DES MOINES, Iowa — Thousands of Iowans will no longer be saddled with student debt under President Biden’s plan to forgive up to $10,000 of remaining debt. A financial expert says alumni should now have a plan for the money they no longer have to pay back.
Dupaco Credit Union COO Matt Dodds estimates one out of every four clients at the credit union have student debt, and that has affected financial behavior across the board.
“People are spending less and buying less because they have that student loan debt to take care of,” Dodds said. “Take for example, a young person who’s trying to buy their first home, but they’re still navigating student loan debt.”
Dodds said the newfound certainty surrounding student loan debt, including the restart of payments in 2023, should give borrowers time to get their money situation organized to pay what they owe.
“Our conversations today will be what their budgets look like. Not for today, but what does it look like after January 1st,” Dodds said.
He warns those with forgiven loans not to go crazy with spending, as there may be other priorities to take care of before any leisure.
“I can take that $10,000 and buy a new car, but you still likely have your student loan payment,” Dodds said. “If you go borrow money, $10,000 somewhere else, now you have a new payment.”
Dodds encourages Iowans to save, and is optimistic for how the student loan forgiveness plan could affect the state’s economy.
“If this helps a segment of our population get just a little bit ahead of the game, that’s powerful and impactful,” Dodds said.