Turn Student Debt Into Zero Interest Loan

In March 2020 the CARES Act suspended interest and monthly payments to the approximately 42 million student loan borrowers in the country. According to Mark Kantrowitz, a nationally-recognized expert on student financial aid, less than 11% of borrowers have continued to make payments during the pandemic. As of January 27, 2021, President Biden extended this moratorium through at least September 30, 2021.

This is great news for the millions of unemployed. However, if you are working, this presents a great opportunity to pay down debt and save on interest. In addition, borrowers have the ability to direct their manual payments toward their highest interest rate loans. For example, a $20k 10-year student loan at 5% would normally require a monthly payment of $212. By continuing to pay the $212 monthly, your principal would have been reduced by $3,816 over the 18 months that the payments are projected to be suspended. You would never pay interest on that amount again. In fact, if a borrower is in a fortunate position, they could increase the monthly payment amount to the point where the loan would be paid off before the moratorium ends. This would turn a student loan into a zero interest rate loan.