Financial planner offers tips to borrowers during student loan payment pause

TAMPA, Fla. — It was welcome news to many borrowers with student loan debt. Late last month, President Joe Biden extended the current pause in student loan repayment through May 1.

In Florida, home to 2.55 million student borrowers, financial planner Bob Doyle says balancing the repayment of student loans has been a frequent topic of discussion.

“If it’s not our clients, it’s the — perhaps — children of our clients, but the student loan situation in the United States touches a lot of families,” he said.

Doyle, the President of Doyle Wealth Management in St. Petersburg, says the extension of the repayment pause presents a unique opportunity for borrowers, and it should allow many the opportunity to improve their finances.

“It’s easy to talk about. It’s hard to execute, but like I say, it’s Financial Planning 101,” he said.

If borrowers can afford to make payments right now — during the pause extension — Doyle says they can make decent dents in their overall balances, since the payments will apply to the principals of their loans. Currently, the pause includes a 0% interest rate.

“All of the payments you’ll be making now until this current pause ends — all of those payments will reduce principal by 100%, and that is a good opportunity to get ahead on your student loans,” Doyle said.

However, the financial planner believes it’s likely not smart for all borrowers to pay on their student loans during the grace period.

“It may not make sense to pay on a student loan right now if you have higher loan debts elsewhere, such as credit card debt, car loans, second mortgages,” he said.

Doyle also stresses the necessity of creating and maintaining a rainy-day fund. If a borrower doesn’t currently have one, Doyle thinks it’s wiser to start building one with whatever extra money he or she has, instead of applying that money to student debt.

You must have a rainy day fund. You must have an emergency reserve. If we learned anything in this pandemic — if we learned one thing — we have to take away from this is you have to have an emergency reserve,” he said. “‘Why do I need an emergency reserve? I’ve got a good job. Why do I need this reserve?’ How about this? I don’t know. Maybe we get hit with a pandemic. So having the reserve is critical.”

According to EducationData.org, Floridians account for about $98.2 billion of the nation’s $1.75 trillion total student loan debt. In Florida, $38,481 is the average student loan debt for an individual borrower.

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