PHOENIX — With the coronavirus pandemic stretching on for months, payments for federal student loans have been put on hold through September of 2021. On top of the pause, lawmakers, including President Biden, have been discussing plans to wipe out existing student loan debt.
It was a campaign promise to help Americans burdened by debts, but the initial $50,000 that was discussed keeps getting smaller.
When asked on February 16 during a CNN Town Hall how he was going to work to wipe out $50,000, President Biden said he wasn't working toward that number, instead, supporting $10,000 in loan forgiveness.
"There are nearly 15 million borrowers who have loan amounts under $10,000. So, Biden's proposal could get rid of their debt completely," said Anna Helhoski, a student loan expert with Nerdwallet.
Helhoski says why that may be disappointing to some, individuals with this amount of debt often start college but never reach a degree. This leaves them without a higher-paying job in most cases to pay it off.
The big question for many is should you hold out for that possible forgiveness - no matter how much it ends up being - or pay down your loan while payments are on hold. The answer to that is tricky.
The amount of $10,000 is not set in stone and with payments on pause for the next seven months, there is no pressure for lawmakers to act now.
While it is likely to be passed, it could still get scaled back by lawmakers as far as who qualifies based on current income or even total debt. So, here are some things to consider.
Making payments now can help you pay less over time.
"You can kind of, you know, start chipping away at that debt a little bit without dealing with interest," said Helhoski.
It can, however, put you at risk of reducing the amount of forgiveness you can get at the end of your 20 or 25-year repayment period if you're on an income-driven repayment plan.
The good thing, if you don't pay now, you won't be penalized, and you can put money into an emergency fund in case you lose your job or something else happens unexpectedly.
A big thing to remember is scammers are trying to take advantage of the pandemic. They are making calls saying they can wipe out some or all of your debt by enrolling in a debt relief plan with them. DON'T share your information with them and NEVER pay for student loan help.
Instead, look into one of these programs or contact your loan servicer.
- Loan Forgiveness - StudentAid.Gov (https://studentaid.gov/manage-loans/forgiveness-cancellation)
- Managing your Loans - StudentAid.Gov (https://studentaid.gov/h/manage-loans)
- How to contact your servicer - StudentAid.Gov (https://studentaid.gov/manage-loans/repayment/servicers)