619 | The Student Loan Rulebook Was Rewritten | Travis Hornsby

24:18So if you look at some of the big schools that have exploded their revenues from out-of-state students, that's how they do it is through the Parent Plus program, allowing kids to borrow unlimited sums. And so the schools lobbied and blocked any caps on Parent PLUS loans because of that. So what happened is, is a lot of parents got themselves in a lot of debt because the schools were basically like, okay, you got great news. Your kid got into their dream school. Bad news. They are not maybe high enough scoring to get our top merit aid packages or top aid discounting, whatever. So you got to pay full freight if you want to come here.

24:50And a lot of those parents, because they could say yes to the Parent PLUS program, they said yes. and thinking that it was doable, thinking that they would be able to figure it out. A lot of times, the people who have the highest Parent Plus balances, some of them felt like they could pay it back and then they realized they couldn't. Others kind of felt like, well, they're giving me the loan. I hope it'll work out because not everybody's super financially literate. They have created this problem where people are getting into huge amounts of Parent Plus debt and then they capped it for the future, but they grandfathered them in, but then they eliminated all the repayment plans for them immediately instead of like gradually.

25:25And so it's just this like policy problem that they didn't think through enough carefully. And it's just, yeah, because of that, a lot of people are going to default and it's going to be a mess. And that's just one example of like one microcosm problem in this big student loan reform. So I don't want to get too drawn into the minutia, right? But I just do want people to realize there's all these like situations that affect people in very specific situations, right? Pair of plus borrowers, people that borrow between 2014 and 2026, you know, people that borrow it after July, people who borrowed before July 2014, there's all this mess.

25:56And in two to three years, it gets significantly cleaned up. So that's the great news. Okay. I do want to just drill down on the parent plus for one more thing, if you don't mind. Sure. My logical question, which we don't have an answer to, is basically at what point should a parent just say like, hey, we can't really afford this school. But that's neither here nor there. But the actual question is, okay, these are federal loans. And now there's always the distinction between private loans and the federal loans. Is there a world now where a parent with good credit who might qualify for lower rate than 9.07 might go straight to private financing now?

26:35And if so, what protections would they be giving up? Yeah, I would say the new parent plus loan really has no use case if you can get a better rate through the private. That's really different than what it used to be. Massively different. Yeah, massively different. Probably the Parent Plus loan going forward is now officially a loan of last resort for families because it's with such a high rate, with only being able to borrow$20 ,000 a year. It's just not that great anymore. I think that people need to be heavily looking at private. When I say look at private, you're going to have to shop around a lot.

27:11The rates for private are way different. than like so that the differences in the rates are way bigger in the private market than for refinancing so we do like we help people get matched with like refinancing offers a lot you know a lot of times people shop three different lenders and the spread between the different offers is like one percent we saw i think a deal somebody was telling me the day that the spread between the rates they were offered was seven percent like the lowest rate was seven the highest rate was 14 and so it's like okay that's you really need to shop around because the private loan market is just the wild west why because a lot of the lenders don't have any data they haven't actually used the private loan market in big size for 20 years and so they're trying to dust off all their models and talk to their you know 50 and 60 something year old workers and be like what was it like back in 2002 again what did y 'all do so the private loan market's going to explode because families know in the world of ai like yeah you know there's still a lot of jobs that are worthwhile going to get like there's a lot of i mean people underestimate like there's certain jobs where, you know, AI can't get sued for medical malpractice, right?

28:13I guess not yet. I don't think it can, but that's going to protect a lot of jobs. So those kinds of things still matter. It's still going to be a source of security, right? So private loans are going to be a huge deal going forward. And again, you know, for the parents, I would say, you know, one benefit of the private loans you don't have for parent plus is private loans in a lot of cases are co-signed, meaning that the kid is also like on the hook, right? Whereas parent plus loans, A lot of times people, you have this handshake agreement with their kid, the kid's on the hook, but I've had more than one family nearly fall apart with a kid not wanting to take responsibility after the fact because maybe they don't have great economic prospects.

28:49The parent being like, wait, what? I'm the only name on this loan and there's no kid having to share the risk with me because they're not obligated legally? I mean, it's a little bit of a tricky situation, obviously, right? The danger of the private loans is it's really hard to bankrupt them, right? That's getting easier in some parts of the country, depending on the jurisdiction. But the takeaway message is it's still really hard to bankrupt a private suit alone. So I think people just have to get really back to the basics on higher ed going forward with this current regime that we have in place and say, you know, what is the highest value, right?

29:21What is the best deal for my money? And also for students who want to negotiate, I mean, you should be negotiating the heck out of your financial aid. Like unless it's a public university that is super bureaucratic and never moves the dial on anything because they're just this large bureaucracy and they're going to charge what they're going to charge. People should be asking out the wazoo for schools to give them better aid packages and make similar schools that compete for the same kind of students compete harder for your money, both at the undergrad level and at the graduate level because it used to be a grad level had almost no price competition or very limited price competition because they could charge you whatever they want and people could take out as much debt as they wanted to.

30:01There was nothing inhibiting price. So students are going to have to take it on to themselves to aggressively talk to the schools they get into to say, hey, I need a better aid package because this other school across the street is offering me this. Yeah, that's so interesting. I'm going back to your example of Syracuse. in terms of, I mean, man, if they're having to hand out 20 plus thousand dollars just to fill their class, a lot of students out there are going to have some leverage, especially the elite, elite schools are going to have their pick. And that's not to say that you don't have any possibility of leverage, but I mean, let's be realistic.

30:40Most people who are going to Harvard or Princeton or Brown or one of the T14 law schools or whatever it may be, like you're going to have much less leverage, but you can pit schools against each other. Not necessarily, obviously you want to go about it in a smart way, right? It's always like, how can I make it clear that I have other options? And then you just never know what they're going to offer. Travis, I'm curious, do you give out little hacks on how people can go about that? So let's say somebody's 18, they're getting ready to go to freshman year of college, or let's say rewind six months.

31:10Are there specific tactics that you have that somebody could approach schools with? the problem is if your family has a lot of money people tend to hire consultants and that's the thing is not everybody can afford that just like don't everybody can afford a loan planner consultation not everybody can afford like a college consultant and most of those good ones charge a lot more than what we charge for our consultation if you can afford a few thousand dollar college consultant but generally speaking a highly rated one is worth the money because they'll help you probably save more than you pay because they'll help you come up with hacks and strategies and make you aware of things you're just not aware of as a family shopping right If you're a working class student or a family with limited income, think about casting a wide net and having a strategy.

31:52So my strategy was I applied to schools that had named merit scholarships that were mostly public universities. Some private, but I would go after ones that covered everything. And so I applied to eight or nine schools that had prestigious scholarships that covered everything. I got one of those. I got into one of those, but all I needed was one. and that one i ended up making money going to school for undergrad but i had a strategy where it was like seeking value and then if i was a student like you said t14 law school one of the things that popped in my head when you said that is i would i would say don't underestimate that top 14 i mean it might be top five now in other words the demographic crisis is getting so bad over time and it's not gonna happen right away but like every year pretty much the kids that are available gets worse and worse and worse for a while in terms of the population, especially if we're having more strict immigration policy, not letting as many international students come over, right?

32:46Because that's capping the demand further. So it's like, okay, maybe if you have top scores and you get into one of the top three schools and you're looking at a top 10 school, maybe that top 10 school would give you a boatload of aid and give you a super amazing price. And that might be worth it in terms of the level of financial stress we'll have later in life. So I would say that strategies are, have a strategy with how you apply. Don't just apply based on brochures, right? Like look at - Or football. Yeah, or football. Or you can, or you can. And then let's say you get into two or three schools you could live with, then it's think about leverage in general in a negotiation.

33:22You have leverage if you're willing to walk away. If you're not willing to walk away, then I would say at least say, is that the best that you can give me? Just say that. If you're not willing to walk away, because what are they going to say? Yes, and we rescind your offer of admission. No, they're not going to say that, right? They're just going to say, sorry, that's the best we can do. And if you are willing to walk away, then you have to say, well, this school offered me this amount of merit scholarship is going to be about this cost to attend a year. I like your school a little bit better, but this discount is like too large for me to ignore.

33:55Can you do anything? And it really helps that that school is viewed as a competitor, right? So like if that school is a competitor to that other school, that school will say, you know, usually what they'll say is, you know what, on further reflection, we can give you an additional 5 ,000 a year merit aid. And what that really is, is not merit aid, it's a discounting, and it's a very complicated strategy. Like look behind the curtain. I went to this presentation at one of these conferences once, and they had this consultant group that worked for colleges and universities. They drilled down to the last four zip code on your zip code to micro target parts within a zip code based off of income asset levels, you know, census data to price what they offer you.

34:39So these things that are dressed up as merit aid, it's not merit aid at all. I don't want to burst anybody's bubble. Everybody's getting special, right? I mean, I got a bunch of merit aid. Most of it was not merit aid for me. It was like discounted tuition.

34:51Jonathan Mendonsa:You're so special, Travis. Exactly. Yeah. So that's what's going on is the schools are basically discounting and they can't call it 60 % off because they don't want to seem like JCPenney. They want you to think they're Saks Fifth Avenue, right? So in other words, they want to make it seem like this is a prestigious school. This is extremely high value education. And because you are so special, we're going to give you 25K a year in merit aid or whatever it is. But what it really is, is discounting. And what do we learn about economics? It's price discrimination. Different groups of consumers are willing to pay different amounts to be on the same airplane, so to speak.

35:26I guess people are really underestimating how powerful negotiating is when talking about what you pay for college, unless it's like Harvard, MIT, Stanford, or UVA, University of Florida, one of those big flagship kind of schools that just kind of mostly charges the same price minus like Pell Grants and those kinds of things. Yeah, interesting. There's so many factors here. Like you said, you brought up just in passing about the new immigration enforcement. My thought went immediately when you were talking about Syracuse and other schools trying to find students that can pay. My thought went immediately to foreign students because that's been the cash cow for most higher education facilities over the last couple decades is, oh, we'll just get more international students.

36:10But man, if we're not allowing them into the country anymore, there goes that. Yeah, no, I'm a big time. And, you know, another huge thing that has changed in the 10 years that I've been doing this is educational polarization. It is an objective fact that the more educated you are, the more disproportionately it's predictive that you would vote for the Democratic Party. And that didn't used to be like that back in the day. And what kind of happened is I think you had more of a bipartisan support of the status quo of letting universities have an easy hand and not challenging with their business model that much.

36:45but with the shift more towards more of the working class coalition for Republicans, more of the educated, higher professional degree kind of class for Democrats, like you start seeing this bifurcation of how the parties treat student loans and higher education in general. And that's one of the reasons I say people need to be ready to get whiplash because in 2028, if you have a different party in the White House, like I have no doubt you'll see different policies on student loans. And then all this stuff that we talked about would have to be modified yet again. But if we have a Republican in the White House again in 2028, I do think that we'll see a long continuation of these policies.

37:20And I think student loans would not be touched again and probably until 2032 if that were to happen. I wanted to go to the state of play regarding litigation. Yeah. I just hear in the ether, there's the Biden rules for loan forgiveness. There have been court issues.

37:40Jonathan Mendonsa:And then I heard recently that something was supposed to go into play July 1st about PSLF, and that got vacated like the day before or something. Can you, A, I guess just confirm my random ramblings, and B, give us a state of play of where things stand. Have people actually gotten the forgiveness that under Biden that it was purported? Is that happening, or did that all get turned down? No, people are still getting it. The good news I can say is almost all the litigation is really, really niche stuff that's not affecting that many people. The consequences of the affected people are large. I don't want to minimize that.

38:18But the number of affected people is way smaller than you would think about based on the headlines. So the PSLF litigation has to do with nonprofits that are doing things the Trump administration doesn't like. That's the simplification, but that's basically what is going on. The groups that would be very strongly supportive of immigration work or strongly supportive of certain kinds of things that would be objectionable by the Trump administration, essentially what the angle is is like substantial legal purpose is the word they're using. And so their argument is that no nonprofit that exists for a substantial legal purpose should qualify for PSLF.

38:57And that's not what the law says, in my opinion. It says if you're a 501c3 qualified organization that has employees, and it does list a bunch of things that don't qualify, like labor unions and some different things like that that don't qualify. They're litigating. It makes sense, right? A lot of this is more political theater than something that's going to really affect a lot of people. Sometimes I get these emails that people are really worried. I think that when the dust settles, I don't think people with student loans will have to be super worried because the parliamentarian already made a lot of the status quo preserved by stopping them from affecting PSLF for existing borrowers in a lot of ways.

39:39So I think that the litigation is mostly loud noise that's going to get settled out. You know, never say never, obviously, but I think it's something that people can mostly relax about. The other stuff that's going on, and we mentioned the professional definition lawsuit, you know, again, that affects a lot of people, but not a huge number of people. Like there are a lot of nurse practitioners and physician assistants in the country and physical therapists, but there are not tens of millions. There are a large number, but it's not tens of millions. Does that affect a lot of people? It does, but my guess is that maybe would affect, 5-10 % of the student loan borrowers that are listening to this episode.

40:15Of the student loan borrowers, right? And not everybody listening to this has student loans. It's something that impacts people, but it's not like when we were dealing with the save plan lawsuit where that affected all student loan borrowers, if that makes sense. Yeah, of course. Travis, since we're on PSLF, PSLF Buyback?

40:33Jonathan Mendonsa:Is that something you can educate us on? Yeah, PSLF Buyback is a program that was rolled out in the Biden administration specifically to address forbearance steering and deferment steering by servicers. It was a lot easier for a busy, tired, exhausted, disengaged, and sometimes phone rep to tell somebody, just sign up for a forbearance. That's easier. I don't want to have to spend 10 minutes telling you how to apply for income-based repayment. Just sign up for a forbearance. That takes me 30 seconds. The problem is that didn't count for PSLF and forgiveness and other things, right? So the Biden administration came up with this program.

41:06Hey, if this happened to you, you can buy back periods that you're in forbearance to count for PSLF. Then unexpectedly, a court put a hold on the save plan and then 9 million people got put into forbearance between June 2024 and about mid 2025. I would say a huge number of student loan borrowers, millions, now have over a year of forbearance in many cases that was unexpected. And so the PSLF buyback program went from being something that was expected to be kind of a niche program that wouldn't apply to a lot of people to something that suddenly applied to 9 million people because of a court order.

41:46Does that make sense? Yeah, it does. And, you know, 9 million, it's a subset of 9 million because it's the public servants within the 9 million, but that's probably 3 or 4 million people within the 9. And so you think about a program that was designed to be like edge case fixing something that one or two people at the Department of Ed could have done. And now that's 1 % of the U.S. population. Yeah, and you've got millions of cases you've got to review and look at. And they also cut a huge part of the Department of Education. So you don't have nearly as many people as you need to adjudicate these things.

42:15And suddenly they made a form. And so tens of thousands of people started submitting forms. It's just sort of a game of math. If you have a person looking at 100 a day and they're a career staffer and they work 200 days a year, okay, you're going to have that one staffer get through 2 ,000 forms. And oh, by the way, there's 20 ,000 in the queue. And oh, last week they just submitted another 3 ,000. So it's like the queue for PSLopBuyback was building and building and building way faster than they were able to deal with it. And they are hiring, they are into permanent ed, believe it or not, and they're trying to get out from this backlog of all these cases that people are filing.

42:49and they are nowhere near getting through that backlog. But it takes several months and people do get answers. And so what we kind of tell people is, well, if you are planning to switch jobs when you get PSLF, it's probably best to just keep the payments going. And maybe it depends on how much time left you've got. Like if you're kind of close, you might as well just get on with your life. Now, if you're going to stay at an employer, at a PSLF eligible employer anyway, then there's not really much of a downside of just saying, yeah, evaluate me for PSLF buyback. See if I can buy back some periods at cheaper rates than I would pay now.

43:24PSLF buyback is also one of those case-by-case situations where a lot of people want to think about, do I apply for it, do I not? And I think it comes down to people's career plans mostly. How quickly do you want to change jobs and be done with your current role if you do? And if you don't, then most people should throw their hat in the ring and just know it's going to take six months. Interesting. Interesting. Okay. Thanks for the clarification. I did want to double back to the RAP, so Repayment Assistance Plan. That's the post-7-1-2026.

43:57Jonathan Mendonsa:You mentioned earlier that it uses something like 1 % to 10 % of your income, but I'm under the impression that this is AGI, and then alarm bells going off in my head of like, oh, AGI is something very different. maybe this is post 401k, post other potential deductions that those of us in the Choose a Fight community know and love well. Are there ways that people in the fight community can impact this to the good in ways that maybe other people who haven't saved so diligently otherwise could? Well, if you're doing pre-tax accounts, you do get the benefit of that before they take the 10%. So I mean, like, you know, if you do a pre-tax 401k and you're doing the$24 ,500 or whatever, that you can exclude that from the amount they take the 10 % from.

44:44So we really tell people to think about it like an income tax. And that means you want to think about what is your combined tax rate when you're making decisions about, do I do pre-tax? Do I do Roth? The thing that I sometimes see people not think about that have student loans is, let's say you're in a 24 % federal bracket and you're in 5 % state tax bracket, and then you're paying 10 to student loans. that's 40%. Are you going to be in a higher tax rate at retirement than 40 %? Probably not. Maybe if you get super successful, but then you're already super wealthy. You know what I mean? So the angle is most student loan borrowers need to be focusing on pre-tax accounts, maxing all those out before they turn their attention to backdoor Roths even.

45:23And then you do your backdoor Roth. And then when you're done with all your pre-tax, including HSAs, and your Roth backdoor in a lot of cases, because here's another little fun fact, if you have a spouse who has student loans and you don't, a lot of people have to file separately for taxes, but that takes away the ability to do a Roth IRA unless you do a backdoor Roth IRA, because the income limitation on a Roth for marrying separately is like 10 ,000 bucks. It's almost nothing. So that's another thing to think about is like we very commonly see people already contributed their Roth IRA contribution and they need to file separately for student loans.

45:57And then we have to tell them the bad news. Hey, sir, you got to recharacterize your Roth contribution you got to redo your broth array to make it back to a roth and even though that's not terrible to a financially minded kind of person like if somebody's like got a low pain tolerance that's like hearing nails on a chalkboard right like i gotta do what i gotta yeah that's where my brain is going in terms whenever you hear back to a roth period yeah it's return on hassle for me it's like oh come on i'm not doing this but that's just me everybody's different obviously but it does make a big difference when you're talking 40 tax rates you know and also things like dependent care FSAs, if you have those.

46:32I mean, a lot of things that people really overlook. Also spending, if we wanna talk about spending, if you're in a 40 % income tax bracket because you have student loans and you're paying on an income-based plan, like that non-deductible car is more expensive than it is for other people because you gotta go out and earn more money in pre-taxes to pay for the car after taxes. And another thing to think about too, people that have control over their schedule, the amount of income that you earn from working that last shift, every week. You get to take home less of that money than somebody without student loans does.

47:04What I tell student loan borrowers is there's in some ways, if you're able to be careful with your finances, spending only what gives you the most joy because you've got a high tax rate, it's almost kind of like some people are like in Sweden level taxes where it kind of, there's not a huge reward to work for working, you know, 40 hours a week. Maybe you can work 30 hours a week if you're still getting full-time benefits and maybe that's like a better plan, you know, if you have a bunch of student loans because of your tax rate. And maybe you drive a Camry instead of a, you know, a Lexus, you know, so there's all kinds of little hacks you can think about as it relates to having the student loan debt.

47:38Jonathan Mendonsa:Yeah. So the repayment, does this get calculated on your income from the prior year? So is it recalculated every year? How does that work? Yes. You got an IDR recertification date, which is basically the time that they say, turn in your tax returns and you can link them automatically or not link them automatically. That also depends on what your situation is, if you want to do that or not. And if you link them automatically, there are ways to get that AGI lower. There are some ways to get AGI low that I think are more hassle than they're worth. There are ways to get it very low. Sometimes people that are super into real estate, there's some hacks around like professional real estate investor status, but that has a lot of restrictions.

48:17The best one is just to contribute your 401k. That's by far the easiest and the best or in your agency. say. HSA, like you mentioned, especially nowadays with all bronze ACA plans are HSA eligible, which is huge. Okay. Yeah, that is interesting. I think in general, you know, people underestimate how important it is to pay attention to your tax rate. I think a lot of people would make really different decisions in life if they paid attention to their tax rate. And that's all I'm kind of suggesting is people just need to be aware of it and make decisions that are informed by their true situation with their taxes.

48:52Yeah, I think that's broader than just student loans. We talk about that all the time here. It's amazing how people in the FI community can benefit from really controlling what they can control, which I'm a big, massive advocate of pre-tax savings because I think a lot of people are going to be able to pull this money out of those vehicles for, I mean, very close to 0 % effective tax rates, especially if you've been following FI principles and your expenses under control, et cetera, et cetera. So this is beyond the scope, obviously, of a student loan conversation, Travis, but I know you and I can wax poetic on that for a while.

49:25Well, just a quick thought. I like something called because negotiating. So a lot of times when people make mistakes, right? And they say, well, I want a 10 % raise. And it's like, well, why? Well, because I'm great. You know, that's not a great reason. I think a lot of times what you can say is if you have the knowledge about things like student loans, but this is true for anything, You can say, well, because I lose 40 % of my income to taxes, working that fifth day a week is really not all that compelling to me because of the full-time requirement of 0.75 working at least four days a week. So, hey, employer, because of the high tax rate that I lose out on, that's why I'm asking for a salary of X instead of Y.

50:08If you want me to work the five day a week schedule instead of the four day a week schedule that I know that you are already open to me working because you told me that I could. Right. So this is, I think, a helpful way, because in other words, what it does is it takes away the combativeness of a negotiation and it explains a reason. and that's a great thing to talk to significant others about too, right? Why can't we buy the Lexus that you want so much? Well, we could and giving people options, right, is really helpful. We could buy the Lexus, but if we do that, that means our retirement date probably gets shifted five years into the future or it means our children cannot go to as nice of a school as we want them to.

50:49We have to go to the public school in the neighborhood instead of the private school that you really like that teaches them French or whatever. I'm just making that up. I think that having data, right, to have conversations collaboratively, it takes away, like same thing, like I said, with the negotiating the price in college. Well, I want that$5 ,000 additional discount because this school over here admitted me and gave me this. And if you gave me this, then that would make me more likely to accept your offer. That's not a mean thing. You know, it doesn't have to be. A lot of people, I think, shy away from negotiating because they think it's like rude.

51:22and I think that it's really important to ditch the thought process and insert this like giving data back to reasons for your asks and I think you'll get a lot more yeses if you do that. Totally agree. It's one thing that we've said here forever. A guest many, many years ago said everything is negotiable. In certain cultures, ours being one of them, it is a little bit uncomfortable to negotiate. It literally never hurts to ask. I have so many success stories of just using that as a guiding light is everything is negotiable. So Travis, who has a decision point right now? If anybody, there are people who are going to take away that they need to take action in some way.

52:05Are there actual decisions that need to be made in a post 7-1 2026 environment? Yeah, there's a lot of people at the end of September that start getting kicked out of the safe forbearance and they have to choose a plan or else they get put onto a much more expensive standard repayment plan that's a lot higher. So a lot of people are being forced between end of September and I would say probably March to switch to a new plan and they will be put onto something way worse if they don't make a decision. So there's a bunch of people that have to make a decision. And remember I said, if you took out all your loans before July, 2026, you have multiple choices instead of just like pay it back or do the wrap plan.

52:44So if you have this pre-July 2026 loan setup, those are the people that we can help the most. We have a website on your website, right? It's choosefi.com slash SLP. That's the place to go. If you've got six figures of student loan debt, you want that customized plan, you're being forced to make a decision right now, you're worried about that decision being the right one. That's really who that's for, is people that have got, you know, a hundred thousand plus in student loans that don't mind paying a few hundred dollars with it there's an extra discount for choose if i listeners that's going to help people have confidence that okay i'm i'm picking the right thing that i'm being asked to pick between yeah you are one of the very very very few partners that we actually have you've helped so many i mean probably thousands at this point of choose if i listeners over the last 10 years so uh like you said it's choose fi.com slash slp for student loan planner.

53:41And the reason you go through there is you get a discount if you click through that link. Travis and his team have been so kind to provide. Travis, you know this industry better than almost anyone on earth. What should people be thinking about now should be trying to avoid? Are there is there that one critical jugular decision that could make or break them? I'm going to say something a little controversial, specifically because I'm talking to the audience that I'm talking to. You have special listeners. I'm going to say that the listeners that you guys have dramatically underestimate how wealthy they're going to be one day.

54:14When I say that, most people take out student loans, not for like the insulting reasons you hear thrown around in the media, like taking basket weaving or something. Most people take out student loans for becoming a nurse practitioner, becoming a dentist or becoming a lawyer or a business person or a fill in the blank. Right. And you're making more money because of that. And yeah, the student loan debt is large, but we've talked about in this episode and past ones, how well, at worst, it's just an income tax and it's a fixed percentage of your income. So it's always affordable by definition. That's the worst case scenario.

54:45So best case scenario, what's happening? You're going to make millions of dollars over your career. And if somebody's lean fi, they might, you know, maybe it's a million dollars because they're going to retire, you know, in 30 or something. Just on 20 ,000 a year, I'm just joking. But, you know, probably millions of dollars for the fat fire people out there, right? And so if you think about that, the problem is, is earlier in your life, all of your wealth is in your human capital and not a lot of it's in your physical capital. And when you're older, it's the reverse. You don't have a lot of human capital earnings left, but you've got a lot of physical capital.

55:17So I think what happens is people kind of underestimate how wealthy they're going to be. If they are, if I'm going to say the huge F, if they are listening to the Choose FI podcast and they are more frugally minded and more personal finance oriented people that are paying attention to the hacks, right? Those people are going to be in great shape one day. And so I would just kind of caution somebody, hey, your back feels different at 25 than it does at 35. Your knees are stronger at 25 instead of 35. So it's like if you have the opportunity to do reasonably priced things, like take the trip with friends to Europe or do the extra trip of a lifetime on the cruise ship that you want to do with your college friends, whatever, do those things, right?

55:59Be really careful on the big stuff. and pay attention to the hacks and do the little things, like have the fun, right? So that would be my encouragement to our very financially aware audience. You know, I remember like we had a great white shark expedition excursion in South Africa that we could have done, but it was like 50 bucks. And I was like, that's too much, man. $50 compounded. That'll be like two thousands of dollars one day. I can't afford that. And then it's like, dude, I could have swam with great white sharks. I could have gotten eaten, but you know, it probably wouldn't have happened.

56:29They wanted to get paid, right? Make sure you pay them after the fact. So I'm just saying that as a joke, but it's like sometimes the five-minded group of people puts decisions off. And I don't want people to put decisions off, even if they have a lot of student loans. That's really kind of why we exist, is to make sure that people don't put off those big life decisions that we help them make the decisions they want to make much faster. Wow, Travis, I like that. I didn't expect the broad intellectual will die with zero answer to that question. That's very, very cool. Well, if they do that, you'll still die with way more than zero.

57:03They're just, you know, way more than zero. Because I just run across it so many times of people so worried, are they going to have enough? And they get to the older years and it's like, you have so much more than you need. So much more. I genuinely love it. And I agree. I'm glad you dialed in on that. But you did mention a word in there, hacks. You gave us that one hack for opening up a credit card to get three years. the three-year clock started. Were there any other hacks? I think you said specifically for grad school. Anything else jump out? Yes. So when you graduate, file a tax return because you could use that tax return as a student with your low income to use that zero income to claim a low income for your income-driven repayment.

57:45Even if you're going to pay your loans off, you could sign up for the repayment assistance plan and get a subsidy of all of your interest in the first year by having a payment that's zero. Basically, the way the RAP plan is structured is your interest is subsidized to the extent that your required payment doesn't cover it. So if your payment is really low, they cover the interest difference up to the maximum interest that you have. And so a lot of people, what do they do? What's your income? They just tell them, here's my income. What you could do is just file your tax return and then the IRS says, can we link your, and you say, yes, please.

58:18And you give it to them and then they see, oh, this person had a$5 ,000 student income. Okay, their payment's$10 a month and almost all their interest is subsidized. So that's a hack with the new RAP plan. It's not all terrible. There are some still beneficial hacks, right? Like I said, instead of the Gutenberg Bible, it's like Us Weekly now, you know what I mean? So there's still some stuff. It's just not as thick as it was. Okay. All right. Well, to be continued, if you think of any other ones, shoot them my way. I'll put them in the show notes or I'll put them on my newsletter because those are fun and people I know will both get a kick out of it and of course benefit from it.

58:55Travis, really appreciate your expertise. Thanks for being a friend of the show and our community for so many years. I really, really appreciate it. Thank you for having me again, Brad.

59:03Jonathan Mendonsa:Before we go, I want to remind you that Chooseify has always been bigger than just this podcast. Chooseify is really four parts all working together. The podcast is where we explore ideas. The newsletter is where I get to write to you personally. It's a little more reflective and it's where I share ideas that I think are worth passing along as I'm thinking about them each and every week. Jonathan has been building and expanding our online community where the conversation continues, where you can ask questions, share what you're working on and learn from thousands of other people walking this path right alongside you.

59:36Jonathan Mendonsa:And our local groups are where all of this becomes real life, where you can actually meet people making similar choices, build friendships and build better Tuesdays together. There are more than 300 Chooseify local groups around the world with in-person meetups happening every month. If you're only listening to podcasts, you're really only experiencing one part of what we've built. You can join the newsletter, our online community, find your local group, or leave a comment on today's episode at choosefi.com. And we'd love to hear from you. You can always reach us at feedback at choosefi.com. Until next time, keep asking better questions, keep taking action, and keep designing a life you don't need a vacation from.

1:00:18We'll be right back.