Federal Student loans have been paused for another month.
President Trump has signed an executive order to continue the now nearly year long pause of federal student loan payments. This order is intended to function as a continuation of the Cares Act which was passed by congress earlier this year.
-Payments are currently set to resume after January 31, 2021
-Accumulation of interest on Federal Student Loans is paused over the same period
-Debt collections on defaulted federal student loans have been paused
-Joe Biden is expected to continue efforts upon inauguration (Jan 20, 2021)
-Private student loans do not qualify for benefits under the Cares Act
-Those with private student loans should seek out their loaning institution who may also be offering relief
Opposition to expanded relief
Critics of relief extended past where warranted by COVID-19 claim the act of fully waiving student debt to be prohibitively expensive and an unequal way of distributing welfare to citizens. It is also worth noting that while both parties in congress proposed solutions they were unable to pass aid for indebted students, causing a further lack of confidence in their ability to resolve the issue of student debt.
Student Loan Solutions
It is still unclear what actions Biden will take once in office as well as what actions a President can legally take. There is much confusion surrounding the ability of the office to waive student debt through an executive order. What’s important is that loan borrowers are prepared to do their due diligence by fulfilling their financial obligations and don’t seek to become dependent on government relief.
While many grads may have difficulty making monthly payments and handling mounting interest, there are options available which can lighten the stress of their debt and allow them to make strides towards other important goals, such as beginning to save for retirement which is far better to begin sooner than later.
With payments set to resume, the indebted and any cosigners should be encouraged to investigate the value provided by refinancing. Which can this result in a lower interest rate, a longer term, and potentially a lower overall cost.
Such a weight as student debt placed on someone, especially a young someone, can have drastic implications on their future. If not properly handled it can result in perpetual debt and rob one of their goals and ambitions. If you are faced with the issue of student debt and would like to discuss the merit of strategies, how they would apply to you as an individual, and what can be done to improve your situation; click here for a complementary strategy session with Michael Romanello. Please specify your appointment type (Video call, Phone Call, or a Covid-19 compliant In Person Meeting) under notes.
Michael G.Romanello is a registered representative of and offers Securities through Independence Capital Company Inc. Member FINRA/SIPC.
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Investment Advisory Services offered through Independence Capital Company Inc.