09. PROGRAMS FOR STUDENT LOAN FORGIVENESS

SUMMARY KEYWORDS

student loans, debt, income based repayment, people, talk, nonprofit, nurse, degree, years, student loan forgiveness, pay, forgiven, accruing, career, income, payments, adrian, interest, millionaires, professionals

SPEAKERS

Rob, Intro, Adrian

Intro 

Welcome to the get rich, slow podcast. This is the stuff we and our expert guests Wish we knew a decade ago to get the most out of our financial life will provide you with insight into wealth building activities and practices that can expand your net worth exponentially. get insight from top professionals who will reveal how to build wealth the long way, work smarter, not harder and identify your financial blind spots. With over 25 plus years of experience as licensed real estate professionals and a long track record of winning for their clients. Robin Adrian will teach you what it takes to be an everyday real estate millionaire.

Adrian 

Hello, future millionaires. Welcome back to The get rich, slow podcast. I’m here with my co host, Rob Delavan. This is Adrian SHERMER. And today we are going to talk about student loans and more importantly, the programs that exists to forgive debt, you’ve probably heard that a penny saved is a penny earned. Well, a penny forgiven is just as good.

Rob 

Yes, I agree. And good morning. Specifically, there’s a program. And it’s student aid.gov is one of the places you can go to there’s a there’s a bunch more. But this is called a public service loan forgiveness. PSLF is the enact is the acronym that you’ll type into Google and student student aid.gov. And you’ll get there and it talks all about it. But before we go there, let’s back up a little bit and set the set the table for this conversation about this particular life hack product. Yeah, you know, issue. So, you know, you were talking about this, this came up a friend of yours got a degree in or a law degree is that correct?

Adrian 

Yeah. Yeah. highly intelligent, very well read. And she chose, you know, of all things you can do with a law degree, she chose to go into the nonprofit sector.

Rob 

Right. And, and also some more details how, how old is she? Roughly?

Adrian 

She’s in early 30s.

Rob 

Okay. And she probably went to school, you know, it took what, like, three years as law school after? Give or take?

Adrian 

Yeah, yeah, it’s a haul. And it’s not, not a small amount of debt. She even tried to and this is something I want to expand on in a different episode. But, you know, she even loaded some of the debt on her credit card, some of our costs expenses, you know, to try to trim down on student loans, thinking that would give her the best pathway and still accrued, you know, what is now sitting at about $100,000 worth of debt,

Rob 

which is actually not a lot. I know, now I have a friend career. Yeah, who is in that same career path. And his was well over 300,000. And so one of the things we’ll talk about, and with this loan forgiveness program, obviously, racking things up on a credit card versus actually doing it on the student loan side was probably not a great idea. But she didn’t know. Yeah, she just she didn’t know. So. Okay, so she has a ton of debt. She’s 30 years old, 100,000 plus in student loan debt. And she’s now working for a nonprofit. And this Public Service Loan Forgiveness situation is there for that the basics of it are, if you make 120 payments, while you’re working 30 or more hours a week for a nonprofit,

Adrian 

yes,

Rob 

you will get your loans forgiven. So if you know that that’s the case, and technically, and one of the caveats here is technically the government Congress could do away with this. You could be six years in and make minimum payments be negatively accruing. You know, interest only based on income based repayment,

Adrian 

as is often the case, that’s

Rob 

exactly the norm. Like you’re, you know, you’re paying 400 because you make $70,000 or something like that, instead of I mean, this was 60k. And she was paying $35. Okay, there you go.

Adrian 

So she, I mean, her and this is not an abnormal setup. I see this pretty regularly, honestly.

Rob 

So she’s totally negatively accruing. And, you know, there is some risk here. Like I said, Congress could totally take this way. would they? Probably not making a bet here, but she’s negatively accruing due to the interest rate. She’s making $35 a month, she makes 120 payments, so it’s a 10 year process, and then she’ll have probably 120 130 $140,000 wiped away. Yeah, of student loan debt. And the only question becomes as a man if you could do this. Why didn’t you just do $200,000 in debt and enjoy yourself while she was in college? Right?

Adrian 

Yeah, arguments could definitely be made for a strategy of you know, use student loans, the way That they’re intended to be used, maximize them not to buy a jetski per se, but you know, to afford the cost of living and to put focus in your studies and serve working some part time job or whatever to try to supplement you know, right. or putting it on credit. abusive interest rates,

Rob 

right. Not a good idea.

Adrian 

Yeah. You know, use the system as part of a full arm plan. And when we talk about building wealth, we talked about, you know, a big piece of this conversation is going to be the income generation, even though most people don’t become millionaires, just by tucking a million dollars away. You know, there’s the there’s the back end strategy component, but getting solid paying jobs like this, you know, lawyers are paid very well. But there’s also you have the list there. Rob, I believe we had firemen, we had nurses,

Rob 

so let me run down it. So this is, so you have to work for a nonprofit or government. And we are looking at so emergency management. So for example, like EMT, you know, that sort of thing. Military Service counts, government, public safety, so cops, firefighters, and such law enforcement, which cops do, but controller reduction of crime or the enforcement of criminal law, public interest law services, this is the attorneys that sort of thing, but legal services provided by an organization that is funded in whole or part by US federal, state, local, tribal, you know, all of those things. Early Childhood Education. So this is not just yeah, teachers, but this is like pre K teachers, daycare, that sort of thing. Again, it can’t be it has to be a nonprofit, though, that you work for. It can’t be, you know, right. What is it? kindercare? Yeah, you know, one of those that’s for profit, public service for individuals with disabilities and the elderly. That’s one public health, which includes nurses, nurse practitioners, nurses in a clinical setting, basically, anything with the name of nurse on it is a huge one, but also full time professionals engaged in health care practitioner occupations, and health support, which I’ll get to in a second, public education, public library services or school library or other school based services. It also includes a lot of private schools that are nonprofits, but they have to be 501 c three. So that’s a big one for educators. But here’s an additional piece, and I won’t dive into this because you know, our audience, you guys can look at this and go through the, the,

Adrian 

yeah, you’ll have to narrow down to your specific band and

Rob 

dig into these Exactly. But you must, you can also be part of a support for, say, a public school, you don’t have to be a teacher, you could be on staff as support for that. Yeah. So it’d be an administrative role. Administrative. You could, I mean, technically, you could be on like, facilities, you know, what we, we call it? You know, back in the day, we said, Oh, that was janitor. Yeah. Now, it’s facilities management, you know, what have you. But this gets into more of the meat of this, which is actually kind of fun. So what happens if you have that? Typical, we make fun of it. But and we probably shouldn’t, because there’s value there. But the the degrees that you connect with, would you like fries with that? Or, oh, it’s it’s barista training? You know? Yeah, the anthropology. Oh, I got a philosophy degree. I mean, I don’t know, I don’t want to pick on our audience too much. But you guys know, what we’re talking about is sociology. You know, just just those different, like, those degrees that are great, most of them tend to be in the liberal arts, most of them tend to be still pretty expensive. A lot of liberal arts colleges. Yeah, nobody’s in 100 $200,000 worth of debt. Okay, what does facilities management look like? You know,

Adrian 

in defense of these fields, I think that they are, you know, I’m not gonna go too far in this. But I think that a big piece of this is that these careers are not they’re not like job slips, you know, you get a degree as an RN, what are you gonna do? Go be a nurse, you know, and there That isn’t what you have to do. But there’s very much a defaulting and a funneling for some of these careers. And that’s what makes them great choices. For a lot of people. If you go and get an English major, you might have to be more creative or more proactive about where you want your placement to be in the employment world. I definitely wouldn’t recommend going a four year degree in some of these. You know what, let’s call them yeah, the the barista career paths, you know, that people say that they, you know, all they did is just pay off a student loan for something they never used. That’s because it’s a it’s it’s not, it is harder, in its own unique way. And you’ve just got to prep yourself for that. And unfortunately, what a lot of this, this bigger picture conversation boils down to is, you know, I’m, I never had this conversation with my guidance counselor. I’ve talked to lots of people who have had the same experience, you know, they say, what do you want to do? What do you Have for a career. But this is a, this is an upper level hack, I’m talking about someone right now who’s going to get $100,000 forgiven, right, you know, over a period of 10 years of making $35 payments, and when you factor in the interest, especially, and then look at the fact that this is money that you’d have to pay post taxes, right, you’d have to get taxed on your income, and then make payments on this, and then maybe get a little write off, right for the interest on your tax returns. Right. But in the grand scheme of things, you probably are paying 150 160 70 80,000 by the time you can start chipping into this debt, and certainly at a meaningful rate, right, lots of people carry these this debt for well, more than 10 years, you know, paying off student loans in 10 years is abnormal, right? Because most people do get on the income based repayment, and they stretch them all the way out into their late 30s 40s, whatever it’s gonna be even if they went to school right after high school. So again, penny saved is a penny earned. This is a hack for generating with it’s all about the net worth needle that we’re talking about here. Right? It’s a combination of earnings. And these are great jobs. You know, the reason that this exists for these jobs is because they serve the community on the whole, right. And they’re necessary jobs, and they’re in demand. So blood student loan forgiveness, talk in the news, it exists right now, there’s people right now getting their student loans forgiven, right. But it’s you have to be deliberate about how you go about getting into your writer.

Rob 

So let’s, let’s unpack that income based repayment piece. Because in glass, our audiences is googling this and going through it, they probably won’t get it.

Adrian 

So

Rob 

the idea is what happens with, you know, somebody, and I’m actually going to use my wife as an example on this one. So my wife’s a nurse. And she’s been doing this for we’re about eight years. And in 2023, she’ll be done. And she’ll be 42 years old. And she has been a nurse for a little over 10 years. But she was in school for a couple those years. So it doesn’t count until you consolidate. And after. There’s a lot of hoops to jump through on this. The point is, is smart people do it, you know, and they will work hard to set themselves up. So the payment My wife has roughly like $80,000 she got a graduate degree in nursing at University of Portland, which is not a cheap, yeah, yeah. And she was working through a good part of it. And we paid for a good part of it, but she still had $80,000 worth of debt. Well, eight years later, her payments have been between about $400. And like 550, if she was if she was not doing the income based repayment, which is a program through the Department of Education, and it really gives credit for having kids in the household household size, those different things, your attorney friend did the same thing. If you make a reasonable mid income, my wife, you know, 10 years ago, she started she was making 60, some $1,000 a year as a floor nurse in a in a hospital. That’s a nonprofit, Providence, St. Vincent’s to be specific, and which is in the Portland metro area. And then now she makes, you know, closer to 100,000, she works like 32 hours a week. And she makes Yeah, 55 $58 an hour by the time you get all of the different differentials and, and different things, she does make a little extra cuz she has a master’s degree versus a bachelor’s and, and so on. But you put all that together, you think her payment would be a lot because she makes $1,000 a year or close to it. But if you it’s based on your net income, not your gross and she we contribute the 90,500 to her retirement accounts. Well, that comes off the top, it’s her it’s basically the nonprofit equivalent of a 401k. So we maxed that out, we’ve been maxing that out for a number of years, well, her net pay is net of that. So you contribute your retirement first and that sort of thing. And this is I don’t want to veer too far into the lane of you know, the financial planning side. But there’s these different things that you do also, her and I have been filing separately, because of my income as a successful business owner was included in her tax return, the payment would be like 2000 a month instead of 550 600, something like that. So we file separately so that my income doesn’t affect her income based repayment. So basically, every year she does her tax return her by herself. We have our CPA firm do that. But they she does that by herself, writes off the kids and then does the application which is very generous for someone like her who’s filing separately even though she’s married. And the payments even now, at $100,000 year close to it. It’s like less than 600 bucks. So that’s hardly even touching the interest or the principal, much less the interest And in two years, it’ll be forgiven. So this is that concept of income based repayment, you’ve got to work through the the department of education process and their system and all of that sort of thing. Right, there’s a way to do it is is my point. And I think I’ll leave that there. But the idea is minimize your income. Now, there’s repercussions for that. There’s some tax ramifications on my side and her side, we’re both professionals, in real estate her as a nurse, because we file separately, there’s, there’s some limitations on what I can do for savings. And actually, that’ll be in another episode, where we talk to a CPA and are

Adrian 

finding there’s just a ton of layers to unpeel. Right? So that’s one thing, you can engage exactly one of these strategies, you don’t have to do all these things at once did you figure this whole problem out in one go, she graduated college and you figured out student loan,

Rob 

right,

Adrian 

so take it in steps, you know, don’t don’t get let yourself get overwhelmed. But especially for our folks out there who are looking at the beginning of their career and thinking potentially about where they or their kids are going to go to school and what their careers look like, as it flushes out, there’s lots of stuff, we’re not going to run out of demand for nurses firemen, or, you know, teachers, right? These are all if anything, demand is exceeding supplies. So right. Um, you know, you will see examples. This is one of those like economix, one on one kind of, you know, they do the the breakdown, where they go up bill went to college, and Joe didn’t, you know, and student loans subtracted. But what if you take that out of there, you know, like a lot of these equations, lean on the idea that student loans are something that you have to pay off, and that you have to carry. And this is, again, just one of my favorite hacks out there, you know, you can get into a great career, you can get into a six figure career, while not having to contribute a huge amount to the student loans. And I love the program, I’m happy to do it, you know, and to be part of the society that forgives this debt, because, again, these are high demand professions, we need these people, right. And just to to drive that point home.

Rob 

A quick google search on like average student loan debt in the United States, for an average student that is a loan borrower in America, it’s 30 to 30, over $32,000. And it’s, that’s a 20%, jump from 2015 16. I mean, 25,000 to $15,000, in outstanding student loan debt, that’s a big deal. So, again, you’re looking at this big picture, and this is what pulls in for you. And I Adrian is, you know, you uniquely as a lender, helping people, you know, build wealth, creating everyday millionaires in real estate, right? Yeah. And myself as a real estate broker. We’re not just sitting in this one little Oh, hey, we’ll help you buy a house, it’s such a bigger conversation, you have to have that tax piece, you have to have that financial planning, you have to have you know, a certain point, you have to have bookkeeping, you have to have your life insurance, you have to have all of these things. And what ends up happening is, you want to work with professionals in the mortgage in the real estate brokerage world, as realtors that actually have these relationships. That’s really frankly, you know, we’ve talked about this as far as our goals, and in previous episodes, just we want our people and which is our audience, our clients? To be smart to be savvy. Yeah, okay. It’s live deliberately. Yeah, exactly. And to be. And granted, this requires discipline, there’s a whole bunch of steps, you have to go through this, but,

Adrian 

but you don’t have to wake up every morning and apply for student loan forgiveness, you just right, you have to say I’m gonna, I’m gonna step back, and I’m gonna make some bigger level decisions. Exactly, then I can let them ride out,

Rob 

right. And once a year, you’re going to go in and do that application and update it and document it and send it in, you’re going to do your taxes accordingly. You’re going to do these different things, you’re going to live smarter, you’re going to work smarter, not harder. And you’re going to do it because you know, you have a team of professionals that are you know, working with you on this giving you these hacks. You’re listening to this podcast, not to build ourselves up because frankly, there’s lots of people out there, yeah, that that do this. But you just it’s just one of those things. You don’t know what you don’t know. Until you do, right. So this is one of my favorites. Yeah, this is this is awesome. I’m looking forward to that. There’s a number of other dives that we can do in this in further episodes, but this is a fun one. So the the website again, at least that we went to the student aid.gov

Adrian 

and the name of that program,

Rob 

the name the name of the program is p s s F, which is the public service, loan forgiveness. And if you Google that, you will find this. And you’ll be able to, you know, go through a whole bunch more details. Obviously, people can reach out contact us. We’re happy to walk them through. And but usually by the time they talk to you guys talk to us, right? There’s a purpose, but the further ahead that you do this, and you do these different things, you know that the better off you’re going to be, this isn’t something you do overnight. So yeah,

Adrian 

absolutely. long game right. long game.

Rob 

Yeah. Love it. Thank you, Adrian. This was a fun one. Thank you, audience for your audience. Listen to us drone on about this. But obviously, we’re passionate about it. So yeah. Yeah, just keep keep up the good work.

Adrian 

Thank you. Catch you next time if you try. Yeah.

Intro 

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