Financial expert advises on debt repayment versus investing

Financial planner Douglas Boneparth provides guidance on whether to prioritize debt repayment or investing when managing extra funds. Regarding student loans, Boneparth notes that federal consolidation can simplify payments but may increase total interest costs over time or disqualify borrowers from certain forgiveness programs.

Private refinancing may offer lower interest rates but results in the permanent loss of federal protections such as deferment, forbearance, and forgiveness.

When deciding between paying down debt or investing, Boneparth suggests using interest rates as a benchmark. If a loan's interest rate is above 6%, aggressively paying down the debt is recommended as it provides a guaranteed return. If the rate is below 5% and an emergency fund is established, investing the extra money may be a more viable option.