You may be wondering, should I pay off my student loans while federally-held student loans are on an administrative forbearance with 0% interest an d without a requirement to pay until . And on top of that there are discussions about forgiveness. If you don’t have a loan with COVID-19 relief being offered, then you may be wondering how all these discussions affect you.
Here’s the thing, you always want to make student loan repayment a priority, even now. Even if additional assistance comes from the government, you have to wait for that to happen. While you wait, you want to make sure that you are staying current with your student loans.
If you’re wondering if you should pay off your student loans, the overwhelming answer is YES! Student loans are very difficult to discharge in a bankruptcy, and not paying off your student loans can result in wage garnishment and other legal action.
Should I Pay Off My Student Loans Early
If you can, you should pay off your student loans early. There are no prepayment penalties on federal or private student loans, and we recommend taking advantage of this to save yourself money in the long run. Paying off your student loans early will save you interest over the life of the loan, which is money that you could utilize for other significant expenses like a down payment on a home. In addition, knocking down your student loan debt payday loans without a bank account in Westlake LA faster gives you more time to build up your credit score for other loans you may need.
Student Loan Forgiveness 2021
There has been a lot of talk about the government offering $10,000 to $50,000 various amounts of student loan forgiveness-beyond existing , beyond the current forgiveness programs, which include like Public Service Loan Forgiveness. You may be wondering, will this happen? Well, the answer is, we will only know once the decision is either approved by Congress, granted in an executable executive order, or authorized under an enforceable law. But until that happens, nothing is final or guaranteed. Due to the COVID-19 pandemic, federal student loans owned by the U.S. Department of Education are on an administrative forbearance (postponement) with a zero percent interest rate until .
PSLF Forgiveness Update: Time-Limited Waiver Opportunity
With respect to Public Student Loan Forgiveness, on , the U.S. Department of Education (ED) announced a time-limited waiver opportunity to its PSLF program rules. Under the time- limited waiver opportunity, borrowers could receive credit for past payments which would not have been previously classified as qualifying payments or instances in which payments were not made, specifically, servicemembers who were advised to put their loans in a deferment or forbearance status and did not make payments while on active duty. The months the borrower spent on active duty can be counted toward the PSLF.
Borrowers will need to submit a PSLF form-the single application used for a review of employment certification, payment counts, and processing of forgiveness-on or before to have previously ineligible payments counted.
The time- limited waiver essentially waives all requirements except the employment requirement. If you have Federal Family Education Loans (FFEL) or Perkins loans, you will still be required to consolidate your loan with a Direct Consolidation Loan by . However, any payments made on your federal student loans, under any repayment plan (partial, full, or late), on any FFEL, Perkins, or Direct Loan, will count towards your 120 qualifying payments.
Under the new time-limited waiver, you need to have been employed or are currently employed by an eligible employer (government, 501(c)(3) not-for-profit, or other not-for-profit organization which qualifies), and working full-time. You can still qualify for the full-time requirement if you are working multiple part-time jobs (that totals at least 30 hours per week) with eligible employers. For more information on which employers meet PSLF Program requirements visit the PSLF Help Tool.