[00:00:00] Intro: Forget the civilized path. It’s time to break the chains of debt and dependency, take control of our financial lives, and live free. This is the Fiscally Savage podcast.

[00:00:15] Dylan Bain: Hello, and welcome to Fiscally Savage. I’m your host, Dylan Bain. Happy Friday, everybody. And if you’re new here on these Friday shows, we like to take something in the news and go one step deeper. Unless, of course, Dylan’s deciding he wants to talk about a whole bunch of other cool stuff, like the schools of economic thought.

[00:00:30] You can go into past episodes and check those out if you would like, but today we’re coming off of the 4th of July weekend. I hope everybody still has all their fingers right where they’re supposed to be. And your 4th of July has been absolutely amazing. And I have to tell you, it was quite a pleasure to be able to read the Declaration of Independence, even if I did stumble a little bit.

[00:00:52] But today, I want to talk about some of the developments in the United States from a legal standpoint that will impact a lot of people’s finances. And of course, I’m talking about President Biden’s student loan forgiveness plan that was just recently struck down by the Supreme Court. Now, this is one of these things, and when I was a teacher, I was very big on the idea that my role as a teacher was to help develop and raise good citizens for our Republic. That’s how I looked at things. And as part of that, I’ve always taken it very serious to be informed as to what the branches of government are, what they do, and be an informed citizen.

[00:01:31] As part of that, let me now just talk about the Supreme Court and what their role is. As I’ve mentioned before, the Supreme Court interprets laws. That is, you can think about it that the legislature passes laws, the executive branch enforces laws, and the judicial branch will interpret laws. And there’s a lot of different schools of thought on this. It’s worth noting that there’s a lot of people like Justice Clarence Thomas and Samuel Alito who are considered themselves originalists. That is, they try to put themselves in the mind of somebody in the early 18, late 1700s and interpret the laws based upon what their understanding at the time would be, which has always seemed a little bit weird to me when you consider that airplanes and the internet weren’t a thing.

[00:02:15] But it’s also interesting to me because they use the same powers that were actually invented by a case before the Supreme Court in the early days of the Republic called Marbury v Madison, where the Supreme Court interpreted the Constitution to grant themselves additional powers.

[00:02:30] That’s right, ladies and gentlemen, the US Constitution explains really well what the legislature is supposed to do and what the executive branch is supposed to do, but it’s not exactly great when it comes to the Supreme Court and how the judicial system is supposed to go. So there’s a lot of wiggle room here, and they granted them this, what’s called “judicial review” that allows them to look at the laws.

[00:02:50] And in the case of Biden’s plan to forgive student debt, they were asked to interpret whether or not the Higher Education Relief Opportunity for Students Act or HEROS Act that was passed in 2003, which basically states that in times of national emergency, the US Department of Education has the ability to ensure that people are not put in worse positions financially as a result of the emergency. That gave them the ability to modify or waive loans, specifically student loans. And the idea here was like, in a national emergency, we don’t want people to just go in revolt because we’re focused on the emergency, and the emergency of course was COVID.

[00:03:30] And so President Biden said we have a national emergency and I’m going to take advantage of this. So if you make 125,000 or less, you will be forgiven 10,000 of your student loans, 20,000 if you have a Pell Grant. And for somebody like myself, I still have some of the last remaining debt I have are in fact, student loans.

[00:03:50] The Supreme Court that is repeatedly going on record, specifically the conservative wing of the Supreme Court, saying that the court should not legislate from the bench. The court’s job is not to create new laws or to modify laws. It’s to interpret laws and call balls and strikes, to quote Chief Justice John Roberts. Then basically came in and said, no, that law doesn’t say what it means it says.

[00:04:13] And this has been a comical thing, because don’t get me wrong, there’s lots of reasons we shouldn’t be forgiving student debt. There’s lots of reasons that maybe we should. That’s a political question. What I’m looking at is what the court has said and how the court has acted. And it’s always one of these things that I think is very important as a citizen to look at. The court says that we shouldn’t be trying to enforce words into Congress’s mouth.

[00:04:39] It’s interesting because some of the sponsors of this bill back in 2003, who are no longer in Congress, Republicans included, filed what’s called an amicus brief, which is a friend of the court brief where they can come in and say, hey, here’s some information the court might want to know. And in that brief, they filed and said, this is exactly what we meant. Biden, as people in Congress who passed this bill at that time, this is why we did that. And so while we might not like it, it is legal. The court decided no, that Congress really didn’t mean that, and they struck this down. That is within the court’s purview to do. And maybe that’s the right choice economically, philosophically, or ethically. That’s not really for me to say.

[00:05:20] But what is interesting though, is that when the Supreme Court said this requires Congress to speak more clearly before the Department Secretary can unilaterally alter large sections of the American economy. So again, now the court is saying they’re considering the economic impacts here, and they’re going way outside the narrow confines of the law that they like to say that they’re going to stick to in order to make this ruling. And this kind of falls under what the conservatives in the Supreme Court have called the major questions doctrines.

[00:05:51] What is the major questions doctrine? It’s essentially the idea that if a law allows later down the road, some department, individual, figure, or agency to make a rule that will create a large impact on the economy, that’s a major question. And Congress, specifically the House of Representatives, which hold the power of the purse, should actually be the ones to opine that and make it explicit, and if not, it’s unconstitutional.

[00:06:19] Whether that’s actually legal? Now again, that’s up for debate. That’s why we have things like politics. But that is where we are going with this.

[00:06:27] But Biden, of course, is not going to take this lying down because a big part of his base comes from people who are millennial and younger, most of whom are, for those who have gone to college, still saddled with student debt.

[00:06:40] And so he, right out of the gate, came right back around and had Plan B, and saying that he’s going to use the Higher Education Act of 1965, which is really where student loans started. That’s when we started getting into the student loan market. The government started granting loans to people who go to college. I did an entire podcast on that back in January. You can go and check that out. This law basically grants the US Department of Education the ability to, and I’m quoting here, “Compromise, waive, or release loans.” And so what that means is that to compromise the loan is to alter the terms, to waive them is to say you don’t have to pay, and to release them is to basically forgive them. So this act basically says, yeah, we can do this.

[00:07:24] It’s curious, though, that I believe that Biden didn’t use this one initially because it’s a weaker legal argument. They used the HEROS Act initially hoping that — unless of course you subscribe to the idea that politicians are both inept and evil, at the same time also playing four dimensional chess — in which case Biden expected the Supreme Court to shoot down his first attempt in order to make it an issue in the upcoming campaign in 2024, but I don’t think any politician actually thinks that far enough ahead. So I don’t subscribe to that theory.

[00:07:55] But what this has done is that it means that we’re going to be getting new repayment options. And if you’ve been following the news at all, you know some people like the likes of AOC have been saying what the US Department of Education should do is just waive the interest.

[00:08:08] Okay, you have to pay it back and, yes, you’re going to pay maybe $400 a month to your student loans. But unlike some of the current repayment plans that allows that loan balance to continue to grow and grow and grow, we’re just going to say there’s no interest attached to it. So you’re just going to repay the money you took out interest-free.

[00:08:25] Now, whether or not the Supreme Court would consider that to be something that falls under the major effects of the economy or not remains to be seen, but I think it’s safe to say that the Supreme Court in this current formation is an extremely weird animal, because we do expect it to be going 6:3 conservative versus liberal every single time, but we’ve had a lot of surprises. So it’s a crapshoot any way it goes.

[00:08:50] The one thing to note about Biden’s new approach, though, is that it’s going to have to go through a public commenting period, and that’s going to take time. So this is definitely going to be an issue that’s going to be on the ballot in 2024 when you are selecting who you want to be the President of the United States. Whether it’s going to be President Biden, whoever takes over if he was to suddenly keel over dead, or whatever Republican challenger actually ends up winning the primary elections.

[00:09:18] But again, conservatives have come out immediately in saying that any type of loan forgiveness is a misuse of tax dollars and is an excessive and unconstitutional scam, and the sky is falling, and yada yada yada, because politicians love to sit there and try to make everything that is a molehill into a gigantic mountain.

[00:09:36] But ladies and gentlemen, if you are somebody who is holding student loans and hoping for this forgiveness, let me just say for a moment that I’m very sorry that it didn’t happen. And if you’re somebody who’s saying, yes, I’m breathing a sigh of relief that we didn’t forgive this debt, my question to you is, all the tax cuts, where’s your position on that?

[00:09:56] It’s important in my mind, at least, to try to be consistent in one’s philosophy. And if we’re worried about spending, always remember that tax cuts and credits are a form of government spending. But that’s not really the point, is it? Because this is now the reality, this is the law of the land.

[00:10:11] And we can sit here and complain about Clarence Thomas and his special relationship with Republican donors, or we can sit here and complain about, the idea that Biden’s just, you know, making the sky falling and resurrecting Cthulhu through his student loan forgiveness program, or we can do any other number of things, but that’s not going to actually help us now, is it?

[00:10:31] So I think one of the things, when we look at what’s happening in the world and we take the news with our mammoth grain of salt, that we start to ask ourselves, “Okay, how does this fundamentally change my actions and how does this fundamentally change my goals?” Because I think if we started framing things that way, we wouldn’t actually be as so wrapped up in these things as we actually are at the present moment.

[00:10:54] That is to say, whether Biden was able to get this through or not, doesn’t change what I’m doing in my life. It doesn’t change my goals. My goals have not changed. My goals are to finish paying off my student debt, and then to 10x my retirement savings to be able to continue to build wealth. And I’ve had a lot of wins over wealth. So it’s not we’re completely idle on this.

[00:11:17] When I closed my books for June, my net worth — the front digit on my net worth changed. That’s always a good feeling. And this decision by the Supreme Court doesn’t change the path that I’m on to finish extinguishing my student debt and then continuing to increase my wealth and build over time.

[00:11:33] So why do I really care?

[00:11:36] It’s a sideshow, and the media of course has an agenda that agenda is to get your attention and nothing gets your attention, so they can sell you things like fear and outrage. At the end of the day, this is probably a very small sideshow. It’s a distraction. It’s reality TV playing out in US politics.

[00:11:55] And so my question to you as the listener is to sit down and really think to yourself at the end of the day, what does this fundamentally change for me? I think the answer might be not a whole lot. Now, if you’re someone for whom student loan repayments are very onerous and very difficult, the good news is that some of the new repayment plans are going to be much, much better for you.

[00:12:18] Specifically, Biden has suggesting that we cap out the income-based repayment plan and 10% of your income, and that a minimum of 50% of that payment, whatever that payment is, has to be waived the interest so that 50% of it goes to principal. That would be a pretty good thing. And I personally think that’s eminently reasonable.

[00:12:39] But at the other hand, that might be a place where Congress actually has to go and talk about it. But it won’t fundamentally change the fact that repayments are starting again. It will not fundamentally change your path of what you were going to do if your entire student loan balance was forgiven.

[00:12:55] The point here, ladies and gentlemen is that we want to be making a plan for our lives that we can continue to move forward. How do you beat the machines of Washington? You rendered them irrelevant to your life.

[00:13:07] One of my friends likes this phrase where he says, “Before enlightenment I chopped wood and I carried water, and after enlightenment I found that I needed to chop wood and carry water.” what that is to say is that these monumental things that seem like a huge deal, in the end of the day really aren’t. And why are we giving so much energy and time and pieces of our lives, precious moments that are our most precious nonrenewable resource— two of these things, when we could focus on improving ourselves, spending time with our wives, our husbands, our brothers, our sisters, our friends, our kids, our communities, building tribes of people and living on our terms.

[00:13:46] It’s one of these things where yeah, I’ve read stuff so you don’t have to, but at the end of the day, this decision actually isn’t that big of a deal to me because it doesn’t change anything. Because whether it was upheld or not, my solution was going to be to chop wood and carry water. I’d invite you to do the same.

[00:14:07] Ladies and gentlemen, that’s going to be the end for my Friday show, but I do want to point out that we are going to be rebranding the podcast. It will stop being Fiscally Savage sometime this month and start becoming Intuitive Finance. My website will transition from FiscallySavage.com to DylanBain.Com as we continue to expand our coaching practice and our other offerings that we are hoping to bring to market here at the back half of this year. I’ve got a new website that’s coming. I’m super excited about it. And I’m glad that each and every single one of you is here.

[00:14:35] I would like to ask you, please, go and stop what you’re doing and go get, leave me a rating, review and share the podcast with somebody who you think would benefit from the message. It means a lot. It really helps us stand out. I’m always wanting to be able to grow my audience and we’re growing steadily. But with your help, I think we can really throw some gasoline on our fire and it would be amazing because who doesn’t love playing with fire?

[00:15:00] So ladies and gentlemen, happy Friday. Thank you so much for listening. I love each and every single one of you and I will see you on Tuesday.

[00:15:10] Outro: Thanks for listening. If you like what we do here, please hit that subscribe button. Leave us a rating, review, and share the content with somebody who would benefit from the message. You can follow us on Instagram, Facebook, and Twitter, all @FiscallySavage, and head over to FiscallySavage.com to get our free tools, suggested reading, and everything else you need to take control of your financial life and live free.