The news is abuzz with tax refunds and student loan forgiveness. And while I have mixed opinions on whether or not either really resolves current financial crises, it doesn’t really matter what those opinions are, it matters what you do with your money as a result. This could really be a moment for you to turn the tides of your finances and make the most of new relief and programs. So let’s talk about how to maximize student loan forgiveness and tax refunds so you can make improvements in your money.
Know What the Stipulations Are
With any financial venture, you have to know if you qualify. While it would be awesome to have student loan debt disappear without our knowledge, that’s not the way the system works. Now is the time to investigate and find out if you qualify. You can find details on the new student loan forgiveness program here. Another great bullet point explanation of the new program can be found here. A number of news outlets have also explained it. Always be sure you’re on a reputable news or agency site to get the most accurate and up to date information.
When You Can, Apply for the Program
Once you discover whether or not you qualify for a particular program, then you must apply. Here in Indiana, we’ve recently received some tax refunds. For those particular refunds, there was no application process. If you’ve filed your taxes electronically in the prior year, the funds are directly deposited into your account. Paper checks will be mailed up until November for those who did not file electronically. There is not currently an application open yet for the newly announced student loan forgiveness program. However, you can go to the Department of Education website and subscribe to be notified about when it does open. It does appear the application will be open by the end of the year. Check back on the website frequently and pay close attention to the news.
Organize Your Information
In order to be ready when those gates do open, gather all of your information into one place. Keep current statements ordered. Know your login information. Be aware of any other pertinent details. And realize that the application process will probably take at least 30 minutes to complete once you begin. Especially when the gates initially open, I’m assuming the website will be lagging as people attempt to apply en masse. If you’re going to take advantage of the program, you’re going to need to be prepared in advance and then patient.
Ask Questions
If you don’t understand a program or financial investment or how your account works, then ask questions. Find a contact form or a number you can call and directly contact someone to speak to. Reach out to a trusted friend who is actually good with money and ask them. Hint: oftentimes they don’t talk about money as much as people who are clueless about it. This particular program is a first time program and there could potentially be challenges with the rollout. You’re not the only person who doesn’t understand. Everyone will be a first timer. The people who handle their money the best are those who are the first to express that they don’t understand and then seek to find it.
Do Something With the Money
Anytime we have unexpected funds, it matters how we respond in our personal finances. So getting a tax refund is awesome or receiving an unexpected gift is fantastic. But if you let it sit in your checking account, it will disappear. Trust me, you’ll spend it. So if you do qualify for one of these programs, I’m not going to be bitter even though we paid off 90k in student loan debt. I’m going to encourage you to maximize this moment. My guess is that a lot of you may have more than 10k (or 20k) in student loan debt so this will be a chipping away moment, not the end of the road. It matters what you do now.
- If you receive a tax refund, channel those dollars toward an emergency fund, debt repayment, or a savings goal. Don’t absorb the money into your checking account or blow it on something frivolous. Or set aside a small portion for “fun” spending and use the rest for responsible money management.
- Get a plan in place to use the momentum of any student loan forgiveness to eliminate the rest of your debt now. Then when the program releases, dive in to knock it out.
- Start dreaming big. Now is the moment to outline your financial goals. From getting out of debt to taking a dream vacation, leverage this time to figure out what you really want and then begin resourcing yourself to make those dreams happen.
Back in 2008, our very first starter emergency fund got a boost because of the economic stimulus check we received in the mail. It was a source of unexpected money at the beginning of our journey that helped us more quickly progress toward paying off debt. This may be a catalyst moment for you, too.
I have mixed feelings on whether or not student loan forgiveness will actually cause any definite long term change in our system. There need to be some changes made to the lending process to keep the same problem from repeating over and over again. And people need resources and assistance to manage their money well prior to borrowing through personal finance education. It could be really easy for me to be cynical about the entire process but I’m not choosing that story. After all, what’s done is done.
Instead, I’m hoping that if this is part of your next steps you maximize it and change your money story starting today.
My book is now available: Slaying the Debt Dragon: How One Family Conquered Their Money Monster and Found an Inspired Happily Ever After. You can also check out The Debt Free Devotional
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