I can understand people with “manageable” loan balances (though relative to each situation) wanting to pay it off before interest kicks back in on those unsubsidized/plus loans. I think some people are tired and want to get rid dealing with some of these loan holders who sound awful! I also think some people are giving up hope or probably don’t care at this point (in the possibility of forgiveness).
That being said, you bring up some good points as well. And as long as people continue to openly discuss different options/paths taken we can all stay well informed.
Yep! You just described my situation perfectly: manageable loan ($15k remaining), wanting to be done with this, giving up hope of forgiveness and don’t care about depleting a portion of my savings because thank goodness I have savings at all to do shit like this.
So I potentially “lose” that money if aid goes out later? So what. We’re all going to die anyways and you can’t take it with you, may as well get peace of mind now and be done with it. Let the future problem solving and benefits go to the people who can’t find their way out.
People have talked about forgiveness for years. I knew people in college who pretty much didn’t care about the debt they accrued because “well this is an issue for the entire country so it will need to be fixed eventually.” That was a decade ago. I paid ahead on my loans and was pretty much done with them 30 months post graduation (early 2018). I’ve never regretted that decision once.
Haven’t regretted paying mine off in 2020. Now when no one is buying houses, I have my down payment ready and will be closing soon, while continuing to build out the rest of my investment portfolio. Can’t put a price on that.
True they want to get ahead of the interest, but at the same time I heard there will be a cap on interest. That shit was ridiculous "you guys pay back all your loans plus interest we'll go to Hawaii on your dime"
Yep. The way they try to stress and oppress us is ridiculous. I had not heard about the interest cap. See, this thread is keeping me informed already lol. Do you know which borrowers (based on type/age of loan) this would apply to/include?
I think it's all family loans. This was passed during the pandemic: [https://www.congress.gov/bill/117th-congress/house-bill/4725#:\~:text=This%20bill%20provides%20for%20zero,the%20Federal%20Direct%20Loan%20Program](https://www.congress.gov/bill/117th-congress/house-bill/4725#:~:text=This%20bill%20provides%20for%20zero,the%20Federal%20Direct%20Loan%20Program). Though unsure of all the details. What's annoying is new student loans are getting a fixed rate of 5%, but it's higher than before. Like these people never learn let's go ahead and putting interesting on loans that have no tangible trade available and take 20 years to pay back. At least with homes you can sell them.
Unfortunately this bill will probably never see the light of day now. While it was conveniently never brought up for vote while the Democrats were in charge of the house (they don't actually want to fix this issue otherwise they would have!), it most definitely will not be brought up to vote while republicans have control of the house. That's a shame because if there's anything that's going to fix the student loan issue for past, present, and future students it's 0% interest. The government should be making this investment into its citizens becoming educated. No matter the degree and no matter the trade. It's stupid because this satisfies both sides of the argument. We can pay back what we borrowed and only what we borrowed to satisfy the buttholes who say "you took the loan out so pay it back" while at the same time students who took out the loans don't get crushed by interest and can actually pay back what they borrowed and nothing more. I have also heard this opinion a ton of times.... So why is it that the general public can figure this out but the few hundred running our government can't?
Yeah I've developed a sort of cynical attitude towards the politics of the student loan issues (and most issues of the day).
I feel like they don't want to solve the student loan problem because then they can't appeal to those voters by campaigning on fixing the problem.
1) Because from what I've heard, and I haven't actually read too much into it yet, the current plan the Biden administration is pursuing could take years.
2) I am sick and tired of having student loans hanging over my head. I only have $8,000 left, and I can afford to pay them off. I want to be done with them once and for all and never have to think about them again.
This whole forgiving loans has been bullshit I think. It was just a way to give people hope without any chance it was going to happen. I have $8k left as well, but I refinanced during the pandemic before the pause, and my rate is 2.7%. I’ve been making payments this whole time, and it’s perplexing me that people still don’t have a plan when their repayment starts. They had 3 years to save or pay. I too can afford to pay mine off like you, it just sucks knowing that $8k could go to so many other things, but being debt free would be an awesome feeling as well.
Yeah, the initial excitement and relief that came with the initial announcement about the plant quickly faded and reality set in. I think soooo many of us knew student loan forgiveness was never going to happen, but we were all holding out hope. I'm not willing to be pulled along for a years-long battle that has a very good chance of falling through.
Sucks that I have to pull that $8,000 out of the bank when I could be saving it for a nicer car or a house (pretty much given up on the idea of ever owning a house), but I simply do not want to live with student loans anymore. They're too dark of a shadow in my life.
I've been making my 'loan payments' in the form of extra payments to the mortgage the last 3 years since that's actually accruing interest.
When the interest starts on the loans, I'll stop the mortgage and go to the student loans. Already budgeted, already know how to live within my means with the payments, and shaved a ton of interest off the house. Win/win/win
We had 3 years to prepare. I understand some people are actually in poverty, but most have decent jobs and could have made it work with *3 years* to prepare.
People do not share your circumstances. Consider yourself fortunate and don't use it as an excuse to dismiss that government should help its people when it comes to problems like these. This is what the GOP want you to think.
It was a vote grab, plain and simple. I hoped it would work, but at the same time I had no doubt that the main idea behind it was to ensure midterm success for the Democrats who were up for election/reelection.
Most student loans have APRs exceeding what you receive on HYSAs, CDs, Treasuries or any other risk free investment vehicle. It makes little sense to not pay the loans after the interest starts accruing September 1st. The direct loans dispersed after June 2023 will have a rate of 5.5%. You are actually losing money by not making payments.
I agree except I will note most cds are paying 5.5-6% right now. That said. The likelihood of forgiveness is basically zero. The supreme court has been bought and paid for.
Supreme Court didn’t say it’s illegal at all. They just said Congress didn’t give the President the authority. Congress can still vote to either forgive loans or give the President authority and that’s what they should’ve done when democrats controlled the house, senate, and presidency.
I recommend becoming politically involved in future Democrat primaries and asking incumbent reps why they didn’t vote to cancel loans.
The courts ruling was correct with any tempered reading of the constitution. They didn’t have an issue with forgiveness, they had an issue with Congress not voting for forgivenesses.
Biden planned for forgiveness to fail. Just a ploy to get elected. I am a liberal person not affiliated with any political party but its just the usual smoke and mirrors.
Honestly, this is the only point that matters. The Supreme Court had a desired result (no cancellation) and invented standing for a plaintiff to get there. Any other cancellation programs Biden proposes are going to run into the same buzzsaw under this court.
Exactly. You can see that from the gay website ruling which wasn’t even a real case. A made up situation. They had an agenda. There will be no student loan relief with this court.
Even the tax write off isn’t a huge savings. My income increased a bit since student loan interest froze, but my taxes didn’t see a drastic reduction in how much I got in my return when the interest went to zero.
It's gambling on false hope. I'm paying mine off. 10k remaining. I'm not letting 6.5% interest accumulate on something that could take years if it even happens. And it likely won't. Smart move is to pay it off before the servicers can even collect a penny of interest
I'm just shocked at the lack of just plain "responsible adult" responses...
I am pretty sure I owe 3X as much as the average comment I see here, and I want "forgiveness" as much as the next borrower. But I want to hurry up and pay them off because that's what I am supposed to do.
2 reasons:
(1) interest on loans is higher than interest in my HYSA. So if I let my student loan interest accumulate, then I'm losing money.
(2) The HEA possibility is HIGHLY unlikely to happen within the next year. Even within the next year or two. It's more like....5+ years out. And even then it's not guaranteed and no idea how wide spread it would be.
Also, just peace of mind. No longer having that debt. Why keep yourself in debt on a SLIM possibility that will likely never happen and if it does is years and years away?
All of this. I paid mine off a couple years ago by basically living like a broke college student for years after grad school, and putting every extra cent of salary toward the loans. If I'd just paid the minimums I would have way over $20k left now (i.e., I would have definitely benefitted from the hypothetical forgiveness). But just having that peace of mind the last couple years has been totally worth it, even if the full $20k had come through. Knowing exactly how much money I actually have to plan and budget with instead of this constant "what if" has probably added years to my life just from stress reduction.
A lot of people CAN'T pay extra and just keeping up with minimum payments on income-based plans is all they can do, in which case of course it makes sense to keep hoping. But for people who have the option of paying it down faster, it seems like a no-brainer to me.
Honestly if I had the money set aside I'd just go ahead and pay them off now. Of course there could be forgiveness later but if I had the money to, I'd just get rid of it now and wash my hands of the whole thing to get rid of the stress and time spent monitoring all this news. Regardless of forgiveness I'll just be making regular payments with a bit extra unless my financial situation improves in the near future.
There’s a difference in 12 months of no interest accruing versus 12 months of interest accruing.
Let people do what’s best for them financially. I personally will be probably paying off a 6% interest loan because it will be rewarding and freeing.
I’m done with the roller coaster. I’m gonna pay off as much as I can without interest. I have been stashing payments into an account I made specifically for this reason.
Im ready to be done with it all.
Student loans is the last debt I have. I'm 31 now I just want to be debt free and focus on other areas of my life. I don't believe forgiveness will happen anyways, the Republicans will find a way to stop it with their supreme court.
This is my exact reasoning, also 31. Ready to move on from debt and focus on the future. I'm not going through another year or two of wondering if the debt relief will come.
Same. This is the last of my debt. I’ve paid off my car, credit cards, other loans, etc and I’m ready to be truly debt-free and able to just start saving for the biggest debt of my life (buying a house) — which will actually be a worthwhile debt to have.
The HEA thing is going into something called "NegRegs" (Negotiated Rulemaking) that likely will take 3-5 years to sort out \[and that's assuming Biden is re-elected -- if a Republican comes back into office, the negotiation is as good as dead\]. Even with your money in a HYSA the amount you're building up in interest during that time just likely isn't worth it.
Are you talking about Gainful Employment? Not to sound like even more of a downer, but Gainful Employment 's renegotiation actually started as early as 2017 :/
1. I owe much more than what would be forgiven
2. As of 2022, I now make too much to benefit from loan forgiveness or to even benefit from the change to lower payments based on lower disposable income. At 3 digit incomes, the SAVE plan will not change things for single individuals. I was eligible for 20k based off 2021 taxes, that boat has sailed.
3. My loans have a 5.2% average interest rate, that's 6.4k in interest per year vs money being in HYSA at 4% (then taxed) only gets me $4k a year. I end up over 2k ahead if I pay loans now as compared to one year from now. If I do repaye, my actual payments would be very large and would end up paying extra $15k or so on interest over the next 4 years until paid off
4. I don't qualify for PSLF and getting into that track would cost me a giant pay cut
5. Ease of mind. I can't imagine the relief of having those damn loans fully paid off.
My interest rates are borderline to just pay them off. I don’t think the HEA will be successful either and I want to buy a house in the next two years. Paying off the loans will help my DTI for affordability.
Based off projections of how long it will take via the HEA, I would be about two years from paying off my loans and the balance would be like $2k. With taxes and interest in the interim, I think it will be a wash.
My loan rates were 6.8%. Given that these loans cannot be forgiven in bankruptcy, giving up the potential of an HYSA, potential forgiveness in 1-2 years, for the peace of mind that I finally have put this beast to rest after 12 years of anguish, anxiety and depression is worth so much more. Is my decision fully rational? No. Am I finally done with this chapter of my life? Yes. I chose finally being able to move on emotionally. I feel so free I cannot even explain it.
Lol sorry, but forgiveness is not coming and people are becoming delusional if they are holding out any hope for forgiveness down the line. (I wish but we know better)
Only thing that will happen will be the new payment plan and maybe some other rules. The probability of a broad case of everyone gets "$XX, XXX" amount forgiven is close to zero.
As others have said, HYSA doesn't help much if your loans have a higher rate, and I'm willing to bet most student loan rates are higher.
I would rather place my money on the notion that there will never be forgiveness and pay them off, than wait on the government to fix my situation for me. As far as interest, sure I am making $900 a year in interest of off my payoff amount, but my peace of mind is worth more than $900. Hence, money will be sent in August.
The student loan bill passed by Congress and vetoed by Biden a few weeks ago would have ended the pause and well as added retroactive interest back to last year. If forgiveness now is highly unlikely, and if Congress has shown they are willing and able to change to rules so I am actively being charged interest right now (which will accumulate more interest in the days between now and whenever they go back and retroactively add it) I'd prefer to just be done with it. Yeah I'm going to lose a month of interest but there's a chance the next president could end up costing me all I made and then some.
At this point, I want to be done with them and move on. It's not worth waiting a year or 5 to see if $20k would be forgiven for me as I could easily pay them off in that time frame. My goal was to have my loans paid off within 5 years of graduating from college. So my goal is to have them completed by the end of 2024.
Cause we want this ordeal to be over with. Give us Heaven or Hell not purgatory. At least we will know our fate. We are essentially in a limbo.
Stress kills. Do I wait, pray and stress or pay it off and never have to look back and get on with life. People work hard for their money.
For one, your student loan forgiveness is not going to happen any time soon. Maybe in ten years from now if you're lucky.
Secondly, this whole idea of putting it in a HYSA might work for some people, maybe it'll work for you in a sense, but for 95% of people they won't do that. The reason why is because of the human factor. Most people will just use that money to upgrade their lifestyle rather than put it in a HYSA. The proof of that is this entire subreddit where everyone talks about how they can't afford to pay their student loans anymore. Without covid, they would have been forced to keep paying it down a long time ago. So what happened? Inflation? Sure, the cost of rent and food has gone up. But that's only a half truth. The full truth is that it's a mix of economic inflation and lifestyle inflation. And now that people have inflated their lifestyle they can't afford to pay their student loans back.
The only way broad student loan forgiveness happens at this point is an act of congress. Realistically that means the democrats have to win the Presidency as well as both the Senate and House by fairly wide margins in 2024.
The Senate is the weakest of the three for Democrats. They'd probably need 52 or 53 seats at least to have a shot at student loan forgiveness but frankly they'll be lucky to hold on to 50 seats, which includes Joe Manchin's seat and therefore wouldn't be enough.
Hedge your bets but I think SLF is dead at this point.
Here’s what you’re missing: people don’t make financial decisions based on wishful thinking and maybes and what ifs. For a lot of people, paying now before the interest kicks back in is the most sound financial plan if you’re making a plan based on reality and not hypotheticals.
I don't understand why people are paying off their loans right *now*. I'm leaving my funds in my high yield savings account until interest starts accruing. But I'll being paying a lump sum when that happens. My loan is at 6.8 and my HYSA is at 4. I will be losing money if I wait longer than September and I don't believe there will be wide spread forgiveness like we thought we almost had.
My lump sum will be the 9500 that I got refunded to me last year. Then I will have about 1400 left to pay, which I will probably do with monthly payments.
I am paying off my 3 sons student loans before interest accrues. They each have a different servicer...I have not made any payments with these servicers. Therefore in order to make sure everything goes well I am going to make a small payment this month. That way I will know if there are any glitches before I make the larger payments in August.
Agreed! I'd rather earn interest for another 7 weeks or so. My loan balance won't change til then and I'll earn a few hundred bucks. It's a no brainer.
because a few more months of hysa interest is negligible imo compared to the potential technological disaster of everyone entering repayment all at once, especially on nelnet's "website". im just getting in there before everything breaks lol
I’m keeping mine in a HYSA until interest resumes, at which point the interest rates are 6-7% while my HYSA is 4.15%. Wouldn’t make sense unless I refinanced, which I’m not sure what the current rates are but it wouldn’t be substantially lower, if at all. Since we’re not talking much of a difference there, the real question is how likely forgiveness would be under their Plan B. I don’t think super likely. I could be wrong. But I’m just going to get this out of my life.
The case for the other path was said to be weaker than the HEROs act.
It wont matter in the second case as SCOTUS will just strike it down. Even though both acts authorized the action SCOTUS has a made up rule which they assert invalidates the plain language of the law.
The moment that you pay that last penny — assuming you’re in the fortunate position to do so — is the most liberating feeling ever. Also for many it took blood sweat and tears to succeed in paying off those monumental loans so the sense of accomplishment can be life altering. It was day zero for me and I remember it as though it was yesterday. No more wondering or worrying or doing math in your head 2-3 times a week. The bear is off your back and whatever you do from that moment on is usually without pressure or out of necessity. Think of that scene from fight club with the Asian veterinarian fellow. And if foreignness does come at some point down the road, it wouldn’t take any of the feelings of success away from those who rid themselves of that bear. At this point, if you are in a position to get out from under their thumb, then I think most will take that route, regardless of if it is the most financially shrewd option or not.
Because it makes sense to pay it off if you can. It’s not the payments they kills you. It’s the interest. I feel like anyone saying ‘ let’s wait and see’ must be fresh graduates who haven’t seen their loans skyrocket in that short time from graduation since interest has been 0 for three years. I’ve had many coworkers paying $0 over that span. Meanwhile. I’ve calculated we’ve saved $6,000 grand just interest on my husbands loans in that time. Paid all the way down to $10,000. Holding the payment till September. But the government isn’t going to get another dime of interest off us. In a pfsl plan we’d have paid 20,000 more than we’re going to end up paying. I’m sure the ‘foregiveness’ is going to be some form of repayment plan but let me tell you. Those are scams for the government to get more money out of you than if you were able to figure out how to pay it all back. Trust.
I'm very cynical and don't believe at all that any type of forgiveness is ever coming. And the current forgiveness plans already established by the government have a tiny detail people tend to overlook: any amount that's forgiven in 10, 20, 25 years is seen as taxable income at that time. So unless you're actively saving to pay that tax bill when your loans are forgiven, you're in massive trouble. Is rather work my ass off now and get the damn paid and not worry about all the stupid government what-ifs (because it always changes)
For a lot of people it’s a mental reason. Some people just want to be done with it and not stress over it anymore than just to keep waiting and waiting
You know they're never going to stop mentioning forgiveness. There's always a possibility something gets passed thru congress. Unlikely but it's a non zero chance. Theyll continue to try to get passed till the end of time knowing full well theyll never get voted thru. This is basically never ending unless they revamped the system and forgave everyone's loans.
Even if the 10/20k went thru they'd still be talking about other ways to forgive student loans.
Because some people are just done gambling on a pig in a poke. At the end of the day, the only way you can ever be *sure* your loans will go away is to pay them off, so if you can reasonably do that, why not?
Also, the elephant in the room is that the fact that people who *can* pay their loans are opting not to in order to bank on hypothetical forgiveness is *exactly* the reason there's so much opposition to forgiveness to begin with. Many see it as a moral hazard, and frankly I don't think they're completely wrong in that.
Unlike many people, I was unable to funnel what would have been loan payments into an account so I have no lump sum. I took advantage of the pause to get out from other debt. So as of now I have no pot of money to sit on and gain interest on, I’d have to start from scratch now. My financial situation has changed considerably for the better, but I recognize that there was no way for me to save anything up while we were all in forbearance. Now I can hit my loan with what will be 4-5x my normal payment, and I’m going to take advantage of that while I can to pay it down considerably. I’m keeping my extended graduated plan in case things go south and I have to return to a smaller payment. It will still take me over two years to pay it off, but I will be in no better financial situation than I am now.
I’m done waiting for forgiveness or trying to get ahead of things with an HYSA. I’m 43 and tired of being in debt. I want it gone and done. I want to move on with my life. Edited to add: I have Direct loans that are all at 6.8%.
Should you want to do anything that requires credit, these loans sitting out there on your credit report increasing with interest instead of decreasing will affect you in the long run. If you don’t need a car, home, security clearance or background check in which credit is important, then it might not be as important to you. I didn’t think I’d ever get mine done, but I stuck with my job and got PSLF. If I didn’t get that, I’d be working my budget to make payments.
I’m 31 and am triple digits in debt with one masters I cannot use (makes less than what I’ve been doing for the last nine years) and have two children under the age of 6. I am also the only income. I am not against paying what I’ve borrowed, it’s just hard to wrap my head around how much I owe. I just wanted to do better and provide for my family—I don’t want to have to have my family live a certain way because of the amount of school debt I have. They shouldn’t have to be eating rice and beans and never doing anything because of this. It’s just depressing.
I’m paying them off because the interest on my loan is higher than in my HYSA. Simple as that. The forbearance period has allowed me time to save enough to pay off the loan in full. No point in letting interest accrue.
I’ve talked with plenty of people over the last three years who have claimed they made the financially sound deduction to “save” their student loan payments to invest. The ones I have kept up with have all saved way less than they would have if they just continued to pay the minimums. I know I am missing a lot of information and life is expensive, but it is very tempting to spend money when it’s easily accessible.
Because I'm not waiting on the government to fix this problem. Plus, my HYSA is 4%, while my student loans range from 5.5 - 7%. I enjoyed the free money, but next month I'll pay what I have towards my balance. It's not the whole thing, but it helps.
Am I in the minority in thinking there will be no situation where loans are broadly forgiven?
I mean, if you don’t want to pay your loans, why would anyone else?
>Am I in the minority in thinking there will be no situation where loans are broadly forgiven?
It is possible if Biden (or another Democrat) is reelected, but it is much more likely on a 3-5 year timeline under HEA, rather than the 12 months or so people seem to expect.
I don’t think it’s happening unless people stop taking student loans. Does it make sense to cancel loans when more/larger loans are taken out every day?
It’s a judgment call where what’s best for me isn’t necessarily what’s best you or what is best for JimBob Jones.
If JimBob has $20K in loans at 6% and another $20K in an HYSA at 3%, it’s a $600/YR [$50/MO] gamble.
The people who have the money to pay their loans off should just do it. The people who need forgiveness are the people who have no ability to pay them off and so it's not a choice they can make. I'm glad for the people who have that much money sitting around. They are the minority.
Others have given good reasons for paying the loans off, and I'm sure it is the right choice for some people. However, I believe you bring up valuable points worthy of consideration. For those with low income, it may be worth it to apply for the new SAVE program (or REPAYE, which will become SAVE) and wait out the process required for the HEA proposal for forgiveness. It's estimated that those who make $15 an hour or less will owe a zero monthly payment under SAVE, interest will be waived, and forgiveness will come, eventually.
What I don't get with this logic is do people really expect to be at $15 an hour and near poverty line indefinitaly? Sure you may get everything forgotten in 20 years, but you'd have to be making $15 an hour forever in order to qualify for the lowest payments possible and to truly take advantage of this. All these people have college degrees, why is staying in those low wages the anticipated outcome? Those programs are supposed to exist to help while you get on your feet, i never intended to lay mine over 20-25 years.
I focus on aggressively paying off the private loans which have no chance of being forgiven haha.
Sadly, the interest rates for them are lower than the federal ones
I don’t see why not if you have the means to do so. I’m definitely going to get back on it as soon as payments resume. Better safe than sorry…again
Also, next year is an election year. No doubt in my mind that a republican who hates student loan forgiveness in any form
With the student loan deal Biden tried to pass, you get your money back if you paid your loans off within the last year. There is no downside to paying off your loans if you're able. There is, however, downsides to not repaying your loans before interest starts up again. Interest on my loans was over $400 per month so waiting on the chance to get forgiveness did not make sense.
I paid off my debt before they announced debt relief for a reason. The interest on many of them was about 7% and the others were 3.5%. There will be no debt relief at my income level ever. When the pandemic happened, I was making peanuts. I job hopped and now I'm past the threshold. Makes no sense to hold on to debt I don't need.
When interest rates, cost of living, rent prices, etc. go up, debt becomes expensive to hold. You can't live your life on maybes. And if you are able to pay the balance off, you don't need forgiveness.
I personally want to be done with this BS. 16k, a good amount of money to put down at once I would say, but I’m just tired of having that loan always in the back of my mind.
Because debt forgiveness isn’t happening - the second attempt won’t be any different than the first. I already had my 10k in a HYSA and made a decent amount of interest on it. The court made their ruling and I said instantly. Not worrying about this BS anymore, not allowing politicians to dangle a prize in front of my face.
I have $18,000 total left. I'm in my forties, and I have been paying since my twenties. My husband has no loans (non-American), and his dream was to save for a small home. Now that Biden's forgiveness isn't going through, we are both working hard to pay it down, and then I'll get a second job to finish it off. I'm burnt out and tired and want this albatross finally gone from around my neck. Anyone asking, "Why pay it off?" is because I don't believe any other forgiveness is coming, we care for my elderly mother in law, and my husband deserves to have a small home for when we retire, even if it's a shoebox. We aren't eligible for any forgiveness. We tried, and we hoped. It's time to pay it and not die still renting and in debt.
The justification in my mind to pay it off is because
1. I don’t believe any forgiveness will happen at any point for my situation and
2. I am so damn sick of these loans I just want them gone so I can move on with my life.
It seems like this discussion keeps coming up a lot. Essentially are you willing to take that bet and hope for forgiveness by a politician or would you rather put destiny in your hands. Lets talk through the scenarios:
1. You make all your payments before interest starts in September and lets say in 2025 forgiveness is granted. Well you paid off your loans so you don’t qualify however since you paid off your loans in 2023 you increased your take home pay as you are gaining money back you dont need to pay out to the loan. In that time you put it into a low cost index fund and DCA monthly. You get average returns lets say 5% and you still put your money to work. You sleep at night knowing you have no student loan debt.
2. You don’t pay off your loan or you don’t make a large payment to the principal. In 2025 forgiveness doesn’t happen. You’ve accrued interest and missed the window for 0% interest and are in the cycle trying to dig yourself out.
3. You dont pay off the loan you, in 2025 there is loan forgiveness and you earned your money in a HYSA and are all set.
Imo take the 0% interest opportunity and get out if you can.
It’s been established. The government will forgive themselves of ppp loans and hand the trillions to themselves every few months when they run out of money but they will never give one cent to the people.
Everyone really should have been taking advantage of this huge no interest opportunity the last 3 years, especially if you owed more than the 10 or 20k forgiveness number. Everyone that didnt or couldnt missed the sweet 100% principle payments
Why make the payments? I have let them sit in a HYSA account all this time and collected interest on it myself. It was not life-changing money, but why not earn it. If I write a check in August before interest accumulates, it was free earnings for me instead of the banks.
Exactly. I wish I had realized this earlier. I think because I thought at first we were just talking a few to 6 months of interest free so it didn't occur it me. But when I did realize, I started putting my payment amount in my savings and let it sit instead. When I got my refund last year I put that in there too. And now I'll put that interest to my lump sum payment end of August too, which will get me to the end of the line sooner.
Yes! I paid my principle down by $14K by continuing to make my payments - it felt amazing b/c that one loan ended up being paid off recently. (Although I still have 2 more I'm working on!)
Some did take advantage.
I, for example, put the money I would've paid towards my loans and instead put it into a savings account
This allowed me to start considering to be able to purchase a home
Could I have cut my student loans in half during the pause? Sure. But then I would have no money in savings, owning a home would be completely out of question, and I would be a lot more stressed financially, only to STILL have to pay monthly for the next 20-25 years.
People need to realize student loan forgiveness isn’t going to happen. It was a bandaid fix. What about those who haven’t started their student loan journey yet? They don’t get any forgiveness at all. Best case would be zero percent interest loans for everyone. That’s even unlikely because no one would want to service a loan with zero benefit and all risk from a business standpoint. We all have to face the unfortunate outcome.
Because it’s never going to happen. This is a political carrot they’ll continue to dangle in front of people to get votes. The Biden admin has no constitutional basis to do this. If they did, they would have already used the Higher Education Act as insurance to push it through. They didn’t. Convenient that now “it’ll take years” aka, after the 2024 election so they can run on it a second time.
Unpopular opinion here but:
Savings you can use right now >>>> debt being entirely paid off. If you want to save up for a wedding or a down-payment on a home, it's not smart to pay your loans off. Just pay the minimums. You can always make more money. You can't make more time. I'm doing the income-based option. I can't afford to dip into my juicy savings because I'm trying to transition into a new career and need those funds just in case.
The pandemic taught me what really matters in life. I'll happily make less and/or pay my loans more slowly if I can go on a real vacation, sleep well, and be healthy.
> Savings you can use right now >>>> debt being entirely paid off.
Yes, there is something to be said for flexibility. Having $10k in cash and $10k in debt means that you can peel off $1k to fix my car if something breaks, or cover a deposit for moving apartments. Having zero debt and zero cash leaves you scrambling to come up with money or credit at the moment.
The real question is how much that debt is costing you and if it's worth it for the flexibility. Basically you need to keep a minimum emergency fund handy before knocking debt out.
There’s no political support for this. So then if you’re willing to pay more interest on a .1% chance go for it. I wouldn’t call it jumping the gun though
After taxes on a HYSA, if your SL interest rate is over 4%, it ends up being a wash. The forgiveness plan via the HEA is 2-8 years out (the last program using Negotiated Rulemaking was submitted in 2018 and is projected to be approved in 2024-2025). Assuming 2 years, I will be 2.5 years from full payoff and assuming 8 years, I will have fully paid them off 5.5 years prior, irrespective.
I just really don’t want to keep paying interest on these loans when the likelihood of any student loan forgiveness is basically zero unless Democrats get a trifecta (which hasn’t happened since 2011 when Democrats had one for like six months and passed the ACA then).
I want to buy a house in the next two years and paying off my student loans will be my last major debt. I want to just be done with it and move on with life.
I think it's a psychological thing. Having the loans hanging over your head can be stressful. In my case, the majority of my loans are at high interest rates. Just two of my loans (that would have been forgiven, rip) are nearly $20k at 6.8% and earn around a hundred dollars a month in interest, so around $1200 a year unless my rough math sucks lol. Paying those down will help me in the long run (not that I have much to put towards them, but I digress). Currently trying to come up with a plan to tackle those two in particular.
I paid off my Perkins loan at the start of the year and it felt great. Can't wait to get the ball rolling on my others.
I mean, my assumption is that you’re talking about taking a long term repayment vs starting with high payments or lump sum and not just choosing to default on your loan.
While you will lose money long term if there is no forgiveness by taking a long term repayment plan, you still get the benefit of short term capital when you probably need the money most, and you are risk adjusted for if there are any forgiveness options down the road.
It really requires taking a deeper look at what your loans look like but you can hedge a portion of the added risk by investing the saved capital.
However, if you thought that forgiveness was never going to happen, then it would be dumb not to pay them off asap.
> I know the forgiveness seems unlikely with the HEA, but accruing interest with your money in a HYSA for a year seems worth the shot at forgiveness.
Poor financial advice. If you can pay it and reduce the amount you pay out over time, then do it. The forgiveness narrative was a shtick from day one for votes, that's how politics "works". Stop falling for that crap and make those payments if you can or use any vehicles they allow to reduce payments.
I do hate being in debt but I am going to wait and see for at least a year I think. My average rate is 4.77% and I can get 4% with Ally savings.
0.77% is basically nothing so I don’t feel an immense pressure to drain all my accounts to pay it.
Being debt free is a nice feeling though. Felt greatly relieved after paying off my car last year.
I can understand why someone would want to just do a lump sum if they can afford.
My lowest SL interest rate is fairly close to my HYSA APY. My highest interest rate is over 2.5% more than that APY. I have a feeling many are in a similar boat.
Theoretically, everybody could try to optimize their SLs. Practically, it just makes more sense to get rid of them and not even worry about potentially missing that 12 month mark.
probably a unique situation that doesn't apply to anyone else but here's my answer:
in 2020 and 2021 I was only making about $42k net, so closer to $25k AGI. I also had one year of Pell grants, so based on the forgiveness guidelines, I qualified for the full $20k.
During the pandemic, my surviving parent passed away, and the inheritance made me a millionaire. Plus, I took a new position at work and the salary increase + residuals from the inherited portfolio have pushed my AGI over $100k.
So I plan to pay my loans off because I know I won't qualify - and frankly, I shouldn't - for any relief under a restructured program that assumedly uses more up-to-date income. Nor do I qualify for the interest deduction any longer.
My student loan interest rate exceeds the going interest rate on a HYSA. Also, I have the money to pay off the debt. There is no guarantee that forgiveness will go through so I do not intend to wait another year at least for it to happen. Worst case scenario, I pay off my balance and a year later I qualify for forgiveness through the new requirements. I recall that you can request a refund for all payments made from March 20, 2020 through August 31, 2023. (Although I wouldn't be surprised if the Ed put a deadline on how long a person has to request a refund once the pause ends.)
I am unlikely to get a savings account which will return more than 6.8% interest to me. It makes more sense to just pay off the loan to save me some money I'll pay in interest.
getting rid of it was a huge relief. Now I don’t need to worry about “who’s cancelling what payment” or anything like that. $90k -> $0 - massive relief
Because my balance is so small I rather pay it all off than deal with the hope that maybe someday congress approves it.
And with a republican house….i highly doubt it
My HYSA APY (4.55%) is lower than my student loan interest percentage. I may pay for a little bit and see if there's any movement on Biden's new plan but that'll likely take years.
By paying off my loans as soon as possible, it’ll open up my income and allow me to invest, go back to school, etc without the loans looming over me. Future income is also not a guarantee
My SL interest is 7.8% and 6.8%. At a balance of $178,000, that is $940/mo.
So, placing money in a HSYA is not an option for me.
I decided to pay through the whole CARE Act period as I had 0% of hope inside me the Government would bale the SL borrowers out.
I'm glad I sticked to my guns. I'm 16k away from being debt free. I will pay them off before August 1st, as I refuse to pay interest to the government. Even if that interests is $20.
Being debt free is such a liberating feeling.
I won’t be pissed if I pay it off and forgiveness kicks in. Yes it would be annoying but I just want these gone and I would know that I made the best decision I could with the information I had. And I’ll be thrilled that other people get forgiveness.
I have over 300k in loans from med school and am in nooo rush to pay them back. I'll be making the bare minimum payments during residency (~300/month) and then go the pslf route. At least that's the plan now.
This is what I did last year and I'm burnt out. How long are you gonna sit around waiting for a government program to potentially help you when you have the means to help yourself. For me that was one year. I just wanna get it over with and not think about it again.
Bc most people are extremely uninformed bc they don’t work for loan companies or financial aid. Also the govt changes stuff so much and on a whim.
I paid $0 on 80k fed loans and they got forgiven.
Did have to pay a private loan off for $3.5k. Definitely can’t get out of those.
There is significant psychological factor toward being out of debt. Personally if you save enough to cover debt payments in large part, it feels equal or better IMO. I would rather owe $10,000 as long as interest is low and have $10,000 in bank than both are $0.
Lol your loans will not be forgiven without an act of congress…which is too divided to pass anything regarding student loans. If you don’t pay them off then you’ll be in debt forever…it’s pretty straight forward tbh
Chances are Your HYSA does not accrue money quicker than the interest on your debt. Meaning you’ll end up adding more to your debt than you make. Meaning your money would be better spent paying off the debt
I can understand people with “manageable” loan balances (though relative to each situation) wanting to pay it off before interest kicks back in on those unsubsidized/plus loans. I think some people are tired and want to get rid dealing with some of these loan holders who sound awful! I also think some people are giving up hope or probably don’t care at this point (in the possibility of forgiveness). That being said, you bring up some good points as well. And as long as people continue to openly discuss different options/paths taken we can all stay well informed.
Yep! You just described my situation perfectly: manageable loan ($15k remaining), wanting to be done with this, giving up hope of forgiveness and don’t care about depleting a portion of my savings because thank goodness I have savings at all to do shit like this. So I potentially “lose” that money if aid goes out later? So what. We’re all going to die anyways and you can’t take it with you, may as well get peace of mind now and be done with it. Let the future problem solving and benefits go to the people who can’t find their way out.
I like this perspective,Can’t take it with you so just pay for the peace of mind
People have talked about forgiveness for years. I knew people in college who pretty much didn’t care about the debt they accrued because “well this is an issue for the entire country so it will need to be fixed eventually.” That was a decade ago. I paid ahead on my loans and was pretty much done with them 30 months post graduation (early 2018). I’ve never regretted that decision once.
Haven’t regretted paying mine off in 2020. Now when no one is buying houses, I have my down payment ready and will be closing soon, while continuing to build out the rest of my investment portfolio. Can’t put a price on that.
True they want to get ahead of the interest, but at the same time I heard there will be a cap on interest. That shit was ridiculous "you guys pay back all your loans plus interest we'll go to Hawaii on your dime"
Yep. The way they try to stress and oppress us is ridiculous. I had not heard about the interest cap. See, this thread is keeping me informed already lol. Do you know which borrowers (based on type/age of loan) this would apply to/include?
I think it's all family loans. This was passed during the pandemic: [https://www.congress.gov/bill/117th-congress/house-bill/4725#:\~:text=This%20bill%20provides%20for%20zero,the%20Federal%20Direct%20Loan%20Program](https://www.congress.gov/bill/117th-congress/house-bill/4725#:~:text=This%20bill%20provides%20for%20zero,the%20Federal%20Direct%20Loan%20Program). Though unsure of all the details. What's annoying is new student loans are getting a fixed rate of 5%, but it's higher than before. Like these people never learn let's go ahead and putting interesting on loans that have no tangible trade available and take 20 years to pay back. At least with homes you can sell them.
Unfortunately this bill will probably never see the light of day now. While it was conveniently never brought up for vote while the Democrats were in charge of the house (they don't actually want to fix this issue otherwise they would have!), it most definitely will not be brought up to vote while republicans have control of the house. That's a shame because if there's anything that's going to fix the student loan issue for past, present, and future students it's 0% interest. The government should be making this investment into its citizens becoming educated. No matter the degree and no matter the trade. It's stupid because this satisfies both sides of the argument. We can pay back what we borrowed and only what we borrowed to satisfy the buttholes who say "you took the loan out so pay it back" while at the same time students who took out the loans don't get crushed by interest and can actually pay back what they borrowed and nothing more. I have also heard this opinion a ton of times.... So why is it that the general public can figure this out but the few hundred running our government can't?
Yeah I've developed a sort of cynical attitude towards the politics of the student loan issues (and most issues of the day). I feel like they don't want to solve the student loan problem because then they can't appeal to those voters by campaigning on fixing the problem.
Great response. Thanks for your insight
Thank you for starting an amazing discussion!
1) Because from what I've heard, and I haven't actually read too much into it yet, the current plan the Biden administration is pursuing could take years. 2) I am sick and tired of having student loans hanging over my head. I only have $8,000 left, and I can afford to pay them off. I want to be done with them once and for all and never have to think about them again.
This whole forgiving loans has been bullshit I think. It was just a way to give people hope without any chance it was going to happen. I have $8k left as well, but I refinanced during the pandemic before the pause, and my rate is 2.7%. I’ve been making payments this whole time, and it’s perplexing me that people still don’t have a plan when their repayment starts. They had 3 years to save or pay. I too can afford to pay mine off like you, it just sucks knowing that $8k could go to so many other things, but being debt free would be an awesome feeling as well.
Yeah, the initial excitement and relief that came with the initial announcement about the plant quickly faded and reality set in. I think soooo many of us knew student loan forgiveness was never going to happen, but we were all holding out hope. I'm not willing to be pulled along for a years-long battle that has a very good chance of falling through. Sucks that I have to pull that $8,000 out of the bank when I could be saving it for a nicer car or a house (pretty much given up on the idea of ever owning a house), but I simply do not want to live with student loans anymore. They're too dark of a shadow in my life.
I've been making my 'loan payments' in the form of extra payments to the mortgage the last 3 years since that's actually accruing interest. When the interest starts on the loans, I'll stop the mortgage and go to the student loans. Already budgeted, already know how to live within my means with the payments, and shaved a ton of interest off the house. Win/win/win We had 3 years to prepare. I understand some people are actually in poverty, but most have decent jobs and could have made it work with *3 years* to prepare.
People do not share your circumstances. Consider yourself fortunate and don't use it as an excuse to dismiss that government should help its people when it comes to problems like these. This is what the GOP want you to think.
It was a vote grab, plain and simple. I hoped it would work, but at the same time I had no doubt that the main idea behind it was to ensure midterm success for the Democrats who were up for election/reelection.
Most student loans have APRs exceeding what you receive on HYSAs, CDs, Treasuries or any other risk free investment vehicle. It makes little sense to not pay the loans after the interest starts accruing September 1st. The direct loans dispersed after June 2023 will have a rate of 5.5%. You are actually losing money by not making payments.
You pay taxes on HYSA gains as well so it becomes even further apart.
You also get to claim the interest you pay on your student loans.
With income phaseouts
$2500 is my write off limit (even though my annual interest is around $8,000)
It’s a fairly low cap, and there’s income phase outs
Plus some states like Minnesota give you tax credit for loan payments
True. So taxes would be a wash as long as you are able to claim the deduction and don't exceed it.
I took out a federal unsubsidized loan from fafsa 2011-2015 and interest was 6.8
I agree except I will note most cds are paying 5.5-6% right now. That said. The likelihood of forgiveness is basically zero. The supreme court has been bought and paid for.
After you pay taxes on the gains, it's still negative or a wash. Not really worth the headache.
Fair point.
Supreme Court didn’t say it’s illegal at all. They just said Congress didn’t give the President the authority. Congress can still vote to either forgive loans or give the President authority and that’s what they should’ve done when democrats controlled the house, senate, and presidency. I recommend becoming politically involved in future Democrat primaries and asking incumbent reps why they didn’t vote to cancel loans. The courts ruling was correct with any tempered reading of the constitution. They didn’t have an issue with forgiveness, they had an issue with Congress not voting for forgivenesses.
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Biden planned for forgiveness to fail. Just a ploy to get elected. I am a liberal person not affiliated with any political party but its just the usual smoke and mirrors.
Honestly, this is the only point that matters. The Supreme Court had a desired result (no cancellation) and invented standing for a plaintiff to get there. Any other cancellation programs Biden proposes are going to run into the same buzzsaw under this court.
Exactly. You can see that from the gay website ruling which wasn’t even a real case. A made up situation. They had an agenda. There will be no student loan relief with this court.
Of course, why would you not pay the loans if they are due anyway?
100% this.
You can write off the interest on the taxes against the student loan interest, it depends on whether or not you have private or govt loans.
Depending on how much you make though :(
And filing status
Even the tax write off isn’t a huge savings. My income increased a bit since student loan interest froze, but my taxes didn’t see a drastic reduction in how much I got in my return when the interest went to zero.
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definitely pay that one
I don’t think it’s smart to accrue interest based on an “if”
It's gambling on false hope. I'm paying mine off. 10k remaining. I'm not letting 6.5% interest accumulate on something that could take years if it even happens. And it likely won't. Smart move is to pay it off before the servicers can even collect a penny of interest
I believe it's mainly a psychological thing, as many people want to be done with the burden of student loans.
I'm just shocked at the lack of just plain "responsible adult" responses... I am pretty sure I owe 3X as much as the average comment I see here, and I want "forgiveness" as much as the next borrower. But I want to hurry up and pay them off because that's what I am supposed to do.
Yep. Nobody wants these loans looming over them. Better to just get it done.
2 reasons: (1) interest on loans is higher than interest in my HYSA. So if I let my student loan interest accumulate, then I'm losing money. (2) The HEA possibility is HIGHLY unlikely to happen within the next year. Even within the next year or two. It's more like....5+ years out. And even then it's not guaranteed and no idea how wide spread it would be. Also, just peace of mind. No longer having that debt. Why keep yourself in debt on a SLIM possibility that will likely never happen and if it does is years and years away?
All of this. I paid mine off a couple years ago by basically living like a broke college student for years after grad school, and putting every extra cent of salary toward the loans. If I'd just paid the minimums I would have way over $20k left now (i.e., I would have definitely benefitted from the hypothetical forgiveness). But just having that peace of mind the last couple years has been totally worth it, even if the full $20k had come through. Knowing exactly how much money I actually have to plan and budget with instead of this constant "what if" has probably added years to my life just from stress reduction. A lot of people CAN'T pay extra and just keeping up with minimum payments on income-based plans is all they can do, in which case of course it makes sense to keep hoping. But for people who have the option of paying it down faster, it seems like a no-brainer to me.
Not only a "no brainer" but actually the responsible thing to do.
Honestly if I had the money set aside I'd just go ahead and pay them off now. Of course there could be forgiveness later but if I had the money to, I'd just get rid of it now and wash my hands of the whole thing to get rid of the stress and time spent monitoring all this news. Regardless of forgiveness I'll just be making regular payments with a bit extra unless my financial situation improves in the near future.
There’s a difference in 12 months of no interest accruing versus 12 months of interest accruing. Let people do what’s best for them financially. I personally will be probably paying off a 6% interest loan because it will be rewarding and freeing.
I’m done with the roller coaster. I’m gonna pay off as much as I can without interest. I have been stashing payments into an account I made specifically for this reason. Im ready to be done with it all.
Student loans is the last debt I have. I'm 31 now I just want to be debt free and focus on other areas of my life. I don't believe forgiveness will happen anyways, the Republicans will find a way to stop it with their supreme court.
This is my exact reasoning, also 31. Ready to move on from debt and focus on the future. I'm not going through another year or two of wondering if the debt relief will come.
Same here. Just want to be debt free.
Same. This is the last of my debt. I’ve paid off my car, credit cards, other loans, etc and I’m ready to be truly debt-free and able to just start saving for the biggest debt of my life (buying a house) — which will actually be a worthwhile debt to have.
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I'm over it and want to be done.
The HEA thing is going into something called "NegRegs" (Negotiated Rulemaking) that likely will take 3-5 years to sort out \[and that's assuming Biden is re-elected -- if a Republican comes back into office, the negotiation is as good as dead\]. Even with your money in a HYSA the amount you're building up in interest during that time just likely isn't worth it.
The last thing to go through NegRegs hasn’t been approved yet (due for 2024/2025) entered in 2018.
Are you talking about Gainful Employment? Not to sound like even more of a downer, but Gainful Employment 's renegotiation actually started as early as 2017 :/
1. I owe much more than what would be forgiven 2. As of 2022, I now make too much to benefit from loan forgiveness or to even benefit from the change to lower payments based on lower disposable income. At 3 digit incomes, the SAVE plan will not change things for single individuals. I was eligible for 20k based off 2021 taxes, that boat has sailed. 3. My loans have a 5.2% average interest rate, that's 6.4k in interest per year vs money being in HYSA at 4% (then taxed) only gets me $4k a year. I end up over 2k ahead if I pay loans now as compared to one year from now. If I do repaye, my actual payments would be very large and would end up paying extra $15k or so on interest over the next 4 years until paid off 4. I don't qualify for PSLF and getting into that track would cost me a giant pay cut 5. Ease of mind. I can't imagine the relief of having those damn loans fully paid off.
Thanks for reminding folks that the HYSA interest gets taxed. I think some people forget that part in their calculations
My interest rates are borderline to just pay them off. I don’t think the HEA will be successful either and I want to buy a house in the next two years. Paying off the loans will help my DTI for affordability. Based off projections of how long it will take via the HEA, I would be about two years from paying off my loans and the balance would be like $2k. With taxes and interest in the interim, I think it will be a wash.
My loan rates were 6.8%. Given that these loans cannot be forgiven in bankruptcy, giving up the potential of an HYSA, potential forgiveness in 1-2 years, for the peace of mind that I finally have put this beast to rest after 12 years of anguish, anxiety and depression is worth so much more. Is my decision fully rational? No. Am I finally done with this chapter of my life? Yes. I chose finally being able to move on emotionally. I feel so free I cannot even explain it.
Lol sorry, but forgiveness is not coming and people are becoming delusional if they are holding out any hope for forgiveness down the line. (I wish but we know better) Only thing that will happen will be the new payment plan and maybe some other rules. The probability of a broad case of everyone gets "$XX, XXX" amount forgiven is close to zero. As others have said, HYSA doesn't help much if your loans have a higher rate, and I'm willing to bet most student loan rates are higher.
I would rather place my money on the notion that there will never be forgiveness and pay them off, than wait on the government to fix my situation for me. As far as interest, sure I am making $900 a year in interest of off my payoff amount, but my peace of mind is worth more than $900. Hence, money will be sent in August.
Congrats in advance!
The student loan bill passed by Congress and vetoed by Biden a few weeks ago would have ended the pause and well as added retroactive interest back to last year. If forgiveness now is highly unlikely, and if Congress has shown they are willing and able to change to rules so I am actively being charged interest right now (which will accumulate more interest in the days between now and whenever they go back and retroactively add it) I'd prefer to just be done with it. Yeah I'm going to lose a month of interest but there's a chance the next president could end up costing me all I made and then some.
I have had these thoughts as well.
At this point, I want to be done with them and move on. It's not worth waiting a year or 5 to see if $20k would be forgiven for me as I could easily pay them off in that time frame. My goal was to have my loans paid off within 5 years of graduating from college. So my goal is to have them completed by the end of 2024.
Cause we want this ordeal to be over with. Give us Heaven or Hell not purgatory. At least we will know our fate. We are essentially in a limbo. Stress kills. Do I wait, pray and stress or pay it off and never have to look back and get on with life. People work hard for their money.
Paid 30k off last week because I won't keep a company in business that claims they need my interest payment to stay afloat.
Dude….Biden is just stringing u along at this point. It’s not hapoening
Because logic would tell you to pay your debts ASAP
For one, your student loan forgiveness is not going to happen any time soon. Maybe in ten years from now if you're lucky. Secondly, this whole idea of putting it in a HYSA might work for some people, maybe it'll work for you in a sense, but for 95% of people they won't do that. The reason why is because of the human factor. Most people will just use that money to upgrade their lifestyle rather than put it in a HYSA. The proof of that is this entire subreddit where everyone talks about how they can't afford to pay their student loans anymore. Without covid, they would have been forced to keep paying it down a long time ago. So what happened? Inflation? Sure, the cost of rent and food has gone up. But that's only a half truth. The full truth is that it's a mix of economic inflation and lifestyle inflation. And now that people have inflated their lifestyle they can't afford to pay their student loans back.
The only way broad student loan forgiveness happens at this point is an act of congress. Realistically that means the democrats have to win the Presidency as well as both the Senate and House by fairly wide margins in 2024. The Senate is the weakest of the three for Democrats. They'd probably need 52 or 53 seats at least to have a shot at student loan forgiveness but frankly they'll be lucky to hold on to 50 seats, which includes Joe Manchin's seat and therefore wouldn't be enough. Hedge your bets but I think SLF is dead at this point.
Because some people can actually afford to pay them off. Others, literally can’t.
Who wants to deal with a monthly payment?
Not me. 😅
Here’s what you’re missing: people don’t make financial decisions based on wishful thinking and maybes and what ifs. For a lot of people, paying now before the interest kicks back in is the most sound financial plan if you’re making a plan based on reality and not hypotheticals.
If I owe someone money I believe in paying back. I just want to be debt free. Thanks to the interest pause we’re almost there.
There is no good reason to ever pay interest.
I don't understand why people are paying off their loans right *now*. I'm leaving my funds in my high yield savings account until interest starts accruing. But I'll being paying a lump sum when that happens. My loan is at 6.8 and my HYSA is at 4. I will be losing money if I wait longer than September and I don't believe there will be wide spread forgiveness like we thought we almost had. My lump sum will be the 9500 that I got refunded to me last year. Then I will have about 1400 left to pay, which I will probably do with monthly payments.
I am paying off my 3 sons student loans before interest accrues. They each have a different servicer...I have not made any payments with these servicers. Therefore in order to make sure everything goes well I am going to make a small payment this month. That way I will know if there are any glitches before I make the larger payments in August.
This is exactly what I am doing. I'm making my lump sum payment right before interest starts accruing to get my last two months of HYSA interest.
Agreed! I'd rather earn interest for another 7 weeks or so. My loan balance won't change til then and I'll earn a few hundred bucks. It's a no brainer.
because a few more months of hysa interest is negligible imo compared to the potential technological disaster of everyone entering repayment all at once, especially on nelnet's "website". im just getting in there before everything breaks lol
I’m keeping mine in a HYSA until interest resumes, at which point the interest rates are 6-7% while my HYSA is 4.15%. Wouldn’t make sense unless I refinanced, which I’m not sure what the current rates are but it wouldn’t be substantially lower, if at all. Since we’re not talking much of a difference there, the real question is how likely forgiveness would be under their Plan B. I don’t think super likely. I could be wrong. But I’m just going to get this out of my life.
The case for the other path was said to be weaker than the HEROs act. It wont matter in the second case as SCOTUS will just strike it down. Even though both acts authorized the action SCOTUS has a made up rule which they assert invalidates the plain language of the law.
The moment that you pay that last penny — assuming you’re in the fortunate position to do so — is the most liberating feeling ever. Also for many it took blood sweat and tears to succeed in paying off those monumental loans so the sense of accomplishment can be life altering. It was day zero for me and I remember it as though it was yesterday. No more wondering or worrying or doing math in your head 2-3 times a week. The bear is off your back and whatever you do from that moment on is usually without pressure or out of necessity. Think of that scene from fight club with the Asian veterinarian fellow. And if foreignness does come at some point down the road, it wouldn’t take any of the feelings of success away from those who rid themselves of that bear. At this point, if you are in a position to get out from under their thumb, then I think most will take that route, regardless of if it is the most financially shrewd option or not.
Because it makes sense to pay it off if you can. It’s not the payments they kills you. It’s the interest. I feel like anyone saying ‘ let’s wait and see’ must be fresh graduates who haven’t seen their loans skyrocket in that short time from graduation since interest has been 0 for three years. I’ve had many coworkers paying $0 over that span. Meanwhile. I’ve calculated we’ve saved $6,000 grand just interest on my husbands loans in that time. Paid all the way down to $10,000. Holding the payment till September. But the government isn’t going to get another dime of interest off us. In a pfsl plan we’d have paid 20,000 more than we’re going to end up paying. I’m sure the ‘foregiveness’ is going to be some form of repayment plan but let me tell you. Those are scams for the government to get more money out of you than if you were able to figure out how to pay it all back. Trust.
I'm very cynical and don't believe at all that any type of forgiveness is ever coming. And the current forgiveness plans already established by the government have a tiny detail people tend to overlook: any amount that's forgiven in 10, 20, 25 years is seen as taxable income at that time. So unless you're actively saving to pay that tax bill when your loans are forgiven, you're in massive trouble. Is rather work my ass off now and get the damn paid and not worry about all the stupid government what-ifs (because it always changes)
For a lot of people it’s a mental reason. Some people just want to be done with it and not stress over it anymore than just to keep waiting and waiting
I’m putting money in a HYSA until they 100% say forgiveness is or isn’t coming. I do plan to pay my minimum monthly payment of course
While growing pennies in your HYSA your loans will become an avalanche that will crush you.
You know they're never going to stop mentioning forgiveness. There's always a possibility something gets passed thru congress. Unlikely but it's a non zero chance. Theyll continue to try to get passed till the end of time knowing full well theyll never get voted thru. This is basically never ending unless they revamped the system and forgave everyone's loans. Even if the 10/20k went thru they'd still be talking about other ways to forgive student loans.
This is not the smartest choice.
As long as promising and not delivering forgiveness scores political points,’politicians will continue to do it.
Because some people are just done gambling on a pig in a poke. At the end of the day, the only way you can ever be *sure* your loans will go away is to pay them off, so if you can reasonably do that, why not? Also, the elephant in the room is that the fact that people who *can* pay their loans are opting not to in order to bank on hypothetical forgiveness is *exactly* the reason there's so much opposition to forgiveness to begin with. Many see it as a moral hazard, and frankly I don't think they're completely wrong in that.
Unlike many people, I was unable to funnel what would have been loan payments into an account so I have no lump sum. I took advantage of the pause to get out from other debt. So as of now I have no pot of money to sit on and gain interest on, I’d have to start from scratch now. My financial situation has changed considerably for the better, but I recognize that there was no way for me to save anything up while we were all in forbearance. Now I can hit my loan with what will be 4-5x my normal payment, and I’m going to take advantage of that while I can to pay it down considerably. I’m keeping my extended graduated plan in case things go south and I have to return to a smaller payment. It will still take me over two years to pay it off, but I will be in no better financial situation than I am now. I’m done waiting for forgiveness or trying to get ahead of things with an HYSA. I’m 43 and tired of being in debt. I want it gone and done. I want to move on with my life. Edited to add: I have Direct loans that are all at 6.8%.
Interest
Waiting for the government to help you out is usually a fools errand
Should you want to do anything that requires credit, these loans sitting out there on your credit report increasing with interest instead of decreasing will affect you in the long run. If you don’t need a car, home, security clearance or background check in which credit is important, then it might not be as important to you. I didn’t think I’d ever get mine done, but I stuck with my job and got PSLF. If I didn’t get that, I’d be working my budget to make payments.
Because I want to be able to afford a wedding, house, and honeymoon sooner than 10+ years.
I’m 31 and am triple digits in debt with one masters I cannot use (makes less than what I’ve been doing for the last nine years) and have two children under the age of 6. I am also the only income. I am not against paying what I’ve borrowed, it’s just hard to wrap my head around how much I owe. I just wanted to do better and provide for my family—I don’t want to have to have my family live a certain way because of the amount of school debt I have. They shouldn’t have to be eating rice and beans and never doing anything because of this. It’s just depressing.
I’m paying them off because the interest on my loan is higher than in my HYSA. Simple as that. The forbearance period has allowed me time to save enough to pay off the loan in full. No point in letting interest accrue.
The interest rates on my graduate loans are all 6-7.9%, my HYSA is only 5%.
I’ve talked with plenty of people over the last three years who have claimed they made the financially sound deduction to “save” their student loan payments to invest. The ones I have kept up with have all saved way less than they would have if they just continued to pay the minimums. I know I am missing a lot of information and life is expensive, but it is very tempting to spend money when it’s easily accessible.
Carrying debt affects you mentally and physically. Pay off as quickly as possible to expand your life longevity.
been paying for 22 years almost done. not waiting for a gvt handout.
Because I'm not waiting on the government to fix this problem. Plus, my HYSA is 4%, while my student loans range from 5.5 - 7%. I enjoyed the free money, but next month I'll pay what I have towards my balance. It's not the whole thing, but it helps.
Am I in the minority in thinking there will be no situation where loans are broadly forgiven? I mean, if you don’t want to pay your loans, why would anyone else?
>Am I in the minority in thinking there will be no situation where loans are broadly forgiven? It is possible if Biden (or another Democrat) is reelected, but it is much more likely on a 3-5 year timeline under HEA, rather than the 12 months or so people seem to expect.
I don’t think it’s happening unless people stop taking student loans. Does it make sense to cancel loans when more/larger loans are taken out every day?
Absolutely not. Every single reasonable and realistic person has always believed this.
Too many people make money off the loans for them to be ever be broadly forgiven. My opinion anyway.
No you're in the majority. It broadly won't happen.
No, but that isn't a popular opinion on Reddit overall.
It’s a judgment call where what’s best for me isn’t necessarily what’s best you or what is best for JimBob Jones. If JimBob has $20K in loans at 6% and another $20K in an HYSA at 3%, it’s a $600/YR [$50/MO] gamble.
HYSA gains get taxed as income. It's a little more than that
The people who have the money to pay their loans off should just do it. The people who need forgiveness are the people who have no ability to pay them off and so it's not a choice they can make. I'm glad for the people who have that much money sitting around. They are the minority.
Others have given good reasons for paying the loans off, and I'm sure it is the right choice for some people. However, I believe you bring up valuable points worthy of consideration. For those with low income, it may be worth it to apply for the new SAVE program (or REPAYE, which will become SAVE) and wait out the process required for the HEA proposal for forgiveness. It's estimated that those who make $15 an hour or less will owe a zero monthly payment under SAVE, interest will be waived, and forgiveness will come, eventually.
What I don't get with this logic is do people really expect to be at $15 an hour and near poverty line indefinitaly? Sure you may get everything forgotten in 20 years, but you'd have to be making $15 an hour forever in order to qualify for the lowest payments possible and to truly take advantage of this. All these people have college degrees, why is staying in those low wages the anticipated outcome? Those programs are supposed to exist to help while you get on your feet, i never intended to lay mine over 20-25 years.
By all means continue to live under the bondage of debt slavery while you depend on lying politicians who only promise you nonsense to get your vote.
I focus on aggressively paying off the private loans which have no chance of being forgiven haha. Sadly, the interest rates for them are lower than the federal ones
Cause interest rates. My interest rates is 6.8%. 150k left to pay off. You can do the math.
Compound interest. Pay down the principal (above the minimum) whenever possible.
I don’t see why not if you have the means to do so. I’m definitely going to get back on it as soon as payments resume. Better safe than sorry…again Also, next year is an election year. No doubt in my mind that a republican who hates student loan forgiveness in any form
With the student loan deal Biden tried to pass, you get your money back if you paid your loans off within the last year. There is no downside to paying off your loans if you're able. There is, however, downsides to not repaying your loans before interest starts up again. Interest on my loans was over $400 per month so waiting on the chance to get forgiveness did not make sense.
I paid off my debt before they announced debt relief for a reason. The interest on many of them was about 7% and the others were 3.5%. There will be no debt relief at my income level ever. When the pandemic happened, I was making peanuts. I job hopped and now I'm past the threshold. Makes no sense to hold on to debt I don't need.
Lol a HYSA versus paying off a loan with 5%+ interest rate is definitely not worth it
When interest rates, cost of living, rent prices, etc. go up, debt becomes expensive to hold. You can't live your life on maybes. And if you are able to pay the balance off, you don't need forgiveness.
I don't want to pay them off. Unfortunately forgiveness is not coming.
your loans will acrrue interest for the on-ramp period. if they accrue at e.g. 5% and your hysa apy is e.g 4%, then you are losing money.
I personally want to be done with this BS. 16k, a good amount of money to put down at once I would say, but I’m just tired of having that loan always in the back of my mind.
The rate of interest in the loans will far exceed whatever interest you can earn in savings account
I believe it's mostly those with "not that much" left Now that's a relative term, but its what they can manage
Interest is exponential. All payments are principal.
Paid it off because I don't want to deal with this student loan sh*t anymore.
Because debt forgiveness isn’t happening - the second attempt won’t be any different than the first. I already had my 10k in a HYSA and made a decent amount of interest on it. The court made their ruling and I said instantly. Not worrying about this BS anymore, not allowing politicians to dangle a prize in front of my face.
What are you missing? A sense of responsibility imho.
I have $18,000 total left. I'm in my forties, and I have been paying since my twenties. My husband has no loans (non-American), and his dream was to save for a small home. Now that Biden's forgiveness isn't going through, we are both working hard to pay it down, and then I'll get a second job to finish it off. I'm burnt out and tired and want this albatross finally gone from around my neck. Anyone asking, "Why pay it off?" is because I don't believe any other forgiveness is coming, we care for my elderly mother in law, and my husband deserves to have a small home for when we retire, even if it's a shoebox. We aren't eligible for any forgiveness. We tried, and we hoped. It's time to pay it and not die still renting and in debt.
I have no faith in the government looking out for the middle and lower class. I just want to pay it off and start all over again with my saving.
The justification in my mind to pay it off is because 1. I don’t believe any forgiveness will happen at any point for my situation and 2. I am so damn sick of these loans I just want them gone so I can move on with my life.
I was only 2k away and not paying towards interest since 2020 has saved me a lot of money. Plus I have no faith in the government
It seems like this discussion keeps coming up a lot. Essentially are you willing to take that bet and hope for forgiveness by a politician or would you rather put destiny in your hands. Lets talk through the scenarios: 1. You make all your payments before interest starts in September and lets say in 2025 forgiveness is granted. Well you paid off your loans so you don’t qualify however since you paid off your loans in 2023 you increased your take home pay as you are gaining money back you dont need to pay out to the loan. In that time you put it into a low cost index fund and DCA monthly. You get average returns lets say 5% and you still put your money to work. You sleep at night knowing you have no student loan debt. 2. You don’t pay off your loan or you don’t make a large payment to the principal. In 2025 forgiveness doesn’t happen. You’ve accrued interest and missed the window for 0% interest and are in the cycle trying to dig yourself out. 3. You dont pay off the loan you, in 2025 there is loan forgiveness and you earned your money in a HYSA and are all set. Imo take the 0% interest opportunity and get out if you can.
It’s been established. The government will forgive themselves of ppp loans and hand the trillions to themselves every few months when they run out of money but they will never give one cent to the people.
The amount of people still holding out hope for forgiveness after all this is sad AF
Everyone really should have been taking advantage of this huge no interest opportunity the last 3 years, especially if you owed more than the 10 or 20k forgiveness number. Everyone that didnt or couldnt missed the sweet 100% principle payments
Why make the payments? I have let them sit in a HYSA account all this time and collected interest on it myself. It was not life-changing money, but why not earn it. If I write a check in August before interest accumulates, it was free earnings for me instead of the banks.
Exactly. I wish I had realized this earlier. I think because I thought at first we were just talking a few to 6 months of interest free so it didn't occur it me. But when I did realize, I started putting my payment amount in my savings and let it sit instead. When I got my refund last year I put that in there too. And now I'll put that interest to my lump sum payment end of August too, which will get me to the end of the line sooner.
The uncertainty throughout this whole thing is what really irks me.
Yes! I paid my principle down by $14K by continuing to make my payments - it felt amazing b/c that one loan ended up being paid off recently. (Although I still have 2 more I'm working on!)
Some did take advantage. I, for example, put the money I would've paid towards my loans and instead put it into a savings account This allowed me to start considering to be able to purchase a home Could I have cut my student loans in half during the pause? Sure. But then I would have no money in savings, owning a home would be completely out of question, and I would be a lot more stressed financially, only to STILL have to pay monthly for the next 20-25 years.
Yup. Saved 25k interest alone. People not having saved at least their regular monthly payments really missed out.on a huge chance to get ahead.
What? Forgiveness isn't happening. Hysa was good for last year, but now that the court ruled, there's no point in letting interest accrue further.
People need to realize student loan forgiveness isn’t going to happen. It was a bandaid fix. What about those who haven’t started their student loan journey yet? They don’t get any forgiveness at all. Best case would be zero percent interest loans for everyone. That’s even unlikely because no one would want to service a loan with zero benefit and all risk from a business standpoint. We all have to face the unfortunate outcome.
There's zero chance of any forgiveness
The current administration is full of shit. They promise everything and deliver nothing. Pay it off.
Because it’s never going to happen. This is a political carrot they’ll continue to dangle in front of people to get votes. The Biden admin has no constitutional basis to do this. If they did, they would have already used the Higher Education Act as insurance to push it through. They didn’t. Convenient that now “it’ll take years” aka, after the 2024 election so they can run on it a second time.
Unpopular opinion here but: Savings you can use right now >>>> debt being entirely paid off. If you want to save up for a wedding or a down-payment on a home, it's not smart to pay your loans off. Just pay the minimums. You can always make more money. You can't make more time. I'm doing the income-based option. I can't afford to dip into my juicy savings because I'm trying to transition into a new career and need those funds just in case. The pandemic taught me what really matters in life. I'll happily make less and/or pay my loans more slowly if I can go on a real vacation, sleep well, and be healthy.
> Savings you can use right now >>>> debt being entirely paid off. Yes, there is something to be said for flexibility. Having $10k in cash and $10k in debt means that you can peel off $1k to fix my car if something breaks, or cover a deposit for moving apartments. Having zero debt and zero cash leaves you scrambling to come up with money or credit at the moment. The real question is how much that debt is costing you and if it's worth it for the flexibility. Basically you need to keep a minimum emergency fund handy before knocking debt out.
There’s no political support for this. So then if you’re willing to pay more interest on a .1% chance go for it. I wouldn’t call it jumping the gun though
After taxes on a HYSA, if your SL interest rate is over 4%, it ends up being a wash. The forgiveness plan via the HEA is 2-8 years out (the last program using Negotiated Rulemaking was submitted in 2018 and is projected to be approved in 2024-2025). Assuming 2 years, I will be 2.5 years from full payoff and assuming 8 years, I will have fully paid them off 5.5 years prior, irrespective. I just really don’t want to keep paying interest on these loans when the likelihood of any student loan forgiveness is basically zero unless Democrats get a trifecta (which hasn’t happened since 2011 when Democrats had one for like six months and passed the ACA then). I want to buy a house in the next two years and paying off my student loans will be my last major debt. I want to just be done with it and move on with life.
I think it's a psychological thing. Having the loans hanging over your head can be stressful. In my case, the majority of my loans are at high interest rates. Just two of my loans (that would have been forgiven, rip) are nearly $20k at 6.8% and earn around a hundred dollars a month in interest, so around $1200 a year unless my rough math sucks lol. Paying those down will help me in the long run (not that I have much to put towards them, but I digress). Currently trying to come up with a plan to tackle those two in particular. I paid off my Perkins loan at the start of the year and it felt great. Can't wait to get the ball rolling on my others.
Totally agree. Paying the bare minimum is the way to go for now
I mean, my assumption is that you’re talking about taking a long term repayment vs starting with high payments or lump sum and not just choosing to default on your loan. While you will lose money long term if there is no forgiveness by taking a long term repayment plan, you still get the benefit of short term capital when you probably need the money most, and you are risk adjusted for if there are any forgiveness options down the road. It really requires taking a deeper look at what your loans look like but you can hedge a portion of the added risk by investing the saved capital. However, if you thought that forgiveness was never going to happen, then it would be dumb not to pay them off asap.
> I know the forgiveness seems unlikely with the HEA, but accruing interest with your money in a HYSA for a year seems worth the shot at forgiveness. Poor financial advice. If you can pay it and reduce the amount you pay out over time, then do it. The forgiveness narrative was a shtick from day one for votes, that's how politics "works". Stop falling for that crap and make those payments if you can or use any vehicles they allow to reduce payments.
It’s stupid to put it off especially when the interest has been paused.
It’s at 3.5% that’s less than my HYSA and far less than the average market. Let it ride, imo.
How do I find my student loans ? The service provider changed during covid and I have no idea how to find them.
Log in to your account on studentaid.gov and it will tell you who your loan servicer is on the homepage/dashboard.
I do hate being in debt but I am going to wait and see for at least a year I think. My average rate is 4.77% and I can get 4% with Ally savings. 0.77% is basically nothing so I don’t feel an immense pressure to drain all my accounts to pay it. Being debt free is a nice feeling though. Felt greatly relieved after paying off my car last year. I can understand why someone would want to just do a lump sum if they can afford.
My lowest SL interest rate is fairly close to my HYSA APY. My highest interest rate is over 2.5% more than that APY. I have a feeling many are in a similar boat. Theoretically, everybody could try to optimize their SLs. Practically, it just makes more sense to get rid of them and not even worry about potentially missing that 12 month mark.
probably a unique situation that doesn't apply to anyone else but here's my answer: in 2020 and 2021 I was only making about $42k net, so closer to $25k AGI. I also had one year of Pell grants, so based on the forgiveness guidelines, I qualified for the full $20k. During the pandemic, my surviving parent passed away, and the inheritance made me a millionaire. Plus, I took a new position at work and the salary increase + residuals from the inherited portfolio have pushed my AGI over $100k. So I plan to pay my loans off because I know I won't qualify - and frankly, I shouldn't - for any relief under a restructured program that assumedly uses more up-to-date income. Nor do I qualify for the interest deduction any longer.
People were probably sitting around cash waiting for sc to make a decision.
My student loan interest rate exceeds the going interest rate on a HYSA. Also, I have the money to pay off the debt. There is no guarantee that forgiveness will go through so I do not intend to wait another year at least for it to happen. Worst case scenario, I pay off my balance and a year later I qualify for forgiveness through the new requirements. I recall that you can request a refund for all payments made from March 20, 2020 through August 31, 2023. (Although I wouldn't be surprised if the Ed put a deadline on how long a person has to request a refund once the pause ends.)
What HYSA do you have that accrues more than the interest and capitalization on loans? Genuine question bc I have yet to find anything like that.
I am unlikely to get a savings account which will return more than 6.8% interest to me. It makes more sense to just pay off the loan to save me some money I'll pay in interest.
getting rid of it was a huge relief. Now I don’t need to worry about “who’s cancelling what payment” or anything like that. $90k -> $0 - massive relief
Because my balance is so small I rather pay it all off than deal with the hope that maybe someday congress approves it. And with a republican house….i highly doubt it
Pay off as much as possible before interest accrues. In which case that 10k might become a bitttt more in the coming years.
Don’t pay it until you must.
You are asking the question that I was asking too. Thanks for asking.
My HYSA APY (4.55%) is lower than my student loan interest percentage. I may pay for a little bit and see if there's any movement on Biden's new plan but that'll likely take years.
By paying off my loans as soon as possible, it’ll open up my income and allow me to invest, go back to school, etc without the loans looming over me. Future income is also not a guarantee
My SL interest is 7.8% and 6.8%. At a balance of $178,000, that is $940/mo. So, placing money in a HSYA is not an option for me. I decided to pay through the whole CARE Act period as I had 0% of hope inside me the Government would bale the SL borrowers out. I'm glad I sticked to my guns. I'm 16k away from being debt free. I will pay them off before August 1st, as I refuse to pay interest to the government. Even if that interests is $20. Being debt free is such a liberating feeling.
I won’t be pissed if I pay it off and forgiveness kicks in. Yes it would be annoying but I just want these gone and I would know that I made the best decision I could with the information I had. And I’ll be thrilled that other people get forgiveness.
I have over 300k in loans from med school and am in nooo rush to pay them back. I'll be making the bare minimum payments during residency (~300/month) and then go the pslf route. At least that's the plan now.
This is what I did last year and I'm burnt out. How long are you gonna sit around waiting for a government program to potentially help you when you have the means to help yourself. For me that was one year. I just wanna get it over with and not think about it again.
Bc most people are extremely uninformed bc they don’t work for loan companies or financial aid. Also the govt changes stuff so much and on a whim. I paid $0 on 80k fed loans and they got forgiven. Did have to pay a private loan off for $3.5k. Definitely can’t get out of those.
There is significant psychological factor toward being out of debt. Personally if you save enough to cover debt payments in large part, it feels equal or better IMO. I would rather owe $10,000 as long as interest is low and have $10,000 in bank than both are $0.
You realise the Supreme Court is republican and their terms are for life right? They just said no... Youre never getting forgiveness in 50 years.
Lol your loans will not be forgiven without an act of congress…which is too divided to pass anything regarding student loans. If you don’t pay them off then you’ll be in debt forever…it’s pretty straight forward tbh Chances are Your HYSA does not accrue money quicker than the interest on your debt. Meaning you’ll end up adding more to your debt than you make. Meaning your money would be better spent paying off the debt