During his presidential campaign, Joe Biden called on Congress to cancel up to $ 10,000 in outstanding student loans per borrower. Senate Democrats have called on the president to write off federal student debt through executive order, but Biden would have preferred Congress to come together to pass the law rather than rely on his presidency.
Prospects for student loan forgiveness grew even darker when Biden left out college debt cancellation in his latest federal budget proposal released last week. IN $ 6 trillion budget released Friday, outlined its plan to rebuild America’s infrastructure. The focus is on financing affordable housing, education and health care.
However, since no plan to cancel student loan debt in sight, maybe now is the time to start paying off or refinancing your student loans.
Dealing with college debt depends on the type of loans you have: federal or private. Read the case study to find out what to do with each of them below, and if you decide refinancing is best for you, make sure you get the lowest possible interest rate shopping on an online loan marketplace like Credible.
What to do if you have federal student loans
Federal student loans are currently deferred, which means certain borrowers are not required to make payments and no interest will be charged during that time. Some college graduates have been refraining from additional payments in the hope that their student loan debt will be forgiven in part or in full.
However, this period of abstinence will expire on September 30, 2021, and if you have federal student loans, you have several options for what to do with the extra money before payments resume:
- Keep doing payments on your loans. Since there is no interest accruing during the abstinence period, the student loan repayment will go towards the loan principal. This will help you pay off debt faster and save money on interest in the long run.
- Use the extra money to pay off other debts. For example, if you have high interest credit card debt, you can direct your student loan payments to pay off that balance. This can provide a faster, more profitable way to save on interest.
- Save money for future payments. You can set aside money from your student loan payments so you have a cushion when payments resume this October.
It is not advisable to refinance your federal student loans privately because you could lose public protection and ruin your chances of potentially qualifying for a federal education. student loan forgiveness in future. If you are not sure what kind of loan you have, contact an experienced loan officer on Credible for more information.
What to do with private student loans
College graduates who have private student loans are not subject to the current moratorium, and they are unlikely to be hit by federal student loan forgiveness.
But that doesn’t mean that there is nothing you can do about your student loans right now. Private Student Loan Holders Should Consider refinancing at low interest rates…
Refinancing rates for fixed rate student loans continue to be at record lows. Refinancing a student loan at a higher rate can save you thousands of dollars over the life of the loan. Borrowers who refinanced for a shorter–The Credible term loan saved an average of $ 17,344.
Still not sure if student loan refinancing is right for you? Use student loan refinancing calculator to see if it’s worth it. If so, compare student loan repayment rates among several lenders on Credible.
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