• Discounts and special offers
  • Subscriber-only articles and interviews
  • Breaking news and trending topics

Already a subscriber?

By signing up, you accept Moneywise's Terms of Use, Subscription Agreement, and Privacy Policy.

Not interested ?

Student loan forgiveness remains a big question

Graduation mortar board cap on one hundred dollar bills concept for the cost of a college and university education
Brian A Jackson / Shutterstock

Broad student loan forgiveness would give millions of Americans more room in their budgets to pay off other debt, save or start investing.

Biden has said since the campaign that he favors canceling some federal student loan debt for every borrower, but during a CNN town hall in early February he expressed doubt that he could go as far as some members of Congress would like.

"I am prepared to write off the $10,000 debt but not 50 (thousand), because I don't think I have the authority to do it," the president said.

Democrats including Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren have been pushing hard for up to $50,000 in forgiveness.

Schumer has had this message for Biden: "You don’t need Congress; All you need is the flick of a pen." Stepping up the pressure, the New York Democrat said in mid-March that the Justice Department was looking into the authority issue.

But the president has asked his education secretary to investigate the question, too. Even so, Biden is working on other priorities at the moment — namely, a $2 trillion infrastructure plan.

Kiss Your Credit Card Debt Goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

Explore better rates

The case for refinancing your student loans

Close up of signing loan agreement, couple sitting on sofa, male hand with a pen setting signature, taking bank credit with easy terms of payment and low interest rate for purchasing property
fizkes / Shutterstock

Some signs suggest the groundwork is being laid for widespread student loan forgiveness.

Within the span of about 10 days, the Biden administration recently canceled $2.3 billion in student loans for certain borrowers, and the COVID relief law now paying out those third, $1,400 stimulus checks includes a huge tax exemption on forgiven student debt.

But Biden’s plan for reducing student debt is still just that — a plan — and governing through executive orders can be risky, politically. So impactful federal student loan relief is not exactly guaranteed.

Instead of waiting around, you might want to consider refinancing your student loans at a record-low interest rate.

Think about the interest paid on a $100,000 student loan. If a borrower originally took on that loan at a 7% interest rate and then refinanced it to a new loan at 3%, that’s a savings of $4,000 a year on interest payments.

A gamble that may be worth it

rolling dices on a wooden table
marco martins / Shutterstock

Since the government doesn't offer refinancing on its loans, a refi of a federal loan involves switching to a private student loan offered by a bank or other private-sector lender.

Doing so would disqualify you from any loan forgiveness that comes along from the federal government. But that may be a gamble worth taking.

With the economy on the road to recovery, interest rates are under pressure — so student loan rates are likely to rise.

By waiting for presidential action that may not materialize and not refinancing your student loans now, you could miss out on an opportunity to save some real money.

Note that if you already have private student loans, you don’t stand to benefit from any federal forgiveness measures. So, if you haven't already done it, you'll want to compare rates from multiple lenders and refinance your college debt at one of today's low rates.

Sponsored

Meet Your Retirement Goals Effortlessly

The road to retirement may seem long, but with Advisor, you can find a trusted partner to guide you every step of the way

Advisor matches you with vetted financial advisors that offer personalized advice to help you to make the right choices, invest wisely, and secure the retirement you've always dreamed of. Start planning early, and get your retirement mapped out today.

Clayton Jarvis is a mortgage reporter at MoneyWise. Prior to joining the MoneyWise team, Clay wrote for and edited a variety of real estate publications, including Canadian Real Estate Wealth, Real Estate Professional, Mortgage Broker News, Canadian Mortgage Professional, and Mortgage Professional America.

Disclaimer

The content provided on Moneywise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter. Advertisers are not responsible for the content of this site, including any editorials or reviews that may appear on this site. For complete and current information on any advertiser product, please visit their website.