A common question I’m asked is whether or not someone should pay off their student loans while the Cares Act keeps student loan payments deferred and 0% interest. The simple answer is no. Here’s why.
Worrying is like paying on a debt that may never come due.
There isn’t a plan for complete student loan forgiveness, but both Presidential nominees have mentioned student loans as part of their promise for the next term. Trump has pledged to continue to defer the payment’s long into his second term if reelected. Biden has also announced he would defer payments with an additional $10,000 student loan payment program for essential workers. There is a high likelihood that student loan interest will be 0% going into next year.
Another reason for saying no to student loans during this unprecedented time is there are better uses for cash than paying on a zero-interest debt. Financial planning 101 is to attack the debt with the highest interest. Do yourself a favor and use the money you would be paying for student loans and pay down other debts like car payments, credit card bills, mortgage, etc.
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