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Student loans — pay-off or wait/hope for forgiveness

By Terry Savage on November 23, 2021 | College Savings / Student Loans

I have $23k in students loans (paid down from $80k). I have cash in hand to pay off before COVID forbearance ends in January with still about $10k that will be remaining in saving for emergencies. Should I just pay off this monkey on my back or should I just pay half and keep on waiting for a potential (unlikely?) loan forgiveness from the Biden administration? In good shape financially overall, own home outright, decent retirement and investment accounts. I hate the idea of paying it off and then a few months later Biden forgives $10k. But I’m also tired of this debt hanging over my head when I can afford to be done with it. Help!?

Terry Says

This is probably the toughest question I have had recently. It’s tough because we just don’t know what the Biden administration might propose. Clearly, student loan debt is not on the front burner. We haven’t seen anything about it in the proposed budget. And recent legal opinions say this would have to be adjusted by Congress, which doesn’t play well together.

In your place, I’d definitely pay down all but $10,000 — and then see what happens when forbearance ends at the end of January. That’s bound to stir up the topic. In fact, you might wait to pay any down until we see what develops. But the best thing is to get out from under that burden as soon as things clear up.

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