Why You Shouldn't Turn To TikTok For Student Loan Advice

Since the government’s payment pause on federal student loan bills ended in October, borrowers have found themselves bombarded with information and advice on the subject. In such a situation, students and others have turned to unconventional sources of advice, one of which is TikTok. As per a New York Post report, #studentloans alone has over 1.3 billion views. It has become a go to place for “how to” videos on managing, minimizing, restructuring, and refinancing the student loans. However, experts have raised concerns over such advice which can potentially harm their financial well-being.

How is TikTok advising?

In one video, a TikTok user by the name of @ahormozi claimed to his 769,500 followers that student loans can actually be used to invest in real estate. He claimed that if someone takes out about $200,000 in student loans, they use that money and buy a rental property and make a profit of $4,000 per month, while paying the loan back. He even claimed that one of his friends had done this before.

However, Bobby Matson, CEO of student loan fintech Payitoff, explained that this type of a scheme is illegal, in The Post report. Matson added that federal student loans are typically disbursed directly to the university, thus this may not even be possible. He further cautioned that there are countless examples of similar attention-grabbing TikTok videos that do nothing but add to the confusion over student loans.

Dangers of taking advice from TikTok

Student loans are considered to be highly complex, with ever-changing rules and regulations. Due to this, even the financial advisors and policymakers find it challenging to navigate.

Matson explained in the report that while financial advisors provide unbiased information to work in their clients’ best interests, TikTok influencers are motivated by generating views and income.  The TikTok creator’s incentive is based on creating viral videos, which may compromise long-term well-being of borrowers.

Since influencers on TikTok get compensated for trending videos, they may share information that is not accurate, just because it has the potential to go viral. Thus, engagement and views may be the top priority of creators rather than providing accurate and best long-term solutions.

However, Matson does mention that not all creators of TikTok are providing dangerous information. There are creators who diligently research their content and provide accurate information to their followers.

However, the surge in such type of content regarding student loans suggests that the debt is probably one of the most confusing for consumers. It further highlights the lack of reliable resources of information for people to look forward to.

Matson cautions that the solutions offered by these content creators on social media platforms are either incredibly wrong or they encourage the borrower to take great risks which can hurt their financial wellbeing in the long run.

How to be safe from dangerous student loan advice?

Verify any advice externally through third parties and government resources. Matson says that there is a hack that people can use to determine if the information shared is authentic. If the advice is given through a sponsor or brand, it means that the guidance has been vetted by a company’s risk and compliance team.