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Do I need to continue paying during the student loan freeze period?Experts participate

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Former White House spokesman Jen Psaki said in a recent press conference that “no one has paid for federal student loans in the country since the president took office,” and stopped interest on debt. Mentioned.

In fact, some borrowers, such as Lea Ceasrine, 28, have been paying for a long time.

For them, this 30-month moratorium has provided a rare opportunity to move loans forward while interest is not accrued.

Ceasrine initially used a combination of private and federal student loans to pay for bachelor’s and master’s degrees, and graduated with a loan balance of nearly $ 70,000.

“During the pandemic, I aimed to repay my first loan,” Ceasrine said. The Chicago-based podcast producer not only focused on student debt, but also strengthened payments.

Over the last two years, she has reduced her outstanding balance to $ 54,000.

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According to student loan expert Mark Cantrowitz, about 1.2% of borrowers continued to pay and reduced their loan balances during the long-term freeze on student loans, based on U.S. Department of Education repayment data. ..

“These spending also counts into the 120 payment requirements for public service loan exemptions,” said Cantrowitz, “substantially reducing the number of eligible payments by a factor of four.” Said.

But now that the story of large student loan forgiveness is back at the table, these borrowers are wondering if further payments are economically meaningful.

Ceasrine said she recently stopped paying The debate over forgiveness of student loans has intensified.

“I was paying $ 1,300 a month. I wasn’t spending anything on my savings to make the biggest possible payment,” she said. “I can’t keep it going.”

In addition, Ceasrine said she hopes there will be a law that partially compensates for the system that most of her failed.

“For students in an unstable situation, we are still at the bottom of the economic ladder and couldn’t climb, so that’s necessary,” said Ceasrine.

“I went to school as a student without financial support,” she explained. “I borrowed her first loan at the age of 17 for a college experience that wasn’t worth it to me.”

After graduating, “I didn’t have enough money to repay.”

President Joe Biden has been skeptical of clearing student loan forgiveness in the past, but recently, reports have shown that he may actually offer some form of student debt cancellation. Said there is.

Whitney Berkeley Denny, Senior Policy Adviser for the Responsible Lending Center, said:

“There is a matter of time here,” said Berkeley Denny. “People need to plan how to handle this loan debt in the future.”

Is it time to stop paying?

“We don’t recommend paying federal student loans at this time,” said Brian Leslie, director of financial planning at Edelman Financial Engines.

“I don’t know if I’ll finally get a student loan forgiveness, but for now, there’s basically no cost to play a’wait-and-see game’. “

But it’s important to be disciplined, Leslie said.

“If you’re buying a new jet ski or other depreciable asset with the money used for a student loan, that’s probably not the best way to use it.”

He advised that you should consider spending money on savings or using it to repay other unpaid loans.

“If you have an employer’s retirement plan and you haven’t fully contributed to getting a match, that’s the first place I go with those dollars.”

Or secure some money in a high-yielding savings account. “Whenever forgiveness is over and you’re at a point where forgiveness is unlikely, you can always pick up the money you’ve saved and apply a lump sum to those student loans,” Leslie said.

According to Lawrence Kotlikoff, a professor of economics at Boston University and author of “Money Magic,” loan forgiveness is still a long way off.

“The president does not have the authority to unilaterally cancel student debt,” he said. “He can’t just swing the magic wand.”

“Unless someone knows I don’t know, there’s no way to cancel a student loan,” Kotrikov said, unless Congress passes a student loan permit bill and gets 60 votes in the Senate. It is about.

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