Student loan expert offers advice for borrowers as moratorium is extended

NOW: Student loan expert offers advice for borrowers as moratorium is extended

MILWAUKEE (CBS 58) -- President Joe Biden announced Wednesday, April 5 that the moratorium on federal student loan payments, which has been in place since March 2020 and was set to expire on May 1, will be extended to August 31, 2022.

"I know folks were hit hard by this pandemic," President Biden said. "Though we've come a long way in the last year, we're still recovering from the economic crisis it caused. This continued pause will help Americans breathe a little easier as we recover and rebuild from the pandemic."

Vice President Kamala Harris released a statement following the announcement saying "We have made strong progress as a country in the face of a global pandemic and an economic downturn, but there is still work to do. Today’s announcement will make a meaningful difference as we continue moving forward."

A recent nationwide survey conducted by Student Loan Hero spoke with over a thousand borrowers. Results for that survey show that 72 percent of federal loan borrowers say they're not financially ready to resume submitting monthly payments.

Erik Kroll is the owner of Student Loans Over 50. He says that borrowers should use their heads when it comes to their finances and the moratorium extension.

"To someone who would just spend the money, use the money to spend, I would say 'Not so fast,'" Kroll said. "Use that money to either pay down some higher interest debt, like credit cards, or high interest personal loans. Build up your emergency fund."

Kroll says using the moratorium to get caught up on other payments can help borrowers get themselves in a better situation financially and prepare for when the moratorium is eventually lifted.

"Interest isn't growing. This is a time to get ahead, so to speak," Kroll said. "The minimum payment is zero. You can make a payment higher than zero, a dollar higher than zero, a hundred, a thousand dollars higher. It doesn't matter. You can pay early, pay more. Get ahead and then that just puts you in a better position down the road, too."

Kroll says that budgeting and preparing will help individuals and families not feel as held back by their student loans.

"Student loans don't have to control your life," Kroll said. "You can create a plan around managing that debt."

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