June 4, 2021

Should I Pay Off My Student Loans?

Repayment

Student loans have been a hot topic since President Biden’s first day in office. Talks of student loan forgiveness have been on the radar, with many politicians on board. Biden has iterated numerous times that he is pushing for forgiving $10,000 for each American in student debt, though the plan isn't final. Other politicians want the forgiveness of up to $50,000, which may or may not see play.

Whatever the case, the question on people’s minds is, should I pay off my student loans? Biden extended the suspension of student loan payments until September 2021. We still have months ahead of us before we get any approval or disapproval of loan forgiveness.

Do I Continue Making Payments?

Some argue that making payments is an ideal strategy while loans are at a pause. No interest is accruing during this period, making each deposit hit the loan’s principal. When the principal lowers, interest also lowers significantly. While this is an ideal scenario, it might not be a good move for everyone.

The $10,000 forgiveness will remove student debt for 34% of those who have it. Some of you may no longer need to pay the debt if this occurs. The possibility of $50,000, while small, can also happen with viable legislation. There are better ways to utilize your money in the meantime.

Alternatives for Your Extra Money

You may have extra money now that you’ve not yet used with all the news of loan forgiveness around. While you can keep it handy waiting for confirmation, you can also use that money to work for you in other ways. Here are a few things you can do with it:

Build Your Emergency Fund

The pandemic has likely depleted the resources of many around us. Even with stimulus checks, extra liquidity is important to take care of any unexpected life events. You can start building cash reserves to help you in case you lose your job or have to deal with a medical condition. You won’t feel as stressed when you know you have money saved up for a rainy day.

Invest

“Cash is trash” is a phrase used by investors popularized by the billionaire Ray Dalio. Instead of having the money saved up in your bank account, consider putting it in an investment. You can place the cash in low-risk investments that could add to your eventual retirement fund. The stock market increases by around 8-10% annually based on history.

There are also other avenues for investments that are becoming popular in recent years. Real estate is seeing some increases, though these investments require a lot of money. Another popular option is cryptocurrency, though it is not for those who have a weak stomach. The crypto markets are very volatile.

Whatever you decide to invest in, there is always a chance that the money you put in ends up lower after a year. Long term, many of these markets show that they always go up. Find a financial advisor, do your research, and take some time to learn about what you want to invest in before pulling the trigger.

Pay Off Other Debts

There is a chance that student loans aren’t the only thing you are paying off. Consider using the money you save to pay off other outstanding bills. Paying off credit card interest can help you save more money in the long run. You can also use the money to pay off loans for a car or a house. There are two ways to approach this:

  1. Start with the debt with the lowest balance. It will lower the number of payments in a month, and you can start moving to the next.
  2. Start with the highest interest rate. The interest rate can add up and even compound in some loans. This can get you into deep debt if you don’t take care of them while you can. Focusing on debts with high interest rates ensures that you pay lower amounts over time.

Free Yourself From Stress

Debt can get people into a lot of stress, and it’s good that the government is considering debt forgiveness. However, don’t just leave your money for student debt stagnant. It’s not ideal to pay it right now with all the talks of removing debt. Instead, use the money for other areas which can benefit you in the long run.

Whether investing, paying off other debts, or building liquidity, all of these work for a better financial future. When you are secure financially, you worry less, and you get stressed less. Consider your options, do your research, and don’t be afraid to ask for help.

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

See How Much You Can Save with Round-Ups

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