But if you have student debt and can still afford to pay off the monthly loan, the experts say you absolutely should.
Under the CARES Act, borrowers are not required to pay federal student loan repayments, and interest will not be accrued on those loans. Temporary relief through the CARES Act was initially granted until September, but has since been extended until December 31, 2020.
“Zero interest is a win-win solution for borrowers regardless of their financial situation,” said Anna Helhoski, student loans expert at Nerdwallet.
That said, if you are able to afford the monthly payment, there is one major reason why you should keep paying.
Normally, part of a monthly student loan payment is used for interest, but under the CARES Act, the entire payment will go to the principal balance of the loan.
“If you can afford to keep paying off your federal loans, then it absolutely makes sense to do so,” Robert Humann, managing director of financial services firm Credible, told CNN Business. “The more you owe, the more you can save if you continue to make your monthly student loan payments while interest is waived.”
But, Helhoski said, “If your finances are in trouble and you need to take a break, do it. ”
The CARES Act provides much needed relief to many borrowers. Students who have taken out loans owe an average of $ 32,731 – the average monthly payment being $ 393 – according to a 2017 Federal Reserve study.
People have to keep paying the principal and interest on their private student loans. The US Department of Education has more information on affected loans.