S2:Episode 10 - College Football & Student Loans - Father, Son , Purpose

This podcast episode, titled "College Football & Student Loans - Father, Son, Purpose," begins with a brief discussion on college football before diving into the main topic: the hosts' personal experiences with student loans and the broader issues within the higher education financing system.

Main Topic: The predatory nature of student loans, the lack of financial literacy surrounding them, and the need for systemic reform in education financing.

Key Themes and Ideas:

• Introduction to the Podcast & College Football:

  • The podcast features a Marine Corps dad (Dr. Jordan Smith) and his Army veteran son (Jordan III) discussing life, legacy, and leadership.

  • They briefly cover recent college football games, including Army's loss, Navy's improved passing offense, and critical commentary on quarterback Archer Manning's performance.

• Dr. Jordan Smith's Student Loan Journey:

  • Early Education & Discipline: Attended schools that emphasized education for upward mobility, even using corporal punishment for academic deficiencies (e.g., missing spelling words).

  • First College Experience (CBC): Received a partial scholarship; parents paid tuition. This led to a Naval Academy nomination.

  • Naval Academy (1972-1976): Education valued at ~$270,000, fully funded by the government, with a 6-year active duty service obligation (chose Marines). This eliminated his bachelor's debt.

  • GI Bill & Missed Opportunities:

    • Did not fully understand or utilize his GI Bill benefits while in the Marines, focusing solely on his performance.

    • Observed Caucasian counterparts using GI Bill and Tuition Assistance (TA) for master's degrees, leading to faster promotions.

    • Only learned about TA nine years into his service, realizing it covered most tuition costs ($270 of $300).

    • The GI Bill was later given an expiration date (Dec 31, 1987), rendering his ~$37,000 in benefits unusable.

  • Later Education & Debt:

    • At age 50, to become a "highly qualified" teacher, he incurred $37,000-$40,000 in student loan debt for his master's, then pursued a doctorate.

    • Initially believed in loan forgiveness for public service but found "loopholes" prevented it.

    • Currently, financially comfortable in retirement but still paying off student loans, regretting the lost GI Bill benefits and feeling the system is unjust. He questions why taxpayers should pay his loans, but also feels his 40 years of military and teaching service should count for something.

• Jordan III's Student Loan Experience:

  • GI Bill Utilization: Used GI Bill and TA for various courses (theology, video game creation, personal training) before pursuing a business degree.

  • Student Loans: His GI Bill funds ran out, necessitating student loans, though his current debt is less than $10,000.

  • Grants: Successfully used grants, which significantly reduced his overall debt.

  • Shared Frustrations: Also experienced unfulfilled promises of loan forgiveness.

  • Systemic Critique: Agrees that while individuals should pay their debts, the education system needs reform. He notes other countries offer free secondary education and sees the US system as "another arm of capitalism," questioning the allocation of local school funds.

• The Predatory Nature of Student Loans and Financial Illiteracy:

  • Loan Structure: Dr. Smith illustrates how most borrowers only focus on the monthly payment, not the interest or amortization schedule.

  • Hidden Costs: His own loan breakdown showed that for a $708 monthly payment, $480 was going to interest, with many payments going entirely to interest.

  • Comparison to Mortgages: While mortgages front-load interest, student loans maintain disproportionately high interest payments throughout the loan's life, unlike typical loans where principal payments eventually increase.

  • "Predatory Lending": Both hosts agree the structure constitutes predatory lending, making it difficult for borrowers to ever pay down principal. Dr. Smith states he would not have taken the loan if he'd understood its true structure.

  • Long Repayment Periods: At his current payment, Dr. Smith calculates it would take 27 years to pay off his loan.

  • Power of Compound Interest: Emphasizes that increasing monthly payments significantly reduces total interest paid and repayment time (e.g., an extra $500/month could pay off his loan in 7.5 years instead of 27).

  • Lack of Financial Education: Recounts personal mistakes with car loans due to a lack of understanding about principal and interest, highlighting a widespread educational gap.

• Warnings and Advice:

  • Examine Account History: Advise listeners to pull up their student loan account history to understand where their payments are going (principal vs. interest).

  • Generational Wealth: Student loan debt impacts the ability to create and pass on generational wealth. Wealthy families avoid this through trusts and business structures.

  • Avoid Forbearance: Warn against using forbearance to avoid payments, as federal loans aggressively pursue collection (e.g., wage garnishment).

  • Continuous Enrollment to Avoid Payments: Mentions a colleague with over $300,000 in debt who continuously enrolls in school to defer payments, calling it "scandalous."

The episode concludes with both hosts reflecting on their car ownership and financial decisions, reinforcing the importance of understanding debt and making informed choices for financial freedom.