Musings on 2022's paused student loans

by Randy Gingeleski

5 minutes to read

If I still had student loans, here would be my financial course of action for 2022's deferment period.nancial course of action.

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Despite paying off student loans a long time ago, emails from that arm of the U.S. government still show up in an old (AOL!) account.

Screenshot of email about student loans being paused through August 2022.

Student loans are apparently paused once again. Hypothetically, what would I do with monthly money set aside to pay student loans if they were temporarily optional?

This post lays it out. πŸ’ΈπŸ’ΈπŸ’Έ

Disclaimers and disclosures ⚠️

No financial advice here. Do not interpret this as financial advice. My usual disclaimers and disclosures apply here, as always.

I do not know your whole financial situation.

Should you make early loan payments?

This decision tree starts off like β€” what is the usual interest rate on these student loans? Consider whatever that is relative to the last government inflation estimate (8.5%).

U.S. Bureau of Labor Statistics graph showing 8.5% inflation over the 12 months trailing March 2022.
Personally, 10 to 20% seems like a more accurate number but again this is not financial advice!

Let’s say you have 12% annualized interest on your student loans when they’re not paused. I would probably just make early loan payments and stop reading this post any further. You don’t have to complicate things.

Investing to beat interest and inflation

What if you have, say, a 5% usual student loan interest rate instead?

That seems more probable to beat by journeying down this arm of the decision tree β€”

Google Keep note excerpt which briefly states what the continuing text for this blog post does.

Under the above plan, half of your usual student loan payment would go into stocks via Robinhood while the other half would go into cryptocurrencies via Coinbase.

Transparency β€” I currently handle product security for a cryptocurrency exchange platform that is not Coinbase but that also does not yet serve U.S. customers. My recommendation here is Coinbase for that reason and some other, lesser ones we’ll cover in a moment.

On Robinhood and on Coinbase you get some small bonuses if you sign up through my links. There’s a small kickback to me but feel free to directly navigate to either site if you prefer.,

Robinhood allows you to have a debit card and withdraw cash from margin on your securities, if you pay their monthly fee for Robinhood Gold ($5 to $10/month?). That link is a help one, non-affiliate. In my opinion the Gold benefits make Robinhood great for a non-cash emergency fund that you can borrow against at ~3% annualized. Accurate as of the time of this writing.

My Robinhood debit card sitting on top of a laptop computer.

Coinbase also has some sort of debit or credit card product(s?), however as you can tell I am not as familiar. As a centralized exchange, Coinbase is the best balance of U.S. customer-friendliness, offered asset variety, ease of use, and pricing for this hypothetical situation. Personal opinion.

By making regular investments on either platform, you’re effectively dollar cost averaging. That is outside the scope of this post but should make you fret less about securities’ pricing. Checking Bitcoin price every 20 minutes is a stressful way to live. πŸ₯΅

For Robinhood, why did I choose $VGT and $VOO mixed? That setup seems to cover the whole market with low fees, but skews you towards technology. If you think there’ll be less proliferation of tech in the future, feel free to just do $VOO.

For Coinbase, the mix of $BTC, $ETH, $AVAX, and $LUNA could take all day to explain theses on. Feel free to research either.

Generally, Bitcoin $BTC feels like the asset with the most staying power and least risk. I just spent 3 days at Bitcoin Miami 2022 for whatever that’s worth.

Collage of my pictures from the 2022 Bitcoin Miami conference.

Ethereum $ETH is poised to have a big 2022 when proof-of-stake succeeds proof-of-work. This technological advance may not reflect in the price, I have no idea. But as an environment for running decentralized smart contracts, it too feels like the pick with the most staying power and least risk.

Now, these other couple are much more speculative (read: high risk) crypto propositions. It’s all “magical” Internet money so we might as well swing for the fence, right?

Avalanche $AVAX πŸ”Ί is a challenger to Ethereum and I appreciate the amount of technical influence behind it, from Emin GΓΌn Sirer to Mark Readings to Kumar Thangudu. If you trust Twitter, that is.

For $LUNA I’ll just defer to Murray Rudd’s analyses, starting here. Each digital asset has gotten progressively harder to explain and this is the most complicated. πŸ˜›

Remember my whole post is hypothetically what I would do, not financial advice for you. Many people are not comfortable investing in things they don’t understand. There is a good chance you need more understanding than this back-of-the-napkin rundown provides.

Hell, there is a good chance I do not understand any of it enough.

Closing thoughts

To recap β€”

  • Using Robinhood *affiliate link with bonus*
    • Half of paused student loan amount goes here
      • 50% $VGT
      • 50% $VOO
    • Opt into Robinhood Gold
    • Opt into the debit card, basically whatever cash management products they offer free
  • Using Coinbase *affiliate link with bonus*
    • Other half of paused student loan amount goes here
      • 40% $BTC
      • 40% $ETH
      • 10% $AVAX
      • 10% $LUNA

These were quick and dirty notes. A lot has been left out of scope, including best account security practices for either platform.

Please do additional research with care and generally proceed with caution. Especially in the broader crypto space, crawling with sophisticated scams.

Do not follow anyone without scrutiny, including (especially?) me.

At best, you may buy me a coffee in your future that’s free of student loan debt. 🌝

Gatsby toast with long-term cryptocurrency investments surrounding him.
Bonus for reading to the very end - Chainlink $LINK if one doesn’t mind holding until 2035 for good price action.