Will Student Debt Forgiveness Be Paid For?

*Not financial advice - your money, your choice*

If you want to see what your Federal Student Loan interest rate is or if you find yourself asking "How much will my monthly student loan payment be?", click here and log in to find out.

If you want to see the current rate for Federal Student Loans or are thinking about applying for one, click here. I also have the table below for convenience:

Picture from studentaid.gov

Right now, interest on student loans are paused until the US Dept. of Education implements a student debt relief program OR, if litigation has not been resolved by June 30th, 2023, student loan repayment will begin 60 days after (August 29th, 2023). UPDATE (6/3/2023): the Biden-Harris administration has not renewed the hold on student loan interest rates so 60 days after June 30th, on August 29th 2023, interest will start to build on your student loans. You should receive a notice 21 days before August 29th as a heads-up but USPS isn't always the most reliable so I would start paying my student loans as 8/29/2023 rolls around.

I would only take on one of these loans if having the education will allow for a high enough income to repay the loan (primarily STEM & business subjects, not financial advice; your milage may vary).

One way to see if you can save some money on your student loans is to shop around for refinancing (ideally prior to that August 29th date).

If you opt to go this route, here are the first few steps I would follow:

1. Look at your credit score and improve it if needed (760+ is ideal to get the best rate)

2. Shop around; check with multiple lenders and compare rates

   1. It’s a good idea to set up a table in Excel or Google Sheets to make comparisons easy

   2. Here’s a helpful loan calculator from Bankrate to help with comparing loans

   3. Here’s another resource from them on Best Refinance Student Loans

3. Once you find lenders, you’ll likely get a few repayment options from each (keep track of these in your table):

   1. monthly payments and…

   2. how much you'll pay on your loan in total.

4. Before applying, be sure to read reviews & be wary if you haven’t heard of the lender.

   1. The Consumer Financial Protection Bureau (CFPB; the same gov. org. that just fined Wells Fargo an additional $1.7 billion) has a Consumer Complaint Database that can be helpful here

5. Apply to get the best-fitting loan; this will be a hard credit inquiry & may affect your credit score

   1. Will also need details on existing loans, income verification

   2. Once this has been verified the lender will either send you the funds or pay your loan directly. Payments will begin & interest will accrue as soon as the lender does that.

6. It’s a good idea to set up auto-pay on these to help limit the chance that you’re charged late fees.

Some things to watch out for:

• Adjustable Rate Loans: these are loans that change interest rates every few years based on the standard rate set by the Federal Reserve Bank OR go up based on rules outlined in the loan terms.

  • If interest rates go up, these can be bad - the 2008 housing crash was largely caused by a similar product but for mortgages. Generally, they carry more risk, so I'd steer clear.

• Hidden fees: be sure to check for any hidden fees associated with the loan. These can include:

  • Application fees

  • Origination fees (for starting the loan)

  • Late fees (additional fees if you’re late on a payment)

• Some companies also have some helpful things to keep an eye out for:

  • Offer incentives

  • Discounts

  • Deferment options

Another good idea, regardless of if you figure out that refinancing will be less expensive than keeping your Federal Student Loan, is to figure out your debt pay-off date.

Right now payments are on hold but it’s still good to know as it’s unlikely that student debt will be forgiven. Even if it does end up being forgiven, it’s good to be prepared for all outcomes.

Click here to figure out your debt pay-off date. The Debt Payoff Calculator provided by Calculator.net is a fantastic tool that can figure out how long it will take to pay off one or more debts.

• Generally Credit Card Debt can quickly get out of control so we generally want to pay that down as quickly as is affordable.

Table from Calculator.net

Once you have your output, I recommend buying a bottle of bubbly (non-alcoholic if that’s your jam) and writing the date at which you’re be debt free, on the bottle, so you can celebrate the win when it happens!

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