What is the Future of Student Loan Payments?
Since March 27th 2020, federal student loan interest rates have been set to 0% and payments has been paused. The original policy which was passed onto President Biden is set to expire September 30th 2021 and resume on October 1st 2021. Since March of 2020, the cease of payments and interest rates has been extended four times and a popular subject on Capitol Hill.
Will student loans be forgiven? Will the policy be extended again? How will this affect my current financial situation?
Tens of millions of borrowers are expected to begin repayment on October 1st2021 and the best course of action would be to review your current loan details now to confirm if the previous payment plan still makes sense to your current financial situation. Items such as principal balance, interest rate, years remaining, etc.
For a lot of providers, turning on the faucet of tens of millions of payments could lead to a system and server disaster. With a two-month head start, this could be the perfect opportunity to ensure all of the personal and financial information is correct on file with your provider.
If you have been laid off, transitioned jobs, or experienced a similar life event you should consider reviewing the options of refinancing, consolidating, or adjusting the existing repayment plan such as income-driven. You may have downsized your home or apartment, moved, or cut your expenses by a large portion so you may be able to increase your monthly payment.
These are all engaging questions and topics of discussion you should be having with yourself, spouse, family and/or financial advisor to ensure you continuously align with your short- and long-term goals. Even the smallest difference in payment for the next 5,10 or 15 years could affect your other planned savings into retirement plans or after-tax investment accounts.
If you have questions, please reach out to your ACM Wealth Advisor.
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