Hey everyone, it’s Finance Fridays again. This is just a short post highlighting how student loans will be affected by Coronavirus.
The TL;DR from Forbes is:
- Ability to pause payment on your federal student loans until September 30, 2020.
- No interest on your federal student loan payments through September 30, 2020.
- Stops garnishment of wages, Social Security and tax refunds for student loan debt collection.
This is a good thing.
I’m glad something like this was done to help people who may be working less or potentially unemployed during this pandemic.
However, since medical professionals are considered “essential” the likelihood is that the majority of us will still be working.
For those of you who still have student loans (like me), you may want to re-evaluate how you plan to pay them back.
I kind of outlined by plan of attack a few posts ago. However, this has may slightly alter my plan. In general, I will continue my normal Auto-Pay toward federal/private loans. This will not change.
What’s the change?
Given this change, any extra payments I make will be focused entirely on private loans, assuming that the federal loans will be interest-free until September 2020.
For some of you, you may have a system in place where you just pay a certain amount extra toward all of your loans every month. This is probably fine. However, with this change in interest rates to 0% for federal loans, it makes more sense to pay more toward your private ones. It’s worthwhile to take stock of your loans and loan interest to see which (if any) will be 0%.
Unfortunately, for those of you who refinanced, I don’t think this change in federal loan interest rates to 0% will affect you. Your loans are now wholly privately loaned by whoever you refinanced with.
Federal student loan relief may change your attack plan a little.
Take stock of which loans are 0% and make any extra payments to the higher interest private ones.
Be safe out there.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
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