Student loan is the number one barrier to financial freedom for those under 45. If you’re struggling to pay off your student loan, then this episode is for you. Today’s guest is Catalina Kaiyoorawongs, the Founder and CEO of LoanSense. Catalina joins Jen Du Plessis to share how they’re helping to reduce debt and increase home affordability. Whether you’re an entrepreneur or a real estate agent, you’ll gain valuable insights on how you can get relieved of your student loans today.
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I’m excited every episode. I went back to all of my episodes and I say, “I’m delighted, or I’m excited for every single episode that I do.” Even after all this time, I’m excited for every opportunity that I have, because I know I’m going to learn, and I know that the readers are going to learn. Our guest is Catalina. Catalina with LoanSense. We’re going to talk specifically about something that has to do with student loans. If you’re a real estate agent, hang in because you want to know this. If you’re an entrepreneur, hang in because you may have student loans that you need to have get restructured, get paid off, had some relief from, and that is exactly what Catalina does.
She helps people reduce debt and increase home affordability. That’s what the key is because we know that’s an issue. She helps people save loans, so they don’t go away because someone doesn’t qualify, and as a result, prevent loan drop off or conversion ratio is dropping. For loan officers, maintain their pipeline, and increase sales. The thing is it’s not just for loan officers, it’s also for real estate agents. Real estate agents need to read this message as well. When they’re talking to clients that say, “I want to buy, but instead I’m going to rent because I know I have student loans and I don’t qualify.” That’s the trigger they should be hearing as well. Welcome to our show, Catalina. I’m so delighted to have you here.
Thanks, Jen. I appreciate it. I’m happy to share.
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Let’s talk about what you do. I know that you have a plug-and-play system that loan officers could tap into for their clients. When I think about a plug and play system, it reminds me of credit restoration as well. I know that you’re uniquely different than credit restoration. Walk us through how do we get engaged with you as opposed to an engagement with credit restoration, and then we’ll talk about what you do.
I’ll address the concern first on how we’re not credit restoration. The rising trend of this generation, those under 45, is high debt-to-income. That is the number one reason people are disqualified from financing, which essentially disqualifies them from buying a house and the real estate transaction as well. It’s not due to needing credit dispute letters or needing to restore their credit, it’s because they have too much consumer debt. That consumer debt comes in the form of credit card, car payments, but increasingly, student loan debt.
What we do is we help people reduce their debt-to-income so they can qualify for mortgage leading with student loan debt, because there are so many federal relief programs that people can enroll in that will reduce that payment and give them interest subsidy if they file into the program. LoanSense does all of that. We’re different from credit restoration because we don’t touch the credit report. We don’t touch to credit repair. We are a comprehensive advisory solution that is tech-enabled to help people reduce the DTI, including student debt and other forms of debt, but beating with student debt because it’s the number one barrier for those under 45.
Prior to COVID, the average consumer had $46,000 in auto loans. Hopefully, they haven’t had to buy gas as often so they can pay that off faster. Let’s hope people did that. I look at that and I’m thinking there’s probably going to be some type of a shift because of COVID, people maybe don’t feel like they need a second car so they’re selling cars. What’s happening in the student loan and educational piece of this, because universities, we’re hearing it left and right, the enrollment in universities is starting to decline, or maybe it’s shifting into distance learning. We already have a segment that needs some relief, but what do you see as for the future going? Is this something that down the road is going to be a little more diminished or you see that it’s going to continue to grow because people are working from home and now they say, “I can go to school?” What are your thoughts there?
The largest segment of consumers with student debt aren’t people that graduate with a degree. About 15 million Americans go to school, start school and never get a degree. You can enroll for a semester, take six credits, get access to student loans and use those funds for outside expenses that’s outside of tuition as well. Like 14% of student loan money goes to alcohol. For example, they did a study. There are all kinds of things you can buy with living expenses. A lot of people get access to these funds and they use it for other things outside their tuition and may not even get a degree. I’m not saying anything wrong with that. I’m saying the system has made it so that everyone can access these funds, and it’s inflating the amount of debt people are taking for an education.
The trend moving forward, we’re going to have a huge change in the way people think of education. There’s going to be a huge proliferation of online education. Google released six months certificates for project managers, UX designers, and Google is saying, “We’re going to treat this six-month certification like a college degree.” It’s $49 a month. What’s going to happen is, tech companies and other companies are going to come out and say, “You could do this certificate program and we’ll hire you for a decent wage job.” It’s competing with the structure of four-year degrees. Four-year institutions are going to have to rethink how they go about educating young Americans.
Nobody cares where you graduated from anymore. It’s what you can do. We already know that. It used to be that way. It used to be where did you graduate from and do you have the degree, and now it’s, “What can you do.” We have the largest segment of the market being Gen Y. They’re giggers. They do gigs. They’re not so interested in having a real job. It’ll be interesting to see what happens moving forward. I want to talk about this. I had a workshop, we had Dave Stevens on, who’s dear friend of mine and was the former CEO of Mortgage Bankers Association. He does a lot of statistical stuff. He was with HUD.
One of the questions that was posed in the chat was about student loans. Do you see that we’re going to have any relief with student loans with the new administration and all of that? We do have a tsunami of homeownership that’s about ready to enter our marketplace in the mortgage and real estate space, and that being in the multi-dimension of ethnicity that’s coming in because there’s going to be some additional homeownership relief that comes in for that sake. Generally, it’s going to come in, but it’s going to provide a tsunami. This question was, “That’s great. Except that if they still have this crazy student loan, nobody’s going to qualify. No one’s going to be able to qualify.” It was interesting that they brought that in. His response was, “Probably we won’t see much happening.” That’s a good thing for you because now you’re a resource for people.
First of all, as an entrepreneur, I don’t wish for the existence of a problem to make my business exist. I want to solve a problem to help people. If the problem has been solved, I’ll move on to solve another. That’s number one. The myth that “I need a persistent problem to exist as a business,” is false. Number two, because that’s going to be a problem no matter what and there’s no real comprehensive debt management and debt planning solution out there that’s been tech enabled that’s been effective in the marketplace. That is what we’re focusing on. Student debt is not our only concern. Here’s the thing, we don’t need to wait for student loan relief. There’s already very generous student loan relief. That’s the thing people don’t understand. Two-thirds of Americans qualify to reduce their payments once it gets kicked in by the this were in CARES Act, $0 payments now.
If a person works for a nonprofit or has experienced a drop in wages because of this pandemic, 2/3 of Americans, before this pandemic, qualify to reduce their monthly loan payment. Those are programs that are already in existence that Obama put into effect. The problem is people don’t know what paperwork to file and where to go. LoanSense solves that problem. We do that all for the consumer. Don’t wait on, “Is there going to be a relief?” There are already tons of relief. It’s a matter of understanding what relief you qualify for, and that’s what LoanSense does, we plug into the lending process, but also, we have tools if a real estate agent wants to even put us up on their website as a tool. The point is, we estimate what that reduction amount is, and then we help the individual manage that load and share back all the debt-to-income calculations, even back with their lender so that the lender doesn’t have to understand any student loan policy or mortgage credit rules to be able to help that individual. Don’t wait for any extra laws to pass, get relieved now if you need it in order to achieve your goals.
How does this affect credit generally, scores, when you’re in a relief program? That’s going to be a question, it’s like, “There’s got to be a catch here. Whenever we reduce that, it’s being tagged on to the end, or I’m going to be shown as being late payments.” Help us make sure that we understand that, because if people want to use this program, they need to fully understand how to be able to share this with their client.
It does not negatively impact your credit. What it does is instead of showing the fully amortized amount on your credit report, it shows that reduced payment amount. It could be reduced all the way to $0, depending on how much you earn. As long as you’re making that payment, you are improving your credit. It’s when people can’t afford the payment and they don’t understand the relief options, they stop paying it and go into default, which 1 in 5 Americans are doing, that is when it’s going to hurt your credit.
By reducing your payment and being able to afford the payment, you’re improving your credit by about 9 to 20 points over 3 to 6 payments. Once you reduce your loan payment and have funds to pay off other debt, then you continue to improve your credit score. We’re helping consumers figure out how to get out of a crushing student debt burden so they can focus those funds on other forms of debt that may be higher interests that don’t have Federal Government relief so that they can get their debt-to-income ratio and a standing to be able to qualify in 3 to 6 months instead of three years because they’re not able to figure it out on their own.
One of the things that you had told me was student debt is the number one barrier to homeownership, 2/3 of Millennials have student debt, consumers are pushing off homeownership 4 to 5 years because of student debt, and 8 out of 10 borrowers have denied a mortgage because of student debt. I want to talk about the consumers are pushing off homeownership 4 to 5 years. I’m going to ask you some market things, this has nothing to do with the loan part. I talked to a client, they had 56 offers on a home, and that was in Utah. What do you see is the challenge for people that want to get into homeownership, but then are challenged now having to go through this process and saying, “I did all this work, and now I can’t even get the house I want to do?” It’s a general, what is your take what’s happening in the marketplace?
First and foremost, I want to say something about the 8 out of 10 people that are denied, not necessarily because of student debt, 8 out of 10 that come into are lender’s pipeline don’t ultimately leave with an ability to get that financing and the leading reason is a high debt to income. For those under 45, it’s driven by student debt. From a market perspective like every economic equation, there’s supply and demand. What LoanSense is assisting, especially moderate-income Americans, those are typical users, $45,000 to about $70,000 as an individual, not family earning power. Our goal is to help more middle-income Americans achieve the dream of homeownership. We can help those with higher income and higher debt, but our focus is on this middle-income American because that’s who needs the most help right now.
There’s the supply and demand side. The demand side, we’re helping with the demand side, we’re helping prepare more consumers so that we don’t have second-class renting citizenship forever because of the debt loan. There’s also the supply side of the housing. What is broken in the US now, unfortunately, that we’re not actively attempting to solve is we’re working on that demand side of the equation and not the supply side. A lot of things need to happen in the US infrastructure and construction and figuring out how to build homes for cheaper, figuring out how to make homes more flexible to the needs of this generation, which is moving to smaller size homes, because we’re having smaller families.
There’s a lot of things that need to happen on the supply side of the housing that we’re not necessarily tackling that need to be addressed. It’s part of the persistent problem. It’s just economics. If we continue to decrease interest rates, there’s going to be an influx of people interested in housing because interest rates are so low, but the supply side of housing doesn’t exist. We can’t construct fast enough. It’s that general equation while interest rates are low, that’s going to be a persistent problem. How do I address it? You be prepared, you be competitive, you be an offer that’s more attractive, or maybe you wait and it’s not now you’re going to buy, maybe it has to be 3, 6, 8 months from now. I don’t know the answer, but I understand what’s happening and the problem.
I wasn’t asking for your answer. I was asking for your opinion on it because I have opinions on it too. One of the things that we’re seeing springing up here in our area is developers buying land, and then instead of developing a whole bunch of houses with driveways, they’re doing tiny houses in a complete neighborhood. It’s almost like a homeless camp thing, but it’s complete neighborhoods of tiny homes. These are people that are buying and saying, “I need to buy something. I need to get in the game and be part of this.” They’re permanent and it’s going to be interesting to see what happens there. There’s going to be a big conversion of commercial into condominiums.
These vacant buildings with offices, some walls will be knocked down and do some condo conversions. Different than we used to in the past where we converted from apartments to, but now we’re going to convert from commercial too because these things are going to sit there. It’s going to be the craziest thing in the world. I’m the loan officer and I’m saying, “Just shut up and get to the bottom line on this.” How do I get engaged with you? How can I close more business? How can I get more people to qualify? Those that are reading, you know I’m all about action. What would I do? One, I would get back to all my clients that didn’t qualify. Two, I would share this with my realtor colleagues and my financial planner colleagues, because a lot of people that have student loans also go to financial planners for advice.
Also with the lenders too.
The scalability. I would do a class on this and do a webinar on it and say, “I have something new for us as we start heading into the new marketplace.” What am I going to do with you? How do I engage with you to introduce you or my client to you?
First of all, we have tons of materials so that lenders, realtors can share with their own clients, people that they’ve engaged, but denied. If they have email lists, they can use our materials, that’s one way. Another way is we also have recorded webinars that we’re happy to share, as well as if you have a group of a certain size, we’re happy to even do one live and answer questions. The live webinar, it also acts as a product demo, those are two ways. Get our materials, share them, invite a group of your network that helps you whatever that core group of people you rely on to close transactions, invite them, your lender, your planners, your realtor colleagues, your lender colleagues, and your brokerage.
Invite us to come to a demo. We’re happy to talk about the problem we solve, the tech-enabled solution, and we’ll work with you, whether you want it to be a direct referral or whether you want our technology tools on your site and tech-enable the process. If you want us to hook into send information to your CRM even, there’s ways we can directly work together or ways that we can work on a referral basis. I’d invite you to learn more. You’ll get a special offer if you come through this show. You give us your email, phone number and then we book a time with you. If you’re interested, we’ll follow up with more information.
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Do you keep people updated on what’s happening? Do you have a mechanism that you keep loan officers updated as to whether the client has entertained that or not?
First of all, two forms of updates. If you sign up at the Bitly link, you will be on our email list and we send out information weekly. Also, we keep you updated by working with you. As a referral source, we keep leads in your pipeline at all times. That means that you refer them to us for one reason, because that student debt and they want to close now, but student debt is the main impediment, we can help them get that lower and manage their student debt in about three weeks’ time. If other forms of debt, it takes longer. What we do is we keep you updated. When the debt-to-income is reduced for the lender, for example, we keep them informed, we keep in communication with the lender. If the consumer gets a session with our loan advisor, we’ll even CC any communication to the loan officer if a consumer consent. We keep the loan officer in the loop and help them understand the DTI and the impacts of the DTI once we’ve worked with our client.
This is interesting because there’s credit restoration where the credit restoration company will keep us apprised of the credit score. What you’re talking about here at LoanSense is keeping us apprised of the DTI position that’s in there. How has the consumer responded to this? I don’t want to talk price but is this expensive? Is this moderately expensive?
We can talk price but the average student loan savings we receive, if you come to our information session, we tell you exactly who to refer, we save about $600 on average, and we help improve home affordability by about $100,000 on average. The value is huge because that $600 can go pay off other debt if they’re not ready now, or that $600 can increase affordability by reducing the debt-to-income. We share back all the DTI calculations across all mortgage types, FHA, Fannie and Freddie, VA, USDA so the loan officer doesn’t have to guess the policy on, “What is the credit policy again?” We take that equation out. If they want assistance enrolling in the program, which is mostly tech-enabled, it’s like a TurboTax for student loan experience. It’s $129.
It’s TurboTax for student loans. We share back the DTI with the lender. If they want to speak to a loan expert and get a comprehensive plan, it’s $3.99. We especially recommend it for those that are bad student loan standing like they’ve had their wages garnished, they’re in default or they work for a nonprofit government, they can get a lot of loan relief. We recommend that, or they are going to get married, want to buy a house and have no understanding of marriage implications on their student loan payment. Your student loan payment can double or triple if you don’t understand, because if you get married and you file your income taxes joining now, they can count your spouse’s income to pay your student loan.
We help people understand, if they’re going to get married, they want to buy a house, we’re a holistic planner. Even after they close, LoanSense will still be there. If they get communication from their service that they don’t understand, they can still connect with us and we’ll be supportive and help them with their goals and objectives along the lifetime of their student loan. It’s a way for you to continue to provide that added support. If you’re a lender and you directly integrate with us and we serve them, we can also share back information on the consumer as long as they consent back with that lender. If they can refinance or they’re a great candidate to refinance, take money on and pay down their student loan, those are product offerings most lenders have never even thought about offering. We can point out those candidates. We have a huge data play with LoanSense and working with lenders so that we can assist more consumers achieve their goals as efficiently as possible.
When you say that 80% of people were eligible for student debt relief prior to COVID as generally are, why wouldn’t someone be eligible? Is it if they make too much money? A lot of times they may not and I’m here in the Washington DC area. We have highly paid professionals who have high debt like $200,000, $300,000 in student loans and they make $300. They still need relief. It’s a scalable law. I feel like it’s a law of scales in it. Some people get relief because they make money less than a certain amount of money.
There’s no income cap. It’s all about debt-to-income. Here’s an example if you want to talk about higher earners. We helped a doctor get $290,000 of forgiveness plus $117 refund from the US Treasury in overpayments. They qualify based on the debt-to-income ratio and also based on who their employer is, what their profession is. It’s not about the earning potential. The reason I talk about middle income Americans is because they’re the people that a high student debt amount impacts their ability afford the most. It’s not because we can’t serve higher earning people. It’s just that it impacts their debt to income a little less for the most part because they earn their money.
To clarify, it’s not that higher earning people don’t qualify and can’t qualify. To address this statistic, 2/3 of Americans qualify to reduce their payments, it’s not that it’s lower because of COVID. It’s that COVID has put people on $0 interest and $0 payments now so the impact on their student loans isn’t felt right now because they’re not making payments, but it still completely affects the DTI. The DTI still counts that student loan even if the consumer isn’t paying. We need to help change and get the payment change even if it’s officially recorded at $0 so that we can lower the DTI so that people can close.
Thank you so much for clarifying that for me as well. If someone wants to get in touch with you, what is going to be the best way? We have the affiliate link here, it’s Bit.Ly/JenDuPlessis. What is the best way for someone to get involved in this? Is it to go ahead and go through that affiliate link and then that’d be the nice portal for you to get some little benefits and that’s where they can get the demo if they want to have the demo or should they be calling you directly and saying, “We want to do something in our branch and in our brokerage firm?”
I recommend going through that link because then we’re giving three months of free use of our tools through that link. That’s the best possible way. If you have additional questions, we always want to be available to answer that. You can email us at Sales@MyLoanSense.com, which our partnership and sales team will automatically get back to you, or you could text or call us at (734) 203-0101. That is our office number, but now since we’re out of office, it’s linked to our cell phones. You can even text it. You can text to schedule, you can email us, whatever format is best for you, but we recommend going to the Bitly link because then we know that they’re tracked to this offer and we’re pretty responsive through that format as well. We won’t forget you don’t worry.
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What would you like to leave us with if a loan officer and a real estate agent and some financial planner, an entrepreneur is reading? What would you to leave us with in helping us grow our business?
What I want to leave the homeownership journey audience whether you’re trying to buying a home or helping people transact is, I know, oftentimes, as people running your own businesses that we often think about how much money we’re making, “Did I close this transaction? Did I not?” I always try to remember that behind every denial that a person that a person receives is a human. A human who is told no without understanding their options, it’s a hard for them. It can boost your business if you help give that human. They’re a trash funnel in a lot of lenders eyes, and a lot of real estate brokerage eyes because it’s about numbers, dollars and cents, but behind those numbers, dollars and cents and transactions are humans.
LoanSense can help even be on an adverse action letter that deny someone, be a resource of support and help link them back when they’re ready, because the reality is so few people will ever come back to you if you don’t provide those additional resources. If you do, and they remember that, and we’re connected to you already, we can get them back that can boost your business and you’re treating them and humanizing the no. Remember, behind every transaction is that human, and some humans need more help than others to figure out how to get back. Our goal is to help every American understand the steps to make home ownership possible.
We can’t realize that truth if we’re not giving people the supportive resources they need to get there. Even I as a CEO, even though I’m not meeting with people day in and day out like my loan counselors are, I try to listen in to these quality control calls because I want to remember who we represent and who we serve and what we’re trying to achieve for them. It’s huge. I want to thank you for your work, and I want to leave you with that because we hear stories every day and it’s heartbreaking, and we want to be part of the solution for more Americans to achieve their dreams.
I appreciate that. The readers in this show already know that. They know that annuity income for them. We don’t just poopoo everybody away and say, “Sorry, we can’t help you.” Don’t worry about it. That’s how we level up and become a master. That’s how we become a master and an expert. We don’t just do transactions. We do relationships and ensure that we have that annuity income in the future. Hence the reason that I have you on here, and yet another tool in our toolbox to help make that happen and manifest it. I want to thank you so much, Catalina, for being with us. We are so excited to learn what you’re doing and all the wonderful work that you’re doing to help people out there, but also help people grow their businesses in addition to that. Thank you so much for taking your time. We look forward to seeing you on the next episode.
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About Catalina Kaiyoorawongs
Catalina is a graduate of both Columbia University and University Michigan and a Gates Foundation Fellow well-versed in federal education policy and creating impactful financial programs for higher education. In four years as Associate Executive Director at UNIDOSNOW, Catalina increased their funding fivefold and launched programs that assisted ~300 students secure $1M+ in grant funding, placing Sarasota County #1 in Florida in FAFSA completion. While at UofM, she built the foundation for LoanSense by counseling her peers in over $50 Million in student loan debt on an Excel spreadsheet, those same algorithms were used to build LoanSense’s products and tools.
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