I thought as soon as the Supreme Court's decision on student loan forgiveness was announced, I would quickly post my reaction. But on that Friday morning, the only writing I did was a quick text to a friend.
If you've read my previous posts, you know that I've been skeptical that the forgiveness plan would go through, so I thought I was prepared to hear this news. Surprisingly, I was very disappointed, and it took me some time to gather my thoughts and share my opinion.
Post-Decision Angst
I worked very hard to pay $100K+ in student loans over the last four years, so there was a spark of hope that my remaining $20K balance would be forgiven. I already paid my principal amount and over $40K in interest! Therefore, I didn't consider it a government hand-out to provide relief to those who have been financially burdened by a broken and predatory student loan system.
Ultimately, I can't place my confidence in politicians. If I want to make it happen, I have to do it myself. Still, I don't want to be completely negative. On the positive side, I likely saved a few thousand in interest during the pause, and it allowed me to pay down my balance faster than I would have in a pre-pandemic environment.
Do I still think things need to change? Absolutely! Those changes go beyond the federal government. I'm thinking about...
State governments that have increasingly cut educational funding, forcing middle and low-income students to over rely on student loans.
Colleges and universities that have significantly increased tuition to support bloated administrations, new sport facilities, and degree programs with little to no value in the real world.
Financial institutions that lobby for policies that pad their coffers at the expense of borrowers.
And college bound students who are insufficiently educated about student loans. I have a sliver of hope that all the media attention over the last few years has brought awareness of how student loan debt can negatively impact their post-college lives. Perhaps some will be encouraged to look at alternatives (e.g., scholarships, grants, apprenticeships), or at least be mindful of how much debt they can take on and pay back over a reasonable period of time. (Currently, the average time it takes to pay off student loan debt is approximately 20 years, which is far from reasonable.)
My Next Steps
The payment pause will officially end on August 30. Interest will restart September 1, and payments will be due in October. My position is that I've paid more than enough interest over the years, and I will not give them one more penny!
Therefore, my plan is to pay my remaining balance by the end of August. In early August, I paid $15K towards my $20K balance with funds I saved last year and throughout this year.
My remaining balance is $5K. The end is in sight!
The Path Ahead
Millions of borrowers are dreading the restart of student loan payments, so I do appreciate the Biden Administration's efforts to support borrowers during this huge transition with a 12-month grace period. Borrowers won't be penalized if they miss payments, or do not make payments within the first year. The downside is that interest will still accrue on the balance. So, if you have the ability to pay, you should do so. (From personal experience, the interest is a killer. For real.)
Lastly, stay on top of the latest news. There are so many opinion articles out there, and it becomes a very noisy space. Even I find it a bit overwhelming, and I'm used to reading these types of articles weekly! Therefore, I recommend going to the Department of Education's site for the most current updates. The more informed you are, the better you can formulate a plan that works best for your individual situation. As I love to say, even an imperfect plan is better than none.