I paid off my parenting student loans during the pandemic and never missed a payment. I currently owe about $ 100,000 for two kids to attend college.
I am also retired with income from my pension, savings, and social security. Shouldn’t I have paid these loans during the pandemic and waited until October 1st to pay them off? Should i still pay? Postpone payment? I hope there is a rejection.
It’s hard to say whether you should have stopped paying these loans retrospectively. When federal student loans were automatically forbidden – meaning payments and interest were suspended – it was March 13, 2020 that now looks like a lifetime ago. It was the beginning of a very dark chapter, the end of which was nowhere in sight.
You made the best possible decisions with the information you had. I suspect you kept making payments because you wanted to get rid of this debt as soon as possible, but now that you are talking about forgiveness, kick yourself.
I think you made the right call continue to make paymentsassuming you have no interest-bearing debt. In the last 14 months, 100% of your payments have gone to the client.
But if you still regret that decision, this is one of those rare times in life that you get a makeover. You can request a refund for any lenient federal student loan payment by contacting your loan service provider. If you don’t believe me, take a look at this Coronavirus and Forbearance Information Page on the Department of Education’s Federal Student Aid website.
Applying for a refund can be a good option if you have other high-yield debt, such as: B. a credit card balance. You could put these loan payments on top of the interest debt first and then pay back the student loan. However, I don’t think student loan forgiveness should be an important factor in your decision making.
Yes, President Joe Biden supported Cancellation of US $ 10,000 federal loan per borrower. But it still has to deal with proposals for up to $ 50,000 in debt relief, as a handful of progressive Democrats have called for. Even the $ 10,000 isn’t realistic.
I certainly wouldn’t bet on $ 50,000 forgiveness, which is essentially what it takes to wipe your slate clean. However, if you are more optimistic than I am, the best solution is to stop paying for the next five months to see how things play out.
However, I would not spend or invest that money. Put it in a bank account so it’s safe. If September 30th comes and goes with no forgiveness in sight, you can make those five-month payments in one lump sum before interest accrues again.
They are not saying whether these loan payments are a burden on you Retirement budget. If you’re having trouble making payments, you need two conversations.
The first is with your student loan service provider. Depending on your income, you may be able to lower your monthly payments through an income-based repayment plan. You must first consolidate your Federal Parent PLUS loan into one Federal Direct Consolidation loan.
But the bigger conversation you need to have is with your children. They took on this debt to help finance their education. If they are able to help you with payments please ask them. If your kids are still in school, be honest with them about how much debt you owe. They may not be able to give you cash for payments right now, but at least you can put it on their radar that you expect them to tune in after they graduate.
Perhaps one day there will be some level of forgiveness for student loans. But now you have to plan like it will never become a reality.
Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
This article originally appeared on www.thepennyhoarder.com