Student Loans Are Paused Again, What Now?
On Wednesday, the Biden Administration announced another student loan payment pause, this time lasting until August 31, 2022 🎈
For those counting, that'll mark 30 consecutive months without payments.
While the pause doesn't solve the overarching student loan issue itself, its helped millions of people manage their cash flow during the pandemic.
It's estimated that the pause has saved borrowers $210/month and even though it's not a lot in the grand scheme of things, that extra money has been put towards other debts, living expenses, and maybe the occasional meme stock.
The Loan Pause by the numbers:
- 37 million borrowers have collectively saved an estimated $195 billion in waived payments
- About 44% of borrowers reduced the amount of debt on their credit cards
- 6% of borrowers increased payments on other loans, like an auto or mortgage loan
- 18% of borrowers continued making payments
- 602,000 borrowers rehabilitated their loans in 2020 and 2021
Overall the pauses have been helpful but don't worry, the CEO of SoFi (one of the largest student loan lenders) said that extending the pause “takes from struggling families and gives to the affluent, and at worst it’s political theater.”
The guy who profits off of student loan interest and chose to sponsor the Los Angeles Rams stadium is saying that the pause in the middle of the pandemic is taking from struggling families? Not sure if that checks out...
However, part of that quote is true. There's definitely an underlying political strategy that exists alongside the student loan pauses as well.
Because Biden has been so vocal about student loan forgiveness and payment pauses, going back on his statements and actions would hurt his midterm election performance, so it's assumed that's why August was chosen for now.
If they announced a longer period of payment pauses that extended past midterms without issuing any forgiveness, it'd be even easier to call out the pause as a political strategy.
But the fact that the student loan crisis is a chess game to those who don't have them bothers me.
Those in control are causing uncertainty in millions of people's financial futures and they're providing minimal assistance for a problem that they helped create.
While I don't know what the true solution could or should look like, I do know that we have to address the problems in front of us, so below are a few quick resources for paying down student loans and filing for FAFSA:
Two quick resources:
- Student Loans Are Paused - Should You Pay Anyway? (5 minute read)
- If you or someone you know is going through college, here's Nerdwallet's 2022-23 FAFSA Filing Guide
For some positivity, here are 190 responses to the question "if you woke up and your student loans were forgiven, what would you do?"
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Just keep swimming,
Treyton DeVore, Certified Digital Asset Advisor™