The Rachel Cruze Show - Student Loan Crisis! Is There Hope?

Episode Date: September 30, 2019

Student loan debt is costing Americans trillions of dollars and now surpasses every other type of consumer debt.1 People rarely talk about student loans anymore without attaching the word crisis to it. If you’re in the depths of your own student loan crisis, I want to show you how to get out of debt fast! In the latest episode of The Rachel Cruze Show, you’ll learn: Four simple ways to pay off your student loan debt faster The reality about student loan forgiveness that politicians won’t tell you How to go to college without going into debt  Plus, my friend and bestselling author Anthony ONeal will be here to answer questions about student loans and payments from people just like you.  Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing:  — Zander Insurance Resources (everything mentioned in this episode): Debt-Free Degree Zander Insurance Adjusting your tax withholding video How Long Does It Take to Pay Off Student Loans BONUS LISTEN: Borrowed Future Podcast Learn more about your ad choices. Visit megaphone.fm/adchoices

Guys, I'm so excited. I am giving away a $100 Amazon gift card. That's right. Okay, I've got a new survey just for you, my podcast listeners, and I would love your feedback. I want to know what you want to hear more of on future episodes of the podcast. So all you have to do is text the word podcast to 33789. That's podcast to the number 33789. You'll get a link to the survey, and if you complete it, you could win a $100 Amazon gift card. So make sure to check it out. I took out $120,000. We have created a culture where student loans are so normal. This is what's holding us back. It wasn't worth it. I'm bringing in Anthony O'Neill. Four year universities are not the only route. It's a great route if you can get their debt free.

The only guarantee is your hard work ethic. Hey guys, welcome to another episode of the Rachel Cruz Show podcast. I'm so glad that you're here. Well, in this episode, we're going to tackle something that 44 men's. million of you in America are struggling with, and that is student loan debts. Yes, student loans, they are a huge problem, and the problem continues to grow. It is now the number one consumer debt in America. That means student loan debt has surpassed credit card debt, car loans, I mean, everything. It is now number one. So in this episode, I'm going to be bringing on Anthony

O'Neill, who's an expert in this area. He'll answer your questions and explain how it is possible to go to college without debts. Also, if you're someone out there who borrowed money to go to school at 18 years old and you feel like you had no clue what you were doing when you're signing up for those student loans, well, the same is true for Josiah. I'm going to be bringing him on and hear his story because it is a really compelling one and one that you could probably relate to if you have a lot of student loan debt. Plus, I'm going to give you some tactical ways to start paying off your student loan debt right now. All right. Let's just get a lot. Let's just get a little insights about how bad the problem is. Okay, I've pulled some stats, so listen to these.

Roughly 44.7 million people in America have student loan debts. And with all the debt combined, it totals $1.5 trillion dollars in debt. You guys, that's crazy. Trillion, not just a billion, trillion. And one out of ten people are 90 days or more behind on their student loan payments. And as of September of last year, there were over 40,000. applicants for student loan forgiveness. But guess how many were approved? 206. Yeah, 206 out of 40,000. That's exactly half a percent. Now listen, statistics are all fine and dandy, but when you're one of them, you're feeling it. Okay, so here's the deal with student loans in America. I think we have just become stupid about education. Isn't that sad? Something is supposed to make you smarter.

we've like lost our minds with. So here's the deal. If you have student loans and your name is on it, you're going to have to pay for it. And that sucks. Let's just say it out loud. Because we have created a culture where student loans are so normal, where you probably had school counselors telling you like, yeah, this is the only way you're going to be able to go to school. Maybe even your own parents told you that this is the only option. People that you trusted led you down this path. And the sad thing is that those people were probably ignorant and didn't know there was another option. So taking the personal responsibility can be really hard in this area because you may be thinking, yeah, I have all these student loans because my parents told me this is what I should do,

that this was the wise choice to make. And you're stuck with the bill. So what you have to realize, though, is like, okay, my name is on the loan. I have to pay this. It is going to be up to you. And student loans are not bankruptible. So you are going to have to bail yourself out. If you bankrupt, the student loans are still going to be there.

And also, this time of the year, there's an election going on. And so you're hearing different people promising different things out on the campaign trail, specifically with student loans. Now, listen, you do not want to rely on Washington, D.C. to fix your problems, okay? Because here's the deal. If a certain person gets elected into office that promised this thing, they're not king or queen. They can't just, like, make things happen.

they have to go through the checks and balances of our system. They have to go through Congress. They have to go and create a bill. I mean, like, all the things have to happen. So do not rely. Do not have your hope on if just someone can get into office, my problems are going to be taken care of. Go ahead and fix the problems now.

Because also, if the problem is taken care of and student loans for some reason are forgiven, it's not free. Someone's paying for that. Those institutions want their money. So they're going to be paid somehow. I guess who's going to be paying them? taxpayers. Yes, so this whole idea that it's just free is not true. So you need a plan to pay them off.

So here are four ways to pay off your student loans faster. Number one, you got to get mad. You're not going to make progress if you're like, yeah, I'm kind of okay with my student loans, it's fine. If I pay it off for in a decade, no big deal. Yeah, yeah, yeah. You're not going to be paying them off fast if that's you. You've got to get passionate. You've got to get mad because number two is the debt snowball. And this is where you pay off all of your debts, to largest, regardless of the interest rate, pay minimum payments on everything, and pay off the smallest debt first. Now, you do this because you're going to see traction and you're going to see your quick wins because personal finance, it's 80% behavior. It's only 20% head knowledge. So if you have multiple student loans, put them in the order again of smallest to largest with all

the other debt. Now, if your student loans are sold to another company, you can get kind of confusing. So go online and just specify the smallest loan that you are paying towards and just know, this is it. And focus on that. Now, if you are paying off student loan debt, then I've got a great goal tracker for you so you can track your progress. So click the link in the show notes. Number three is to refinance. All right, keep in mind. First off, you're only able to do this one time if your loan is through Sally Mae. Second, you have to get a fixed rate. And third, it's only worth it if your fixed rate is lower than your current rate. And just to throw it out there, you may find that if you consolidate your student loans, you'll get a better rate as well. And consolidation, when it comes to

student loans, it's the only type of debt I'm okay with you consolidating, but again, you can only do that once. And number four, adjust your tax withholding. Now, this is something that you may not think about when it comes to your student loans, but it's going to help you pay them off faster. Because if you got a big refund in your taxes last year, that money is your money. That could have been working towards paying off debt this whole year. So go and adjust your withholding so that that money goes back into your paycheck. And I have a whole video that explains this. So click the link in the show notes. All right, coming up next, Anthony is going to go over some great ways to go to college completely debt-free. And this is advice for you, if it's your kids going, or if you want to go

back to school yourself in the future. And if you've got student loan debt already, we're going to answer some of your questions about your student loan situation. Anthony, thanks for being on. Rach! You're back? Yes, I'm back, and we're not wearing the same color. I know. Yes. We're not matching. We matched last time, and it was actually pretty fantastic. It was pretty cool.

Okay, so I'm so glad you're on because this episode we're talking a lot about student loans and getting out of student loans. And this is like your bread and butter. I mean, you are so passionate on the preventative side of helping students go to school debt-free. So I want to know what makes you passionate about it and like, what's your story? Well, the main reason why, Rachel, is because I took out $10,000 in student loans when I didn't even need it. Okay, so I had my father's GI Bill, and I had a full-ride scholarship for the NFL. So not the football. I'm too short.

I was going to say. I'm too short. I'm sorry. No, no, no. But it stood for the National Forensies League. So I was a good debater. And so because of that, school was taken care of. But I've seen all my peers taking out their loans to pay for cars, to buy nice things.

I was like, well, why not just take them out? And I wasn't even thinking. No one really taught me the importance of avoiding business. debt, especially student loans. Going to college was the very first big decision I ever made on my own. And the second one was taking out debt. And that was a huge mistake that I've made because of the lack of education. And so I am so passionate by helping all young people make better decisions and starting off their life correctly. And you do that by avoiding student loans. Totally. Well, the whole college conversation is just huge. And I feel like that there is, I mean, we're all for education

around here. We'll probably say that a few times. But the truth of the matter is, like, you don't have to go straight into a four-year school. So like, talk about that because I feel like that there's a lie out there that, like, most seniors in high school feel like, okay, well, I have to go, that has to be my next step. No matter what, no matter where I am financially, this is what I'm supposed to do. When people think of four-year universities, they think that, oh, I've made it. I was good in high school. But when they think about community college, when they think about trade school, it's like, oh, I didn't make it. Well, no, I say that one of the best decisions a young person can make, if you cannot pay cash via cash or scholarship to go to a four-year

university, going to a trade school and or a community college is one of the best decisions you can make. We talk about this in my book, Debt Free Degree, that the average community college costs anywhere between $3,000 and $4,000. And there are several states, like the state of Tennessee, that you can go to community college for free the first two years. years. Yes. So, no, four-year universities are not the only route. It's a great route if you can get their debt-free. But you have community colleges, you have trade schools, you have four-year universities. And here's the thing, too, I say, you have no school. Sometimes you don't have to go to school depending on the route that you want to go. So in the subject overall, just like with student

loans, what are you hearing from parents and students around the subject? Because you're traveling all over the country, talking specifically to students. Yeah. But what are you hearing? You know, I'm hearing a lot from teens, you know, Rachel, they're nervous, they're scared, at the same time they're excited. You know, I want to go off to college, but I want to do it the right way. Anthony, I've learned from you to avoid it. I've learned from Rachel to avoid it. I know I do not need to rack up debt, but this is all that I know. I just know if I don't have the scholarships, then get student loans. And I don't want, I don't want the student loans because I don't want to come back home when I leave home.

I want to start my life off correctly with a good job. And then here's something out here all the time, Rachel, as well is, if I go to school, I'm guaranteed to get a good job. Yes. That's false. Uh-uh. Uh-uh. No. I know.

And that is, that's a huge lie out there. I mean, does it help you get into the doors of some places? Sure. Does it. Do some career paths you have to have a four-year degree? Yes. Absolutely. But it is not a guarantee.

There is no guarantee. And I tell this to every young person that's watching your show and when I'm out there around the country, the only guarantee is your hard work ethic. You know, can you outwork the next person next to you? Is education important? Will it help you? Yes, every single day you and I are learning something. Education is important, but I believe what guarantees you a career is how hard are you willing to work. Yeah, it's so good.

And if you have the education with that, that's great. But what can you bring to the table here? Okay, so someone watching, probably a parent watching the show, maybe even a teenager, maybe some smart teens are watching the Richard Crewee show. But they're thinking, okay, so how do I go to school, death free? What are some, like, quick hits that you can, just some quick advice you can give them? I want you to, one, identify your dream school. Now, Rachel, what's a dream school?

A dream school is an affordable school. An affordable school to me is, you know. I was like one on the beach. You know, so that's the very first one. Dream school, affordable school, community college. And I also want you to step back and look at what careers can you get into that are bringing in money. Why sit here and spend $40,000 for education when you may only make $30,000 for the next 10 years? I want you to really identify that route.

The number three, I always tell young people to spend at least one hour every single day from freshman year to their senior year looking up grants and scholarships. For the next four years, that's 1460 hours over those four years. That's about 60 days. That's two months that you're giving yourself that's going to be focused on your future. Yeah. So look up grants and scholarships every single day. So good. Those are the main three that I really say. Yeah, I love it. Okay, guys, I'm going to interrupt here for just a second.

So Anthony just said high school students spend up to nine hours a day on social media. Well, let's just think about us adults for a second, okay? Let's take the teenager out of it. And let's just say we divide it by half. Maybe we're half better than the teenagers out there. So that means we could be spending on average or on four. four and a half hours a day on social media, which if you have the little ticker thing on your phone now that tracks how long you spend on social media, you're going to get an accurate

picture. But it's insane. Like it really is. It just reminded me. It kind of gave me like this gut check of like, how much time do I spend on social media as an adult? Like as someone who works and pays property tax, like a full functioning adult, how much time am I looking at my dang phone on social media. And so it's just a reminder, you guys, a reminder, whether you're a teenager, college student, working adult, I don't care who you are out there. Where are you spending your time? Where is it most beneficial? And obviously in this episode we're talking about specifically in this segment getting scholarships and grants and how teenagers can spend their time furthering their future by applying for scholarships and grants versus being on social media. But what else could you be doing

with your time if you're not just staring at social media? We went on a beach trip as a family just a few weeks ago. And Winston and I were like, okay, we're going to unplug from email and I'm going to unplug from social media. He didn't have to unplug from social media because he is unplugged in life. But I decided to unplug, to I moved all my apps, my little folder with all my social media apps, the very, very back of my phone, like six pages past, you know, all the apps. And I didn't get on at all. And just even having a small detox, like, it was so nice. And it made me not even want to get back on. I'll be honest. I mean, all you Instagram followers out there, I love doing Instagram live with you.

I love interacting with you, but I'm not going to lie, it was kind of nice. It was kind of nice just to live life in the moment and not worrying about what everyone else is doing. And so it's just a reminder out there again. We're talking about teenagers here in this segment. But even us adults, we can be reminded that we may be wasting a lot of our time on social media. So when you're talking to a parent, say that they're paying off their debt, but they also want to help their child go to school, go to college. And in a perfect world, obviously, they could help financially, but they may not be able to. So what encouragement would you give them?

You've done enough. You know, I want you to focus on you right now. And I want you to also focus on your future and their future, but first, your future. Here's the key thing. I want you to stop paying off your debt to help them get into school and then they're all good and then you're still sitting here hurting. You've may have got them through school, but then now when they get old and you get older, now you've got to go to them for help.

That puts more burden on to them in the future. And so as parents, what I tell parents all the time is make sure that you have a solid foundation to stand on. Make sure that you're out of debt. Make sure that you have emergency fund. And make sure that you're investing into your retirement. Because we know for sure you're going to retire. And Chris Hogan says this all the time.

But there's a possibility, like me, your kid may not finish their school. Yeah. Or may not even go to school. May not. So I really want you to focus on you. And once you get there, I have no problem with parents helping. But here's the truth. The main responsibility when it comes to colleges and their future is your kid's responsibility.

It's your job to. to train and guide them. Yes, absolutely. Totally agree. And I love it because you wrote a whole book on this. Yes. Debt three degree. Anthony, what a good-looking cover.

Man, that's a good-looking man. Can we just talk about that for a second? Seriously, this is so fun because this book, tell me about it, because it's geared, I love it, to parents and young people. It's geared to parents and young people. My story is in there. We've interviewed so many people. Our team and I did so much research.

And this really started from my heart back when I was in my youth pastor days. I really had a heart and desire to help young people as early as middle school to start thinking about college. And once you get into your high school years, you have to really get focused on it. So we literally talk about what a seventh grader through 12th grader need to be doing every single semester, every single school year to, what classes should they be taking? What does their resume need to look like? How do you prepare for the ACT and SAT?

What's the difference between the two? How do you get more funding when it comes to grants and scholarships? How do you negotiate with colleges? We really talk about a lot of things. And this is a guaranteed way that you can get your child into college 100% debt free. I love it. And there's just, I feel like the whole college admission process, it's kind of like you just go into like this black hole and be like, I don't know, no one's here to help me. Like I were even feeling that, right?

Like all the applications and everything, it's just, it's so confusing. It's so confusing. And the FAFSA and all of that, you talk about everything in here in the book. Guys, make sure to check it out. Go to Anthony O'Neill.com. Check out debt-free degree because we want a whole generation debt-free. Yes, we do. But there's a whole generation that's not debt-free, and they're working on their student loans as we speak. And so we went into my Facebook group and said, okay, guys, what questions do you have around this topic? So we'll go back and forth and answer these, Anthony. Okay. Naomi asks, how do you take ownership of something that is so freaking enormous that you're speaking? spouse brought in, i.e. one person had student loans, one person didn't. Now we're married,

and we both have this loan. I'm talking $140,000, not something little. All right, Naomi, my advice always with couples is that you are one. Like, you are one in every aspect of your marriage, including your money. And so when you said, I do, you took on the student loans. And so you have to change those pronouns to his loans or my loans to our loans together. And there's kind of this emotional buy-in. I feel like couples have to take in. And if you're not working together as a team, it's going to be that much more difficult to pay it off. But when you're working together, all of the forces, all of the motivation, everything is pointed at this together. It's going to help you so much faster. Do you see that a lot with married couples as they're facing this mistake

when they say, okay, one of them has two loans, one of them doesn't? I do. You know, and being a young single man, I say exactly what you say. Hey, when she got married, you became one. So it's ours. Then I just recommend to the single people just find you someone dead free. Put that on your profile. Yeah, you're doing. Okay. So Desiree asks, when your student loans are high, $300,000. Did you completely stop contributing or never contribute to your Roth IRA or 401k until you're completely finished with the student loan debt? You know, Desiree, I want to encourage you. That's low. We've met people who have four or five hundred thousand dollars with student loans. I want to encourage you. This will happen and you can become debt free. But yes, I want you

to stop investing. I really want you to stick to the baby steps that we teach. You know, I want you to get out of debt. I know that's a large number, but if you really focus on it and put all of your income towards that, that one big show that you have, that timeframe will be shortened. And then once you get into investing, Rachel, you can invest a lot more. You can invest a lot more. Because what we're learning, the average person who is in debt, they're investing about 1 and 3%. Well, we invest about 15% what we want you to be investing. And so I really want you to focus on that. But yes, please, stop investing into your future and invest in to your future by becoming debt-free today.

Yeah. Chris Hogan always says our friend, I love it, because he's like, pause. Just pause. You know, it's not stopping forever. It may take you a little bit longer, but pause. But I like that. But the key thing here is, do not remove nothing out of the 401K or something that you invest it into.

Oh, that's right. Let that sit right there. Exactly. Okay. Catherine asks, is it okay to have two debt snowballs? One for our credit card debt, one for our student loans. No. No.

Simple answer. No. I mean, we want you to use a debt snowball, line up all of your debt from smallest to largest. If your student loans are the largest, it goes towards the end. And you just aggressively attack it that way. Now, once you get to the student loans and if that is the last thing and you have to say five student loans, I don't have a lot. a problem with you then having a debt snowball and doing it that way. But loans, credit cards,

car notes, boom, all in one big debt snowball. All right. Last question is from Monique. She said, even if we attack our student loans aggressively, it'll take us five years. I've decided to pause and complete graduate school. I think she decided to pause paying off debt and complete graduate school, which will significantly increase our income. My question is, should I go part time and continue working full time, which will take four to five years to complete? Or should I go full time into school, and I'll have enough cash saved up for about half, and then try to get merit scholarships for the last half, which will take me three years. Okay, here's what I would say, Monique. If it'll take you three years to go full-time and you may not have enough cash saved up,

or it'll take you four years to go part-time and you're working way through four years, all the way, girlfriend. But I would pause all of it and be paying off your debt. Get completely debt-free and get an emergency fund before going back to school. And this is the hard thing, because I feel like there are a lot of people wanting to go back for degrees. But the thing is, and tell me what you think about this, but I'm like, you have to clean up your mess first because it's going to be so stressful having to juggle trying to pay off debt and you're going back to school and you're trying to do this. You're trying to do like 18 things at once and you're not going to get a lot of traction. When you pause, focus, it may take you a few years, but that's okay. It's okay. Clean up the mess,

get that emergency fund and then go back to school and cash flow it. I like what you're saying that, Rachel, because when you pause and focus on one thing, you can put all your energy towards that. Yes. And also, too, before you go back to grad school, make sure you do a lot of research. Make sure that you know for sure that if I pay this out of pocket that is going to bring back a return,

I am going to land a specific career, a specific job that is worth what I'm spending. And if it's not worth it, forget about it. Well, and what's funny is, honestly, while you're on the journey of paying off debt, you may look up and be like, oh, well, I already got to raise at work. I don't need to go back to grad school. I mean, seriously, like I feel like a lot of people,

fall into this trap, oh, I just need to go to grad school. Absolutely. And there's a lot of people that waste a lot of money on grad school. Sometimes it's good. Sometimes it's not. And then also, too, once you pay off your debt, you just actually got a pay raise right there. That's true, too.

You may realize, life's pretty good. Life's pretty good. I'm dead free. I think we can solve the world's problems. We really can. This needs to become the Rachel and Anthony. O'Neill Show.

Yeah, that's true. Come on. You can be my guest to the host. Anthony, seriously, thanks for coming on. I love your heart. I love your passion, because this is such a huge topic to tackle, but it's like one family at a time, one team at a time. Again, you guys, debt-free degree, check it out at Anthonyonial.com. Thanks, Anthony.

Thank you, Rachel. Wasn't Anthony great? I love him. Seriously, I love working with him and all the energy he brings to life, but especially the subject of student loans. All right, coming up next is the story of Josiah. This is a really interesting one because I feel like he paints the perfect perspective of how so many people in America feel about their student loans. He was 18 years old when he signed up for him, and he really had no clue what he was signing up for. And so kind of that ignorance, if you will, is the reality for so many people, maybe even you. So I'm sure you can relate to his story. So here it is.

I was the youngest child, brother and sister, both gone, going to college. So I decided that I wanted to go to college. Mom wanted me to go to college. Stabdad wanted me to go to college. So I wasn't worried about money. I wasn't worried about anything else that was going to happen because I'm 18, so what bad can actually happen? Going through high school, like, I don't even know if I remember anyone ever saying it's a possibility to pay, you know, school out of pocket. I feel like I was always, hey, you know, you got to apply for student loans.

You want to go here, you got to apply for this loan. You got to apply for this loan. You can apply for all the scholarships you want, but that's probably not going to cover it because you're not going to be able to live and sustain your lifestyle in college. So now it becomes more than just, oh, I got to take money to go college. Now it's I got to take money to be able to afford a car, to afford food, to afford fast food every maybe two, three times a day. I have to be able to maintain my lifestyle while I'm there. And so it really became a societal thing where you just got to do it.

If you don't do it, you're going to be miserable. And college is supposed to be the best four years, sometimes six years of your life. So when it came time to actually co-signed for loans, my mom, decided that, you know, okay, I got good credit score. I got all these things that I'm just ready to do. So she said, I can help you out. So awesome, I'll take the money where I can get it. So when we applied for the student loans,

and then we got approved, the interest rate for that loan is at 13%. And that's just a mind-bending number. Like, how is that even possible? To me being 18, that didn't mean anything. It's just a number, it's 13%, whatever. I don't know what that really even means. To my mom, no, that was, you know, shocking.

That was, she couldn't believe what was going on. But I'm the one that kind of pressure into saying, hey, we're like a week away from school. I got to do this. Okay, I got to take this money now or else I'm never going to get it. I'm never going to go to school. Because me being 18, I thought it was going to be the end of the world if I didn't do exactly what I wanted to do right at that point in time. I took out $120,000. The minimum payment I have to make on my student loans when I first graduated, it was $550 a month.

It wasn't worth it to go do, to put myself in debt for 30 years like they wanted me to be. I was talking to my wife the other day about this, and she's like, well, I can think of right off the bat, like, things that we can't do just because of your student loans. And so, like, she knows, like, this is what's holding us back. Really, it stopped me from being able to get a house with my wife. You know, we live in a super small house that we just kind of survive in. It stopped us from starting our family. My wife has always loved kids. I've loved kids.

And it stopped us from wanting to do that yet because we don't want to bring a child up in this, you know, basically poverty stricken home. It stopped me from getting my car fix. My car broke down about a week ago, actually. It stopped me from just really being happy a lot of the time. I don't know if it's a matter of I didn't know exactly how to do the math or if it was more a thing of I didn't want to do the math. Because either way, like, that just infuriates me.

How did I make myself believe that that was okay? It's something I got to live with though. It's my mistake. It is completely possible to go to college debt-free. It's just a fact of, are you willing to do? what it takes to go to college debt-free. Are you willing to go get that job while you're full-time in school? Are you willing to talk to your parents early about what's going to go on and save a little bit of money into an account? That way, that first year hits, you're ready to go.

Are you willing to go to that community college because it's the cheaper option? Or do you want the glitz and the glam of society to look on you and say, like, oh, they're going to a good school? So it is possible. It's just, are you willing to to do what you had to do to make it possible. Well, my hope is that you see that it is possible that you can live life without student loans. Thank you so much to Anthony O'Neill for coming in and dropping all of your wisdom.

Loved it so much. Josiah's story, I hope you guys felt motivated to pay off your student loans faster and even help your kids avoid this money mistake. And if you want anything that we've talked about in this episode, make sure to click the link in the show notes. And if you're not subscribed to this podcast, make sure you go click that little bit.

button and if the spirit leads, you can leave a review. All right, as always, make sure you take control of your money and create a life you love.