Before the covid pandemic, and the grace period, I never missed a payment on my student loans.
That’s right, for years I had a spotless record of making every student loan payment on time and for the entire amount required that month.
When we were given the first student loan grace period by the government earlier this year, I saw it as an opportunity to capitalize on my loan payments. My loans wouldn’t be gaining interest and I was reducing expenses by working remotely. It seemed like a sign from above that it was time to make a serious dent in these bad boys.
After a few months of paying almost double of what I normally paid, an extension to the grace period was announced saying that it would last until the end of the year.
This news caused me to check how much progress I made by paying double the last few months. Surely I had already made a dent.
To my surprise, the overall amount hadn’t gone down much at all and it led me to reconsider my options.
I had three options:
- Keep paying double.
- Keep paying my regular monthly amount.
- Stop paying altogether until I actually have to.
I chose the latter of the three and haven’t looked back.
Student Loans Could Be Forgiven
You hear it all the time, but it’s more likely to happen now.
In 2021, student loan debt could be forgiven as part of a COVID relief bill or as a declaration by President-elect Joe Biden himself. Biden has said on numerous occasions that he would forgive at least $10,000 in student debt for all borrowers.
Reducing student loan debt by $10,000 per person would do a world of wonders for any of us. That is way more of a ‘dent’ in our student loans than what we could’ve put in them during these last few months.
The idea of a student loan forgiveness plan has been on the government’s docket since the pandemic started. Controversy aside, even if the forgiveness is a certain percent of our loans, we’ll take it.
With the idea of student loan forgiveness floating around, it makes less sense to pay money toward loans during this grace period.
Why pay with the possibility of not needing to pay?
For any pessimists asking: “The government always says that but where will all that money come from?”
We’ve seen the government conjure up a ton of stimulus money from thin air in these past few months. If a grace period and an extension to that grace period can be made in the snap of a finger, then some loan forgiveness is a real-life possibility.
A pandemic like this is a once in a lifetime occurrence. Something like student loan debt forgiveness is more likely now than ever before.
Money For The Holidays
The holidays are approaching and like always, they are expensive.
I felt I needed to buy more gifts for family members this year due to the pandemic. Some of my older loved ones haven’t left their homes in months. They’re alone, depressed and afraid.
Instead of putting money toward my loans, I’m using it to buy more gifts for these loved ones I won’t be seeing. My goal is to replace family time with gifts. The pandemic has taught me that life is too short not to express love for family members in any way possible.
For those of you traveling to see your families, you’ll need money to travel, buy gifts and for anything else that might get in your way.
I’m even using some of my money for charitable donations this year — humble brag, I know — because the world is in so much chaos right now and I want to help.
Taking advantage of this student loan debt grace period during covid for gifts, family time and charity donations aren’t wasteful. I’d rather buy a nice gift for a family member who has been stuck inside or a meal for a homeless shelter then try to get ahead on my student loans.
Nothing To Lose
At the end of the day, you have nothing to lose — and only money to gain — by taking a break from paying your student loans for a few months.
Will not paying hurt your credit score? No.
Will not paying make your interest rates rise? No.
Will not paying leave you with more money in your pocket? Yes.
Part of being financially literate is knowing when to take advantage of situations that make your money grow. This grace period is one of those situations.
Yes, you could be a ‘goody-two-shoes’ and get ahead of your loan payments during the pandemic. Good for you.
My goal is to make my money last and stretch it out. I’ll take any break I can get from paying a monthly expense like a student loan, especially in the unstable covid world we’re living in right now.