Biden's student loan forgiveness unlikely to have 'a plan B' after SCOTUS ruling: Expert

the Supreme Court striking down President Biden's student loan forgiveness program today the ruling blocks the president's plan to cancel 430 billion dollars in debt that was a campaign promise affecting more than 40 million Americans those who carry student loan debt will now have to start repainting those loans in October so what should you be doing now joining us now is Midland Financial founder and author of financial planning made personal Lawrence sprung Lawrence I'd imagine you've probably gotten a lot of calls from those students who have to repay those loans to say well what does this now mean for my finances if we're talking about monthly payments of upwards of three four hundred dollars sure great great point and thank you for having me uh we we thankfully have not been getting those calls personally because we've worked with these young individuals to make sure that if they were in this situation that they had a plan and we've been working with them under the expectation of a worst case scenario that this debt was not going to go away and they would have to resume payments come October of this year so you know that is a hugely impactful and beneficial way of attacking things now you know if you haven't done that that's something you certainly should start thinking about today and Laura just more specifically on that digging down into exactly what that plan looks like what's the first couple of steps that people should be taking right now yeah so I mean even the folks that we started with a plan when this was first announced we obviously have been revisiting it in recent weeks in expectation of this uh announcement coming out and now what we're in the process of doing is re-looking at their situation putting a plan together looking at their budget it's going to be very important to make sure that we take a look at how much money they have coming in because that could have changed in the environment in the last three years where their money is going out each month and those expenses to make sure that they're going to have sufficient cash flow to pay for these payments as they restart now if they're in a situation where that number is not in a situation where they're going to be able to repay it's important that we look at those expenses with a fine-tooth comb and see what may be able to be extinguished what what subscriptions do you have that you're paying for that you may be able to get rid of what other expenses will you maybe have the opportunity to reduce to make room for these upcoming payments yeah so it is about shaving down your expenses sort of just looking at what that personal balance sheet looks like but you know when you think about it a lot of students today we're talking about the president's student loan forgiveness program but there's also been the covid related payment pause there's a lot of students out there who graduated from college who haven't had to pay anything for three years I mean if you are in that position where suddenly you're faced with that but can't necessarily meet those payments what are the other options I I think you have to start looking at all of your options which may be looking at other ways to refinance that debt other opportunities where you can move it maybe to a private lender uh you you know all bets are on the table at that point I mean it's something that's certainly new but again this is why you have to have and we talk about it here at our at our firm all the time it's so important to have a plan because you don't want these things to creep up on you it's important that you look at all of your options and make a decision that's what's in your best interest whether it be a private loan or looking to extinguish the debt in some other way but the bottom line is either way these payments are coming and you have to be prepared to start paying them or pay off the debt Lawrence what do you think the road map from here on out looks like because we know President Biden he's going to face even more pressure to get something passed get something that will be able to be upheld is any future negotiations is that off the table uh you know listen I'm not a lawyer but my understanding is that there are other there are other options that exist but it wouldn't be through the hero act which is where uh we he tried to uh enact this initially it would have to be through some other kind of legislation or congressional action I I think of the likelihood of that taking place this late in his term I I find it highly unlikely that there's going to be a plan B and this is going to be addressed again what I would like to see however is a greater plan to attack the student loan debt situation as a whole because although this was going to extinguish about a half a billion or 500 billion in uh in debt we have a two trillion dollar problem which even after this whether it was extinguished or not is going to continue um Lawrence I want to get back to something you said there about the potential for other options including private loans and obviously your clients have been looking ahead they've been preparing for the worst but not everybody has been there um is that an option that you would advise on well I think you have to be a little careful with that because if there is some kind of option b for uh some kind of uh abatement on these uh on the debt then once you move it to a private loan you're going to be out of the mix for that debt so you have to make a personal decision as to whether or not you are willing to risk that and you also have to weigh the benefits and the disadvantages maybe there are better rates maybe there aren't and uh you know we're not in a situation where we were three years ago where interest rates were extremely low they've creeped up quite a bit so that's got to be part of the conversation as well Lauren from the conversations that you're having you mentioned the fact that this doesn't obviously the twenty thousand dollars of forgiveness that President Biden was pursuing that doesn't address what's at the Crux of this issue here the conversations that you've had with these students are they rethinking higher edu education are they maybe stepping back and pausing just in terms of what makes the most Financial sense here for them to do at this point yeah I I agree yeah I I do think that's the case I think we're seeing more folks that are exploring the options of trade and technical schools which are great options I think we've created this construct in this country that you know you have to go to college that you go to high school and then that's the natural order and you know the trades have suffered as a result of that and there's great opportunity for people who are willing to go down that route and they could come out of high school learning a skill uh earn a very good living and not have the opportunity to amass this debt so I I think that a lot of folks when they're exploring higher education should certainly take that into account and really make their decision on whether college or whatever route they want to take is right for them based upon due diligence not based upon you know that where they want to go the sunshine you know the sunshine environment good football team there has to be a return on investment there and it has to be looked at many folks spend more time evaluating you know what car they're going to buy and whether that makes sense and what you know features and benefits they're going to get than they do when it comes to higher education what does that return on investment look like when you compare it through to a four-year University to potentially some of those trade schools you just mentioned what's the difference because the argument has been that at least regardless of what your decision is when you are valued in the labor market that four-year degree still holds value and that you can command a higher salary yeah I I think that that you know that's a valid point but I also think that this has been a construct that's been created by the environment we're in and I think one of one of the culprits of the student loan crisis or the schools themselves they are great marketing machines who are telling our students and our young folks that what you just mentioned is exactly the case I do not feel that's the case because if you look at it side by side the person who goes to trade school or whatever route they take is starting with a clean slate they're not going to have any debt and they're earning potential starts immediately and I think at the end of the day they could end up in a similar position whether they go to college and get the four-year degree or not and you know it's really a personal decision some careers uh may need that four-year degree and may need higher education others may not so it's really like I wrote in my book financial planning is personal it's very personal and I think it's a decision that has to be made with a lot of factors in mind and not just you know where should I go to school what's the environment I want to be in it really has to look at what is the return on my investment and I did this personally myself I have one son right now in college he's a sophomore and one son looking at school in the next couple of years certainly very very important points uh to take into account Lawrence sprung great to talk to you thanks thank you so much

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Id: Ml2O3Ko_KyQ

Length: 9min 3sec (543 seconds)

Published: Fri Jun 30 2023