Former White House press secretary Jen Psaki said in a recent press conference, referring to the suspension of interest rates on debts.
In fact, some borrowers, like 28-year-old Lea Ceasrine, have kept their payments the same.
For them, this 30-month moratorium has provided a rare opportunity to make some of their loans while no interest accrues.
Ceasrine initially took out a mixture of private and federal student loans to pay for his bachelor’s and master’s degrees and graduated with a debt balance of nearly $70,000.
“During the pandemic, I made it a goal to pay off my first loan,” says Ceasrine. The Chicago-based podcast producer isn’t just focusing on her student debt, she’s also ramping up her payments.
Over the past two years, she’s brought her outstanding balance down to $54,000.
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Approximately 1.2% of borrowers have withheld payments and ignored their loan balance for the period prolonged student loan freezeaccording to student loan expert Mark Kantrowitz, based on loan repayment data from the US Department of Education.
Mr. Kantrowitz noted that those payments were also included in the 120-payment request for public service debt forgiveness.
But now, talk about big student loan forgiveness are back on the table prompting these borrowers to question whether follow-up payments are financially sound.
Ceasrine said she only stopped paying when The debate around student debt forgiveness heats up.
“I’m paying $1,300 a month, I’m not putting anything else into savings to be able to make the maximum payment I can,” she said. “I can’t sustain that job.”
Plus, Ceasrine said she hopes that there will be legislation to partially compensate, for a system that has largely failed her.
“For students who are put in a precarious situation, it is essential because we are still at the bottom of the economic ladder and we cannot climb up yet,” says Ceasrine.
“I went to school as a student with no financial aid,” she explains. “I paid off my first loan at 17 because a college experience was worth nothing to me.”
After graduation, “I don’t make enough money to pay it back.”
Although President Joe Biden has express skepticism about the past forgiveness of student loan debt, he recently appointed in fact, he can offer some form of student loan cancellation, according to arrive many reports.
“It really shifts the president’s responsibility to make his plans clear sooner,” said Whitney Barkley-Denney, senior policy adviser at the Center for Responsible Lending. is later”.
“Having a terrible time here,” Barkley-Denney said. “People need to plan for how they will handle this loan in the future.”
Time to stop paying?
“I don’t recommend paying off federal student loans at this time,” said Brian Leslie, financial planning director at Edelman Financial Engines.
“We don’t know if we’ll eventually hit a student loan forgiveness score, but right now the cost to play the ‘wait and see’ game is essentially nothing.”
Still, it’s important to stay disciplined, says Leslie.
“If you’re taking your money into a student loan and using it to buy a new jet ski or some other discounted property, that might not be the best use.”
He advises considering saving money or using it to pay off other debts.
“If you have an employer retirement plan and you don’t contribute fully to get the match, that’s the first place I would go for that dollar.”
Also, put some funds aside High yield savings account. “If we get to a point where tolerance is over and forgiveness is not possible, you can always take the money you have accumulated and apply it once to your student loans,” says Leslie. there,” said Leslie.
According to Laurence Kotlikoff, professor of economics at Boston University and author of the book “Money Magic,” loan forgiveness is still a long way off.
“The president does not have the power to unilaterally cancel student debt,” he said. “He can’t just wave a magic wand.”
According to Kotlikoff, Congress would have to pass a student loan forgiveness bill and without 60 votes in the Senate, “I don’t see a way to cancel student loans unless someone knows something that’s going to happen.” I do not do it.”
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