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Student Loan Scams with Robert Farrington

Easy Prey
“It is a very tough time emotionally and financially and that is what these student loan companies are preying on.” - Robert Farrington Share on X

If you’ve got student loans, you feel the pressure of that financial obligation, but watch out. There are scammers looking to take advantage of your situation, offering student loan consolidation or elimination for a fee. Our guest today is Robert Farrington.

Robert is founder of The College Investor. He has been featured in many media outlets such as The New York Times, Washington Post, ABC and NBC News. As America’s millennial money expert and America’s student loan debt expert, he is on a mission to help people escape student loan debt and start building wealth for their future.

“No legitimate company will ever ask you for your password or log in on your behalf. It is a literal federal crime.” - Robert Farrington Share on X

Show Notes:

“College is an investment and just like any other investment, if you spend too much, it might not be worth it.” - Robert Farrington Share on X

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Transcript:

Robert, thank you so much for coming on the Easy Prey podcast today. Can you give our audience a little bit of background about how you became the millennial money expert and started thecollegeinvestor.com?

Does anyone try to take advantage of student loan debt?

Robert: Definitely. Thanks for having me. I’m excited to be here. I started The College Investor over 10 years ago when I was finishing college. I wanted to have it as a platform to share my thoughts on investing and money. I’d been side-hustling and entrepreneurial since I was a teen, and I was taking that money and investing it.

After doing it for about a year, a year-and-a-half, I encountered a struggle with my own student loan debt and my own student loan servicer messing things up. I wrote about it, because what does any good blogger do? When you encounter a frustrating situation, you write a whole essay about it. It was one of my first articles to go viral. A lot of people were out there saying, oh my gosh, my student loan servicer is doing this too and it’s just a mess.

I started realizing that I need to dive into this subject more, look at student loans, and how we can help people get out of it so that I could help people invest and build wealth and earn money. That’s really where The College Investor is today, where we help people get out of student loan debt, to start investing and building wealth as early as possible.

Chris: That’s awesome. We were talking about creating wealth and education. There’s a little bit of a tug and pull there a little bit or a push and pull, in that college costs you money, and in some cases six figures or more, and is your education really going to recoup the cost and be able to help you pay that off?

I’m a big fan of Mike Rowe and he’s a big proponent of making sure that you can afford college and that college is way too expensive and college is not right. A four-year degree is not necessarily a track for everybody. Do you have any thoughts on that?

Robert: Yeah. I love Mike Rowe, Dirty Jobs. College is great for a lot of people. Even the statistics show it. People that go to college, as an average—we’re talking the average—make more money over the course of their lifetime than people that don’t go to college. But once again, it’s an average. It doesn’t mean everybody. It is expensive and if you spend too much, just like any other investment, it might not be worth it.

College is an investment.

I like to have people remember that education is an investment. College is an investment. if you want to learn something, go on YouTube. You can learn anything in the world for free these days. You’re not going to college to learn it. You’re going to college because it’s a social signal to a future employer that you’ve done a thing. Whether the thing is worth it or not is relative to how much you spend on the thing.

If you go to college and only spend a little bit, maybe go to community college, go to a local state school and you’re in it for $10,000–$20,000, that’s probably a good investment. But if you spend $80,000–$100,000 and all you wanted to do was be a teacher, that’s not going to be a good investment because you can Google what a teacher’s salary is. You can know how much you’re going to make.

We’re in a different age than even 20 years ago where there are things like Glassdoor and these websites where you can type in salaries and see exactly what people make and the job you want to do. The real thing is, don’t overpay for school.

Trade schools are great financial investments.

Now, there are also other options. As you said, the dirty jobs. You can go on to the trades. I love the trades. I think the problem is we don’t expose a lot of young adults to the trades these days. As a result, they don’t necessarily know that they can make really good money being a plumber and electrician.

If you don’t know this when you’re in high school, you only know that Elon Musk and technology and all these things, that’s all you know? That’s what you suddenly start going down a path towards. But if you see alignment from your power company, you look and they’re making $150,000 a year, wow, maybe that’s a path you actually want, but you just didn’t know it existed. Yes, college isn’t for everyone, but if you’re going to go to college, you need to be smart about how much you borrow and spend on it.

Chris: Got you. Correct me if I’m wrong, there are generally two types of colleges. You have educational institutions like the University of California Irvine or local community colleges that are state- and government-run, and then you have for profits. I guess these types are probably three. There are for-profit institutions where it is a company that their job is to make money for their shareholders and the product that they’re selling is in education and they charge you for it, and then there are probably nonprofit ones where they’re not necessarily accountable to a shareholder.

Research your student loan options carefully.

Robert: Exactly. You really do have three. You have the public schools—community colleges, state-run schools like (you said) UCLA, UC Berkeley, Michigan State, Penn State, all these state schools. Then you have the nonprofit universities—they’re the Harvard’s of the world; Harvard, Cornell, have these prestigious names. But they’re not necessarily run by the state, they’re run by a board of directors and they’re a nonprofit. And then you have for-profit schools. The University of Phoenix, probably one of the most well-known ones. A lot of these do online schooling today or they do vocations. They’re trying to get you technical training. Part of these are also nursing schools, or how to be a barber, beauty school, or things like that, truck driving school. They do target the trades a lot of times, but they also do a lot of online education. They also could be those online MDAs, night and weekend schools, things like that.

Chris: I assume all the schools, whether they’re public, private, nonprofit, for-profit, they're all going to have student loan programs whether through them or partners?

Robert: Exactly. There are also two big buckets of student loan types. You have federal student loans. These are open to anyone, not credit qualifications or anything, you apply for the FAFSA—the Free Application for Federal Student Aid—and you qualify for a government student loan. These are the direct student loans. You have to have one requirement though. Your school has to be accredited.

I will say that all the state schools, all the nonprofits like Harvard are accredited. Some for-profits are accredited. The University of Phoenix is accredited; some of the bigger names. But some of the small vocational schools may not be accredited so you can’t access federal student loan money.

On the flip side, there are private student loans. These are student loans that come from banks, credit unions, and online lenders. They act just like a car loan or a mortgage where they check your credit. If you’re approved, they will give you a student loan. As a result, because they come from banks and private institutions, they don’t have very many flexible programs and those are a lot more aggressive when it comes to collecting, too, so something to be aware of.

Chris: This leads us into the topic of our discussion—the student loan scams. I’m sure there are listless topics. In my mind, I’m thinking of a fake loan, but also once you already have a loan and you’re struggling to make payments, the scammers scoops in and says, hey, we can get your loan forgiven or reduce your payments. What are the student loan scams that you’ve seen?

Robert: There are so many and it becomes a game of whack-a-mole. They all have a variation of a theme. It’s either I’m going to give you some kind of loan forgiveness or I’m going to lower your monthly payment somehow. These scams are targeting people that already have student loans. I don’t know about you, but I get these robocalls—probably because I’m in the States—and I bet listeners have gotten robocalls about student loan scams or they get flyers in the mail that say like, Department of Education, you’re approved for loan forgiveness.

If you see these things, red light should be going off in your mind. There are a lot of student loan forgiveness programs out there. Over 50% of all federal loan borrowers qualify for something. But I’ll tell you what—they’re all free. They’re all run by the state and the federal government and they have no fees to charge you for it.

If it seems too easy, be careful.

The biggest trend with every single student loan scam is you’re going to pay a fee for some type of assistance. They’re going to make you pay, they’ll lower your student loan payments. They’re going to make you pay to get loan forgiveness. We’re going to enroll you in a special program if you pay us three payments of $500 or some variation on that theme. That’s what you have to really look for.

Chris: Are any of these programs legitimate where someone can refinance and reduce interest rates outside of those institutions that originally did the loans?

Robert: Yes. These programs are so totally legitimate and that’s what makes these things a scam. You’re paying for something that you don’t need to pay for. Basically, if you have a federal student loan, a loan forgiveness comes in a variety of forms. The most popular one is public service loan forgiveness. You might have heard this. You work in public service, nonprofit or a teacher for 10 years, and you can get your loans totally completely forgiven tax-free. It’s a federal program, it’s amazing. It’s the best student loan forgiveness program there is out there.

All it takes is filling out a form every year on the Department of Education’s website—called the Employment Certification Form, take it to your boss, have your boss sign-off on it that yes, I have worked as a teacher for the last 12 months or whatever period of time is, and you mail that to your loan servicer. That’s all it takes.

But these companies will charge you $1200–$1500 and they will fill out that form, supposedly on your behalf. A lot of times what they’re finding is they’re faking the names and information on it. That’s why it’s a scam. They’re like, oh we’ll qualify you for this program. You now work at XYZ nonprofit and they sign it and they mail it in for you.

Now you have two issues. One, you paid a fee for this, two, you sent false information to the Department of Education which can lead to a lot of trouble for you if they find out, so you have to be very mindful of it. But yes, these programs are real. You can lower your payments, you can get loan forgiveness, but you don’t need to pay a third party random company for that.

Chris: What about some of those consolidations? Are you pulling it out of a federal program into a private entity or are they actually able to… it […] to a total scam.

Robert: There are two different things. There’s loan consolidation, which is a free government program in which you consolidate all your federal loans into a single new loan. Now, most people do not need to consolidate their loans. In fact, most people should never consolidate their loans. The reason is when you consolidate your loans, you now take on a new loan to replace your old loans.

What happens is, you just reset any forgiveness clock you had. If you had been paying your loans for five years and you consolidate, you just lost half of your time towards public service loan forgiveness and you probably paid a company to do it for you that is not a fiduciary, they’re not in your best interest, they’re just trying to get a fee from you, and it might not have been the best thing. In fact, I see it more often to be the worst thing for people, so most people shouldn’t consolidate their loans.

When it comes to lowering your payment, there’s a lot of payment plan options for federal loans. Income-driven repayment plans, those payments can get to as low as zero if you don’t make a lot of money. But again, it’s a free program. If you call your lender directly and say, I can’t afford my payments. I like to get on income-driven repayment. Boom! They key it into the system and you’re set for free.

Again, you don’t have to pay, but these companies snare you in because they know you’re hurting, they know you’re struggling with your loans, and they’re like, hey, I can lower your payments for you. Sometimes they lie, sometimes they say, you have 10 kids so that it makes you look like you can’t afford your loans and things like that. Again, that can get you in trouble because at the end of the day, you’re the one that’s responsible for what information you send in.

Chris: That’s scary that someone else is filling out paperwork on your behalf and you’re not paying attention. They’re misrepresenting who you are and what’s going on in your life, and you’re on the hook for that.

Robert: 100%. That’s the thing. The CFPB and FTC have been shutting these companies down. I would say they shut about 30–50 of these similar scams down every single year, but it’s like whack-a-mole. You see this all the time. They shut one down, another company starts up. I’m going to be a student loan assistant LLC and then they come up and we’re going to be like student loan assistant help. We’ll just add something else on and they do the same thing. It’s painful.

Chris: Are there any other specific scams that usually go on with student loans?

Read the paperwork carefully. You will be responsible for what you sign.

Robert: Yeah. One that’s become popular lately is there are pseudo law firms involved in this. What they try to advocate is that we can get your loans discharged, we can get the company to do it, but you have to default on them. We’ll negotiate on your behalf and get you to pay 50% of what your loan is. What they don’t tell you is to default on your student loan means you don’t make payments for a year.

You trash your credit, all this stuff. Meanwhile, while you’re not paying your student loans, you’re paying this law firm to “protect you.” Once you default, they try to negotiate on your behalf. They say, look, this borrower hasn’t made a payment in 12 months and they can’t afford it. You should give them a 50% discount on their loans.

Two aspects of that. One, the lender never has to agree to anything. Part two is, by not paying your loan for a year or longer, your loan has now ballooned up maybe 25%, 30% and late fees, accrued interest, penalties, things like that.

Even if they come back to you and get you any type of settlement, it’s only on the new high balance. You’ve increased your loan by 30% to save a little bit and you paid a law firm this whole time. You never usually come out ahead. The only people that come out ahead on this are these potential law firms and things like that.

Chris: Are there ones where those things are legitimate if you are experiencing financial hardship, that there are programs that can help you with that? Or any of this stuff is a scam?

Robert: No. There are definitely tools that can help you for free when it comes to your student loan debt. The first thing is to call your loan servicer. I know the Sallie Maes of the world, Navients. We hate them. It’s fun to say these are horrible places, but on the flip side they do have options for you for free. But you have to remember, you’re just calling it […]. If you don’t necessarily tell the representative what you need or what you’re looking for, they also can’t necessarily guess what they should do for you.

I think that’s the frustration. I call up Navient or Nelnet and I talk to a $12 an hour call center representative. They’re not a financial advisor, but if you say I want to get on this program, they will put you in that program. Thing is, you need to look, Google it, and do a little research on yourself so you know what to ask for.

There’s also a lot of cool apps these days that could help you with your student loans. Chipper app, things like that, where you can enter all your loans and they will help you navigate it for free.

I would also say that there’s paid places that are legitimate as well, but most of these are financial advisors. Legitimate CFPs, they’re licensed, they are fiduciaries to you, but you’re getting more than student loan help there. These are going to be typically companies that will put together a financial plan for you that look at everything. They look at your budget, they look at your investments, and they look at your loans. They help you figure out the best way to navigate everything in your financial life. But you’re going to pay a fee because it’s a real financial advisor, not just some fly-by-night, fill-out-a-paperwork company.

Chris: I assume anyone who’s legitimate will be able to very clearly explain here’s what we do, here’s how we do it, here’s what your obligations are, here are the things that could go wrong, the things that could go right. Any legitimate company should be able to express all that stuff without you having to give them any money.

Robert: 100%. That’s what a lot of these do. They take your money and they say they’re going to do something, and they don’t. Or they take your money and they do something that maybe isn’t the right thing to do for you because they just do it over and over again. A real legitimate company is going to look at everything you got. They’re going to give you a plan. You’ll know what you’re going to pay for.

Most of these companies also won’t ever do it for you because they’re not supposed to. Most of them will give you a plan that then you need to go execute and do yourself. It’s not that hard, it’s not that scary. Like I said, Sallie Mae, the idea of maybe calling them is a little fearful for a lot of student loan borrowers. You see the news and you’re just like, oh, I hate dealing with them. And it’s true, but doing it yourself will let you be informed, will make sure that you’re getting the right things done.

If you hate calling people—I hate calling companies, I will never call companies—send a secure email. Have that digital paperwork record that you reached out and you asked for something digitally. Send a certified letter. You don’t necessarily need to pick up the phone. Stuff gets lost in translation, but you can send them a certified letter, you can send a secure email via their online portals. That also gives you a paperwork record should something ever go amiss. It’s a lot easier to say, I requested this in writing, here’s the proof, than it is I talked to a call center representative and he said, she said, things like that.

Chris: I don’t know when I called, I don’t know what the date was, I don’t know the name of the representative.

Robert: Exactly. Some of the crazy things that I have been seeing in the student loan space is Congress is looking at requiring loan servicers to retain the call logs. Believe it or not, 50% of the loan servicers don’t retain the call logs longer than 90 days. I wonder why that is. Some of them have been very diligent, have kept them for seven years or so.

You might try to say, I called you a year ago. And they’re like, I have no record of it. They literally don’t because they, of course, put policies in place to purge their call logs because they don’t want you to have that record either. Send a letter; it’s a lot better.

Document your calls and keep your records.

Chris: It’s that they want to retain the call logs. I’m being a little mocking here. This is certainly like I have inside information. You have a lot of businesses that retain call recordings and call logs for a short period of time because they want to train and educate their staff. But they also don’t want to retain them forever or for seven years because, for one, it’s a hassle to maintain all these logs, but two, in case they get sued they don’t want to have to well, here’s the call that shows that yeah, he did say this, we messed up. If there’s no history of the call, then they are a little bit washing their hands at the situation. It’s kind of unfortunate there.

Robert: It is. I’ll tell you, I like to rag on these loan servicers much the next person. They do do things incorrectly, they do do things wrong. But on the flip side, they’re servicing 43 million people’s loans. Most people have 3–5 different loans. You really actually have a portfolio of a 150 million loans that you’re trying to service. Even if they’re 99.9% accurate with everything they do, you’re still going to have tens of thousands of errors every single year.

I do sympathize, but on the flip side I’m a big believer that you have to be 100% accountable for your own personal finances because no one in this world is going to care for your money more than you do. There are so many cool resources today. You can Google anything. You can find out more truth in about 30 seconds on Google than anything else. If you’re going to make a decision, at least put it in Google first, whatever the decision is.

Chris: Think it through. Are there other red flags? Obviously, if someone’s wanting a fee upfront, that should be a massive red flag. What are some other red flags that you should be watching out for?

Robert: You should always be reviewing any paper we’re going to sign on your behalf. A year ago, the number one reason why the FTC and CFPB were shutting down loan companies is because they were falsifying things. They were saying that you have seven kids. They were saying that you work in public service and you don’t work in public service. You’re only going to pay this company, but you want to make sure that the paperwork is done right. It’s just like your tax return. You pay a CPA or an accountant or someone to do your taxes. At the end of the day, though, you’re the one that has to sign on that bottom line and tell the IRS that this is accurate.

The same is true when it comes to your student loans. Even if you pay a company or don’t pay a company, which most people shouldn’t pay a company, you’ve got to make sure it’s accurate and check that records and keep a copy of the records. I’ll tell you a lot of these scams too, they’ll take those upfront fees and never do any work. But now you’re here thinking, as you’re getting email updates in this company, oh, we send in your paper works, we send in your paperwork, but nothing’s ever been sent in, then you find out you’re in default on your student loans because this company didn’t do anything for you. You have to just be accountable to it on your own loans.

Chris: It's a little bit of that trust but verify if you’re working with the company to help you legitimately consolidate or something, that the entities that hold the loans and saying hey, I’m working with some of the consolidation. Have you received this paperwork? Have you got this? That sort of thing?

Robert: Yeah, 100%. The hard part is submitting a thing like consolidation or changing your repayment plan application can take 30–60 days. That’s how long it takes. It’s just the bureaucracy of our government. You have to go in and check. If you’re going to work with somebody, you’re going to work with a fiduciary, you need to log in to your loan servicers website still, make sure you don’t miss a payment because if you put an application to change your repayment plan in, you’re still responsible for any current payments due today until that goes through.

You guys know how billing cycles work. The bill could be due next week, but if they’re not going to process your paperwork for 30 days, you might have to pay this current bill before your next bill gets changed. You got to stay on top of your loans because the worst financial thing that could happen to you is going into default. It will be the most painful financial experience you’ve had even worse than (I think) being scammed.

At least a scam is a fixed cost, typically. You pay $700 nothing happens. But if you default on your student loans, you’re looking at wage garnishments, you’re looking at your tax refund taken. If you threw all these out to retirement, social security, disability payments can get garnished. If you default on a private loan, they can sue you. Depending on your state, they could come after your assets, bank accounts, your house even, potentially in some states. You can see a lot of financial pain by not paying your student loans.

Chris: The Sallie Maes, do they reach out to their customers, the people who owe them money, and promote these loan programs? If anyone’s promoting the program to you personally, you should be leery at the fact, like the IRS doesn’t make phone calls. You ever got a call claiming to be from the IRS, it’s not. Did that sort of thing happen with Sallie Mae or do they actually promote their programs?

Robert: Sadly they don’t. One of the things that congress wants them to do is they’re like, hey, tell people they’re eligible for these programs. But they will never call you. No government loan servicer will ever call you. They will send you letters, they will send you emails potentially, but the emails will all say log into your secure mailbox on their website. It will never have anything directly in it.

This is a hard part for a lot of young adults because chances are you took out your student loan your first year of college. Now, fast forward five, seven years, you don’t live in the same place, you might have used a school email address, you never updated your email address or anything like that. They’re having a hard time contacting you.

One of the first things they advocate everyone does if they’re struggling with your student loans is to get organized. Find your loans, make sure all the contact information is correct, make sure you have online access to all your loans so you could see them online, you can check them, you know that you’re getting the emails or the statements every single month because that’s where a lot of people get into trouble before the scammers even try to prey on them. Are you organized? Do you know what’s due? Can they even contact you if there is an issue?

Chris: Keep your contact information up to date. That’s always one of the things that I thought about after I got out of college was, these college email addresses are a problem because after you graduate, some only let you keep it for so long.

Robert: Yeah, they turn it off after 12 months. All of a sudden, the email just stops coming to you. It’s scary especially if you have a bank statement or a loan statement going to it.

Chris: Yeah. It becomes problematic. If […] things are being scammed, they’re not sure if they’re working with legitimate entities or not, regardless of whether they have or haven’t paid the fee yet, what should they do if they think it might be a scam?

Robert: First off, you need to lock down your personal information. Typically, these scammers are going to ask you for a lot of financial details—your name, address, social security, where you work, things like that. If they ask for payment information, you probably want to change your payment information. You might want to monitor your credit if they took your SSN and things like that to process your paperwork. And you want to alert your loan servicers. If you gave them an FSA ID, your financial aid ID, it is used to log in to things like FAFSA and studentaid.gov.

A lot of scam companies will ask you for your FSA ID. If they do go and change it immediately, don’t give them access to it. It’s actually a federal crime for them to use your FSA ID and log in on your behalf. If any company is giving you any beef about refunding you fees you paid, throw it out. I’m going to be reporting you to the FTC, the CFPB, and my state attorney general because XYZ used my FSA ID. You’re not legally allowed to.

A couple of things will usually happen: (1) they’ll probably stop contacting you altogether, (2) most of them will refund you because they are very scared of that, and (3) I suggest you still report them when you get your money back. You need to help other people avoid these things.

Chris: There’s no reason any legitimate entity would be asking for a password.

Robert: Never ask for a password, they will never ask for your FSA ID, no legitimate company will ever log in on your behalf. It is a literal federal crime for someone else to log in to the studentaid.gov portal using your information if they’re not you.

Chris: Wow, that’s crazy. What are some of the craziest stories you’ve heard? I know that you’ve got forums on your website where people are talking about the scams that they’ve been a victim of. What are some of the scariest or most incredible scams that you’ve heard?

Robert: The incredible scams are some of the dollar amounts. There was a company in Northern California that purported to be a reputable help company; they all purport to be reputable. They were helping people through this and they had taken over $43 million from people trying to get help at $1200 a pop. You just do the math on the number of people they scammed.

They were trying to say things like they weren’t just paying for loan help. They would also charge a $35 monthly fee for us so they could reach out anytime and contact us with questions, It’s a customer service fee and they’re just layering on fees to people. The FTC comes, shuts this company down, and the founder tries to flee to South America with $2 million in a briefcase and they arrest him at San Francisco International Airport with just cash full in his briefcase trying to flee the country. These are the people that suppose to “help” you. You really need to do a little googling. You need to just sit down, ask yourself what’s going on.

I think the hardest ones are the people that think that they know that I’m paying for this, I know I don’t need to pay for it, but I choose to because I don’t want to devote any time to it. You especially hear this with people that are busy people, maybe they’re business owners, or they’re doctors or lawyers and they typically have a large amount of debt. These companies literally do nothing to them.

This person might already have $100,000 in debt and the company’s like, we’ll consolidate and I’ll do XYZ. They never do. They just keep taking the guy’s money. Now, these loan balances just grow and grow and grow into astronomical amounts. The people are like, well, it’s being taken care of. You see this too, a lot of people live in denial that they were scammed for a while until things happen. I see it today, I’ll see a comment like I use this company and then I go to their website—it’s a year later—and it says the FTC has shut them down. I don’t understand. Is my loan fixed? Even afterward, they still don’t realize that they were scammed and taken advantage of.

College debt can be emotional.

It’s really challenging because when you’re struggling through a student loan debt, it just seems like the end of the world. It seems like there’s no way out, people know that student loans aren’t getting discharged in bankruptcy typically. People know that there’s not a lot of options and you know the risk of defaulting, is that they’re still going to come after you. You don’t pay and they’re just going to garnish your way just to get paid anyway.

It’s a very tough time—emotionally and financially—and that’s what these student loan companies are preying on. They’re preying on that mindset, they’re praying that you’ll do anything to get out of it and that’s what’s so hard.

Chris: That’s absolutely crazy. Can you confirm for the listeners, because I was fortunate enough to work my butt off to go to school… with federal student loans, you can’t declare bankruptcy on them, you’re on the hook for the rest of your life for them?

Robert: There’s a lot of options, but yes, they are typically not dischargeable on bankruptcies. It’s not that they’re not dischargeable bankruptcy, they’re just not for most people. The reason is, to be discharged in bankruptcy, you have to prove that you’ll never be able to repay your student loans. The reason it’s such a high bar is that there are those income-driven repayment plans we talked about. If you still make a lot of money, a bankruptcy judge is going to be like, well, why don’t you apply to this repayment plan that sets your payment at $0 a month. It’s not that it needs to go to bankruptcy, it’s just that you need to switch your payment plans.

If you truly are disabled or something happens, you can get your loans forgiven with what’s called disability discharge. For people that do become disabled and can’t work, you get your loans discharged. And then there’s a lot of loan forgiveness programs in between. That’s why it’s not that they can’t be. It’s just that it's a very hard bar to pass to get them forgiven or just discharged bankruptcy.

Chris: Got you. There are so many programs to mitigate it. For the vast majority of people, there’s no reason for them to be discharged to bankruptcy.

Robert: Exactly. It’s hard because you tell someone, you’re going to pay $5 a month on your loan. Well, your loan still grows. I think that’s the more emotionally hard part. You’re not going to need to default, but your loan still grows. You also have to realize that those income-driven repayment plans also include loan forgiveness at the end.

They all have a fixed term. The fixed-term is typically 20 years. It’s a long time, but in the 20th year, your loan is discharged. You’re not going to pay any more on it anyways. If life didn't turn out as you want it to and you really aren’t going to be earning a lot of money, there’s still relief. It’s not amazing. It takes 20 years, but you’ll limp it along at what you can afford and then it goes away at 20 years.

Chris: What’s the largest student loan balance you’ve had discussions with the person about?

Robert: There are definitely seven-figure loan balances. There are a hundred Americans that have over a million dollars in student loans. I’ve seen one of them personally. How did they get there? It’s graduate school.

When we’re talking at the beginning of this episode about the ROI of college, I tell you that there are two people that benefit the most from student loan debt. The first that benefit the most are low income, low balance borrowers. These are people that typically are going to make $30,000–$50,000 a year and they only borrow less than $10,000. Those people get a huge ROI on student loans because it’s typically vocational school or something entry-level and they didn’t borrow much, so it’s great. The other one that does the most are people that borrow over $100,000–$200,000 a year. What’s that range? It’s doctors, health care providers. They get a huge ROI. Now, if you’re borrowing between $10,000 and $100,000, that’s a negative ROI. If you borrow over $200,000, it’s a negative ROI.

Chris: Just borrow more and your life will get that down.

Robert: It’s all what you do. These people that borrow and go to the million-dollar mark are all people that went to graduate school, 100% of the time. The reason is there’s a special loan called a grad plus loan that sadly has no cap on what you can borrow.

Chris: Oh gee. What you’re saying is that people are paying for living expenses for their student loan and they have basically zero income while they go do their master’s program, yet they’re supporting a family off the loan, so to speak?

Robert: Yeah. They can borrow up to the cost of attendance of these schools. It’s not that there’s no cap. The cap is exceptionally high. That’s the problem with everybody. It’s never tuition that screws anyone with their student loans. It’s always the living expenses that screw everybody because even at the most expensive school, tuition is like $20,000 a year. How do you get to these […] because they’re paying $40,000 for room and board.

These are typically schools that are like chiropractic schools or orthodontist or anything. And these grad schools, because they know that there’s no cap—unlike undergraduate borrowing—I can suddenly set my cost of attendance here. It’s like what came first, the chicken or the egg? Because the money is free, these grad schools set their cost so high that I’m going to charge $50,000–$60,000 a year and these students borrow $250,000 without even blinking.

Chris: That’s crazy. Do you have resources on your website that can help people navigate some of these things?

Robert: Yes, if you go to thecollegeinvestor.com, we have everything you can want to know about student loans, from getting in smart, figuring out how to borrow effectively, to navigating repayment, hopefully finding loan forgiveness, and of course, avoiding these scams so that you don’t fall victim to it.

Chris: Before providing your social media, any parting advice for the listeners?

Robert: It always starts with getting organized. If you’re feeling overwhelmed with your student loan debt, take 20 minutes and get organized. Figure out where your loans are, what you owe, and who you owe it to. Just figure it out. Write it down. Everyone’s got a different style. I’m a tech guy. I like apps to keep my money in an app. If that’s not your style, maybe it’s an Excel spreadsheet, maybe it’s a journal, maybe it’s just a good old 8×10 piece of paper and you just write it down. Figure out what you owe, and in that way, you can make really better decisions on the next steps. If you don’t know where you’re starting from, that’s where you’re going to get in trouble, every time.

Chris: Absolutely. How can people find out about you and The College Investor?

Robert: You can go to thecollegeinvestor.com, you can read anything there. If you love podcasts—you probably do—we have The College Investor Audio Show. You can find us on your favorite podcasting platform.

Chris: Awesome. Robert, thank you so much for coming on and sharing about student loan scams today.

Robert: Hey, thanks for having me. This has been great.

Chris: Thank you.

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