A singular crisis has led to extraordinary relief options for borrowers. Interest and payments have been paused on federal student loans. Homeowners can request nearly a year of mortgage forbearance. Credit card issuers and other lenders dramatically expanded hardship programs.
Still, many Americans say they took on more debt last year because of the pandemic, according to NerdWallet’s household debt survey.
If you are one of them, or if you have other household debt that’s been put on hold, you may not want to rush to pay that money back even if you can. The COVID-19 crisis and its economic fallout are far from over, so you’ll want to be strategic when dealing with pandemic-related and other debt.
STUDENT LOANS ARE STILL ON HOLD
President Joe Biden extended federal student loan forbearance until October and during his campaign proposed canceling $10,000 in federal student loan debt per borrower. If you could benefit, consider not making any extra student loan payments while you wait to see what happens.
Paying off student loans probably shouldn’t be your top priority anyway. More important goals include saving for retirement, paying off higher-interest-rate debt and building an emergency fund of at least three months’ worth of expenses.