Gabe Rubin
speaker
468 appearances
13 recordings
1 series
first heard Apr 2018
last heard Oct 2023
Gabe Rubin’s voice in public audio — every appearance, attributed to the second.
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Yeah, it could.
So the better your credit is, the lower rates you could qualify for if you're trying to refinance.
And there are lots of financial institutions out there that have pretty attractive or relatively attractive introductory rates to get you into their business.
But that really only applies if you have very good credit and if your income is high enough that you wouldn't really qualify for one of these debt payment programs that the government offers or if your loans are not eligible for that or if they have a very high interest rate.
Folks that have these types of loans would be theoretically at least the target audience for refinancing right now, even though it doesn't make sense for most undergraduate borrowers.
So people with Parent PLUS loans do not qualify for many of the government forgiveness programs, and both graduate and Parent PLUS loans tend to have that higher interest rate, which could make refinancing more attractive to them if they can get that lower rate.
Also, for many graduate loans or professional loans, these are people who are in pretty high-income professions.
Think people who have gone to law school or medical school.
And people in those professions might have an incentive to refinance because they see higher incomes down the road for them, and they wouldn't really benefit from a government forgiveness program that's based on income.
And also, maybe they just want to lower their monthly payments right now because they expect to have very high incomes in the future when paying off loans would be quite easy.
Yeah, they could have, but it didn't necessarily make sense for them then either.
Even though rates were significantly lower, of course, during sort of the depths of the pandemic when the Fed was more concerned with stimulating the economy than slowing it down.
But at the same time, federal loans have been in this pause for three plus years.
And as part of that pause, not only did people not have to make payments, interest rates were also set at zero.
It does mean that.
This program was designed with the borrowers in mind, but it has a chance to be very expensive overall for the federal government and by definition for taxpayers.
So the estimates range because there's a lot of uncertainty related to these plans, but it could ultimately cost anywhere between under $300 billion to over $500 billion over the course of a 10-year period.
So this is certainly expensive, but its purpose overall is to help out student loan borrowers with some cost to the federal government and to taxpayers.
So the White House is trying again.
They are using a far more traditional way of canceling debt this time.
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