Can I Get It OFF Credit?

I paid off my student loans in January, but it seems I replaced one type of debt with another.

I attended PAX East in Boston in April. The hotel room for 5 nights ran me about $1,500, which I then matched for spending money to use on convention goodies, a trip to the casino, and food.

In May, my car's alternator failed. It ran me roughly another $1,000. Now as I'm approaching inspection time, I also had to put new tires on it ($600). These items, along with some recreational spending, has me in the neighborhood of $6,000 in credit card debt.

I have to make compromises in order to work on this debt. My emergency fund contributions are now 1% of income (which covers my Keep The Change feature at my bank). I've also put a freeze on new cryptocurrency buys, at least until I cut this debt in half. The market is chaotic at the moment, so it's probably a good idea to back off anyways.

But there is good news on the moving fund... IT'S OVER $9,000!

P.S.: I have full confidence with debt will be paid by my birthday (March). I am expecting a refund on my student loan payments and my annual bonus. I even started a new savings challenge to round things out.

What If Biden Cancels Student Loans?

Before I begin, I want to say that I understand it was my responsibility to pay off my student loans. Did I miss exit signs during my early college years? Yes. Could I have taken my priorities more seriously? Yes. Could I or should I have switched majors? Yes. But now that’s over a decade ago and my student loans are paid off. But with how recently I paid them off and recent news of loan cancellation, it would be nice for some of that money to come back.

In short, the President can forgive up to $50,000 per borrower, but Biden is leaning toward a modest $10,000.

Worst case scenario: no balance means no forgiveness. I'm no longer burdened by my loans, but with forbearance still in place, I could have continued small payments in hopes that some broad cancellation happens. This would have extended my loan by another 2-3 years.

For the middle of the road, we have to consider what amount is being forgiven. It could be based on the number of payments I made. Following the post-graduation grace period, I would have made 13 payments. Since consolidation, I made 97 payments on my student loans, for a total of 110 payments. The Public Service Loan Forgiveness program requires you make 120 payments and that you’ve worked in a qualifying field. Given that, this scenario might not get me a refund.

But what if it’s based on a set date, like the balance as of December 31, 2021? In that case, I could stand to get back $4,906, the amount of my final payment from January.

Best case scenario: I get the full $10,000.00. But again, does it go back to a certain date, or would I see something for ever having the loans?

In these last two scenarios, any money returned to me goes through my windfall strategy. I keep a fifth for myself then apply the remainder to my financial goals, first paying down my credit card, then increasing my emergency fund.