Will student loans be canceled? Should we continue to pay?
Q. My son is currently paying off his federal subsidized and unsubsidized student loans in monthly installments, doing his best to get the loan paid off. Given that the government has postponed student loan payments as part of the stimulus package, should it halt monthly payments until we know if the federal government is indeed moving forward with the cancellation? loans? And if it ends up paying off the balance completely, would the government reimburse those who paid during the period when the stimulus package was put in place?
A. Although there has been a lot of discussion and proposals regarding the cancellation of student loans, no real legislation has been passed yet.
The proposals range from the cancellation of $ 10,000 to $ 50,000 in student loans per borrower.
There is a lot of talk about what types of student loans could be canceled, said Michael Maye, chartered financial planner and certified public accountant at MJM Financial in Gillette.
For example, he said, the federal government would likely not have the power to cancel private loans.
“Even under the various federal loan programs under previous legislation, some federal student loans were eligible, while others were not,” Maye said. “So the devil will certainly be in the details.”
Recently, Senator Wyden of Oregon proposed a bill called the “Student Loan Retirement Parity Act”.
“This bill is designed to help student loan borrowers who cannot save for retirement due to student loan repayments,” Maye said. “The crux of the legislation is that employers would make matching contributions to their employer retirement accounts. Essentially, this would treat their student loans as if the employee were contributing to the employer’s pension plan.
Given the state of the flow surrounding student loan forgiveness, Maye said he would not recommend that your son stop paying off his student loans.
“Hopefully if the student loan cancellation were enacted, the legislation wouldn’t punish those who did the right thing by continuing to pay off their student loans,” Maye said, but it’s too early to know exactly what lawmakers will ultimately decide.
Send your questions to [email protected].
Karin Price Mueller writes on Bamboo column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Register for NJMoneyHelp.comof weekly electronic newsletter.