With student loan pause extended, here’s what one financial expert suggests doing with that extra money

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EAST PROVIDENCE, R.I. (WPRI) — When Steven Richards learned he wouldn’t have to worry about his student loan payments until the spring, he was relieved.

“It’s the one weight off my shoulders,” the Cranston resident said.

Richards is just one of millions of borrowers who are benefitting from President Joe Biden’s decision to extend the pause on student loan payments until May 1.

The extension doesn’t change the fact that he’s still on the hook for them, however.

“I am excited I don’t have to pay and I can put that towards something else … but it’s just an inevitable looming cloud,” he said.

While borrowers won’t be required to make monthly payments, Donna Sowa Allard of Sowa Financial Group said you still can put money towards the loans.

The benefit of continuing to pay your student loans, according to Sowa Allard, is that you’re not paying interest, and the money will be put directly towards the principal balance.

But some people are still hesitant to continue paying them off during the pause.

“One of the reasons why I hear people are hesitant to continue to make payments while they’re in this moratorium is there in an appetite in Congress for student loan forgiveness,” Sowa Allard explained.

Richards tells 12 News he’s hopeful Biden will consider forgiving student loans, though it’s unclear whether it will actually happen.

If you choose not to continue making payments and don’t need to put the money towards living expenses, Sowa Allard suggests keeping the following things in mind:

  • Continue to pay off private loans, since those won’t be eligible for student loan forgiveness under the proposed plan.
  • Start paying off other debts you might have in the meantime.
  • Put the money in a savings account to use in case of an emergency.
  • Use the money to invest in your future, such as saving for a house or preparing for life changes.

“Make an intentional decision about what you’re going to do with that money that doesn’t have to go towards that loan that month, if you have a better place for it to go,” Sowa Allard said.

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