Navigating the Risks: TikTok’s Student Loan Advice and Its Pitfalls
The #studentloans tag on TikTok alone boasts 1.3 billion views, drawing in a significant audience seeking financial guidance.
As federal student loan bills resumed in October, post-pandemic, many borrowers turned to unconventional sources for advice. TikTok, the popular social media platform, became a hub for managing, minimizing, restructuring, and refinancing student loans. The #studentloans tag on TikTok alone boasts 1.3 billion views, drawing in a significant audience seeking financial guidance.
The Allure of TikTok Financial Advice
While TikTok offers a platform for diverse content, including student loan advice, not all information is reliable. Bobby Matson, CEO of student loan fintech Payitoff, warns that not all TikTok student loan content is trustworthy. “Not all TikTok student loan content is bad. But there is a lot of bad advice to be wary of,” he cautioned. Matson discovered TikTok’s prominence for student loan advice when an influencer directed followers to Payitoff’s partner, Earnest, demonstrating an example of social media financial advice done right.
Do Your Homework: Assessing TikTok Financial Advice
Matson emphasizes the need for users to do their homework when consuming financial advice on TikTok. Many influencers on the platform receive compensation for viral videos, regardless of the information’s accuracy. Unlike unbiased financial advisors, TikTok influencers often prioritize engagement over providing reliable, long-term guidance.
The Real Dangers: Financial Risks and Misinformation
The real danger lies in users taking viral videos at face value, potentially leading to considerable financial risks. Some influencers may present risky financial strategies, such as using student loans to invest in real estate, without proper consideration of feasibility or legality. Matson cites examples of attention-grabbing TikTok videos that contribute to the already confusing landscape of student loans in America.
A Cautionary Tale: The Case of @ahormozi
In one video, TikTok user @ahormozi claimed that student loans can be used to invest in real estate, offering a seemingly questionable financial hack. Matson points out the impracticality of such advice, given that federal student loans are typically disbursed directly to the university. He highlights the speculative nature of such suggestions and the potential risks involved, especially for young individuals lacking real estate investment experience.
Conclusion: Navigating the Student Loan Landscape
As borrowers seek guidance in the post-pandemic era, the allure of TikTok’s student loan advice comes with potential pitfalls. Users must approach financial advice on the platform with caution, recognizing the risks associated with misinformation. In a landscape already burdened with complexity, individuals are urged to consult reliable sources and exercise prudence when making financial decisions based on social media content.