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Your Options For Student Loans Right Now

I’m sure you have heard of “good debt” and “bad debt.” The former includes student loans and the latter includes credit card debt. It’s like “good fat” and “bad fat” where avocados are the former, and french fries are the latter.

At the end of the day, it’s still debt and it’s still fat. You can’t gorge even on the good stuff. However, if you recognize it’s not created equally you can then come up with the right plan that works for you.

With the latest relief for federal student loans, here are five options you have as you come up with yours:

Option 1: Put that money into a high-yield online bank so it earns some (real talk: not much but 1% is not 0%, so take it) interest so you have more to put toward your student loans. If you can take the lump sum out before 9/30, then ALL that money will go to the principle which would help you pay down the whole thing faster.

Option 2: We have to prioritize health, safety and shelter right now. So if you need to spend on that, then for sure spend on healthcare, your car and house. Nothing else matters if that’s not in check.

Option 3: Student loan interest rates are not as high as credit card interest rates so if you have credit card debt, get that off your back first. This federal relief time is the best time to do it if you can.

Option 4: You may have seen that I rejiggered your spending plan to a higher percentage toward “Endgame” because cash is queen…especially right now. (ICYMI: the allocation went from 70/15/15 Essentials/Endgame/Extras to 65/30/5 Essentials/Endgame/Extras in this “new normal” if you need a new Spending Plan worksheet, go to nicolesfreebies.com).

Option 5: I know this might not sound like the most fun option, but it could be the smartest if you can swing it because a) your payments would be going 100% toward the principle sans interest so you would ultimately be paying off the loans faster b) there’s no risk you’ll forget to turn the autopay back on so you safeguard yourself from yourself come October.

All five of these options are legit but the best one for you is what works best in conjunction with the rest of your financial plan. And if anyone can figure that out, it’s you. After all, you have that super big, expensive brain to put toward it.

A version of this article was originally published on Forbes.

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