Forget Extension, Pay Loans Anyway!

Woohoo! The federal student loan freeze is extended to May 1st! When word got out about the extension, borrowers across the US have found some temporary breathing room during the holidays. The initial ending period was going to end after the end of this month and people were stressing out. But it's all good…for now! Even with this extension, there is no telling on what will happen next. Will we get student loan forgiveness for real? Or should we not expect much?

A journalist asked Biden two questions and one of them was, "You campaigned on canceling $10k in student loans. Do you still plan to do so and when?" Then a second question was asked right after. Biden answered the second question right away then ended the conference. Correct me if I'm wrong but I thought questions were supposed to be answered in chronological order. This kind of uncertainty makes me believe that student loan forgiveness is a far reach because it would positively relieve the financial burden on people like me and make debt shareholders and our government lose money.

Debt relief indecision is the reason why organizations like the Debt Collective and Student Loan Justice work effortlessly to monitor the latest news about student loan reform. They understand the fallacies of the US economic system where the working class is forced into massive debt amounts. They continuously advocate for loan forgiveness because it'll make the American dream revive again. We all know that forgiveness is possible, but will Biden sign off on it?

Why I Make Payments?

When Trump first implemented the student loan freeze, a part of me felt that it was necessary to continue paying down my amount, even if it was a mere $20/month. In my 2021 article, How I Paid Off 3 Student Loans with No Income, I explained how I managed to close off three loan accounts in a year. But what wasn't stated is why I started paying back my loans way before the freeze. I wanted to get a head start while still in school because in my mind, the sooner this burden gets paid, the better off I'll be. It'd be a miracle to see debt forgiveness happen in a country where the basis of money relies on debt and interest. This mindset is a major reason why I continue to make payments currently. Because in the long run, I know that no matter the action of the governing body, I chose to bet on myself!

Why making early payments is good?

Eliminating interest money: Interests compounds daily each day on your loans. It accrues based on the principal balance and/or based on the total outstanding balance. Making volunteer payments while on pause now not only decreases your principal but will save you from paying more interest.

Saving time: What's the difference between making one minimum payment a month and two payments a month: the time you shave off your payoff date. An extra payment can turn your March 2035 payoff date into September 2034. That's a 6-month difference!

Best for the economy: We all have a piece of the American dream that we would like to take advantage of. Homeownership? Yes. Investing your money into growing ETFs and index funds? Sure. Have enough FI/RE money to become work-optional? Of course! However, achieving those dreams is dang-near impossible if a good portion of your spending money is stuck on Debt Island. But making early payments now will be the catalyst for you to live the life you truly want!

Government moves too slow: Here in the US, you exercise your right to vote because we live in a democracy. However, what happens when the elected party fails to resolve the issues that are important to you? I will not lie, I think Biden does not represent me in a way where I feel my opinion is valued. Because when he promised to every American that every loan borrower would get $10,000 in loans forgiven, I believed him. But now, I am skeptical about whether that dream will become a reality. This is normal behavior between the presidential administration and the public: making promises they have difficulty upholding. From my perspective, it's best to take control of your financial situation and create your own debt forgiveness. If you wait, you'll be disappointed.

What if you cannot make voluntary payments?

Now, by all means, if you cannot afford to make voluntary payments, do not take this article to heart. I understand how these last two years have made people redefine their financial priorities. You may be trying to find employment, catch up on medical bills, or run into an unexpected expense. Life happens! You're a human with many other financial obligations. Whenever the extension ends (assuming we'll get another extension period), if you can only focus on paying the minimum or you decide to defer your loans, there is no judgment here. Only focus on what's within your reach.

Key Takeaway

Whether you currently make payments or not, it's important to recognize what's happening within our education system. According to CNBC, over $10 billion were forgiven by the Biden Administration, which went to the disabled, public service workers, and people who were scammed by a for-profit school. This is great! But what about everyone else? The student-loan deficit still remains close to $1.8 trillion today and it's only getting larger. As I mentioned before, I rather keep paying off my loans while this extension lasts. I try my best to be proactive in my debt-free journey. Because from my scope, an unreliable administration cannot give me what I voted for. Only I can create my own forgiveness!