Now that your student loan was forgiven, here’s what experts say you should do next

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It’s a question millions of Americans would love the chance to ask: What should I do after my student loans are canceled?

The Biden administration has already given more than 450,000 borrowers reason to think about that, after forgiving the debt for certain disabled borrowers and others who attended fraudulent colleges.

More than 40 million people, of course, are still saddled with the loans, but there are signs that more relief could be on the way.

The U.S. Department of Education has announced that it will be making a number of changes to broaden the reach of the public service loan forgiveness program, which excuses the debt of those who’ve worked for the government or non-profits for a decade.

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And President Joe Biden has said he supports erasing at least $10,000 for all borrowers, while top Democrats, including Sen. Elizabeth Warren, D-Mass., and Sen. Majority Leader Chuck Schumer, D-N.Y., continue to pressure the president to wipe out $50,000 for all. Those proposals would leave between a third and more than 80% of borrowers debt-free.

Getting your student loans forgiven will likely be a turning point in your financial life.

The typical bill is around $400 a month, and research finds the payments make it harder for borrowers to start businesses, save for retirement and purchase a house.

“This is a great opportunity to go back and examine your cash flow so you can figure out where to deploy the money you were previously spending on your loan payments,” said Douglas Boneparth, certified financial planner and president of Bone Fide Wealth in New York.

First steps

Once a borrower’s loans are forgiven, they should ask their lender for a copy of their promissory note stamped “paid in full,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

“This can take a few months,” Mayotte said. “I would save this, as well as the forgiveness approval letter, in their ‘never throw away’ files.”

It could take up to 60 days for your credit report to reflect the drop in debt, Mayotte said. (The three credit bureaus provide a free report once a year.)

“If it doesn’t after that period, the borrower should file a credit dispute or contact the loan servicer,” she said.

Financial moves

Experts recommend that people have enough cash in an emergency savings account to cover between three months to a year of their usual expenses should other income sources dry up.

“If you’re low on cash and could use a greater cushion, this is the first place I would consider putting my money,” Boneparth said.

To watch your savings grow faster, store your money in a high-yield savings account. Experts point out that it’s worth shopping around with different banks to find the best offer: The average online savings account rate is around 0.45%, while it’s just 0.14% with traditional brick-and-mortar banks and credit unions, according to

(You’ll just want to make sure any account you put your savings in is FDIC-insured, meaning up to $250,000 of your deposit is protected from loss.)

If you’re comfortable with the level of your emergency savings, Boneparth recommends redirecting the cash from your student loans to your retirement funds.

If your company offers a 401(k) match at work, try to salt away enough to get the full benefit. In addition, or if you’re self-employed or without a workplace retirement plan, you can save up to a certain amount each year in individual retirement accounts.

“If those are maxed out, start an automatic monthly investment plan to a brokerage account,” Boneparth said.

If you have any credit card debt, experts also advise using the freed up cash to pay it down quicker.

Above all, try to avoid running up another tab, said higher education expert Mark Kantrowitz.

“Enjoy the sense of freedom that comes with being debt-free,” he said.

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