Student Loans: Managing Your Refund Check
August 18, 2016
Adrienne H., Financial Expert
A new semester is approaching, which means student loans are being processed by colleges and student refund checks will soon be disbursed. If you’re a student receiving financial aid, check out this post to understand if you’re handling your refund money wisely.
Remember, it’s not free money.
Seeing thousands of dollars appear in your checking account is exciting and if you have a lot of items on your wish list, spending your refund check can be easy to do. However, consider this: just as you are accruing interest on your student loans and financial aid, your refund check is also gaining interest.
For those of you that are unfamiliar with a student loan refund check, it is essentially “extra” funds after your college processes your cash payments, scholarships, student loans, and financial aid used for tuition. Many times, students are granted more financial aid and student loans than they need for tuition, however, lenders provide “extra” funds, as students often need help with living expenses and other fees, as well.
It’s okay to spend it…responsibly.
Refund checks are great to help students pay for books, rent, utilities, groceries, and other necessities to get by in college. Even if you have a job or are living at your parents’ house, it’s a good idea to spend your refund check on items that will help you in school, such as a bike to ride to class, bus pass, laptop, printer, backpack, pencils, and notebooks. Your education is an investment and spending your refund check on a Spring Break ticket is probably not the best idea. If you’re not going to use it toward your education, return it to the lender as a pre-payment on the thousands of dollars of debt you might already have built up.
However, don’t use your refund check as an excuse to not get a job.
The beginning of a new semester is busy and exciting. New classes, possibly new roommates and apartment, and of course, many social happenings. As you see the money from your refund check deposited into your account, it may seem tempting to live off of that for the semester rather than finding a job to help pay for your living and entertainment expenses. Once you receive your degree, you’ll have to start paying back all of the money you borrowed right away. While you can use your refund check for your living expenses, your paycheck will give you extra spending cash and an opportunity to start saving for the future.
If you’re not quite sure how to manage your financial aid, student loans, and refund check, consider meeting with a financial advisor or counselor to help you make a plan based on your individual situation.