Temporary Interest Relief for Student Loans

Amidst the coronavirus pandemic, President Trump has elected to waive interest on all federal student loans until further notice. For someone who accrues $20,000 in student loan interest a year, this is huge. Trump stated "To help our students and their families, I have waived interest on all student loans held by federal government agencies.” The coronavirus, COVID-19, is only just starting to take hold in the United States. We are in the very early stages of feeling it's impact on the economy. Halting interest on student loans is a great place to start, and will likely be very beneficial to many who need to take time off of work, but I believe that the economy will continue to get worse before it gets better. Does President Trump have future plans in store for student loans?

Moving the interest rates to 0 is an intriguing first step. It have the potential to evolve nicely into avenues like automatic deferment, or suspended payments for all student loans, which could definitely have a positive impact on the economy. If there is no interest on student loans, then suspended payments won't punish those who wish to allocate money elsewhere, and will further reward those who intend to pay down their loans faster. That's more money that can be spent stimulating the economy on things like homes and cars.

How much will it help the economy? That's hard to say. Personally, I would much rather give a break to many Americans with large amounts of student loans than large corporations, but I also have $300,000 in student loans, and very little in stock holdings for large corporations. I think the economic impact of COVID-19 will be much more devistating in the coming months, and decreasing student loan interest to 0 could be the first of several steps taken. For many millennials, this is the first economic uncertainty we've had since high school or college. How we emerge from it could define our financial legacy.