FinCon and Robert Farrington, Student Debt Pro

Forty-four million Americans have student loans, adding up to some $1.5 trillion of debt. It's not a pretty picture. Fortunately, people like Robert Farrington are working to make that burden a little less terrifying. In today's episode of MarketFoolery, host Chris Hill radios in from FinCon 2019 in Washington, D.C., to talk with thecollegeinvestor.com's Robert Farrington. Robert talks about how his blog got started, some of the best and worst resources students can use to pay off their loans, how he sees the government playing into the student loan picture in the next several years, some positive and underreported student loan stats, a few bits of investing advice, and more.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on Sept. 5, 2019.

Chris Hill: It's Thursday, Sept. 5. Welcome to MarketFoolery! I'm Chris Hill. As you can probably tell from the ambient noise, not in the studio at Fool Global Headquarters. I am at FinCon 2019 at the Washington Hilton in Washington, D.C. and I am joined by Robert Farrington, expert in student loan debt, founder of thecollegeinvestor.com -- which, by the way, is one of the best resources for helping millennials get out of student loan debt so that they can focus on building wealth for the future. Robert, it is good to finally meet you! I've been reading your stuff for years. It is good to finally meet you. 

Robert Farrington: Thank you so much! I'm excited to meet you in person as well! I love FinCon, this is one of my favorite events of the whole year.

Hill: Let's start with that. You've been a bunch of times. This is my first time at FinCon. How do you describe FinCon to people? I'll tell you how I've described it, but first, you tell me. When you tell people, "Oh, yeah, I'm going to FinCon," and they say, "What's that?" what do you tell them?

Farrington: It is where all of the best content creators in the money space, whether it's blogging, online, video, podcasting, Instagram, I don't know, whatever's next, come together, and we talk about money, we talk about our business, we talk about helping each other and collaborating. It's a lot of fun. It's the most welcoming community that I've ever found. It's educational. There's a lot of savvy business folks here. It's an amazing event.

Hill: That's so much better than what I tell people. Again, it's my first time. I was just going off of the FinCon website, where one of the tag lines is "where money nerds unite." And I thought, "Well, that's appropriate," given everything you just said. 

To touch one thing you just said, I've been so blown away by the spirit here, the enthusiasm. Everyone here, there's a spirit of collaboration and excitement, which is great. For all of the work that you and I and so many people here do when it comes to money, investing, all the things that touch money -- whether it's buying a home, buying a car, dealing with college debt, which we'll get to in a second -- there's still so much work to be done.

Farrington: Absolutely. The way people are getting their information has been transformed over the last 20 years, 30 years, and it will continue to be. That's what's so cool. These people are on the cutting edge of how to have money conversations online, offline, visually, audio. Here we are recording, a podcast, you know? The mediums change. The math of money is the math of money, but there's much more to it. Family psychology, how do you make it fun, how do you make it educational, entertaining? I'm blown away by the people I find in this community. It's so much fun to be a part of.

Hill: Let's talk about thecollegeinvestor.com. You started that 10 years ago. What is your background, and what led up to you saying, "I'm going to do this"?

Farrington: I started The College Investor when I was wrapping up my last year of college. I thought that I was going to be a college student talking about how to invest. Right or wrong, I did it. I started this blog, and I was like, "You should invest in XYZ stock, and here's why." It was a fun start. Why I did it is, I was always passionate about money. I'd been side hustling and doing odd jobs. I started working at 16. I was selling stuff on eBay when I was 17. I like that kind of thing. I started reading blogs and other personal finance sites, and I was like, "This is cool. I could do this too." It was the intersection of multiple passions. I liked computers and technology. I liked writing. I liked money. And it all came together in one blog. And here we are, 10 years later. 

We don't talk about how to invest in XYZ stocks anymore. I've learned that lesson. [laughs] 

Hill: I want to talk about your investing in just a second, but let's get to the college debt part. You've got more than 44 million Americans who have some form of outstanding student loan debt. You add it all up, the total debt is more than $1.5 trillion. You were leading a breakout session yesterday that I caught a part of. Some of the stats that were being shared by some of the other people on the panel were...

Farrington: It's scary!

Hill: Yeah, scary is one of the words I would use.

Farrington: Yeah. It's a very challenging situation. It's the intersection of everything that people don't want to deal with. It's debt, it's taxes, it's family relationships, it's education. There's a lot of these challenging topics that all get intertwined, and it makes it a challenging thing. It's the government. The government doesn't make it easy to get out of student loan debt. There are over 150 different variables and options on determining how to repay your student loans. It's not like you just go with it. And you can just go with it, but that might not be optimal for you, you might not be able to afford it. If you go down the path of loan forgiveness, deferments, forbearances, all the different repayment plans, it's a very complex subject that touches on a lot of things people struggle with.

Hill: Just as, in the world of investing, we see more often than not with penny stocks -- and this was something that you guys talked about on the panel yesterday -- there's an opportunity for people who want to start a business trying to help people pay off their student loans, and, shocker, some of those people don't have the best intentions in mind. There are absolutely products and services out there that maybe look pretty good on the surface, and once you dig into the nitty-gritty, they're almost predatory.

Farrington: There are a lot of student loan scams. The CFPB and the FTC have been shutting down companies; it's like putting out wildfires. I'm seeing, they're putting down like 40 a month or so all across the country of, you're getting robocalls. I bet you there's a lot of listeners that have gotten a student loan robocall, like, "We can forgive your student loans if you call us." Like all these programs are government programs. They're clearly defined. And you can easily do it yourself. Go to studentloans.gov. We might rag on the government a little bit, but their student loan resources are actually phenomenal. You can educate yourself. It's the material that you need to know. It's super easy. If you can fill out a job application, you can fill out all the forms you need to take care your student loans. Hopefully, if you went to college, you can fill out a job application. It's just confusing. It's hard. I get it. I joke here that it's straightforward, but it is a little scary.

Hill: You mentioned something that we see in stock investing all the time, particularly as we've seen a little bit of increased volatility over the last six months or so. You can look at a stock, you can evaluate a business, look at the numbers -- emotion always plays a part in it. As you said, sometimes the dynamics at work here really are working against young people.

Farrington: They are. We talk about these scary stats, but let's talk about some positive stats. Thirty percent of people still graduate debt-free today. No student loans. There's this narrative right now that says, "you have to get student loans to go to college." That's not true. Thirty percent of people don't have any student loans when they graduate college. A lot of states are making community college free. You could go to community college for free, then transfer to a state school, and not pay a bunch for your degree. On the flip side, 70% of all borrowers are actually just fine. The debt was a good debt. We talk about student loans as being this bad debt, but just like buying a house, it's not necessarily a negative. If you buy too much house and overextend yourself, that's a negative. It's the same when it comes to paying for college. If you pay too much for college and overextend yourself, and then you don't get a high-paying job that can service that debt after graduation, that's where you run into problems. It's the joke, where you become an art history major, and you pay $200,000 in private loans to be an art history major, and you become a docent at a museum, and you're only making $12 an hour. If you want to be a docent in a museum, don't let me stop you, but you shouldn't borrow $200,000 to do it. You could probably get educated and do things in other ways that make you have a positive ROI on your education spending. That's what I want people to think about when it comes to student loans. Paying for college is an ROI. Education is free. You can go to cornell.edu and watch every single class that's taught at Cornell. It's free online. So, if you want to get education for the sake of education, go learn something. But you're going to college because you're trying to get a better job prospect, or you're trying to network, or you're trying to get specific skills, and you're paying money for it. It's an investment, just like you'd buy a stock or you'd invest in a business. That's what people need to think about when it comes to paying for college, is how much you're going to spend, and then what you're going to potentially earn when you graduate. But don't get me wrong, that's also tough to tell a 17-year-old or an 18-year-old. But that's how you need to think about the conversation. [laughs]

Hill: I'm going to ask you to look into your crystal ball. Where do you think the conversation is in five or 10 years? Whether it's with student loan debt on its own, or just with college education? Certainly in the greater D.C. area over the last couple of years, we've seen stories of smaller private colleges closing down because they can't make the business work. 

Farrington: The narrative is out there; all the politicians are talking about different plans and proposals. It is getting this light shined on it. The problem is, there's two parts. How do you deal with the current set of borrowers, which is one huge problem? Then, there's a second problem of, how do you deal with the rising cost of college and all the associated costs there, which is a second problem. You're targeting two different demographics, and two different things. The strategies don't overlap with them. 

For the ones that currently have student loans, we're going to need to look at reforming student loan repayment plans. The problem is, there shouldn't be 153 variations on how to repay your student loans. Slim it down, make it reasonable, make it affordable. I don't think the forgiveness proposals are going to go anywhere, but it's good to talk about it. But you also have to think about, right now, today, with no changes to the law, 50% of all student loan borrowers qualify for some type of loan forgiveness. Might not be total, but some type of loan forgiveness. 50% of them do! We're already having these conversations. You go into certain jobs, jobs are now offering student loan repayment assistance. There are already reforms happening on the borrower side. You already have the loans. Are they what we need? I don't know. But, I think, we continue to have these discussions, and we look for solutions, we'll start seeing some positive change.

Hill: Real quick on investing. Without getting overly personal, how do you invest your money? You're someone who has made a business out of helping people, particularly younger people, deal with these types of issues so that they are in a position where they can be proactive in saving for their retirement and becoming financially independent. What is your investing strategy?

Farrington: I am a long-term, buy-and-hold, low-cost index fund guy. I keep it simple. The biggest bane of my investing existence is that I have so many dang different accounts. A traditional IRA, Roth IRA, brokerage. I wish it was even more consolidated, because I am really believing in the simple long-term growth of my money over time. Everyone knows the studies at this point in time. There's arguments for and against. I will say, one of the things that got me started is, I picked stocks for a while, and I had some really great early wins. Probably the worst thing that ever happened to me, because you should never have really great early wins, because it sets you up for a long-term failure unless you think about it. [laughs] 

Hill: There are a bunch of people I've talked to who have had early experiences that have then informed what they do. In some cases, it's, they started picking stocks in the late 90s and thought, "I'm brilliant at this," and then found out the hard way that, no, there were a couple of other things working in their favor. By the way, I've heard people in the other direction. They bought a couple of stocks early on, it didn't work out, and they swore off investing in stocks for the rest of their life.

Farrington: That's the hard part. However you choose to invest, equities as an asset class have had a 9% to 10% average return over a 100-year history. That could skew one way or another, but it's an asset class that I invest in. I also invest in real estate, because that's an asset class I have. I have my business that invest in, I yield it. And then I have myself. I come to conferences, I try to educate myself and my own earning potential and build out the future for me. That's also how I view it. I view paper assets as just one bucket vs. real estate, business, myself, beyond just, how do you diversify within those buckets.

Hill: Last thing before I let you go, because I know you're really busy -- you're a lifelong son of San Diego, California. 

Farrington: Yes, yes. I am!

Hill: We were talking about before we started recording, I've only been to San Diego a couple of times. It's one of those places that you go to, and if you're from anywhere else, you think to yourself, "Why doesn't everybody just live here?" For anyone who is visiting San Diego, what is one or two things that they should either do, or maybe restaurants? We need a couple of recommendations here from a native.

Farrington: San Diego is the craft beer capital of the world. Sorry, Oregon! No, it's San Diego. If you're a beer drinker, check out San Diego. It's like 100 breweries, known for IPAs. Mexican food, phenomenal! There's a lot of great taco shops. Puesto is one of my favorites, it's down by the water. Great street tacos. Like, the best you'll ever have. They also have phenomenal margaritas if you like margaritas. 

There's so many great things. We're on the beach. You have the zoo. You can go to Legoland. You can go to the mountains. San Diego in Southern California is one of the places where you could actually snowboard, bike, and surf on the same day if you time it right, with the right weather. [laughs] Check it out, there's a lot to do!

Hill: Everyone should check out San Diego, and check out thecollegeinvestor.com. Robert Farrington, thanks so much for being here!

Farrington: Thank you so much! This was fun!

Hill: I appreciate it! As always, people on the program may have interest in the stocks they talk about -- even though we didn't talk about any individual stocks today -- and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's it for this edition of MarketFoolery! The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you on Monday!