In what is nothing less than a major political move, Trump is suspending student loan payments through the end of 2020 according to CNBC.
On Saturday, President Donald Trump signed a series of executive orders and memoranda, bypassing stalled negotiations in Congress and calling for an extension in pandemic relief for tens of millions of Americans.
One memorandum — arguably the least controversial — orders Secretary of Education Betsy DeVos to continue deferring federal student loan payments through the end of the year with no interest accrued during that time. This is a three-month extension of the student loan relief policies under the CARES Act, which are set to expire on September 30.
Though the continuation of relief would allow borrowers to put off paying for their student loans with no penalty, it’s important to remember, eventually you’ll have to pay back your debts.
The extended federal loan deferment could be an opportunity for borrowers to accelerate their payoff progress, argues McClary. With interest waived, any payments you make during this time will go directly toward chipping away at the principal. So, when your payments do eventually resume, interest will collect on a lower balance and your overall debt load will be smaller.
“The suspension of interest on federal student loans makes those payments even more impactful,” McClary says. Plus, the earlier you can pay off your student loans, the better. (source)
This is not about helping students- this is about helping him get re-elected. It is a logical move, but a blatantly political one.
The student loan crisis is a major issue because it is tied to the collapsing financial sector, housing markets, bond markets, and debt market- with so many people being unable to repay their loans owing to declining incomes, a shrinking job poor, and expanding labor pool, and now permanent job losses due to the COVID-19 exposure of the economic problems, the ability to service said debts is nearing to the impossible.
It is going to be a very interesting future, as such situations with unpayable debts always tend towards revolution in the long term, be it with violence or with a fundamental shift for values that defines a society for generations to come.
Right now America is undergoing major political and social shifts. Trump is a part of this, and while it is likely he will be re-elected, if he is re-elected, it will be the last “hurrah” for the Boomers, at which point the indebted, lost, confused, and angry Millennials and Zoomers will take over.
And simply delaying student loan payments won’t likely be enough…