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During the pandemic, I have been repaying my federal parents’ student loans and have not missed any payments. I currently owe two children 100,000 U.S. dollars to go to college.
My pension, savings and social security income also made me retired. Should I not repay these loans during the pandemic and wait until October 1st to pay them off? Should I still pay? Delay in payment? I hope there are some cancellations.
-L
Dear L.,
It’s hard to tell, review whether you should stop repaying these loans. When federal student loans were automatically tolerated (meaning that repayments and interest were suspended), it was March 13, 2020, which now seems to be a lifetime ago. This is the beginning of a very dark chapter, there is no end.
You can make the best decision based on the information you have. I guess you have been paying because you want to get rid of the debt as soon as possible, but now talking about forgiveness, you are kicking yourself.
I think you called the correct call Continue payment, Provided that you have no accrued debts. In the past 14 months, all your payments have been paid to the principal.
However, if you still regret this decision, then this is one of the rare experiences in life. You can request a refund of any federal student loan that is forgiving by contacting your loan servicer.If you don’t believe me, please check Coronavirus and tolerance information page On the Federal Student Aid website of the U.S. Department of Education.
If you have other high-interest debts (such as credit card balances), requesting a refund is a good choice. You can first include these loan payments in the accrued interest debt, and then pay off the student loan. However, I believe that forgiveness of student loans should not be a major factor in your decision here.
Yes, President Biden supports Cancel the $10,000 federal loan Every borrower. However, as a few progressive Democrats have called for, he has not yet accepted the proposal to forgive up to $50,000 in debt. Even $10,000 is not close to reality.
I certainly do not hope for forgiveness of $50,000, which is actually your slate that you need to wipe yourself. However, if you are more optimistic than me, the best solution is to stop payments within the next five months to understand how things are going.
However, I will not spend this money or investment. Put it in a bank account to ensure safety. If there is no forgiveness before or after September 30, you can make a lump-sum payment for these five months and then start accumulating interest.
You didn’t say whether to repay these loans will stress you Retirement budget. If you are having difficulty paying, you will need to have two conversations.
The first is with your student loan servicer. Depending on your income, you can reduce your monthly payments through an income-based repayment plan. You need to first consolidate your Federal Parent PLUS loan into a Federal Direct Consolidation loan.
However, you need to have a bigger conversation with your child. You took on this debt to fund their education. So if they can help you pay, please ask them. If your children are still in school, please be honest with them and tell them how much debt you have. They may not be able to pay you immediately, but at least you can put it on their radar, hoping they can join after graduation.
Maybe someday there will be some degree of forgiveness for student loans. But for now, you need to plan as if it will never become a reality.
Robin Hartill is a registered financial planner and senior writer for The Penny Hoarder.Send your tough money questions to [email protected].
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