Student Loan Forgiveness- Should I pay off my student loans?

You might be tempted to hold off on paying down your federal student loans… but the longer you wait, the more time and money you might be wasting.

Although the Corona virus is absolutely terrible and totally isn’t worth the benefit, one benefit that has come out of the pandemic is temporary student loan forbearance.

Your student loans are still due, just not yet.

However, one great thing about pandemic-induced forbearance is that the conversation about the burden of student loans is now a hot topic on the table. Pausing payments has shed light on what debt relief would feel like and what positive (or negative) economic effects could come from student loan forgiveness.

What the media is saying about student loan forgiveness

Student loan forgiveness is a hot political discussion and is becoming quite divisive. Some argue that college graduates make up a small percentage of the population, and therefore this relief would benefit only a minor proportion of the population.

Additionally, tax payers who did not attend college or who have already paid off their own student loans will now bear the burden of paying off debt someone else signed for. Not to mention, many find it unfair to those who buckled down and already paid their dues without the help of government relief.

On the other hand, others believe that forgiving all or a portion of student loan debt would benefit the economy by potentially allowing millennial and GenX-ers the ability to afford purchasing a home. Likewise, debt relief would allow for more goods and services to be purchased, also funneling more money back into the economy.

The same side also argues that since income has not risen to keep up with inflation (unlike college tuition and housing) something must be done in order to get the student loan crisis under control.

Whether you’re for or against student loan forgiveness, the choice is up to you. But, what should you do if you’ve found yourself at the mercy of federal student loans? Here’s what you need to consider:

Plans for student loan forbearance and forgiveness

According to NerdWallet, Joe Biden’s current plan will potentially cancel up to $10,000 of federal student loans. But, it’s not that simple.

This plan only applies to FEDERAL student loans. If you have private loans through lenders like Discover and Sallie Mae, Biden’s plan will not help you.

Also, it is very important to note that not all federal loans will qualify under this plan. Only federal loans that were used for undergraduate tuition will qualify for forgiveness… if his plan is implemented.

In the short term, student loan forbearance has again been extended due to the financial burden that COVID has caused. Student loan forbearance has been extended three times, but it is unclear whether it will happen again. So don’t bank on it.

As it stands now, the Department of Education states that federal loan repayment will begin again after January 31st, 2021. Start preparing for that now if you haven’t already.

Whether you are for or against student loan forgiveness, you might not qualify anyways. Also, the time your federal loans are on forbearance is running out.

So… should I wait to pay my student loans?

Chances are, probably not….

Unless you owe $10,000 or less on your federal student loans, you will likely still owe money even if Biden’s plan does pass.

However, waiting a little longer might not hurt.

The CARES Act dropped all federal student loan interest rates down to 0%. If you have the ability to pay down debt interest-free, you will save hundreds in the long run.

Or, you can use this opportunity to pay more aggressively on private loans that are still accruing interest. This aligns with both the snowball method and the avalanche method.

So, if you owe more than $10,000 in federal student loans or you have private loans, keep paying. There is no question that less debt will bring independence to your personal finances and a boost into the economy.

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