In a series of executive orders during the week of his inauguration, President Joe Biden signed into law a number of items that will help Americans struggling with debt and the effects of the Coronavirus pandemic. One of these orders will continue to pause on student loan repayment.
- Student loan repayment continues to be paused
- Aggressive COVID-19 actions will occur
- US rejoins Paris Climate Accords
Over 45 million borrowers owe over a trillion dollars, collectively, in student loans. This means a solid amount of income every month goes toward paying down debt, and as many graduates will tell you, they are unable to find work that both supports repayment of those debts and establishment of a new life.
To combat the terrible decision between paying student loans or making rent, President Trump had worked with Congress to temporarily halt student loan repayments on federal student loans. President Biden has extended the student loan payment freeze through September 2021. The economic hardship of student loans, far from being a political issue, has proven to be a moral issue, with both a Republican and Democratic president supporting the moratorium.
If the student loan repayment is not an issue, borrowers are welcome to continue paying off their loans, as the principal will go down, as interest rates have been reduced to 0% temporarily. There are some private loan issuers whose practices are different from the federal government, so any borrowers should contact their loan holders with questions.
If you’re not putting money toward paying down the student loans at this time, and do have extra money, it may be a good time to put some extra in your Solo 401(k). Changes to retirement savings may be coming in the near future as well, as the new administration has spoken about making retirement savings a priority for more Americans.
A Solo 401(k) plan is a 401(k) qualified retirement plan that was designed for self-employed individuals and small business owners with no full-time employees, excluding a business partner and spouse. Much like the traditional 401(k), this unique plan encourages individuals to save for retirement in a tax-advantaged environment. When participants contribute funds into the Solo 401(k), taxes on the funds will be deferred until the participant takes a qualified distribution.
The Solo 401(k) is an IRS-approved plan that has the same rules and requirements as a traditional employer-sponsored 401(k). However, the Solo 401(k) allows participants to make annual contributions to the plan as both an employee and employer, which ultimately increases the yearly maximum contribution limit.
Student Loans And Forgiveness
More controversial is the concept of student loan forgiveness, wherein individual borrowers would be granted a forgiveness of debts up to a certain amount, or entirely. Different propositions had been offered during the campaign trail, ranging from forgiving $10,000 to complete amounts. While contentious debate will likely occur during that debate, there is no denying that if money remains with those most likely to spend it, the economy will be stirred more than if money remains unable to be spent at that time.
There are additional orders signed into effect that protect and establish LGBT and racial equality, bring the United States back into the scientific community regarding climate change and the COVID-19 pandemic. Additionally, President Biden has moved for an extended moratorium on federally held mortgages and evictions, granting additional time to those who will be negatively affected when the protections are lifted.
Over 100 million people in the United States live in rental properties, and some sources suggest over 14 million Americans are behind on their rent. The new order extends the protection through the end of March, up from January.
Americans are expecting more assistance in the coming weeks, with many looking to additional stimulus checks for basic necessities.