Does paying off my loans in full now make sense?

[deek]

Do we think there will be some forgiveness at some point with the new administration? Does it make sense to pay off my 16K balance all at once?

[fuzzy math]

I would wait until the student loan payment holidays are over. Interest is not accruing. If you have the entire balance saved up you can earn interest on it yourself right now. If there's some sort of forgiveness before the holiday is over, you win. If not, hedge your bets on whether you want to pay off the whole thing.

[deek]

I would wait until the student loan payment holidays are over. Interest is not accruing. If you have the entire balance saved up you can earn interest on it yourself right now. If there's some sort of forgiveness before the holiday is over, you win. If not, hedge your bets on whether you want to pay off the whole thing.

Makes complete sense. Thanks!

[foghorn]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf. 

[joe189man]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums? 

I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

[deek]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums?

I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

This.

It's laughable trying to get someone to feel guilty about a government offering that helps increase their net worth and removes a small financial barrier.

[bmjohnson35]

OP: It appears that Biden does want to offer some form of forgiveness for tuition debt.  If you wait a while, there may be government assistance available in the not too distant future.

I was raised in a conservative household and I'm sure my father would have asked the same question as foghorn.  Our national debt is $27+ trillion at this point, roughly $84k per person.  Despite this, our elected officials are printing and spending money like there will be no consequences.  The Biden administration is talking about another 3 trillion spending bill to address other various areas of concern.  Taking the moral high ground is like trying to plug a tiny hole in a sinking ship with your finger, while cannon balls are creating huge holes all around the ship. 

I have mixed feelings at this point.  On one hand, I feel that we should try to fulfill our financial obligations if and when we can.  On the other hand, our education and healthcare systems are so broken and overpriced, US citizens are essentially victims of flawed government policy and greedy industries.   We utilize the ACA because we were unable to source alternative healthcare insurance at reasonable rates and yes, we utilize the subsidies available despite our relatively high net worth.  Without the ACA, I would have been unable to retire early.  Should I have continued working until we could afford to pay crazy high insurance premiums? I see how some could feel this way, but I assure you that I don't lose any sleep over utilizing this government program. Is this an example of rationalizing an immoral choice or two wrongs don't make a right? Maybe?

[foghorn]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums? 



I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

I certainly do not expect to changes anyone's mind here.  If forgiveness becomes available, the OP should take it.  The difference for me is that rules are changing "after the fact".  If someone chose to not go to college because they did not want to take on debt, they may now be frustrated or feel like a chump because they could have received a degree without paying the bill (or part of the bill).  Instead, not only did they not go to college - they will have to pay off the college bills of someone else who did go to college and its getting a freebee.  This may not go over well if this debate moves forward in Congress. 

Most of the programs you mention above have the rules written "going in".  I may not like them or agree with them, but we all know what they are.  When the rules get changed after the fact, that is where the frustration comes from.  Play by one set of rules - make decisions based on those rules - then watch someone else get to play by a separate set of rules. 

I did not receive any stimulus payments. 

[Proud Foot]

I would wait until the student loan payment holidays are over. Interest is not accruing. If you have the entire balance saved up you can earn interest on it yourself right now. If there's some sort of forgiveness before the holiday is over, you win. If not, hedge your bets on whether you want to pay off the whole thing.

This right here. With payments deferred and interest at 0 there is absolutely no reason to pay them off right now. If there is to be activity regarding loan forgiveness I think it will happen closer to, or a short period after the current loan holiday ends at the end of September.

Otherwise what will the interest rates be on your loans and how easily can you cash flow the monthly payment? If they are low rates and you can make your payments easily then I would follow the investment order and invest that money.

[dandarc]

@foghorn  - fuck off with the moralizing.

Start a new off-topic thread if you want to talk politics. OP asked a very specific strategy question given the rules right now - what you think the rules should be has no bearing. Suggesting one individual should forego this because "morals" is frankly disgusting.

MOD EDIT: Forum rule #1 please. :)

[joe189man]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums? 



I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

I certainly do not expect to changes anyone's mind here.  If forgiveness becomes available, the OP should take it.  The difference for me is that rules are changing "after the fact".  If someone chose to not go to college because they did not want to take on debt, they may now be frustrated or feel like a chump because they could have received a degree without paying the bill (or part of the bill).  Instead, not only did they not go to college - they will have to pay off the college bills of someone else who did go to college and its getting a freebee.  This may not go over well if this debate moves forward in Congress. 

Most of the programs you mention above have the rules written "going in".  I may not like them or agree with them, but we all know what they are.  When the rules get changed after the fact, that is where the frustration comes from.  Play by one set of rules - make decisions based on those rules - then watch someone else get to play by a separate set of rules. 

I did not receive any stimulus payments.

i agree with most everything you said above,

the pros and cons of the student loan forgiveness debate can be found in the link below,

https://forum.mrmoneymustache.com/ask-a-mustachian/poll-biden-executive-order-for-student-loan-forgiveness/?topicseen

i also didnt get the 2nd and 3rd stimulus checks,

[Samuel]

@foghorn  - fuck off with the moralizing.

Start a new off-topic thread if you want to talk politics. OP asked a very specific strategy question given the rules right now - what you think the rules should be has no bearing. Suggesting one individual should forego this because "morals" is frankly disgusting.

That's a bit of an overreaction.

It's not disgusting at all. It was a perfectly valid point raised in a respectful "have you considered things from this angle?" manner. There is a moral angle to this question and just because you (and I, and probably 99.9% of people) don't feel the need to entertain it for very long before dismissing it it's still worth considering if one hasn't yet. 

There still are a few hardcore "my word is my bond" people out there who feel that since they agreed to the terms of the loan and can meet them they have a moral obligation to do so and not shift that responsibility to the rest of society because the law is changed to allow it. It's an unreasonably high ethical bar to set for oneself (similar to paying back creditors after having debts discharged in bankruptcy) but some people feel moved to do it.


Personally I would also keep making the loan payments and see if any forgiveness comes down the pike. I would have no qualms about taking the forgiveness if our representatives chose rules that make that possible, even if I don't really agree with the policy in the first place.

[broketriathlete]

I wonder if the administration would offer a tax credit or a refund of sorts for those who were responsible and paid back their student loan debt. I paid back over $150K in student loans in the last two years. It’d be nice to have some of that back if he’s going to erase peoples student loans with a flick of a switch. Wishful thinking I’m sure...

OP if you are hoping it’ll be erased, which I don’t agree with, I agree with other posters saying wait til the interest starts accruing again to make that decision. At the moment there is no harm in keeping your money and seeing what the government does.

[Wolfpack Mustachian]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums? 



I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

I certainly do not expect to changes anyone's mind here.  If forgiveness becomes available, the OP should take it.  The difference for me is that rules are changing "after the fact".  If someone chose to not go to college because they did not want to take on debt, they may now be frustrated or feel like a chump because they could have received a degree without paying the bill (or part of the bill).  Instead, not only did they not go to college - they will have to pay off the college bills of someone else who did go to college and its getting a freebee.  This may not go over well if this debate moves forward in Congress. 

Most of the programs you mention above have the rules written "going in".  I may not like them or agree with them, but we all know what they are.  When the rules get changed after the fact, that is where the frustration comes from.  Play by one set of rules - make decisions based on those rules - then watch someone else get to play by a separate set of rules. 

I did not receive any stimulus payments.

I am very against student loan forgiveness, so definitely on your side on this. However (and this comes from someone who tends to derail threads all the time :-) ), this one seems to be specifically asking about it in a financial context - and it's not in off topic - so I think it's only fair to stick to the question as a financial one.

[Much Fishing to Do]

OP - I guess it makes sense to wait and see if there will be forgiveness. 

However, let me ask you another question.  Since you took on this obligation, do you not feel you should pay it?  Forgiveness does not really make the obligation go away - you are just pushing it on to other people to pay on your behalf.

Did you reject your stimulus payments? or should any one receiving tax breaks/credits not accept them? What about any other program you can think of? Or early retires trying to game the ACA system to reduce insurance premiums? 



I have the cash to pay off my SL but am waiting also, not that i need forgiveness, but if its offered i will take it, i would be taking advantage of a government program, i cant imagine morality needs to be in the equation.

I certainly do not expect to changes anyone's mind here.  If forgiveness becomes available, the OP should take it.  The difference for me is that rules are changing "after the fact".  If someone chose to not go to college because they did not want to take on debt, they may now be frustrated or feel like a chump because they could have received a degree without paying the bill (or part of the bill).  Instead, not only did they not go to college - they will have to pay off the college bills of someone else who did go to college and its getting a freebee.  This may not go over well if this debate moves forward in Congress. 

Most of the programs you mention above have the rules written "going in".  I may not like them or agree with them, but we all know what they are.  When the rules get changed after the fact, that is where the frustration comes from.  Play by one set of rules - make decisions based on those rules - then watch someone else get to play by a separate set of rules. 

I did not receive any stimulus payments.

I am very against student loan forgiveness, so definitely on your side on this. However (and this comes from someone who tends to derail threads all the time :-) ), this one seems to be specifically asking about it in a financial context - and it's not in off topic - so I think it's only fair to stick to the question as a financial one.

Agreed.  I'm wondering if my son should actually borrow when he was planning not to (his 529 is enough to finish school), just in case some will be forgiven later.  Though maybe unlikely per whatever rules are used it seems possible he could borrow for this Fall and get then get it forgiven at some point in the future, so maybe worth a shot even if it doesn't work out (esp. for the approx $10k for the upcoming semester, given the current rules would allow him to later use his 529 to pay off that $10k, and a $10k forgiveness happening seems a slam dunk to me over the next few years)

I'm not for student loan forgiveness, but like any other government tax/spending/forgiveness policies, I'm certainly gonna max out my value as long as I'm honestly following the rules.  I frankly didn't think it was fair that when I had a crappy job with no 401k, all I could put in a tax advantaged account was the low IRA limit, then with a better (and much better paying) job I could put in a lot more with the 401k offered, and then when I was doing my best financially with my business I had the amazing Solo 401k limit option available.  It didn't make sense to me I was being given better and better retirement help as I was getting a better income, and I wish that would get changed, but I certainly wasn't gonna not take that solo 401k $50k deduction.  I'm not sure I agree with a child tax credit (esp. at my income level), but its not like I don't take it.

[Loren Ver]

Do we think there will be some forgiveness at some point with the new administration?  Does it make sense to pay off my 16K balance all at once?

Those are two separate and I see them as unrelated questions so I will answer them as such.

Do we think there will be some forgiveness at some point with the new administration?
I don't think there will be loan forgiveness.  Lot of reasons I don't feel like getting in to. 

Does it make sense to pay off my 16K balance all at once?
This is very dependent on your interest rates.  Student loans can be some of the best rated leveraged money you will have, right along with a mortgage minus the need to get a house and the baggage that goes a long with that.

If you have a good rate for your loan, I would invest the 16k you have sitting around, and use the growth to payoff the loans.  Then when the loan is paid off, you still have the 16k.  Tada!  Or you let the 16k and the growth grow, and use cash flow to pay off the loans.  Take as long as you can.

This is what I did for my federal loans.  I consolidated and refinanced my loans to as low as I could and stretched out my payoff time as long as they would let me.  It's great!  I am now FIREd and still have a student loan, but I have all the growth that I have build up over the past sixteen years.  This is the same principle as the don't pay off your mortgage club.  Leverage.

If your rates are unfavorable, I would recommend getting better rates.  If that isn't possible, then paying it off before paying an unreasonable amount of interest would be my next choice.

Loren