- author: The Rich Dad Channel
The Student Loan Debt Crisis and its Magnitude
In this episode of the Rich Dad Radio show, Robert Kiyosaki and Laine Schoneberger, the Chief Investment Officer of Yrefy, delve into the student loan debt crisis in America. As of 2023, the national debt continues to increase due to a debt crisis that started in 1971 when Nixon took the dollar off the gold standard and allowed an unrestricted printing of money. Today, money is debt, and the only way to create money is to borrow it. Consequently, borrowing money to pay for education has become a widespread practice. However, the root of the problem lies in the inability to pay back those loans.
Here's a detailed list of points discussed in the show:
- The economy is in a debt crisis, and the government is trying to extend the debt instead of reducing it.
- The national debt is skyrocketing and is expected to increase as baby boomers retire, causing problems for social security and Medicare.
- College costs have increased exponentially due to government intervention. The current student loan debt, both federal and private, is above $1.8 trillion.
- Private education lenders continue to lend money that students cannot repay, and nearly 10% of the total portfolio was in default in 2017.
- As the Fed raises interest rates, borrowers who have variable interest rate loans will be crushed.
- Yrefy only focuses on private student loans that are in distress and have been defaulted. Currently, their market is over $45 billion, doubling in the last 12 months alone.
- The federal government cannot forgive private loans, and the conversation about student loan forgiveness creates confusion among borrowers.
In light of this situation, Yrefy's efforts to help out borrowers who are struggling with private student loans are commendable. With their focus on private student loans in distress, they provide solutions that help alleviate the burden on borrowers. Nevertheless, the student loan crisis should be a wake-up call for policymakers and regulators that the government's role in the education system and the lending industry needs a deep reconsideration.
Understanding Student Loan Forbearance
In response to the COVID-19 pandemic, the federal government declared forbearance for all federal student loans, which meant that borrowers were not required to make any payments and the interest rate was reduced to 0%. This measure was initiated to provide relief to borrowers during the pandemic. However, with the forbearance period ending, many borrowers are finding themselves in a state of confusion and uncertainty surrounding their loans. In this article, we will explore the concept of forbearance and how it affects student loan borrowers.
What is forbearance?
Forbearance is a temporary pause on student loan payments granted by the lender or servicer, allowing borrowers to postpone payments for a specific period. During this period, interest on the loan continues to accrue.
In the federal government's world, forbearance means that borrowers do not have to make payments on their federal student loans during the forbearance period, and the interest rate is reduced to 0%. Student loan forbearance is not unique to the United States; it is also available in other countries. However, student loan forbearance is often controversial because it is political, and it is not a permanent solution to the student debt crisis.
Private vs. federal student loans
Before diving into forbearance, it's essential to understand the fundamental difference between federal and private student loans. Federal loans are issued by the government while private loans are issued by banks, credit unions, and other financial institutions. Some private lenders also offer student loans with deferment and forbearance options.
Private student loans are issued based on the borrower's creditworthiness, whereas federal loans are issued based on need. Private loans generally have higher interest rates than federal loans because private lenders assume a higher risk. Private loans are not eligible for federal loan programs such as income-driven repayment plans, loan forgiveness, and deferment and forbearance options. Additionally, private student loans are not dischargeable in bankruptcy like federal student loans.
The student loan debt crisis
The cost of college tuition has been increasing steadily over the years, and many students are graduating with colossal student loan debt. According to Experian, the total outstanding student loan debt in the United States as of 2021 is $1.57 trillion. The student loan debt crisis has been a topic of conversation among policymakers, economists, and borrowers for many years.
The federal government has implemented various programs to ease the student loan debt burden, including income-driven repayment plans, loan forgiveness programs, and forbearance options. However, the question remains: what can be done to eradicate the student loan debt crisis?
The role of Yrefy
Yrefy is a financial technology company that specializes in refinancing and consolidating student loan debt. Yrefy's mission is to help borrowers simplify their student loan debt and make it more manageable, allowing them to focus on their financial goals. Yrefy offers refinancing, consolidation, and loan forgiveness options to eligible borrowers.
Investing in Art to Increase Returns and Lower Volatility
Investing in art has long been seen as a luxury only accessible to those with millions of dollars to spare. However, thanks to companies like Masterworks, this is no longer the case. Masterworks offers a platform where investors can buy shares of paintings by renowned artists like Picasso and Banksy.
Not only is investing in art a way to diversify your portfolio, it can also lead to increased returns and lower volatility. In fact, every single one of Masterworks' exits to date has delivered positive returns to their investors, with recent exits delivering 10%, 13%, and even 35% net returns. It's no surprise that over 700,000 users have invested more than half a billion dollars on Masterworks, and offerings have sold out in minutes.
As a listener of Rich Dad Radio, you can skip the waitlist by going to masterworks.art/richdad. It's important to review the necessary disclosures on their website before investing.
Dangers of Student Loan Debt
Student loan debt has become a major concern in recent years, with many students taking on tens or even hundreds of thousands of dollars in debt to pay for their education. Unlike other types of debt, student loan debt cannot be discharged in bankruptcy and can follow the borrower to their grave, creating long-lasting financial burdens.
Laine Schoneberger from Yrefy appeared on Rich Dad Radio to discuss the dangers of student loan debt and how his company offers a way out for distressed borrowers. Private student loans can quickly spiral out of control, with late fees, default interest rates, and other charges adding up quickly.
Yrefy offers a program where distressed borrowers can call and request help. The company thoroughly underwrites each case and requires borrowers to escrow payments to prove their willingness and ability to pay back the debt. Yrefy then works with existing lenders to acquire the debt and pays it off, showing on the borrower's credit report as settled.
It's important to note that over 70% of borrowers have co-signers, often family members who can also be impacted by the debt. Yrefy's testimonial page showcases the real stories of borrowers and how their relationships with their families have been affected by the debt.
While student loan debt can feel overwhelming, companies like Yrefy offer a glimmer of hope for borrowers struggling to pay back their loans. It's important to explore all options and seek help when needed to avoid default and long-lasting financial repercussions.
Diversifying with Gold
With high inflation, looming recession, and out-of-control spending in Washington, many people are turning to gold as a way to diversify their portfolios and protect their purchasing power. Gold has historically performed well during times of crisis and economic uncertainty.
Gold Alliance offers a free 2023 Gold Guide that shows how to diversify with gold and put yourself on the road to financial peace of mind, even in uncertain times. Their website and phone number can be found at www.freegoldguide.com/robert and 1-800-473-4585. As recommended by Republican governor and conservative commentator Mike Huckabee, Gold Alliance is a trusted source for purchasing gold.
With different options available for diversifying your portfolio, it's important to do your own research and consider what aligns with your financial goals and risk tolerance.
Helping Borrowers and Investors: Yrefy's Innovative Approach to Student Loan Debt
Yrefy is a company that specializes in refinancing student loans for borrowers who are struggling with debt. Their approach is unique and innovative, and it offers benefits both to borrowers and investors.
How Yrefy Works
Yrefy helps borrowers by refinancing their student loans at a lower interest rate. They work with the borrower's existing lender service or collection agency to acquire the debt and pay it off. The debt is then settled, and it shows on the borrower's credit report. This helps the borrower to move forward in a responsible way.
One of the benefits of Yrefy's approach is that they do not underwrite on FICO scores. Their average borrower comes to them with a low FICO score, but Yrefy thoroughly underwrites these individuals to ensure that they have the willingness and ability to pay back the loan.
The Benefits for Borrowers
Yrefy's approach to refinancing student loans has several benefits for borrowers. These include:
- Lower interest rates
- Settling the debt, which shows on the borrower's credit report
- A bump in FICO score (on average, 125 points for borrowers and 135 points for co-borrowers)
- Reduced risks of default
Investing with Yrefy
Yrefy also offers an opportunity for accredited investors to invest in a secured collateralized portfolio. This product is structured similarly to a bond, with fixed interest rates that range from 6.25% to 10.25% depending on the duration of the investment (one to five years). The minimum investment is $50,000, and investors can choose to take interest income only monthly or compound daily and pay monthly. At the end of the investment term, investors get their money back.
The key feature that sets Yrefy's investment opportunity apart from others is the liquidity feature. If an investor wants out early, the penalty is interest only, with no attack on principle. Yrefy's approach to investing is flexible and easy to understand, making it attractive to investors and independent registered investment advisors.
Investing in Private Student Loans
When it comes to investing in private student loans, there are a lot of factors to consider. In a recent interview, Laine Sperling, CEO of Pathway Financial Education, shared insights on their unique approach to this investment opportunity, and provided valuable information on frequently asked questions.
One of the key features of Pathway's approach is their "roll-up" option. This allows investors to choose a shorter term instead of a full five-year note, with terms ranging from one to four years. At the end of their term, the interest earned is locked in, and investors can choose to roll over to a higher interest rate if available. This flexible option also allows investors to get to know Pathway and their services on a smaller scale before committing to a longer-term investment.
Biden Forgiveness and Bankruptcy Laws
One of the most common questions asked is, "What if Biden forgives all the student loans?" From Pathway's perspective, they only deal with private distress loans, which means that they cannot be forgiven by the government. While a forgiveness of federal loans could potentially benefit borrowers, Pathway does not endorse it as it would not hurt their portfolio or investors.
Another concern is what would happen if Congress changed bankruptcy laws. Pathway protects their portfolio by having a 70% co-borrower rate, low average borrower indebtedness and thoroughly underwriting their borrowers. They structure each loan based on the borrower's needs and ability to pay, rather than relying on long-term, predatory loans. In the event of a change in laws, Pathway has a strong defense in place to protect their investors.
Interest Rates and Underwriting
One thing that sets Pathway apart is their low fixed interest rates, with an average of only 3.9%. During their underwriting process, they negotiate down the price of the debt with existing lenders, service or collection agencies, and law firms. They then refinance the borrower's loans at 100% plus their 5% refinance charge, without reducing the face amount of the loan. This custom-built loan allows borrowers to afford their payments, improve their credit, and get out of debt.
The Truth About Student Loan Debt
The student loan debt crisis has become a heavy burden for many individuals, making it difficult for them to succeed financially. In a recent interview with Laine Schoneberger, CEO of Yrefy, a company that specializes in debt restructuring, some interesting insights have come to light regarding the student loan crisis.
The Government's Role
At the heart of the issue is the role of the government, which promises to forgive loans but has no authority to do so. Instead, they continue to lend more money, often to buy votes, and the cycle continues. This leaves individuals with an overwhelming amount of debt that is difficult, if not impossible, to repay.
The Math Genius Solution
When asked about potential solutions, the conversation turned to Hunter Biden, who was referred to as a "math genius" capable of finding a way out of debt. While this may seem like a joke, it highlights the desperation people feel towards their student loans.
One solution to consider is working with companies like Yrefy, which help people restructure their debt to make it more manageable. Schoneberger noted their genuine desire to help people, as they take pride in helping borrowers succeed. One can visit their website, investyrefy.com, to learn more about their services and read testimonials from satisfied customers.
Solving the Student Loan Debt Crisis with Yrefy
The burden of student loan debt is a vexing problem for many Americans. With interest rates that can reach all-time highs and the federal government charging morbid amounts in interest rates, many Americans are faced with a growing problem. The Rich Dad Radio Show invited Laine Schoneberger, the CFO of Yrefy to discuss how the company has found a viable solution to the problem. In this segment, Robert Kiyosaki and Sara explore the viability of Yrefy as a solution to the problem.
Overview of Yrefy
Yrefy is an excellent business that solves a significant problem Americans are facing. The company is run by academic, elite, and woke specialists who have a deep concern for how student loan debt impacts Americans. Yrefy's mission is to help students get out from underneath the debt that they have incurred without mortgaging their future.
How Yrefy Helps Students with Debt
Yrefy negotiates student loans down to a manageable sum, putting them at a win-win advantage. They can access investors who help them cover the sums that are negotiated with the bank. Students are then left free from the burdensome debt that's been following them. The company offers a viable option for students who are beset with mental blocks preventing them from achieving financial freedom.
The Challenge of Tackling the Student Loan Debt Crisis
The student loan debt crisis has doubled over the past 12 months, and more Americans fall into default each day. With interest rates at all-time highs, it becomes increasingly difficult to get out from under debt. Yrefy approaches this problem by doing the underwriting and due diligence for each of its customers. It ensures that students do not fall into the trap of more mortgages but are instead afforded a chance for financial freedom.
Student loan forbearance is a temporary pause on student loan payments granted by the lender or servicer, allowing borrowers to postpone payments for a specific period. federal student loan forbearance has been in effect since the beginning of the covid-19 pandemic, providing relief to borrowers. however, with the forbearance period ending, borrowers are uncertain and confused about their loan payments. understanding the difference between federal and private student loans and the student loan debt crisis is crucial for borrowers. companies like yrefy are essential in helping borrowers manage their student loan debt. Yrefy's innovative approach to refinancing student loans and investing offers a unique opportunity for borrowers and investors. their approach to underwriting borrowers and offering a fixed interest rate structure with a liquidity feature provides a secure investment opportunity. at the same time, borrowers benefit from lower interest rates and an improved credit score, allowing them to move forward in a responsible way. overall, yrefy is an excellent option for those looking to refinance student loans or invest in a secure portfolio. Investing in private student loans can be a unique and valuable opportunity for investors. pathway's approach to underwriting and their roll-up option provide a flexible and secure option for those looking to invest in private student loans. while there are concerns around potential forgiveness and changes to bankruptcy laws, pathway has a strong defense in place to protect their investors and portfolio. The student loan debt crisis is a difficult problem that requires innovative solutions. while the government's promises have fallen short, there are options available for individuals to restructure their debt and take back control of their financial futures. companies like yrefy offer hope and support for those burdened by student loans.
Solving the student loan debt crisis is a significant problem, but Yrefy provides a viable solution that students can access. The solution is a win-win for all involved, and it is an excellent alternative to more mortgages. Yrefy has caught the attention of investors, including Robert Kiyosaki, for its robust business model that solves an issue that has plagued Americans for many years.