could have gone back later and got a…

Austin Wilson:
I guess.

Josh Robb:
… but man, that’s crazy.

Austin Wilson:
I know. That does sound crazy to me.

 

[9:39] – Dad Joke of the Week

Austin Wilson:
So, those are the statistics, the facts of the plan that are, again, very high level and preliminary, but that’s where things sit right now and some other statistics that we’re in that release. Right now, before we get into the nitty gritty, Josh, because we’re going to, I want to make you laugh.

Josh Robb:
All right.

Austin Wilson:
Okay? So I got a Dad joke of the week and this dad joke of the week was sent from my dad for the purpose of being used in the podcast.

Josh Robb:
There you go.

Austin Wilson:
I thought it was pretty funny. So it’s actually a cartoon. It’s a four-piece cartoon. I’m going to read it side by side.

Josh Robb:
I’m going to describe it to you in detail of everything that’s happening.

Austin Wilson:
So there’s two Lego guys and they’re at a Japanese restaurant.

Josh Robb:
Okay.

Austin Wilson:
Okay? So one Lego guy says to the other, “Wait a minute, is that Jesus?” And then the other guy says, “Yeah, he comes in every Thursday and orders a bowl of soup.”

Josh Robb:
Okay. Soup.

Austin Wilson:
And then the other guy says, “Why is Jesus frequenting a Japanese restaurant?” And then the other guy says, “Because he loves miso.”

Josh Robb:
Oh, because he loves me so.

Austin Wilson:
Like me, so stupid. So thanks, dad, for sending that in.

Josh Robb:
There you go.

Austin Wilson:
As a reminder, we would love you to send us dad jokes too, everyone.

Josh Robb:
I was going to laugh.

Austin Wilson:
You can email us at hello@theinvesteddads.com or send them to us on social media, Twitter or whatever. If they make the cut, we might put them in the episode.

Josh Robb:
There you go.

Austin Wilson:
So, that’s the dad joke of the week.

 

[10:54] – Unanswered Questions

Austin Wilson:
Let’s also talk about some things that aren’t necessarily firmed up, but there are some discussions on this. So I mentioned a little bit earlier, these loan repayment plans creating an income-driven function of what payments are going to include there. As a reminder, those brought based on a percentage of discretionary income.

Josh Robb:
How do they define discretionary?

Austin Wilson:
That was my question.

Josh Robb:
I couldn’t see that anywhere.

Austin Wilson:
Because everyone’s discretionary income looks very different.

Josh Robb:
I don’t have that much discretionary income, sorry.

Austin Wilson:
Well yeah, you’re very…

Josh Robb:
If I’m repaying loans, I don’t have any discretion.

Austin Wilson:
Exactly.

Josh Robb:
That’s all required.

Austin Wilson:
So that piece goes from 10 to 5%. Most plans that are being discussed cancel remaining debt if they’ve made 20 years of payments.

Josh Robb:
Interesting.

Austin Wilson:
And no borrower earning less than 225% of the federal poverty level, which is about $15 an hour, based on a full-time salary.

Josh Robb:
225% is $15 an hour?

Austin Wilson:
Yeah.

Josh Robb:
Okay.

Austin Wilson:
Won’t have to make payments at all.

Josh Robb:
Okay.

Austin Wilson:
So that is interesting.

Josh Robb:
Yes.

Austin Wilson:
Also a proposal. Again, these are all proposals to forgive loan balances after 10 years. So not even 20. 10 for those with an original loan balance of less than $12,000.

Josh Robb:
They just pick a number.

Austin Wilson:
Pick a number, yeah.

Josh Robb:
Okay.

Austin Wilson:
And I’m thinking if you can’t pay off $12,000 in 10 years, like woo, that’s $1,200 a year, not counting interest. But this is the part that, speaking of interest, that’s interesting to me. Also, proposing to cover unpaid monthly interest so that loan balances do not grow as long as borrowers are making monthly payments. So you’re not accruing…

Josh Robb:
That was my concern on this whole thing is if they went from 10% to 5% of discretionary income on your loan balance of the max, you can pay. You already hear stories of people’s debt growing while they’re making the minimum payments. That’s just only going to compound that even worse.

Austin Wilson:
Correct.

Josh Robb:
Right? And so I’m wondering…

Austin Wilson:
That’s what that offset.

Josh Robb:
Yeah, they almost have to have something there that says, “Hey, if this is how much we tell you you owe,” that’s almost like if you credit card did that to you, because they give you the minimum balance, the government would be coming at them hard paying. You’re deceiving them, you shouldn’t be doing this.

Austin Wilson:
Raking in money.

Josh Robb:
So I can see why that proposal really, if those go through, it almost has to be there, right?

 

[13:05] – What Should Students & Borrowers Keep in Mind?

Austin Wilson:
So I put together some key thoughts that are just very high level about this to keep in our minds as we’re thinking about this discussion is number one, this is a one time event thus far.

Josh Robb:
Yep.

Austin Wilson:
It is proposed to be a one time thing. It’s not repeating. So that does not mean necessarily in four years, the same next group of college students will have the same thing.

Josh Robb:
Seniors this year in high school are like, “Ah, missed it.”

Austin Wilson:
I know, missed it out by a year or whatever.

Austin Wilson:
So that’s just something to keep in mind. There’s definitely no guarantee it happens again or that it happens this time, period. But at least it’s being discussed as a one time event.

Josh Robb:
Okay.

Austin Wilson:
Number two, the debt really isn’t being canceled or forgiven, per se, because it’s being transferred. The government is taking responsibility for the individual’s debt. So they’re essentially going to still be due. It’s just going to move to the government balance sheet from a personal balance sheet.

Josh Robb:
Right. Paying to the government.

Austin Wilson:
They’re going to pay themselves.

Josh Robb:
Yeah. Interest.

Austin Wilson:
Yeah, of course. Or they’ll sell the loans. They’ll probably sell the loans.

Josh Robb:
Oh, bundle them and sell them all.

Austin Wilson:
Exactly. Yeah.

Josh Robb:
Even better.

Austin Wilson:
So the government still has to pay the debt and they’re going to use tax dollars for that or additional debt, which is the way we’ve been operating for quite a while. This is going to be challenged in court, somebody didn’t think about. So there’s no necessarily 100% assurance that it’s going to go through as described.

Josh Robb:
And it’s being challenged in court because it was not a congressional law passed.

Austin Wilson:
Yep. It’s unclear whether the president has the authority.

Josh Robb:
Okay.

Austin Wilson:
They have oversight of the Department of Education, but do they have the authority to do this? Especially because there’s going to be a transfer payment from the treasury, which I think is where it gets sticky.

Josh Robb:
Okay.

Austin Wilson:
Oftentimes need congressional authority…

Josh Robb:
At least from the house.

Austin Wilson:
… to have transfer payments from the treasury.

Josh Robb:
Okay.

Austin Wilson:
So that is not necessarily a given at this point. Also something to keep in your mind, the income limits.

Austin Wilson:
That 125 for individuals and 250 for married couples is a hard cliff. A lot of the social safety net things we’ve had, or stimulus payments or child tax credits or all these things over the last handful of years have had phase-outs based on income. This is not that way and it’s based on 2020 or 2021 income.

Austin Wilson:
You’re going to use one of those two numbers if you file for this and it’s like if you make 124,999 individually…

Josh Robb:
You’re good.

Austin Wilson:
… you’re good to go, don’t worry. If you make 125,001, it’s zero.

Josh Robb:
Austin, you know they round on the tax returns?

Austin Wilson:
To a dollar.

Josh Robb:
Yeah, they round up or down.

Austin Wilson:
Yeah, to the dollar, not to the penny.

Josh Robb:
That’s what I’m telling you. They round those. So you’re both at 25.

Austin Wilson:
So you got to use it to… No.

Josh Robb:
Yeah, 125. You round it up or down.

Austin Wilson:
You round it to the dollar, not to the penny.

Josh Robb:
You don’t round up?

Austin Wilson:
You round to the dollar, so…

Josh Robb:
124,999.

Austin Wilson:
So $124,999.

Josh Robb:
And 99 cents?

Austin Wilson:
No. Who cares about the… Yeah.

Josh Robb:
Okay, I thought you were giving me 99 cent cents too.

Josh Robb:
I wanted to know that.

Austin Wilson:
No, no pennies.

Josh Robb:
Okay. No pennies.

Austin Wilson:
Okay. And then yeah, to the dollar.

Josh Robb:
Gotcha.

Josh Robb:
Don’t worry about the pennies.

Austin Wilson:
It’s a very interesting thing. It’s very hard…

Josh Robb:
… Keep the change, says the IRS.

Austin Wilson:
That’s right. As of now, it’s a very hard stop.

Josh Robb:
Yes, that could. Which is unusual, especially since they’re looking at past years where you have no control over adjusting your income. That there is a hard clip there, that’s kind of unusual.

Austin Wilson:
It is. And another thing to consider that’s also quite unclear, just not really talked about, is whether this relief will be taxable or not. Now you may be able to shed a little bit more light on this than I, at this point, but essentially this could be considered, depending on how you look at it, as income over who knows what time period. But you could owe taxes on that $10,000 that you were forgiven.

Josh Robb:
Yeah.

Austin Wilson:
It’s unclear. Again, no details on that. We don’t know. So maybe keep an eye on that as more details come out.

 

[16:52] – Austin’s Controversial Thoughts & Opinions

Austin Wilson:
So this is the fun part that everyone’s going to look forward to. So Josh and I, we love each other dearly.

Josh Robb:
We do.

Austin Wilson:
We’re going to probably have different opinions on this, but thus far we’ve pretty much stated facts, okay? But we have a different opinion on this, maybe, or different opinions on certain aspects of it, on how things look. So we’re going to share our opinion and it’s okay to disagree because we are friends and that is how things work and that is how we should be as people. So my opinion, I can start first because I already wrote it up.

Josh Robb:
You do.

Austin Wilson:
The question is, who pays for it, always? Well the taxpayers, right?

Josh Robb:
Right.

Austin Wilson:
Taxpayers are paying for this. But the part that I think is a little interesting is the fact that even taxpayers with no college degree are paying and subsidizing, essentially, those who went to college. So I think that’s a little sticky to me in my mind. I’m having a little bit of trouble with that. It also is hard to take away the fact that it could be viewed as some sort of slippery slope for debt forgiveness in general. So no one made anyone go to college. They took on the debt willingly to go further their education to have a higher potential income in the future. It’s been encouraged, but it’s also a choice. So that could lead to other forgiveness of debt in the future. I don’t know. But that is a part that’s a little sticky to me.

It’s also interesting to me that there’s no designation for having completed degree versus not having completed degree. So one could simply have random courses or whatever, not complete a degree or whatever, but didn’t finish it. And they would be given the same level of forgiveness as someone who finished the degree, got a job in their field, and is using it. So that’s a little interesting, just a thought. And also I believe the income limits are pretty high. So 125 and 250, 125 for individual, 250 for married, thousand, seems quite high for the target to be helping people who need help financially. Because if you’re making over a hundred thousand dollars a year, you should be just fine paying your student loans, in my opinion.

Josh Robb:
Yep.

Austin Wilson:
So I think this disproportionately might help the people who already are set up well. A lot of these people are college educated people with good jobs. So a little bit more help towards the people who already have a bit of an advantage, which I think would further, not help, but further divide in income and wealth separations and stuff like that. That’s something that’s trying to be worked on. And I also think this is an interesting aspect to people who didn’t go to college at all. These people are getting nothing and therefore they are already were, if you’re looking at those wealth dispersion spectrums, at a disadvantage in a lot of ways. Well this is only helping push the people who already have an advantage further ahead. So little bit tough to think about that.

And then if you are in the solid financial situation and made the choices to pay off your student loans, foregoing other things. It’s not necessarily equitable to be paying off someone or relieving someone else’s debt, forgiving someone else’s debt, and then not doing anything to the people who were responsible and did pay off their debt as they were, as you should do with debt. And then my final note, and this isn’t really trying to be too political, but if you look at this year in general, we have midterms coming up in…

Josh Robb:
Is that happening?

Austin Wilson:
… apparently at the end of the year November-ish.

Austin Wilson:
And prelims are already kind of going on as of now, but…

Josh Robb:
Ohio had their elections a little later this year because of some issues.

Austin Wilson:
Yep, yep. So, if we think about what’s coming up later in this year and we think about the current political environment, very polarizing, any certain lever, I think, that could help one party or another is going to be exercised. And I see this as somewhat of a claim on an election promise, which still not to the amount it was promised, but a claim on an election promise to say we’re working towards it to try and juice votes a bit, which either party would do, if they had the ability to. I just think Democrats are using this as a bit of that. So those are my, maybe controversial, thoughts on this. I’m not saying nothing needed to be done. I went to college. College was very expensive. I graduated with student loans. So I get it. I also think this may have not… While they would probably say that there’s a lot of thought that went into this, I don’t think enough thought was put into this. So that’s my opinion, Josh. Hit me.

 

[21:21] – Josh’s Differing Thoughts & Opinions

Josh Robb:
All right. So, you and I, good friends.

Austin Wilson:
We are.

Josh Robb:
Good friends. We don’t always agree.

Austin Wilson:
We don’t.

Josh Robb:
We could be friends.

Austin Wilson:
That’s okay.

Josh Robb:
That’s all right. Couple thoughts on this. First high-level, over the years, I’ve become more open to the concept of helping groups out, even though it may not be fair, equitable for all groups. So this being one of those situations where student loans are not everybody, and when you offer something like this, again, 45 million people have student loans out of what, 330 million people here in the U.S. So you’re choosing people.

Austin Wilson:
That’s a lot of people. But it’s not everyone.

Josh Robb:
– And providing a benefit. But I, over the years, have become more open to that concept of, it doesn’t always have to be fair. I mean, I tell my kids that all the time. As one kid may get something when the other doesn’t, it’s situational. So I’m more open to that. And when it comes to student loan debt, I guess I’m less worried whether they get a degree or not. Because they’re all these fun life circumstances that happen that there may be a reason why they dropped out and then there worse often that they don’t have that degree, but they have the debt that they had started with and never finished. So I think that’s…

Austin Wilson:
Yeah, a lot of those are really tough family situations or whatever.

Josh Robb:
Or maybe there’s a health thing where you had to go back home, take care of family, those type of things. It’s all… So I see this as a benefit. I’m on the same boat as you as I was actually surprised when I saw the 125, 250 income level. It seemed a little high, because I think that’s your adjusted gross income too, if at least from what I’ve read. And so that means on top of the deduction, which is anywhere between 12 and $24,000.

Austin Wilson:
It’s pretty high numbers.

Josh Robb:
It’s up there. But I also to remind myself, we live in a pretty low cost of living spot.

Austin Wilson:
California…

Josh Robb:
My guess is 125, and I actually know this because I have friends that live on both coasts. 125 doesn’t get you as much there as it does where we’re at.

Austin Wilson:
Yeah.

Josh Robb:
So I get that it’s hard to set a number and then have the whole United States get it. So it surprised me from where I’m at. But I guess I also get it that, like you said, the $15 minimum wage is the same thing. You get more for 40, 50 dollars here than you do in New York City. Overall, I’m less opposed to this as I was in the past. My concern is the timing and it’s even less. I agree with you, that’s an election coming up and there’s not a coincidence of trying to push it quicker before that. The timing for me is more of we’ve been battling inflation. There’s been reports of different groups that run these analysis that have said minimal impact, hardly any impact, some impact, a lot of impact.

Austin Wilson:
Yep.

Josh Robb:
I’m not smart enough from an economic standpoint to know really where that is, but my brain just tells me, that’s a lot of money that if you do forgive and what they said, what you said too, was what fully wipe out for about 20 million is what they had estimated?

Austin Wilson:
Yep.

Josh Robb:
So if 20 million people have completely freed up their payments, that is additional spending.

Austin Wilson:
Yeah.

Josh Robb:
And so I would hope they’re saving some of it.

Austin Wilson:
In our industry, of course.

Josh Robb:
But the concept there is that it has to have at least a minimal impact on consumer spending, which has an impact on our GDP and then which [inaudible 00:24:43] inflation.

Austin Wilson:
Or even confidence levels about your situation.

Josh Robb:
Oh yeah.

Austin Wilson:
You’re like, “Oh, all of a sudden I have $10,000 or $20,000 less debt. I’m excited. I’m going to go buy something. I’m going to go celebrate.” So, there could be a psychological impact to that as well.

Josh Robb:
Yeah. So, I’m at the stage in life where I’m starting to think about college for my kids and it’s expensive. So I would actually rather see them spend more time on fixing the system than the debt. But I get the struggle. We work with people who have debt and are paying, and those monthly payments, they add up and it limits the other things they can do. So the costs… It’s to the point where I’m not seeing any relief from government spending any time soon. So, when you look at things they spend for, there’s worse things they spend their money on than this.

Austin Wilson:
Right. You’re not wrong.

Josh Robb:
That’s where I land is… When I first heard this, I was kind of like, what’s happening? And the more I thought about it, just kind of thought about it, I was like, you know what? That money could go to worst things or see less impact overall in people’s lives than other ways. But I’m concerned about inflation, concerned about precedent. I’m concerned about habits. That if again, a senior in high school sees this and they don’t grasp or don’t believe the onetime thing, they be more apt to increase their debt load thinking, “Oh, I’ll get something similar.” I just worry about the habits that could be formed from that in general.

Josh Robb:
So that’s where I sit. That’s kind of a lot of…

Austin Wilson:
No, it’s good.

Josh Robb:
It is what it is.

Austin Wilson:
And I don’t think…

Josh Robb:
There will be people that benefit and I don’t want to be in the boat where I’m mad because it didn’t necessarily benefit me.

Austin Wilson:
Right.

Josh Robb:
But I’m glad. But I just worry long-term where that’ll land us.

Austin Wilson:
It is interesting. And you know what we did today? We had a discussion about our feelings, Josh.

Josh Robb:
We did. We did.

Austin Wilson:
And that’s okay.

Josh Robb:
We didn’t agree, but that’s all right.

Austin Wilson:
We didn’t necessarily agree, but hey, we’re going to keep working together.

Josh Robb:
That’s right.

Austin Wilson:
And be happy.

Josh Robb:
That’s right.

Austin Wilson:
But I think that this is… Hopefully you guys who are listening to this can think this through and be able to have those conversations with your friends, with your family, with your kids, if they’re in school, out of school, going to school, whatever. Just to be able to talk.

Austin Wilson:
That’s good.

Josh Robb:
How cool. What if the government said, “We are just taking 10,000 of your student loan and putting in a Roth IRA.”

Austin Wilson:
See, that I could get behind.

Josh Robb:
Oh, man. There you go.

Austin Wilson:
That I could get behind.

Josh Robb:
Forced retirement savings, man.

Austin Wilson:
And it’s going to grow tax free forever.

Josh Robb:
It’s great.

Austin Wilson:
So anyway, it’s definitely the hottest news this week.

Josh Robb:
It is.

Austin Wilson:
So we thought we’d bring it to you pretty shortly.

Austin Wilson:
So Josh, how can people help us to be contacted or to follow us in our lives?

Josh Robb:
So we have social media.

Austin Wilson:
We do.

Josh Robb:
I’ve been told.

Josh Robb:
So no, we have Instagram, Facebook, Twitter. Follow us on those. We try our best to be engaged with some content there. Also, if you know people, we’re talking about this student loan and after listening to it yourself, you’re not super mad at either of us, you could share it with your friends or family and hopefully this will help carry on that conversation.

Josh Robb:
Also, if you have any questions, thoughts, concerns, you can always email us at hello@theinvesteddads.com.

Austin Wilson:
That’s right.

Austin Wilson:
Well, until next Thursday, have a great week.

Josh Robb:
All right. Talk to you later.

Austin Wilson:
Bye.

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe and don’t miss the next episode.

 

Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecast provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.