Tuesday, September 2, 2014
Most college graduates with federal student loan debt regret how they spent their student loan refund checks. The refund checks are issued to the student from the remaining amount of federal student loan after all university costs are paid. Sometimes these checks are thousands of dollars, which students may feel they can spend as they please. The problem is that this money is debt that will come due when they must start repaying their student loans. Below are three mistakes students should avoid:
- The check is free money. Try to think of this as a loan rather than free money. It may be helpful to consult a financial aid officer and discuss future student loan payments.
- Failing to budget. Student loan refund checks are supposed to be for basic college expenses such as textbooks. Students should learn to develop a budget and think about needs versus wants. Furthermore, look for ways to save money.
- Skipping out on part-time work. Just because a student loan refund check covers expenses does not mean students should not work. Having some work experience is a big part of the employability equation. When students have excess money, they should save it so that they will not have to borrow as much the following year.
See Reyna Gobel, Avoid these Common Mistakes Made with Student Loan Refund Checks, Forbes, Aug. 31, 2014.