Federal student loan payments suspended through September
The Department of Education is extending the zero percent interest rate and suspension of payments on federal student loans through at least September 30, 2021.
"The majority of student loan debt is not forgivable so it's there and it's never going to go away. So, the key for this pause by the government, the Department of Education, is very helpful for people that have student loans but they've lost their job and they're not able to earn income at this moment," said Greg Ghodsi, the managing director of investments for 360 Wealth Management Group of Raymond James.
Student loan debt has reached $1.7 trillion, so with the suspension of payments, a huge chunk of owed money is just sitting there.
"If you take 40 million people that have student loan debt and they're able to pause those payments until October, that's a significant amount of money that's not filtering through the system for the loans and then going to the investors that have purchased all the bonds that those loans securitize," Ghodsi said.
But more relief could be coming from Washington.
"President Biden has mentioned about forgiving a percentage of debt and there are a lot of different proposals some of them have a flat amount that they're going to forgive for everybody up to 'x' amount of dollars -- some will be based on economic need, and that's up to the politicians in DC to argue for the rest of the year about how they're going to do that," said Ghodsi.