The news recently has been filled with stories about student loan relief. Last month, the government proposed a plan to erase or lower student loan debt for more than 30 million people. With the average student loan debt of $38,290 among all borrowers and a total loan debt in America at a record high of $1.74 trillion, any relief will significantly impact individuals nationwide.*
If you’re one of the lucky people who have had their student loan forgiven or hope to soon, a new question arises. What do you do with the extra money each month? With the average monthly student loan payment being about $500, your gut reaction might be to pay all your other bills.** This is undoubtedly a great idea, but here are five ways to put your forgiven student loan money to work for you.
- Pay off debt: As mentioned above, having extra money monthly to pay your current bills on time is a great idea. It helps build your credit score and relieve financial pressure. But let’s make your money even more productive. Use your extra funds to pay off any other high-interest debts you may be holding. Doing so saves you more money by reducing the interest you’ll need to pay in addition to the debt. If one of your debts is a high-interest credit card, consider getting one with lower interest for future charges as you pay down your current high-interest card. Our Select Visa® comes with rock-bottom rates starting at 8.99% APR† if you qualify. Plus, all our Credit Cards offer 0% intro APR+ for the first six months after you open your card.
- Create an emergency fund: Your high monthly student loan payments probably have prevented you from creating an emergency fund. Now’s the time to build or replenish one if it’s grown lean. Putting savings aside for unexpected expenses can provide peace of mind and financial stability. Aim for three to six months of savings for the unexpected. Our Online Savings account is a great way to start. There’s no minimum deposit. No maintenance fees. And you earn 4.00% APY‡ with Direct Deposit (3.50% APY without). Need a disciplined approach to saving? Open a Rainy Day Savings account. You earn 3.04% APY§ on balances up to $2,000. There’s no Debit Card or checks issued, and it includes a maximum of two free withdrawals per calendar year to help you curtail impulse spending.
- Invest in your future: Never stop learning. Use the money to invest in yourself or your future. This could mean taking a course or certification to improve your skills and employability or investing in tools or equipment necessary for your career or side hustle.
- Contribute to your retirement: If you haven’t started saving for retirement, use the money you were using to pay your student loans to open a retirement account or contribute to an existing one. The earlier you start saving for retirement, the more time your investments have to grow. Individual retirement accounts (IRA) are a great way to start securing your future. And they include tax-saving features. Be sure to consult with your tax advisor regarding tax consequences for your specific situation.
- Give back: Donate money to support causes or organizations you care about. Whether contributing to charity, volunteering, or supporting local businesses, giving back can positively impact your community. Consider donating to the educational institution you attended. You don’t have to pay for a building or athletic field to make an impact. Small, regular donations are valuable. And many schools allow you to specify where your money goes, from undergrad scholarships to athletics to arts programs. A little investigation can ensure your meaningful donation goes where you want it to go.
Final thoughts
When you find out your student loan is forgiven, your first idea may be to use your freed-up funds to splurge, but taking a moment to make some responsible decisions can snowball your windfall and lead to additional financial success. Learn more about our different Savings accounts, or call us at 877.800.2345 to open an account today.
*Luthi, Ben, and Pentis, Andrew, and Lowery, Katie, “What is the average student loan debt in 2024 – and what are the impacts,” CNN.com. 23 January 2024. Accessed 23 April 2024.
**Hanson, Melanie, “Average Student Loan Payment,” Educationdata.org. 30 May 2023. Accessed 23 April 2024.
†$100 Bonus for New Credit Cards for: Crystal Visa, Select Visa & Visa Platinum: A $100 (one hundred dollars) bonus will be paid in the form of “Visa Statement Credit” when at least $5,000.00 (five thousand dollars) is spent in purchases within the first 3 months (qualifying period) of the “New” Visa card opening. Bonuses will be paid out within 90 days after the qualification period. Example: If a card is activated on January 1, 2021 and the total of qualifying purchases for the months of January, February and March is at least $5,000, the primary borrower will receive a Bonus of $100 (one hundred dollars) no later than July 1, 2021. Limit of one reward/bonus per member number. Qualifying transactions must “post” to the designated account during the qualified period. All qualifying purchases will count towards the $5,000 in spent purchases unless return for credit of any of the qualifying transactions takes place within 90 days of the end of the qualifying period. Transactions may take two business days from the date of purchase to post. Member must be in good standing to be eligible for bonus. New accounts are subject to FIGFCU approval and all other terms and conditions apply. This offer is valid only for individual account /card holders, is non-transferable and cannot be combined with any other offer. The $100 Bonus is a product promotion sponsored by FIGFCU and may be discontinued at any time. Visa is a registered trademark.
Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Visa Platinum ® Credit Card account holders. This incentive offer, is not available to those members who are opening a new Platinum Visa® and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion.
Select Visa® Zero Percent (0%) Introductory Rate Promotion for purchases, is offered for new FIGFCU Visa® Select Credit Card account holders. This incentive offer, is not available to those members who are opening a new Select Visa and had an outstanding balance or a closed FIGFCU Zero Percent Loan account and/or had any FIGFCU Select Visa® Credit Card within the last year. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of credit balances, credit card account balances or CASH Advance to take advantage of the introductory rate promotion. For full disclosures visit, figfcu.org/select-visa.
Blue Visa is a Share Secured Credit Card requiring deposited funds to be placed on hold with the Credit Union. Your Account is secured by the designated shares you have in a share account, be it an individual or joint account.
These pledged shares will secure your account. You may not withdraw amounts that have been specifically pledged to secure your Credit Card Account until the Credit Union agrees to release all or part of the pledged amount.
+APR = annual percentage rate. Rates include discounts for Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account and Automatic Payment/Folio Deduction. Rates are subject to change at anytime.
The balance transfer amount from other Farmers Insurance Federal Credit Union credit cards will retain its current rate (i.e., Visa Select at 8.99%, Visa Platinum at 10.99%, until the transferred balance is paid off. APR=Annual Percentage Rate. Rate quoted is the lowest rate possible for qualified borrowers and is subject to change. Qualification is based on credit history, debt, and the ability to repay. Your rate may vary. All loans subject to credit approval. The newly opened Credit Union credit card’s rate will only apply to new transactions. Any balances on the previous Credit Union credit card must be paid off at the prior credit card’s rate.
Crystal Visa® Zero Percent (0%) Introductory Rate Promotion is offered for new FIGFCU Crystal Visa® account holders. If you are in an introductory rate promotion period, you are not eligible to transfer other loan balances, line of
credit balances and credit card account balances to take advantage of the introductory rate promotion. For full disclosures, visit figfcu.org/crystal-visa.
‡APY = Annual Percentage Yield. APY is the annualized rate based on a compounding period of one year. When the deposited money earns dividends and the accumulated dividends starts earning dividends as well, we are talking about compounding. Fees could reduce the earnings on an account. All yields except Certificate yields are subject to change retroactively to the beginning of the month.Rate bonus for $1,000 monthly Direct Deposit into a Farmers Insurance Federal Credit Union Checking Account. No branch or call center access with this account.
§APY = Annual Percentage Yield. Rates are subject to change at anytime. Limit one Rainy Day Account per qualified membership. Rainy Day Savings is an interest earning savings account eligible for 3.04% APY interest on balances up to $2,000 and the standard Membership Savings rate on balances over $2,000 when funded via recurring ACH deposit or other qualifying external funds. Dividends are calculated by applying a periodic rate to the Average Daily Balance in the account for the Dividend period. Interest earned will be credited to the account at the end of the statement period. This account is limited to two withdrawals per calendar year, each withdrawal in excess of this amount will incur a $20 excessive withdrawal fee that must be paid at the time of the withdrawal. This account does not qualify for withdrawal access via debit or check and does not support transactions originating via VRU, online banking, mobile banking, or ATMs. Withdrawals can be made in person at a Credit Union branch or by calling us at 800.877.2345. This account does not qualify for overdraft protection. Account holder must be a member with a regular share account who is in good standing. Current interest rates and the annual percentage yield may be found at the Credit Union’s website, may be verified at a Credit Union Branch or by calling 800.877.2345. Interest rates earned and qualifying dollar amounts for interest earned are subject to change at any time. APYs and eligibility criteria are subject to change at any time. Fees may reduce earnings.
