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What To Do With Student Loans in the Pandemic if You’re Annihilating Your Debt

Student loans and what to do with them has been a topic of national conversation recently, especially during conversations regarding the economic stimulus plans for this COVID pandemic.  

After much back and forth and troubleshooting, federal student loan payments have been waived until October, 2020.

First what this means for federal student loan borrowers:  I am sure this is a much welcome relief to your monthly cash flow.  If you are part of the PSLF (Public Service Loan Forgiveness) program, the waived payments are supposed to still count towards PSLF.  That’s awesome.

If you have refinanced your loans and are in the process of annihilating your debt (living below your means and chucking large amounts of cash towards your debt every month), I’m sorry you don’t get much relief from the CARES Act.  If you refinanced your loans, I think some private companies are still offering forbearance for folks whose income has been hit during this pandemic.  It doesn’t hurt to call and ask.  

It’s very annoying, of course, that you- the responsible borrower who is trying to pay down his/her debt-  don’t get a reprieve from the government while other people do.  Also annoying is the fact that docs working on the frontline are getting pay cuts, no hazard pay, and no stimulus checks.  Yes, it’s not fair. 

But, listen, we could look at it that way.  OR we could look at it another way. 

We can’t control the circumstances, we can only control how we react to them.  

5 Ways You Can React to COVID if You're Annihilating Your Debt

1. You have a built in Emergency Fund.

I generally recommend that docs annihilating their student loans have a lean $10k  Emergency Fund.  For most docs, that’s 1-2 months of basic living expenses.  

But, if you’re in rapid debt payoff mode, you have likely been living way below your means. 

So, what would I do if I was in rapid debt payoff and an emergency like a pandemic arose?

I would take that extra cash flow and juice up the emergency fund to 3-6 months. 

If you’re paying 10k a month to student loans, you could pause the extra payments for a couple of months, and put that in your emergency fund.  In a couple of months, you should be up to 30k. 

Boom, instant breathing easier.  And you are SO BLESSED to be able to do that. 

When things normalize and cash flow picks up again, I would throw the extra cash at the student loans and be done with them!

2. Remember rapid loan payoff is OPTIONAL

Rapid loan payoff during good times is ideal and awesome.  If you’re still able to do it comfortably right now, that’s FABULOUS.   Go on with your bad self.  If you have federal loans, you could make some awesome progress with interest accumulation on hold right now.  

But, when an emergency arises like this, remember that rapid loan payoff is optional.  There is nothing wrong with making the minimum payments or taking a forbearance to build up your reserves. 

Reserves may provide much needed peace of mind in case medicine’s cash flow problems turn out to be longer lasting.

3. Refinancing Can Still Be Beneficial

If you’re in a good financial position and have privately financed student loans (not federal), you can try to get a lower rate by refinancing right now, because interest rates are so low. 

If you’re taking pay cuts, you can refinance into a longer term loan to lower your monthly payments to get some relief.  You can refinance back to a shorter term when this is all over. 

Use Credible to shop multiple lenders without multiple hard pulls to your credit report (which lower the score).  If you use my affiliate link, Credible will pay you $750 if you refinance $100,000 or more student loans using their service ($200 if less than $100,000). Welcome bonus will be paid via e-gift card I used them when I was shopping around for loan refinancing and I had it was really convenient to get multiple quotes from different companies to compare.    

4. You are Already Good at Getting Lean

If you’re following this blog, you’re probably already in the process of getting lean.  If you don’t have a budget, start one.  I can help with my new course.   Use code FOUNDINGMEMBER to get in for half off until May 31st.  

If your cash flow is down, you probably have more time on your hands.  USE that time to really streamline your budget- what can you cut?  

Can you get better insurance rates?  Use this time to shop around!

Start learning new recipes and cook at home more.  

Avoid the temptation to order delivery all the time. 

5. Don't Get Too Lean

It’s really easy to get entrenched in scarcity mindset right now.   I totally get that it’s scary to spend money and we want to hold on to every penny.

I’m guilty of the same.  I think for the first time, I realized we saved TOO much money last month.  It’s not healthy. 


So, this month, I’m making myself set aside a certain amount of money for fun.   Life is tough right now.  We don’t have to make it tougher on ourselves.

Set a specific dollar amount savings goal for each month that would make you feel comfortable in these hard times.  Then, make sure you use your budget to allow yourself a certain amount of money that you can use for your well being right now.   That’s important, too.

These are my thoughts on this snowy Mother’s Day Weekend.   Happy Mother’s Day to all you mamma’s out there.  I hope you make some time to indulge in what makes you happy this weekend.  

Stay Frugal, Y’all!


Standard Disclaimer: Not meant as individualized financial or medical advice. *To receive $750 welcome bonus, you must refinance a balance equal to or greater than $100K. If refinancing a balance below $100K, readers are eligible for a $200 welcome bonus. Bonus is paid via e-giftcard. This is an affiliate link, which means a small portion of your refinance fees go to support this site.  


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