Good Financial Reads: Student Loan Forgiveness in a Bear Market

On August 24th, the Biden administration announced a series of changes to student loans and forgiveness of up to $20,000. There is a lot in what they have announced, so let’s look at how it can help you.

Forgiveness of up to $20,000 in student loans (for people who received Pell Grants) and $10,000 for others.

2022 has been a challenging year for investors and economists alike. As inflation emerged from its 40 year hibernation, stocks dropped into bear market territory in the first half of the year. Fears of a recession arose. However, in the last few weeks, recession fears have eased and stocks have rebounded. Are investors out of the woods now? In this week’s post we examine where the economy and stock markets are and how bear markets play out. Is the bear market over?

Federal student loan programs have had forgiveness built-in for a while now, but forgiveness takes a long time.  The standard period for most loans to receive forgiveness is 20-25 years.  Standard payoff plans for federal student loans are 10-year paybacks, so these would obviously not be helpful.  However, there are a several “Income-Driven Repayment” (IDR) plans available that can extend payments for a much longer period.