Lifestyle
College grads had a reprieve from student loans through the pandemic, as the government issued a payment pause. But since federal student loan bills resumed in October, it’s taken a toll on borrowers who are turning to an untraditional place for advice.
Rather than seeking out tips from financial advisors, CPAs and professionals, TikTok has been inundated with “how to” videos for managing, minimizing, restructuring and refinancing student loans. The #studentloans tag on the platform has 1.3 billion views alone.
While it’s natural young people might look for guidance on the popular social media platform, not all the advice is sound.
Bobby Matson, CEO of student loan fintech Payitoff, told The Post that though the sentiment is meant to be helpful, borrowers should beware that not all information has been vetted.
“Not all TikTok student loan content is bad. But there is a lot of bad advice to be weary of,” he cautioned.
Matson said he found out that TikTok was a hotspot for student loan payment advice when an influencer posted a video directing their followers to Payitoff’s partner, Earnest, who in turn used their system.
Matson said that this was an “example of social media financial advice gone right: the influencer is pointing to a free tool and helping their community decide on the best options for them.”
In short, do your homework.
The dangers of financial advice on TikTok
Many influencers on TikTok get compensated for any video that goes viral — whether the information presented is accurate or not.
“You have to keep in mind that, unlike actual financial advisors who are unbiased and/or make money when you make money, TikTok influencers make money with engagement,” Matson said.
Oftentimes, that means there is no true incentive for anyone on the platform to give real guidance to people looking for long-term solutions.
But the “real danger” is that users could see these viral videos and take it at its word, ending up in a situation where they’re actually taking considerable financial risks.
“It’s not to say that all advice you find on social media about student loans is bad, but at best, you should consider them thought-provoking first steps and nothing more,” Matson advised. “Verify everything.”
In one video, TikTok user @ahormozi claimed to his 769,500 followers that student loans can actually be used to invest in real estate — and even alleged that a friend of his with a Ph.D. had done this before.
The user claimed that if someone gets $200,000 in student loans, they could take that money and buy a rental property that profits at $4,000 per month, “literally exiting the system before you even got into it.”
While many in the comments said that the so-called hack felt “definitely, probably illegal,” Matson said that this isn’t even possible considering federal student loans are typically disbursed directly to the university.
He also said that this is a “wildly speculative position to take” especially without any prior real estate investment experience.
“If you’re 18 years old, you obviously don’t have this experience — so diving headfirst into a completely new asset class would be foolish in and of itself,” Matson explained. “But, if I were young, ambitious and thought I had found a hack, who knows: I might waste six months of my life trying to actually follow this advice, only to realize it isn’t feasible.”
While this video is just one case, Matson said that there are “countless examples of the kinds of attention-grabbing TikTok videos that do nothing but add to the already-confusing student loan landscape in America.”
Why is there a surge of advice on student loans on TikTok?
According to Matson, this surge suggests two things: First, student loans are the “most confusing debt by a long shot.” Second, there’s no way to have definitive knowledge of an area where the rules are constantly changing.
“Many people turn to TikTok and Instagram influencers for help on topics like this — but there’s so few with real resources or answers,” he said. “Either the answers are incredibly wrong or drive the borrower to take great risks which hurt their financial position.”
Matson admits that even financial advisors and policymakers find student loans to be a complex subject, too.
“It doesn’t matter how ‘smart’ you are intellectually. The rules are so vast and confusing — changing every election cycle — that it’s impossible for an individual to decide on the best next step for them without some help.”
How can you tell what TikTok advice is trustworthy and what isn’t?
“It’s important to verify the advice given externally through third parties — even government resources — which can validate what advice was given,” Matson advised.
There are plenty of influencers who give actionable guidance and do their research before sharing with their audiences, but it’s important to be diligent.
Matson gave a hack on how to decipher good and bad financial advice if you do choose to go the social media route.
“If the advice is given through a sponsor or brand of some kind, it means that the guidance has been vetted by a company’s risk and compliance team,” he shared. “This is a way to have posts be ‘pre-vetted’ as the information provided has gone through particular financial controls to ensure its accuracy.”
Where should people go for advice on student loan payments?
When it comes to finding trustworthy people, companies and advice on student loans, there seems to be a “colossal void,” Matson said — though there are some software tools available to borrowers to help them set up a monthly payment, including Payitoff and its partners.
These tools are user-friendly and take just five minutes to analyze your loans and find the best payment plan for you.
“If you have student loans, even if you think it’s intelligently structured, it’s worth understanding what options you have to minimize the cost and structure it more intelligently,” he suggested.
What tips can student loan borrowers follow?
Matson shared seven actionable tips for student loan borrowers to follow when looking for advice on student loan finances.
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