PFT #59 - Personal Finance Tip of the Week: Student Loan Moratorium and Future Payments

This week’s topic is about student loan moratorium. The federal student loan moratorium has been extended for the third time due to the Coronavirus pandemic. The loan relief began in March of 2020 and was set to end September 30, 2021 which was moved to January 31, 2022 and then moved again to May 1, 2022.  Moratorium means that payments for principal or interest are not required and without any penalty. With the suspension payments, we know this is needed for many Americans; however, the important notion is to consider making payments if you have the means to do so. The simple fact is that you are delaying payments which only extends the life of your loan.  So let’s take the average student loan interest of 6% and the average loan amount of $30,000 for a 20-year period. That comes to $215 per month or $5,600 over the full moratorium period which is currently 26 months. After this duration, you’d still have a principal balance of $28,201.  The bottom line is that it takes a long time to pay loans off and they are simply a sword in the sides of borrowers. However, amortization is weighed heavily on interest at the beginning of the loan so all payments help, especially additional principal.  The second point is you should not rely on congress for loan forgiveness as the odds are small. Just $10,000 given to each borrower would cost the government over a quadrillion - and if you don’t know that’s a 1 with 12 zeros after it.  Website   https://www.somethingonmymind.net/ Merchandise https://www.somethingonmymind.net/shop Social Media  https://www.instagram.com/somm.podcast/ https://www.youtube.com/channel/UChec5qcZBcGkIhUU3belNDw https://www.tiktok.com/@somm.podcast?lang=en https://www.facebook.com/somm.podcast https://twitter.com/Somm_podcast