In Ohio, the average borrower owes $33,000 in student loans. That’s according to Andrew Pentis, a certified student loan counselor and a senior writer for Student Loan Hero.
A loan that size would work out to $300 to $500 monthly payments for the average graduate.
Since President Joe Biden extended the moratorium on student loans, freezing them in place with no interest accrued and no minimum payment required, a weight has been lifted off many graduates.
For those facing joblessness, that money can go toward necessities like monthly bills. But once those are covered, Pentis says students should seriously think about the best way to apply that cash.
“If you’re suddenly able to put that [loan] in the rearview mirror, at least for a little while, you can dedicate those savings, hopefully, to higher priority personal financial goals,” Pentis said. Higher priority financial goals like, for example, an emergency fund.
If your bills are paid and you feel financially prepared for an emergency, Pentis says other debt like credit cards comes next.
“You can attack higher interest debt, such as credit cards…it’s sort of a time to make sure your financial house is in order…once you’re able to overcome all those personal financial challenges, then it’s beneficial to go back to your federal student loans and coming up with a strategy for those," Pentis said.
The moratorium is also an advantage for those who continue to make voluntary payments on their loans.
“Take an overall look at your personal financial picture," Pentis said. "If you don’t have any concerns outside of your student debt, it would behoove you to continue making voluntary payments because 100% of those payments would go toward attacking your principal debt, so by the time this moratorium ends in the fall, your balance would have shrunk."
Borrowers with federal student loans can ask their loan servicers about their options when it comes to repayment.
For those who need a little extra help, during the pandemic, Pentis is offering his student loan counseling services for free.