Student debt has been at the forefront of the financial implications of the coronavirus. Since the onset of the pandemic in 2020, student loan payments have been delayed a record 5 times! You may be asking yourself, why do they keep pushing these payments back? And will student loans ever be forgiven? Some experts say that although the delayed repayment due to the pandemic creates some much-needed comfort for those in financial hardship as a result of the pandemic, but the only solution according to experts is to forgive the debt as promised by the administration. Biden has firmly said he’d forgive student loans during his time in office, but no actions have been taken. Figures for forgiveness began as high as $50,000 of forgiven debt per borrower but now the target forgiveness is about $10,000 per borrower.
In the mix of all of the talks about housing prices exploding, inflation, and money printing a major problem that contributes to the student debt crisis is simply the cost of higher education. The average college student graduates with over $30,000 in student loans. But many are not as lucky, some private institutions charge north of $65,000 per year to attend their universities. While these costs are high, they keep climbing with the tuition rising 1-2k per year… for the exact same services. Will we see some universities charging $100,000 per year within the next 15 years? Probably. A number of student borrowers are asking is now the perfect time to refinance with rates so low? We'll get more into that later.
To go back to the inceptions of the pandemic in March 2020, the U.S. Department of Education announced the ability for all student borrowers (with federal loans) to essentially press pause on their payments and allow their debt to ride interest-free. Nearly all borrowers accepted, but few are getting ahead of this debt by paying it off while it’s accumulating zero interest. This relief was supposed to last just 6 months initially, but now nearly 2 years later, and 5 extensions filed the pause is still 100% in effect. The current break of the pause is set to end in May, but no one knows if this will hold since the previous extension was announced just 30 days before payments were set to resume.
“We know that millions of student loan borrowers are still coping with the impacts of the pandemic and need some more time before resuming payments,” Biden said in a statement Dec. 22.