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Student loan warning as expert says you should keep paying despite federal bailout

It can be beneficial for IT to continue making your student loan payments even after the pause has been extended.

chairperson Joe Biden expanded suspend student loan payments for another 90 days until May 1, 2022.

Students can save money by continuing to pay student loans during the pause, a financial expert has claimed.

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Students can save money by continuing to pay student loans during the pause, a financial expert has claimed.Credit: Getty
Joe Biden has extended the student loan pause until May 1, 2022

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Joe Biden has extended the student loan pause until May 1, 2022Credit: AP

The relief was launched in March 2020 due to Covid-19 pandemic under the CARES Act, a $2.2 billion stimulus package.

Before the latest extension was in place, student borrowers may have started repaying their loans from February 1, 2022.

Due to the relief, anyone with unpaid federal student loans will not have to pay.

Under the terms of the relief, no interest is accrued on the unpaid amount and there is no collection of defaulted student loans.

So, not continuing to make payments and using the money elsewhere, such as paying off other debts, investing the money, saving for retirement, or even using it to buy property, may seem like a no-brainer. reasonable.

However, this only applies to federal student loans and anyone with private student loans have to keep making payments because there is no bailout for private loans.

Anyone who is having a hard time repaying a private loan should consult your student loan servicer for possible options such as deferring or quitting.

While it may seem obvious to stop making payments on federal student loans, it actually makes sense to keep making payments, according to one financial expert.

Personal finance expert and author of The Life of Lemonade Zack Friedman, believes that continuing to make payments can save you a lot of money.

Since no new interest is accrued during the student loan pause, this means that every dollar paid off will pay off existing student loan interest, he said in an article for Forbes.

After paying off the interest on your student loan, each additional dollar will directly reduce the principal balance of your student loan.

So financially permitting, the payment pause allows you to contribute without any new interest.

If you have a lower principal balance, this means less interest accrues, which will hopefully allow you to pay off your student loans faster.

Under the student loan pause period, you are not obligated to make payments and, due to your financial situation, you may not be able to afford to do so.

However, student relief won’t last forever, and you should have a plan in place to restart payments when required.

Continuing to make student loan payments means you'll pay off your debt faster

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Continuing to make student loan payments means you’ll pay off your debt fasterCredit: Getty
Money expert reveals how Americans with student loans can cut taxes by up to $2,500

https://www.the-sun.com/money/4421675/student-loan-payments-pause-federal-joe-biden/ Student loan warning as expert says you should keep paying despite federal bailout

DevanCole

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