The topic of loan forgiveness has been a controversial one, with some people believing it puts an undue burden on taxpayers and others seeing it as a way to make debt after college more manageable. No matter where you sit on the issue, there are benefits to be reaped for individual investors. Let’s take a closer look at what student loan forgiveness means for individual investors just like you.
Benefits for the Economy
Student debt creates an obstacle for many individuals, preventing them from becoming homeowners or having the available funds to start small businesses or make significant investments. The National Association of Realtors reported that 60% of Millennials who do not own a home stated student debt delayed their ability to become homeowners. With the U.S. Government’s recent student loan forgiveness program, more people will have funds freed up, which can be pumped into the economy in the form of home purchases or other significant investments. The increased financial security those from lower and middle-class backgrounds can achieve through forgiveness can have an immediate impact on local economies.
Renewed Opportunities for Investments
With less debt comes the freedom to begin investing. Not everyone with student loan debt enters into a 6-figure salary after graduating, and those living on modest incomes have struggled with making their payments for decades after graduation. Some loans can take up to 30 years to pay off, and they can include either fixed or graduated payments. Individuals may now see their loans reduced by $10,000 to $20,000, which means they can use the money they would have spent on those payments to begin to build wealth. Even if loan forgiveness only means a reduction in the monthly payments, there are extra funds available to begin depositing money into an investment account or savings account. Not only are people able to get out of debt; they can also begin to build a portfolio and grow their money every month.
What Can You Do with Loan Forgiveness
If you have college debt, it’s a good idea to see if you qualify for this new program. Not all loans are eligible, such as non-federal private loans, but even federal loans that are in default can qualify. Be sure to fill out the application before the deadline to be considered, and then take some steps to plan what you’ll do with the money you save.
- Invest: Investment options with auto-deposit features, such as DiversyFund’s Auto-Invest, make it easy to set aside a predetermined amount of money every month, so you can transition funds from paying debts to building wealth.
- Manage Debt: Paying extra on your remaining student loans, credit cards, or other debts can also help you manage your money better. By paying off accounts early, you can save on interest payments and free up funds for investing in the future.
- Continue Education: An estimated 4 out of 10 people with student debt do not complete their degree within 6 years, in part due to the debt. Student loan forgiveness can be an ideal opportunity for those individuals to complete their education or even work towards a higher degree should they decide to do so.
When dealing with student loans, debt, and other financial matters, it’s always best to speak to an expert for guidance. Using the money saved through loan forgiveness to pay down debt, build wealth, and invest in yourself can help you make the most out of this unique and unprecedented government program. To learn more about how you can invest with DiversyFund, click here.