Below is extracted from an advice column. The person asking advice is a thirty year old who had been making student loan payments regularly, payments not much higher than her car payment which she still makes. But she stopped the student loan payments because during the pandemic interest has been stopped. She has not lost her job or had pay reduced.
She earns $63,000 annually.
- Continue to not make payments while the loan is in forbearance and the interest rate is 0% for federal student loans.
- Wait to see if this administration moves forward with waiving student loan debt of up to $10K (higher amounts of forgiveness are being discussed as well, so it’s very much a wait-and-see moment for student loans)
- I very rarely advise people to not pay off debt, but given the forbearance program as well as the looming potential for loan forgiveness I think it’s wise not to pay down federal student loans right now (provided you’re certain you qualify for the federal student loan forbearance program. Read more about pandemic-specific financial programs in my series.
- Once the COVID forbearance program ends on September 30, 2021 (although keep an eye on this date as it continues to be pushed back), resume paying the monthly minimum required payment.
If I was in this position I think I would do the same thing, not make payments. Of course, it would not be the moral thing to do because I incurred the debt and I am able to make payments.
But this is what you get when policies are based on generalizations, on ignoring obligations on telling people they are victims of something or someone and therefore deserve to have others bail them out.