Editorial Team

The Braintrust: Devin Hughes (LendKey) on the CARES Act and Student Loan Refinance

As the price of college continues to rise, more and more young professionals find themselves swimming in student loan debt. The Class of 2019 medical school students graduated with $201,490 in student loan debt on average and almost half of all millennials owe on student loans. To afford an education, many Americans are burdened with debt for a decade or more.

LendKey uses cloud technology to match lenders with credit unions and community banks across the country to find the best student loan refinancing options. Unifimoney has partnered with LendKey to offer our users up to $2,500 back when they refinance their student loan.

During the Covid-19 Economic Crisis, Congress passed the CARES Act which froze Federal Student Loan Debt. But that debt freeze is set to run out on January 31st. So, we wanted to reach out Devin Hughes, LendKey's VP of Business Development, to learn more about how student loans have affected millennials' wealth-building opportunities and what will happen when the CARES Act freeze expires.

According to Business Insider, 45% of Millennials have student loan debt. How have those education loans burdened the generation financially?

More than 45 million Americans have student loan debt, averaging about $37,000. While it’s shown that in general, college grads between 25-32 tend to earn about $17,000 per year more than those who didn’t attend college, many are still left with financial burden after graduation. This debt can affect living standards and the ability to put away additional savings for retirement.

  • The class of 2018 can expect to wait to purchase their first home with a 20% down payment by age 36 and is projected to retire at age 72, due in large part to student debt
  • 21% of employed adults ages 25-39 with at least a bachelor’s degree and student loan debt work more than one job just to make ends meet  

Going directly to student loan borrowers, a survey by the American Institute of CPAs revealed a startling amount of stress related to student loans with real impact on life milestones.

  • 1 in 2 delayed saving for retirement
  • 1 in 2.5 delayed buying a house
  • 1 in 5 postponed marriage
  • 1 in 5 postponed having children

Student loan debt now represents the 2nd largest debt category for Americans behind on only mortgages. For many, the first major step is taking the time and dose of reality to properly identify and track their existing student debt, then make a plan to pay it down as quickly and cheaply as possible.

The section of the CARES Act that froze Federal student loan debt has gone a long way to protect young, college-educated professionals from financial collapse during COVID-19. What can borrowers do to best prepare for the expiration of the student loan portion of the CARES Act on January 31, 2021?

First, it’s important to understand when payments will be due again so you have enough funds to make your first payment and also to make sure your payment date hasn't been changed (which would be an unfortunate reason to be late when and if you do have the funds ready). Do this for all loans just to make sure you're on top of things, but especially for any loans where you relied on any sort of forbearance (paused payments).

The next thing to consider is to take a look at what kinds of loans you have and what your current interest rates are, then do some shopping to see if refinancing could be a good option for you. You may be able to take advantage of record low interest rates right now through refinancing any high-interest student loans you may be carrying, such as private student loans or GradPLUS loans that typically carry rates near or north of 7%. Take the time to understand all of your options before moving forward with a refinance as you will lose access to unique Federal loan repayment options like income based repayment or public service loan forgiveness.

There's nothing irresponsible about investing in your education and yet student loan debt can be a true barrier to ever achieving sustainable wealth. How can LendKey help a high-earning, high-debt Unifimoney user start to build a stable, durable economic future?

Refinancing your student loans can be a great step in the direction of economic stability.  Obtaining a lower interest rate can save you money over the life of loan, but you can also choose to extend your loan term (the time you have to pay back your loan). By extending your loan term, (say from 10 years to 15 years), you will lower your monthly payment and free up more cash flow now which will allow you to invest more, pay off any other high-interest debts or put additional savings away in rainy day or emergency fund. If you are fortunate enough to have the cash flow that supports reducing your loan term, your interest rate will likely reduce substantially, and while your monthly payments may increase you’ll be paying off your debt as quickly and cheaply as possible.

You can also refinance your loans more than once, so if you have already refinanced your loans, it’s still a good idea to shop around and see if you could be saving even more. Interest rates for student loan refinancing have hit record lows since the start of the pandemic and you could be taking advantage of the lowest interest rates in quite some time.  

Lastly, LendKey services 100% of the loans offered by its funding partners like not-for-profit credit unions and community banks. This means you’ll be able to talk to a real person (based out of our Cincinnati, OH office) quickly and easily if you ever have questions (from application to your final payment). We’ve won multiple awards for our commitment to customer service and look forward to helping all Unifimoney users conquer their student debt.


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The above does NOT constitute an offer, solicitation of an offer, nor advice to buy or sell specific securities. The opinions listed above are not the opinions of Unifimoney Inc. or Unifimoney RIA, Inc. but represent the opinions of independent contributors. These contributors may or may not hold positions in the stocks discussed. Investors should always independently research any stocks listed and form their own opinions, while recognizing that any investments made may lose value, are not bank guaranteed and are not FDIC insured.