JACKSONVILLE BEACH, Fla. — In August, the Biden administration extended the pause on student loans payments until January 31, 2022.
Should you wait to pay student loans until then? Let's VERIFY.
Our sources today are the Federal Student Aid website and Certified Financial Planner Adam Van Wie. Van Wie says it depends what kind of loan you have.
“There are some loans where it will benefit you to continue to pay and some loans where it will not benefit you to continue to pay," Van Wie says.
Van Wie says if you are on an income-based re-payment plan or if you are going for the federal workers student loan forgiveness, don’t pay until January.
“If you make payments during this time, you just end up paying more over the life of your loan than you would if you didn’t make the payments," Van Wie said. "There’s less forgiven at the end so it really doesn’t make sense to make those.”
However, if you have a standard repayment plan where you intend to pay off an entire loan over a set period, you may want to make payments. He says with a 0% interest right now, you’ll be paying more towards 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 in a high yield savings for a down deposit on a home.
“When you have an opportunity like this when you don’t have to make that 300 or 500 dollar payment and can put it toward your credit card, it just represents a real opportunity to knock that down and even pay it off," he said.
Not every loan is included under the extension. Find out if you're eligible here.