TEXAS, USA — We are waiting to hear any day from the President about student loans. Joe Biden has said that he would make a decision soon on whether to extend holding payments and interest or even forgiving some or all debts, depending on what someone has.
Either way, you should prepare, because at the end of this month the moratorium on student loan payments and interest is set to come to an end. That means that the 48 million Americans who have $1.750 trillion in loan debt will have to be prepared.
Certified Financial Planner, Rolondus Johnson told 6 News, "Budgets are going to be needing to be readjusted. Because those things have been out for the last two years and some change, and that's going to take a big chunk out of the budgets and especially for those that have been in high profile jobs and have been in school for eight, nine and ten years. And they've got an astronomical amount of loans."
And for some who have just been getting by forbearance might be the only option but remember student loan debt can't be discharged through bankruptcy.
So, you’ll need a plan for the future. “Rojo” says, "Now be careful with the forbearance because what happens is, you know with the forbearance you don't have to make any payments for a year or two years, but it's adding interest the whole time. So if you get the opportunity to go into like a forbearance situation, make a few you know, whenever you get some extra money. Make a few payments because that may curtail some of that interest, not all of it but it will curtail some of that interest."
Since interest is always accumulating, I recommend splitting your monthly payments and paying half of the monthly payment amount twice a month. This will cut down the interest you end up playing and will actually shave time off the loan. Rolondus does the same thing with their vehicles.
"That's a great idea, I know myself that with our cars we will make multiple payments throughout the month. And you know you end up at the last of the month, the last payment is all principal. So now you shave up a couple of years off of a car payment so yeah, that's an amazing idea."
Refinancing might also be a good idea as well. But interest rates are climbing and Rojo recommends that you are very aware about exactly what you are signing up for. "We don't know what interest rates are going to do over the next year and some change. And you may refinance to something that's astronomically detrimental to you and your budget so if it's best to stay where you are and if you've got multiple loans to consolidate them it could be a good deal there and kind of get everything in one place."
We expect to hear president Biden's school debt plan laid out sometime this month.
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