Expert advice for navigating the student loan payment break
The Education Data website reports that approximately 43 million Americans have student loans.
JACKSONVILLE BEACH, Fla .– In August, the Biden administration extended the hiatus on student loan payments until January 31, 2022.
Should we wait until then to pay off student loans? Let’s check.
Our sources today are the Federal Student Aid website and the Certified Financial Planner. Adam van wie. Van Wie says it depends on the type of loan you have.
“There are loans that you will benefit from continuing to pay for and others where you will not benefit from continuing to pay,” Van Wie said.
Van Wie says if you’re on an income-based repayment plan or go for the Federal Worker Student Loan forgiveness, don’t pay until January.
“If you make payments during that time, you end up paying more over the life of your loan than if you didn’t make the payments,” Van Wie said. It doesn’t make sense to do them.
However, if you have a standard repayment plan where you intend to pay off an entire loan over a set period of time, you may want to make payments. He says that with 0% interest right now, you’ll pay more for the principal.
If you decide to wait until January to make payments, Van Wie says you should then use that money to pay off short-term debt like credit cards or put that money into high yield savings for a down payment. on a house.
“When you have an opportunity like this when you don’t have to make that $ 300 or $ 500 payment and you can put it on your credit card, it’s just a real opportunity to take that down and even drop it. pay it back, “he said. .
Not all loans are included in the extension. Find out if you are eligible here.