Whether your refund is $ 48 or more than $ 1,500, experts say it’s best not to splurge.
Ohio state students began receiving meal and accommodation reimbursements on April 3 after the university moved nearly all students off campus and closed libraries, recreation facilities and dining halls due to COVID-19. All students received reimbursements for recreation costs, and students living in residences with meal plans received additional pro-rated reimbursements for accommodation and meals.
Students living in halls of residence received between $ 1,271.25 and $ 1,693.80, depending on their hall rate and room type, university spokesperson Dave Isaacs said in a report. -mail. Rate III accommodation costs $ 3,371 per semester and Rate I accommodation costs $ 4,329. The students received a reimbursement of $ 48 for recreational expenses.
It was in the first of two waves that students who left the residences March 14-22 received, Isaacs said. He said more than 15,000 students received refunds in the first week.
Students who left residences after March 22 or who lived off campus were included in the second wave starting April 10, Isaacs said.
Ben Raines, financial education wellness coordinator at the Office of Student Life, said students should be intentional in how they spend their refunds.
“We don’t know how long this economic problem could extend beyond that. We don’t know what effect this might have on our lives in the future, ”Raines said.
Students have a few options on how to use their refunds, he said.
Pay off high interest debt
In the first quarter of 2020, about 43 million Americans had federal student loan debt, for a total of $ 1.5 trillion, with each American owing $ 35,397 on average, according to data from the Federal Student Loans Portfolio. Although the number of borrowers has increased by 150% since 2007, total loan debt has increased by almost 300% over the past 13 years.
Raines said students should consider reducing the principal – the original amount owed on a loan – which would reduce the total amount students pay when the loan is finally paid off.
Depending on how much a student repays, he might be able to pay off the full balance of a loan, he said.
Other debts that students may have on credit cards, car loans or payday loans should also be paid off as quickly as possible, Raines said.
Save for the next rainy day
When the unexpected happens, like a global pandemic, having money to offset salaries, scholarships, or other income is a good idea. Raines said students should consider setting up a “rainy day fund” to hold them back until they can work again.
“It was a really unsettling event. A lot of people have lost their jobs. A lot of people had to move out of the blue. So having some money set aside for stuff like that is a really good idea, ”he said.
Students should look for high-interest savings accounts, which typically exist at online-only banks, such as Ally Bank or Capital One, Raines said. The higher the interest, the faster your account balance will grow.
Some banks may charge fees on their accounts, which would reduce a student’s savings. Finding a bank with no fees and a high annual return percentage would be ideal, Raines said.
Will students have to pay taxes on their refund?
Refunds are generally not a “taxable event,” said Nesley Thomas, a registered agent with Block Advisors in Columbus. Typically, the refunded money has already been taxed, including scholarships and income, so a student’s refund would no longer be taxed. However, students should seek advice specific to their situation from a licensed tax agent.
Isaacs said the refunds were deposited into students’ direct deposit accounts. Students who have not set up direct deposit will receive a check in the mail to their permanent residence from the Office of the University Bursar.
Students can make an appointment with a financial coach at Ohio State by visiting the Student Wellness Center website.