Back in March 2020, the Pandemic was in full force. The politicians were doing everything that they could think of to ease the financial pain. One idea was to take the pressure off those in student loan debt by giving them a period of time where they didn't have to make payments and their debt wasn't charged interest.
Since then, there have been several deadlines where this program was supposed to end. Like clockwork, President Biden extended the deadline. Surely he was thinking about this from a political benefit rather than a benefit for student loan borrowers (sorry for being Captain Obvious). With every extended deadline, he is dragging more Americans into potential financial problems – more on that in a minute.
Now we are up against another deadline – August 31, 2022. That means that payments and interest would start up again in September. On the radio program yesterday, Prudent Money Contributor and College Admissions expert John Hapulo said that:
"August 31 was supposed to be the last day of the pause. Interestingly, last month the Federal Government told all the student loan services in the country if anyone asks about when they are going to have to start repaying their loan, don’t comment on that."
Will they extend it? I think that they extend it for two reasons.
First, you have heard of the expression "that is a political landmine." Not extending the deferred payment at least to the end of the year would be a political atomic bomb! With the pressure of the midterm elections, as well as the pressure to forgive student loan debt, I seriously doubt that President Biden will start it back up again and instead extend it to December 31st of this year.
Second, how many student loan borrowers consider student loan debt and payments out of sight out of mind? With escalating inflation, how many borrowers have the extra funds to make that payment? The politicians might have just created a huge financial quagmire when they start payments back up again. When you have a problem with student loan debt, don't forget there is no bankruptcy protection. You are dealing with the US Government (loan sharks).
The politicians are good at kicking the can down the road. Let's deal with today's problems tomorrow. There comes a point where the convenience of extending payments for political favor is damaging to the personal finances of student loan borrowers. There is no way that the politicians are doing student loan borrowers any favors. Time will tell……
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