Money Monday: Paul Hood talks student loans as interest resumes

Student loan interest resumed August 1 for many borrowers after federal protections expired, but an Oklahoma CPA says there are still ways to reduce debt and deduct interest on your taxes.

CPA Paul Hood joined a Money Monday segment to explain how changes in the law affect borrowers — and how Oklahomans can avoid student loan debt through better financial planning.

Interest is back and it’s deductible

“Well, effective August 1st, a lot of people still don't have to make payments, but the interest starts accruing,” said Hood. “So the balance is going to start going up.”

He said that although payments may still be paused for some borrowers, interest that accrues can still be deducted from taxes.

“Just know that even if you don't pay the interest, if it accrues on your loan, you can still deduct it because it's no different than paying it per se,” said Hood.

He also pointed out some income-based plans, including one introduced during the Trump administration, may help limit how much interest accrues.

“If your minimum payment is less than interest has been accrued, they don't accrue any more interest. And you can elect up to $50 to go to principal,” said Hood.

Think before you borrow

Hood emphasized making smart decisions before taking on college debt.

“The big areas that I wanna talk about is should you go to college, should you not go to college? If you do go to college, when should you go to college? And how can you do it without running up some student loans?” he said.

His advice includes:

1. “Make sure you make a business decision. You're gonna go and it's gonna cost you and you're gonna be able to have a job to pay for it.”
2. “Before you go, when you're in high school even, look at the Oklahoma Save.”
3. “Stay home, live cheaper, and take some of your requirements at home, at a local college.”

Trade schools offer another path

“The biggest deal is maybe college isn't for you,” Hood said. “Trade schools, man, you can go and you can get a job right away. They're hiring now.”

He added that education should be treated like an investment, not just an experience.

“Just make a business decision. Don't go into it passively. It's not really to go party and have a good time. It's gonna cost you money, so just think about it.”