Wealth Manager Says Borrowers Can Pay Down Student Loans Quickly During COVID Moratorium
DENVER, (CBS4)- The soaring cost of higher education in Colorado and across the nation has led to Americans owing $1.7 trillion in student loans, according to wealth manager Thomas C. Martin.
'"If you look at college costs 40 years ago, you weren't paying twenty thousand dollars (per semester) to go to a university," said Martin.
He says wages are not rising while the cost of everything else is, and many students are missing out on the American Dream just trying to pay back what they owe.
"It's going to be a rat race your whole entire life to pay off that loan," Martin said.
That's why during the pandemic the Federal Government put a moratorium on Federal student loan payments. Interest isn't building and borrowers have one less monthly bill to pay.
President Biden just extended that moratorium until August.
"We are still recovering from the pandemic and unprecedented economic disruption it caused, which of course is the root reason for this extension," said White House Press Secretary Jen Psaki.
Martin says so far it seems like that may have been a good idea to spur a struggling economy.
"Because they are not taking that money and putting it on their loans, they're going out and buying vehicles buying clothes and it's actually helping the economy," he said.
Martin says that if you have student loans and can afford continuing to pay them off, that might be a good idea.
"Right now, it's probably a good time if you can do it because there is no interest," he said
That means you will eat away at the principal and end up paying less over time.
If you can't make payments right now, Martin says that's OK. Just make sure you are ready when the moratorium is lifted.
"When the loans come back and the interest rates are reenacted, then you know it's going to rev right back up," he said.
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