Student Loan Whiplash - Lab 095

I'm TT and I'm Zakiyah, and this is Dope Labs. Welcome to Dope Labs, a weekly podcast that mixes hardcore science with pop culture and a healthy dose of friendship. I don't know about you, but there has been a lot on my timeline about whether or not people should pay their student loans if they can dispute it the same way you dispute a late payment fee on your MX.

It's not. It's not.

So we had to turn to one of our favorites and get some answers. Yes, but before we do that, let's jump into the recitation and figure out what we know already and what we want to know. First of all, I know that there are a lot of misconceptions about

Mm hmm, Like where is it? What happened?

Who fault is it?

Fault is it?

Because I want to know because I've got questions for them specifically, and are they really garnishing wages. I think I saw something that was like, they can garnish your wages just like child support. They can do the same thing about your student loans. Is that true? I have no idea, but that sounds wild and I would be very nervous. I also want to know is it too late to write the ship? And is student loan forgiveness a thing of the past? Will we never see the thing? Yeah?

I am Colleen Campbell.

I have published a substact called on Detail, and I've spent the last fifteen or so years working at think tanks, at colleges and in the federal government working on higher education affordability and federal student loans.

You know, last time we were here, the conversation was different. Colleen. You were up close and personal with the changes that started coming out of the Trump administration. Now, before we get started really diving into what's different, can you walk us through just in the past year so the major changes that have been happening inside the Department of Education, particularly related to loan servicing and borrow support.

Ooh.

So, I had worked at the Department for five and a half years and my last day was March thirty.

First.

I quit as part of a response to everything that's going on and the Trump administration, especially in terms of layoffs. When I left the federal government, I was the newly appointed executive director of the Office of Loan Portfolio Management, which is a newly created group at the Office of Federal Student Aid which manages all of higher education student

Okay, so before we jump into everything that has changed, can you walk us through some of the most commonly used student loan payments programs because we all know that it's complicated.

So when you borrow your student loans after you leave school, you are expected to repay, and the federal government offers a variety of repayment plans available to student loan borrowers. You kind of get put by default into a plan that's called the standard plan, which has fixed payments every

We can't wait for Congress to do it. We got to do it.

And so they created a variety of plans through regulatory action, so without Congress passing laws, and over time there were more and more plans that grew out of this barrow. You know, folks who have been paying loans for a while might be familiar with the pay as you earn plan or pay revised pays you earn plan or repay. Yeah, we're really cool in acronyms and higher out here.

That brings us to the Biden administration's safe program.

The Biden administration had taken an extremely aggressive policy agenda for higher education, perhaps the most aggressive policy agenda ever for higher education, at least from the executive branch. And so this was really the most generous plan available to doing the law and borrowers instead of offering forgiveness after twenty or twenty five years of repayment, which is common

This sounds great to me, I mean forgiveness after a shorter amount of time. That seems really great for folks that were really struggling with paying down their student loans. But I know everything that glitters is my goal. It has got to be something else to it.

They had tried and failed to forgive student loans. They had tried to create this new, more affordable repayment plan. We had succeeded in awarding new loan servicing contracts and rebuilding the way that public service loan forgiveness worked. And by the time that the Trump administration came in, there were a lot of policies that were kind of half done.

What I do know is that there were a lot of legal challenges for the Biden administration. So when that administration will put a policy in place, there would be an injunction and the court would put a halt to it, and that would leave borrowers in limbo because yes, this thing was being proposed, but then it doesn't get enacted.

And so by the time that I took charge of the Office of Lone Portfolio Management, we had eight million borrowers that were in a forbearance, not paying their loans on as part of the Save plan. We had borrowers who largely hadn't really been paying their loans for the last five years, and so we're trying to figure out how to get those folks back into the habit of

Depending on when you entered the portal, like when you generated loans, you might not even realize like what used to be available, what is available if you generate it really early on? How do you know if you can get into a plan that might let you pay zero dollars now?

I literally had somebody contact me yesterday asking to know more information about student loans.

Like Sally May, like girl Sally May has not been around for.

A whiles, did.

Bad deceased. There's just so much people don't know.

And I think that the people that have student loans, I feel like they be knowing. But then the people who don't or they're so far removed, they don't be knowing. Like the people with the student knows they be knowing that it's complicated, But the people that don't, they just think it's They're like, oh, what's the big deal? And so I feel like my next question is just about the Trump administration and what they're trying to do. So we know that they're trying to make things more efficient

Ooh yeah, this is a big question.

One of the reasons that I left was because I had a group in January that was like two hundred Dish people, and even just looking at that group, I had four divisions. One of those divisions was an oversight division, which basically managed all of the oversight of the different servicers and other contractors that are involved in the space. And that was about fifty people, so at a quarter

The Trump administration hates oversight, from student loans to clean air to consumer protections. The Trump administration has systematically gutted oversight agencies, and oversight is how the government holds powerful actors like corporate rations, schools, and lenders accountable to us

Right, you have lots of news articles being written about like the gutting of oversight functions and that like CSB going away oversay at the department being a subject to the reduction and force of the riff, which is people getting fired essentially.

Okay, pause.

So the CFPB, that's the Consumer Financial Protection Bureau, and that's a government agency that was created after the two thousand and eight financial crisis. Yeah, it will set up to protect regular people from getting scammed by shady lenders, credit card companies, and even student loan services. They handle complaints, they write rules, and hold banks and financial companies accountable when they mess up. Yeah, it was a big deal

But the other prong of this that I think is really important to understand is that they're all the government does is oversight. The government basically is overseeing a ton of contractors that are actually doing the work, coding the technology, collecting the payments from people, talking on the phone to people whenever you call a government phone number, and need to talk to somebody. Ninety percent shot that that is a contractor, and there are federal employees overseeing those contractors,

Washington, d C. Or quit.

There were people who you know, were offered the fork in the road that decided to take that, especially people who were pretty close to retirement, a lot of the federal workforce, and so I had lost some of my best people even before the riffs happened. And when you lose oversight, that's bad. When you lose operations and oversight, there's no way for you to function.

That's wow, because without the folks to do the work and the oversight to make sure that they're doing right by the American people, a lot of things can fall through the crucs.

And it's the onus is going to be on borrowers and students to figure out when they're not getting the benefits that are entitled to.

I think that's a very good point because I've seen a little bit of chatter on threads. I've shifted from mixed to threads folks friends, But people are saying like, oh, well, I went to pay, or this site was down, or I was having issues getting through. I called didn't get anybody.

Yeah, and this has an interesting interactivity with what happened during the COVID payment pause when people weren't being expectatory pay. So there are this is what we're seeing right now is not just And I think it's almost convenient in a way for Democrats to just be able to say, like, everything failing right now is the fault of the Trump administration of laying people off and cutting programs, et cetera, et cetera.

But this has been building over.

A long period of time, and there's negligence kind of on both sides. And so what you're seeing is, you know, during COVID, there are a lot of fits and starts around terenty payment, and people with student loans might notice that it would be like, get ready, you're gonna have to pay loans in August, and then it would come like July thirtieth and be like, just.

Kidding, January January and then like and that happened five or six times to people over the course of the four years of the COVID payment pause.

And what this led to was a lot of instability and confusion among borrowers. Right, Folks were leaving college and never really getting into the habit of paying their student loans or understanding that they had to repay their loans or what options that they had. And so now many years later, here we are telling these folks that, Okay,

People are in a payment pause. People are in a pause.

You don't need people calling their servicer. People are worried about it, but that accumulates over time. And so now what you're saying is there have been cuts to single

I think it's been very convenient, like you said, to categorize this as belonging to one administration, So this goes back multiple administrations. This is even Trump administration before paused loan payment. Yeah, and I feel like now they're aggressively going after those folks, even though we've kind of put them in this position. You know, we've talked about a little bit in one of our our last semester of Dope Labs. We've talked about inflation, and we've talked about

Exactly? It's like eggs a caviar. Yeah, and there's no jobs.

I went to buy some pickles yesterday and they were five dollars a jar.

No put those that I don't need that.

I'm like, can I live without pickles in my life?

I don't know. You become a home sitter. Now you're cutting up qucumbers.

Yo, this is what they're trying to do. They're trying to take us down. That dollary in a farm pipeline. Don't see me dollars, don't.

Want it, and I don't care what anybody says. That lady's not happy. Let's just be real.

They don't want any of us either.

We're not the top candidates. Colleen, You've talked about this before that, you know, and some of the narrative becomes like, oh, those kids are irresponsible, and people have student loans they want to get four and five degrees. And for people who haven't heard you in a previous episode, I think it's so important to understand, like who are these borrowers? These are not folks who are doctor, doctor, masters, public

Shots fired.

Okay, I just called everybody on the call.

Our history degrees. I'm trying to go right now. I want to, I can't afford it.

One of the things that really stands out to me here is like the good intentions of policymakers in most cases, right, Like we want to expand access higher education. We want to create prist differentiations so that if you have the money, you pay out of pocket. If you don't have the money, you get grants or loans to go to school. Initially it was intended that loans go to middle income people.

We spend in that at the grocery store now.

Wild, And so people have to rely on loans, and because of the way that loans are structured, they aren't you know, as much as folks go on about like how much student debt people have and how out of control it is, really still people who are undergraduate students are borrowing. I'm going to say, use the word only only borrowing about thirty thousand dollars on average when they leave school for four year degree. That number hasn't really gone up significantly in.

The last ten fifteen years or so.

And that you know, that amount is not insubstantial, but it is certainly not what we're talking about like eight hundred dollars a month.

Right.

What we're seeing is people growing to graduate at school especially and being able to borrow all the way up to the cost of attendance, so not just their two and not since their forty fifty thousand dollars tuition, but also their living expenses and their food and their books and whatever else they need. And finishing a one under to your graduate program with one hundred thousand, two hundred thousand dollars in.

That this is such a great point. Most people who have money are paying the tuition. The loans are mostly going to low income folks who are trying to get a degree to better their lives, but they also need the additional set of funds for food or living expenses or whatever. The Higher Education Act or HA was passed in nineteen sixty five as a part of President Lyndon B. Johnson's push to make college more accessible, and it's basically

Congress has really dropped the ball.

It is unconscionable that we have not reauthorized the Higher Education Act, which used to happen every.

Five, ten, maybe fifteen years.

We have barely touched it since two thousand and seven, two thousand and eight, and that is wild considering the rhetoric that you hear out of Congress about student loans from both the left and the right, and with the crisis that you know so many borrowers will talk about that they've largely just let the rhetoric speak and have given up on doing policymaking. And the Republicans have introduced a lot of massive reforms to higher education.

On April twenty eighth, and as I was listening to the hearing.

About the markup of this bill, I was just so disappointed to hear how poor the agenda was from Democrats. I mean, the first several amendments were I want the Secretary of Education to certify that this won't raise the cost of college for low income students.

Like they can't do that.

What is that gonna do.

I'm just sure that Linda McMahon's gonna be like, let me sign.

On the Yeah, sure I certify that, sir. Like that doesn't that's right. I would functionally do anything.

And so I think that the problem that Democrats have had on this issue especially is they've been in this like defend, defend, defend posture and not int like what is going to make the sustainable long term?

Something I heard recently about the administration now talking about people who were borrowing even though payments have been paused. Now they're going to say to the people who service those loans, if they're not paying, report them to the credit bureau, garnish their wages. And I'm like, is that real?

So I want it necessary.

I want everyone to take a deep breath, because most people listening to this don't have loans in default.

So okay, that's only for loans in default.

Only for people in default exactly.

So there are about forty three million people have student loans. At the beginning of the pandemic, about eight million of them were in default on their student loans, which means that they didn't make payments for a year and they got hit on their credit reports. They might have been going in the collections process already and then those collections

Okay, so then what do you say to the people, Because I see this all over TikTok. There's always somebody who's taking a selfie style video walking down the street and they're like, stop paying a student loans, don't pay.

Them back, don't give don't give those people money.

And I'm like, is this wise with what will you just told us they're gonna COMFID that money.

They're gonna get their coming.

They're gonna get their money. They will listen, They're gonna get their money. Like that is a bad idea.

There was one So when I was still at Federal Student Aid, there was a.

TikTok video that was going around.

Of somebody being like, if dose accesses your student aid data, they're violating FURPA.

And if they are violating FURPA, then you can get your loans forgiven.

So everybody call your student loan servicer or tell them that they're in violation of your rights, and then dispute your student loans at the credit Reporting Agency. I don't know who that person was, but I'm just gonna tell you that I reported that video a spam because that was complete lized.

It don't work that way, It does not work that way.

It doesn't work that way.

But also, like I guess, like one of the big things here is that, like I understand that people want to like are trying.

To make make it, make anything that they can happen.

Happen, right, Yeah.

However, when that week credit reporting agencies got flooded with like fifteen thousand student loan disputes, that creates a ton of work for the credit reporting agencies and for the student loan servicers. That takes people away from answering calls. So then your callwait time goes up because they're sitting there being like, this is not a legitimate dispute, in part because furba Family Education Rights Privacy Act.

Does not apply to the federal government.

It applies to your school sharing information with other people about you, not anything related to anything that might happen in Tosh.

And the piece that we're leaving out is the emotional aspect when we think about folks who are in this position with so much debt or even a little bit of debt, and thinking about what do I have, how do I negotiate that with the reality of my income right now, the reality of the increasing cost of living like it can also feel very overwhelming to start to even begin the process of looking into this, And so I think that also plays a role in people's desperation

Absolutely, absolutely, and that's create the chaos, creates opportunity for folks who are going to scam you. Right The best thing that if you have a student loan you're like, I don't know what I'm supposed to do in right now, go to student a dot gov. Create an account or log in. That is the place to figure out what your loan status is. If you don't know who your loan servicer is, they will it will tell you who your loan servicer is, will tell your balance, and your

And a lot of distrust right now, but.

Distrust totally that comes with a loan servicer, especially certain loan services.

You may see in the news all the time, But at the end of the.

Day, there is anybody else that is able to provide you with making payments and resources and support aside from your federal student loan servicer.

So is student loan for giveness it like is it a thing of the past, Like that was just a very special time in our history and it will never come back.

Broad based student loan forgiveness has gone so like a massive write off of student loans is there's no world

Hundred billion with a B dollars.

And when you're spending to that level, you are never spending money on higher education for the next ten, fifteen, twenty years. It becomes really really really hard, like we need Unfortunately, a lot of policies have become like everything.

Should be free, we should be forgiving loans.

But like at the end of the day, there is a budget implication for all of this that is very real, and we see that starting to play out with some of the inflation that we're seeing and things like that. When it becomes the the debt of the country and financial situation of the country becomes more and more precarious, you see higher interest rates, higher prices, all of those

Right, those are in a lot of cases see have been seen as more difficult problems to solve.

But now as we've pushed the envelope on high red, we've gotten to a place where it's like, well, now we can't use any of these like more creative kind of levers to get people on forgiveness. However, public service loan forgiveness is absolutely still an option for people. There's a program called Teacher Loan for Goodness, which is kind of supplemental to public service on forgiveness that.

Teachers can use.

There's also programs that can help you if you are have been like defrauded by your school, or if while you were enrolled your school closed, you know, if somebody saw your identity like those programs can also you know, potentially help you and then also, you know, I don't want to forget the income driven repayment plans, all of those plans at the end of a long period admittedly twenty to twenty five years right now, potentially thirty years in the future of making pinions so.

You can get your loans. Forgiven that is a really long timeframe.

It feels really untenable to a lot of folks, but it is at least some light at the end of the tunnel.

I think something that's also important to understand is that all of these problems didn't come out of nowhere. Even if Kamala hit one, we would still be going through all of this, because this was just snowballing, you.

Know, right, Yeah, And I will say that, like the payment pause ended over a year ago, about a year and a half ago. But during the first year of what we called in the government like returnatory payment starting turning payments back on, the Biden administration opted to not basically have like negative consequences to folks who are missing payments, and so things like you didn't make a payment, or you wouldn't be able to.

Get to a point where it would be reported to your credit.

Reporting agency that you were a delinquent that it basically just like we'd roll you back to current and then like you'd start over. I think that was a beneficial thing, Like we definitely needed an on REMP for people. The problem was it wasn't paired with meaningful and appropriate outreach to folks to say, like, hey, you're getting bills, you got to pay these bills, right like, because at some

Take the heat of why.

Are you hitting my credit, why are you turning payments back on and blah blah blah blah, And they were kind of kicking the can down the road.

And then when I lost the election, it was like, well, now it's Trump's problem.

Now it's somebody else's problem.

So like there's definitely some blame to go around here, right Biden administration would be doing the exact thing that the Trump administration is doing right now, Wow, it would be doing the exact same thing. So I think that folks, like I really want folks to understand that like some of this is the Biden administration not wanting to kind

If you were paying zero dollars and now you're being asked to pay eight hundred dollars a month.

What can someone do?

Is there options for them to not have to pay the full amount every month or inn this economy, it just feels unfair to just turn these things back on on folks when there's all these tariffs and things are getting more and more expensive, and then you're also saying, oh, oh this thing that was free ninety nine, now it's actually a huge.

Amount that you have to pay per month.

You know, what folks.

Can do is if they're like getting a bill and they're like, I cannot possibly manage this. There are a variety of repayment plans available to people. So there are the income driven repayment plans that are available to people that base your payment off of your income. That can reduce a lot of folks, especially if they have higher debt.

You just like enroll and you can stand that plan.

If none of those options are either you know, affordable or tenable for you, you can get in touch with your loan servicer and request what's called an alternative repayment plan, which is essentially a plan that you are able to kind of like negotiate with your loan servicer, because at the end of the day, it behooves your loan servicer to have you in a current status in paying your loans on a monthly basis, even if it's ten bucks a month, then it is to have you going to

For sure, I think a question I have just as we think about all the things that you've told us, it feels a little doom and gloom. But I'm curious if there's anything or any movement that you see with your magical eyes that makes you hopeful or that you feel like, Okay, we're headed in the right direction, or even if it feels doom and gloom right now, like this is just a temporary crunch, I think there's something on the other side of this, anything like that.

This is a tough tough time obviously, you know, as a the economy is really tough, Inflation is really rough on people, prices, there's just there's a whole bunch that folks have to navigate. I think for folks that are really struggling, like looking at their situations right now, are like I absolutely cannot.

Pay my federal student loans.

There are options available right Like there's also deferments that people can take advantage of, like economic hardship deferments if they're unemployed or unploment deferments. There are some kind of medical deferments that people can use if necessary, for temporary relief. At least I think that for the for a lot of folks. One of the things that we all need to do right now, and I said this as an unemployed person, is you've got to look at your budget and see like where can I make up? Where can

And your community.

You know.

I think that the other thing here is there is appetite for change. And so I mentioned that the House Republicans had introduced kind of a massive overhaul of higher.

Ed on Monday.

A lot of parts of that are not great and even hazard to say, really bad, but there are other parts of it where I think, like, you know, the repayment Plan option, I nobody's really done like a deep analysis of it yet, but I think it might not be the worst option, especially for folks who are getting

Right.

I think there's always unintended consequences to policies and always

Are still around, and.

You know, there are a lot of folks that are really committed to make the situation better for everybody.

This really illuminated a lot for me. I think the main thing is that this is not a Trump administration faux pas. This is something that has gone back many administrations and we're just now feeling the repercussions from you know, the sins of president's past, you know what I mean,

I know.

And it's just like a lot of these politicians, I feel like they're so out of touch with the people that they are supposed to be serving, and because of that disconnect, they are focused on all the wrong things. People are like, hey, hey, hey, I need help, and they're like, hmm, let's cut the funding for the Parks Department. I'm like, first of all, what did them folks do to you as yet bigger fish to fry y'aller what is going on?

And it's like we're all just tired.

Everybody on the left and the right people are feeling the effects of all of this bad legislation, and it feels like this is only the beginning. So we're gonna be keeping an eye out and updating all of you to make sure that you are up to date and up to speed on the legislation that's coming out. And if you want to go back and hear Colleen's previous episode, that's Lab seven Show Me the Money, and that was great also, so just to see where we came from and how hopeful we were.

Hope, we were so hopeful, so stupid. You can find us on X and Instagram at Dope Labs.

Podcast, tt is on X and Instagram at d R Underscore t Shoe.

And you can find Takiya at Z said so.

Dope Labs is a production of Lamanada Media. Our senior supervising producer is Kristin Lapour and our associate producer is Issara Savez. Dope Labs is sound design edited and mixed by James Farber, Lamanada Media's Vice president of Partnerships and production is Jackie Danziger. Executive producer from iHeart Podcast is Katrina Norvil. Marketing lead is Alison Kanter. Original music composed and produced by Taka Yatsuzawa and Alex sudi Ura, with