DENVER, (CBS4)- The skyrocketing cost of higher education in Colorado and across the country has led Americans to owe $1.7 trillion in student loans, according to wealth manager Thomas C. Martin.
“If you look at college costs 40 years ago, you weren’t paying twenty thousand dollars (per semester) to go to college,” Martin said.
He says salaries aren’t going up while the cost of everything else is, and many students are missing out on the American dream by simply trying to pay back what they owe.
“It’s going to be a life-long race to pay off that loan,” Martin said.
This is why, during the pandemic, the federal government imposed a moratorium on the repayment of federal student loans. Interest does not accrue and borrowers have one less monthly bill to pay.
President Biden has just extended this moratorium until August.
“We are still recovering from the pandemic and the unprecedented economic disruption it has caused, which of course is the fundamental reason for this extension,” White House press secretary Jen Psaki said.
Martin says that so far it looks like it might have been a good idea to stimulate a struggling economy.
“Because they’re not taking that money and putting it on their loans, they’re going out and buying vehicles to buy clothes and that actually helps the economy,” he said.
Martin says if you have student loans and can afford to keep paying them back, that might be a good idea.
“Right now is probably a good time if you can do it because there’s no interest,” he said.
This means you’ll eat away the principal and end up paying less over time.
If you can’t make payments right now, Martin says that’s okay. Just make sure you’re ready when the moratorium is lifted.
“When the loans come back and the interest rates are back up, you know it’s going to go up,” he said.