11 May Will student loans be forgiven? Should we keep paying?
Q. My son is currently paying down his subsidized and unsubsidized federal student loans with monthly payments, trying his best to get the loan paid off. Realizing the government deferred student loan payments under the stimulus package, should he discontinue monthly payments until we hear if the federal government would indeed move forward with loan forgiveness? And if he ultimately does pay off the balance completely, would the government reimburse those who paid during the period the stimulus package was put in place?
A. While there has been a great amount of discussion and proposals surrounding student loan forgiveness, no actual legislation has been passed at this time.
Proposals range from canceling from $10,000 to $50,000 of student loans per borrower.
There’s lots of discussion in terms of what kinds of student loans could be forgiven, said Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette.
For example, he said, the federal government probably wouldn’t have the authority to forgive private loans.
“Even within the various federal loan programs under previous legislation, some federal student loans qualified while others did not,” Maye said. “So the devil will certainly be in the details.”
Recently, Sen. Wyden of Oregon proposed a bill called “The Retirement Parity for Student Loans Act.”
“This bill is designed to help student loan borrowers who can’t save for retirement due to student loan payments,” Maye said. “The crux of the legislation is that employers would make matching contributions into their employer retirement accounts. In essence it would treat their student loans as if the employee was contributing to the employer’s retirement plan.”
Given the state of flux surrounding student loan forgiveness, Maye said he would not recommend your son stop making his student loan repayments.
“Hopefully if student loan forgiveness was enacted, the legislation would not punish those who did the right thing by continuing to make their student loan repayments,” Maye said, but it’s too soon to know exactly what lawmakers will ultimately decide.
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This story was originally published May 11, 2021.
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