Should I pay off my federal loans now or wait to see what happens?

I have about $16k in federal loans with an average interest rate of 4.2%.

I usually invest between $500-$1000 into the SP each month.

So, what should I do? Keep paying the monthly minimum of $150 and hope they get forgiven or that my investments grow faster than the interest? Or just clear them now since I can afford it?

Thanks in advance.

Just pay them off. You won’t believe how good it feels to be done with them. If I could pay mine off now, I definitely would. There’s always talk about changes, but nothing is guaranteed.

Rene said:
Just pay them off. You won’t believe how good it feels to be done with them. If I could pay mine off now, I definitely would. There’s always talk about changes, but nothing is guaranteed.

I paid off over $60k in private loans recently, and yeah, it felt amazing. I just don’t know what’s going on with federal loan forgiveness. I heard it only applies to really high balances, and with the way things are going, I’m not sure it’ll even happen.

@Drew
If they find a way to take back the forgiveness that was already given, they will. Nothing is set in stone.

Just pay them off. That’s where all of this is heading anyway. I started making payments again last month after taking a break, and I just want to be done. I owe a little more than you (about $19k), but I’m hoping to finish in two years.

Look at the numbers. If paying them off saves you money on interest and doesn’t impact your lifestyle much, do it.

If you want to wait, put the money in a high-yield savings account and keep making payments like it’s already gone.

Either way is fine. The interest rate isn’t that high, so I wouldn’t rush.

Personally, I’d rather invest the money or keep it as an emergency fund, but that’s just me.

How long have you had these federal loans?

Tao said:
How long have you had these federal loans?

Graduated in 2020, but payments were on pause during COVID, so I paid off my private loans first.

Drew said:

Tao said:
How long have you had these federal loans?

Graduated in 2020, but payments were on pause during COVID, so I paid off my private loans first.

Got it. If you can pay them off, I would. The only forgiveness happening is for people who have been paying for 20-25 years or those in the public service loan forgiveness program (10 years).

There hasn’t been any broad forgiveness—just specific cases where people qualified over time. You’d have a long way to go, and I don’t see the point in waiting and letting interest build if you can knock it out sooner.

Pay them off. No point in dragging it out.

Pay them off now.

The situation with student loans isn’t getting any better, and you don’t want to be stuck waiting for something that may never happen. If you can afford to clear them, do it and free yourself from the stress.