The Future of Student Loan Forbearance Post-COVID
As we navigate the lingering effects of the pandemic, a critical question arises: is student loan forbearance due to COVID likely to be extended? When it comes to governmental decisions, uncertainty is often the norm. Currently, the forbearance period is scheduled to expire on September 30, 2020. Beyond this date, interest will resume, and regular payments will be reinstated.
Maximizing Your Benefits During Forbearance
The smart move during this period of zero interest has been to repay your student loans or at least stay ahead of the game. If you were able to maintain a steady income, or even matched or exceeded your income through unemployment benefits and the federal 600 weekly bonus, then taking advantage of this opportunity to cut down on your loan term is essential.
Every dollar paid during this forbearance period directly reduces the principal on your loans, effectively saving you time and money in the long run. This is a golden opportunity to make headway on your debt while the interest is suspended, thus reducing the overall interest cost.
Optimism, but Prepared for the Worst
Life is unpredictable, and while a glimmer of hope always exists, it's wise to prepare for the worst while hoping for the best. The HOPE Act, which was proposed to address student debt, is still stalled in the Senate. While politicians may promise the moon, such promises often come with hefty costs.
Take, for instance, the CARES Act, which provided stimulus checks to the American people. These checks, though intended to help, increased the nation's debt by over 9,000 dollars per individual. Total forgiveness of student loans would similarly come at a significant cost and would likely be passed on to future generations.
Actionable Steps to Shorten Your Repayment Period
Given the recent developments, if you are not already repaying your student loans during the forbearance period, you are inadvertently extending your repayment term. Rather than waiting for uncertain extensions or waiting for fantastical promises, take proactive measures.
Paying back as much as you can while the interest rate is zero can significantly reduce the overall repayment period. This is an excellent way to leverage the financial winds in your favor during this extraordinary period. Every dollar saved in interest is one less dollar that you will have to repay in the future.
Conclusion
While there is always an element of unpredictability, taking decisive action now can make a significant difference. Use this period of forbearance wisely and pay as much as you can. Doing so will not only shorten your repayment term but also leave you with more financial flexibility in the future.
Remember, directly addressing your debt during this period is more beneficial than extending it. In the end, you are in control of your financial destiny. The best you can do is take action today to improve your situation tomorrow.