 What's happening? It's Shane here and in today's video I am going to be covering seven common myths that I hear over and over again about student loans. At this point I have answered thousands of questions on videos, I've answered hundreds if not thousands of emails, I've consulted with people, I've coached with people and I have heard the same questions over and over again. And it's become obvious to me that there is a lot of myths and misconceptions about student loans that many people believe. And so in this video I am going to try to fix that, make sure you understand student loans and understand exactly what you're getting yourself into if you decide to take them out and go to college. All right so let's jump right into it but first go ahead gently tap that like button and hit the subscribe button. Let's set the goal for this video to 2,000 likes. All right so the first myth and this is the one you hear about in the news all the time is that student loans are likely going to be forgiven by the government. You hear this all the time in the news politicians talk about it especially when they're trying to get elected and they say if you elect me we're going to forgive all the student loans and blah blah blah blah blah. Now I made an entire video about this on why it is highly highly unlikely that student loans are going to be fully forgiven. I would say that there's maybe a 1% chance that that happens and I might be that might be too high honestly. And this is for many many different reasons it would be very messy very difficult to do. There are many people out there who decided to pay off their student loans early it would be very unfair to them because they're the ones who paid it off early and then other people who didn't pay it off you know they would be forgiven and then I mean would you pay the people back who already paid their loans off it would just get extremely messy. And that's probably one of the least reasons that it's very likely not going to happen. Again you can check that video out if you want all of my reasoning on it. Now there is a pretty decent chance that some of the student loans are going to be forgiven so for instance I wouldn't be surprised if $10,000 in student loans was just wiped off forgiven across the board. It's also possible that maybe $50,000 in student loans might be wiped off. What's very likely going to happen is there's going to be some sort of reform in the college and student loan system to where it's not just going completely out of control. It's very obvious that the way the system is set up right now a significant amount of people who take out student loans are never going to be able to pay them off. So this means that the way the system set up right now it's completely unsustainable. So I wouldn't be surprised if something like for instance taking away student loan interest was something that's on the table. So right now the interest rate on undergrad loans is probably somewhere between three to five and a half percent. The interest rate on graduate loans is seven percent sometimes more and I wouldn't be surprised if they did something where they took that interest rate down to zero or at least lowered it. I also wouldn't be surprised if they took away the fact that you cannot declare bankruptcy on student loans. Pretty much any other type of debt out there you can declare bankruptcy on but student loans you can't. So I wouldn't be surprised if we see a lot of changes that have to do with that and again that would probably be an entire video in and of itself but in terms of just wiping out all student loans across the board very very unlikely. Now the number two myth that I hear is if you work in public service you're going to get your loans forgiven easily. Now this is based off of the PSLF or public service loan forgiveness program and basically the way this program works is you work in some type of public service job and you make a minimum payment on your loan for 10 years or 120 months you never miss a payment and at the end of the 10 years you get all of it forgiven. So that's how it's supposed to work in theory. An actual practice though 99% of people who apply to public service loan forgiveness get rejected. So it is very very unlikely that you will be able to get your loans forgiven after the 10 year mark and the main reasons for this is they are just super super picky about what they consider to be public service and you also have to jump through a bunch of different hoops. It's not easy at all. It's even more difficult to do it for 10 consecutive years but that doesn't mean you can't try for it especially in certain types of careers you're going to have a much better chance than 1%. There are certain forums and subreddits that are dedicated to applying to PSLF and maximizing your chances so if you do that and you know you talked to other people who have actually gotten it that would increase your chances but with that being said it is by no means easy to do it's not something that you can rely on. I've heard this in undergrad even right when I was an undergrad people are like oh I'm just going to do 10 years in PSLF and get my loans forgiven like that's I heard that from a lot of people and the truth is it only works about 1% of the time. Number three on the list and this is a comment that I've gotten on some of my doctoral degree and my master's degree videos and that is graduate school is free. Now this is a comment that I get specifically from PhD students right they'll they'll comment below my video they're like I got a PhD or I'm getting a PhD and I'm not paying anything for it it's completely free and it absolutely is possible if you get a PhD to get some kind of stipend grant or scholarship that pays all of it. However the truth is the average PhD is $108,000 in debt okay all it takes is a simple google search to find this out and if you want me to pop the article up on the screen this is from NCES the National Center of Education Statistics there it is $108,000 in debt for PhDs and no that does not count medical doctors dentists pharmacists etc that is just an education degree a PhD or a doctorate in philosophy. Now when it comes to getting a stipend grant or scholarship that pays for all of your PhD or master's in some cases I highly highly recommend going for that it's much easier to get if you're trying to get a PhD in a STEM degree so science technology engineering and mathematics however it's still possible to get it in other types of degrees as well but that does not mean that everybody is getting that and this shows I mean this is proof right here the average PhD is going $108,000 in debt and I've talked about this in other videos but when it comes to getting a master's from a financial standpoint it can sometimes be worth it when it comes to getting a PhD from a financial standpoint it's almost never worth it yes you do get paid slightly more and there's also a slightly lower unemployment rate but the extra time and money it takes to get a PhD and the opportunity cost that is lost is absolutely not going to be worth it from a financial standpoint now from a personal standpoint if you're somebody who is really passionate about a subject and you want to truly become a master of it and you know move the field forward and discover new things then absolutely that can be worth it but from a financial standpoint almost never worth it and again I go into much more detail in that in other videos that I've made on the channel I made a video that's titled I think should you go to graduate school if you type in graduate school Shane Hummus on google or youtube or if you just type it in on my channel uh should pop up number four myth that I hear you'll be able to pay off your student loans right away now for certain types of degrees this could be true right so if you get an engineering degree you get a high paying job right off the bat you know computer science something like that yeah you're going to be able to pay off your student loans pretty quickly but studies and surveys have showed that the average person takes 20 years to pay off their student loan debt and guys these studies and surveys were from the last 20 years student loans have gotten way worse since then so for us for people who graduated in our generation it's probably going to be more like 25 or 30 years you know you see the salary that you're expecting to make uh after you graduate and in many cases what ends up happening is first of all you're not going to make that salary right away you're going to accept an entry level position that is much lower than that second of all the money that you get you don't realize that first of all tax is going to take a lot out of it and then after that you're going to have a lot of expenses that you probably don't realize and then after that you're probably going to want to start living your life a little bit actually spending money and enjoying yourself and so you think you're going to be able to pay it off right away and if you can that's awesome highly recommended but in most cases you don't and students are going nearly $40,000 in student loan debt and you might think okay i'm making like $50,000 a year i'll do $10,000 a year to that debt i'll pay it off right away but things just don't work that way and the interest is also going to be racking up as well so by the time you pay it off a lot of the time you end up paying twice as much but i can already hear it now number five after 20 years your student loans get forgiven right there are federal programs like the pay as you earn or PAYE program and basically what they do is after 20 years if you have made the minimum payments your student loans do get forgiven but there's a huge catch and a lot of people aren't aware of this but whatever gets forgiven you actually have to pay income tax on that right so just to simplify things if $100,000 gets forgiven and you live in california and you have to pay you know 50 in taxes then that still means you have a tax bill of $50,000 so it's not so straightforward not so simple you have to basically save up extra if you want to go that route so that you can pay all of that tax off now again this is one of those things that maybe they might take away it would be really nice if the government kind of took that tax part away that would make it much more realistic for people to be able to actually pay off their student loans but we really don't know whether that's going to happen hopefully they do but we just don't know number six on the list college is always worth it right college is just a golden ticket to success it doesn't matter what degree you get just go to college get a degree and you're going to be set for life now to be fair this used to be true 20 to 30 years ago and before however in this day and age it absolutely is not true anymore and that's why nearly 50% of people regret getting their college degree and the main reason for the regret is of course these student loans that most people have to take out and that's probably one of the main reasons why people actually have a negative net worth until they're in their early 30s so obviously i talk about this a ton on the channel but it's very important that you make sure that the college degree you're getting is worth it make sure that you have a plan you know what you're getting yourself into don't just go into this blind now another thing that i always hear on the same line is grad school is always worth it and like i mentioned before from a financial standpoint master's degrees can sometimes be worth it but from a financial standpoint phd's are almost never worth it and i talked about this in my videos i do like doctoral degree tier list the best doctoral degrees there are many types of degrees out there where people are going deep into debt and then many of them can't even find a job and then the ones that do find a job it doesn't pay very well and i've also talked about how the phd system in many ways especially when you look at certain types of degrees that are usually in social sciences arts etc it pretty much resembles a pyramid scheme and by that i mean the only people that are actually able to make a living from it are those that are teaching it so there will be professors teaching people who want to become professors and they'll be teaching people who want to become professors etc etc but the only problem is probably only one percent of them are ever going to be able to become a professor and there aren't that many viable jobs outside of teaching and there's even subreddits dedicated to this but a lot of people basically think that the grad school and phd system is essentially a pyramid scheme so no grad school is not always worth it again it's going to have to be a case by case basis and if you want to go to grad school you need to be very very careful i recommend trying to get a stipend scholarship or grant and usually you don't want to do it for the money unless you're going for a professional degree in many cases going for a professional degree like you know md medical doctor pharmacist that sort of thing that can be worth it but you definitely can't make the blanket statement that grad school is always worth it all right so that's all i have for this video go ahead check out my other videos right here i made them just for you hit that like button hit the subscribe button leave the notification bell and comment down below any thoughts comments criticisms etc that you have on the video and i will see you next time