Financial expert recommendations during student loan pause
BIRMINGHAM, Ala. (WBRC) - If you owe student loan debt your due date just got pushed back. The Biden Administration announced Tuesday student loan payments won’t restart until the end of August.
According to the Education Department, over 43 million Americans owe a combined 1.6 trillion dollars in student loan debt so for those who need some financial breathing room, this is a huge sigh of relief.
But if you have money to make payments right now, should you?
Marshall Clay, a senior advisor at The Welch Group, recommends not paying off student loans right now even if you have the money. Instead, put the money you would give to your loan company into another account that can grow in the time being.
To make this easily understandable, Clay put it into layman’s terms: “Let’s say hypothetically that you have $100,000 of student loan debt, but I could put $100,000 in some savings account and make 1% that’s essentially risk-free. Well, I hold on to that, I make 1% and then when I get to August, I could pay $100,000 and I get the 1%.”
That piece of advice is only for those who have no other debt. If you have debt that is accruing interest right now, Clay recommends throwing cash at those bills for the time being.
Student loan payments are scheduled to resume September 1st.
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