President Joe Biden has yet to fulfill his campaign promise of forgiving at least $10,000 in student loans per borrower but the pressure is mounting. Some financial advisors are telling their clients to hold off on paying their student loan debt and wait to see what Biden does.
While the Biden Administration has extended the pause on student loan repayment, interest, and collections through Aug. 31, 2022, student loan forgiveness advocates, including those in his own party, say it isn’t enough. There are unconfirmed reports that Biden plans to forgive student loans at some level, it’s just unclear what.
The student loan payment pause has now been extended six times since Congress passed the $2.2 trillion stimulus package (the CAES Act) in March 2020 at the onset of the coronavirus pandemic.
For some financial experts, the best approach is to wait and see.
“It’s been a roller coaster for a while,” financial planner Richard Cooke of 2Point0 Financial told Bloomberg. “I have a handful of clients who have the funds available to pay off their student loans, but we’re waiting until we have a clear message from the administration before making a final decision.”
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Cooke is not alone in his strategy.
“I’m encouraging clients with federal student loans to make the payments to themselves for the time being until we see how all this unfolds,” said Kyle Hill, owner of Hill-Top Financial Planning.
Despite this advice, some clients want to get out of debt period and are moving forward.
“Some clients are really gung-ho about being debt-free and for those clients, we just fully tackle all of their loans regardless of the political state,” said Nathan Bender, lead planner at Black Bishop Financial Group.
Income will likely be a factor in any kind of forgiveness plan, said Chris Diodato of WELLth Financial Planning.
“The moratoriums are the Biden administration kicking the can until he has enough support in Congress to pass some sort of much more comprehensive reform,” Diodato said. “I don’t know if it will be a full forgiveness package or a certain amount, but if there are going to be income caps, they’re probably going to go off previous years’ tax returns.”
PHOTO: Students celebrate at a Howard University graduation ceremony in Washington, D.C. as music mogul Sean “Diddy” Combs delivers the commencement address, May 10, 2014. (AP Photo/Jose Luis Magana)