What to do with savings from federal student loan pause

CHICAGO (WLS) -- With federal student loan payments now paused through August 31, that means more money can stay in many people's pockets.

But what should people do with that money and should they continue to pay off student loans of they can?

For the next four months, people with federal student loans won't be required to make any payments-and they won't be charged interest either. This is called deferment.

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Certified financial planner Brian Gilder said there are a lot of things you can do with this extra cash, but investing it should not be one of them.

"I would make sure that my necessity expenses are paid for before I did anything else," Gilder said. "You want to make sure your food is paid for, your gas, your rent or your mortgage."

Another question people have is should they continue to pay student loans if they can afford do. Gilder said he would still advise his clients to consider keeping payments on pause.

"With so much uncertainty of what is going to happen to federal student loans, I would advise to keep the money liquid and see what the government is going to do with student loans," Gilder said. "I would set aside my monthly student loans in cash account with the assumption that you will have to start paying your student loans in the future."

Gilder said you can also use the extra money to build up your emergency fund and save as much as you can while student loans are on pause until August.

"Many people are saying to themselves, If I make the payment, there's a chance that the government could forgive my student loan debt or a portion of it," Gilder said. "I think down the road what's going to happen is that we're going to have some type of a compromise where a bill might pass and a portion of your student loan debt might be forgiven based on your income."