How to spend and save your student loan refund check wisely

How to spend and save your student loan refund check wisely

The following is a guest post from Dave Hoffman – a YMF reader who tries his best to stay on top of his money! 

It’s that time of year. You, the Young Money Finance reader, are headed back to college. Yup, the holidays are over and you need to get back in gear and hit the books.

But wait!

Before you focus on classes and assignments you’re probably worrying about this semester’s finances.

When I was in college and living on student loans, the start of the semester was something to look forward to because after about a week of classes, I’d get a Student Loan Refund check or direct deposit.  This is the money left over after you pay your tuition, fees, health fees, gym fees, and did I mention those pesky fees?  All of that adds up for sure, and in most cases your student loan(s) or grant(s) covered all of it and then some.

What should you do with the money that’s left over?

How to spend and save your student loan refund check wisely

This morning was like every other Friday in college. You snoozed your alarm till 9:30 am because you don’t have an early Friday class or a Friday class at all. It’s the first Friday of the semester and you just remembered that the best parties will be tonight before everyone is slammed with schoolwork later in the semester.

Snap! You might be running low on funds or just getting by on that holiday check from Grandma. You’ve got just a little over $500 in checking. Or maybe you’re like a lot of college students, and this week you racked up $450 on your credit card to cover books. This is what I’d call a “proper use of a credit card.”  The money is for the future and for education. Plus you have something up your sleeve. That refund is due to you!

After you grab that shower, it’s time to sit down at your laptop. Being someone that’s financially conscious, the first thing you do is check your online banking.


You got a shot of adrenaline when you opened your online banking and saw that your balance went from $553.29 to $4,008.64. Thanks refund!

Stop! Don’t rush to the nearest store and load up for tonight’s party.

It’s time to exercise some judgement here.

You should be concerned about two things:

  • Your credit card bill which you charged your textbooks on
  • How to allocate the money so it lasts until the end of the semester or until your next influx of money

How to allocate your student loan refund check judiciously

College is about choices.

Today is the day to make the choice to spend and save your student loan money in such a way to make your parents and yourself proud.

Now’s not the time to buy clothes you don’t need or buy a new computer that you don’t necessarily need. Yes, I actually spent $4,000 on computer parts one semester in college with my student loan refund money. Bad decision.

Let’s think this through together. It’s an easy exercise.

Say you want to make sure you still have at least $553.29 (what you’re starting with) in your account at the end of the semester in May.

That leaves $4,008.64 – 553.29 = 3,455.35. So your refund was $3,455.35. Awesome. That’s about right for a lot of college towns. That money needs to cover entirely or in part the following:

  • Books
  • Notebooks, paper, and other school supplies
  • Rent (February, March, April, May). Omit this if your room and board was covered already in your university bill and possibly paid by your loan.
  • Gas
  • Spring break
  • Insurance
  • Doctor visits (hopefully your student health center is mostly covered by those pesky fees you’ve already paid)
  • Groceries
  • Dining Out
  • Drinking out
  • Clothing
  • Incidentals and other

That’s quite the list. How in the world are we going to stretch less than $3,500 to cover it?

Well first off, you could always supplement your loan money with a job. That’s what I did. I actually lived like a king in college. I waited tables earning over $400 a week.

This is basically budgeting 101.

Allocate the money month by month, and stretch it as far as it can go.

But first, take care of that credit card. $3,455.35 – 450 (books on credit card) = 3,005.35.

This is where a spreadsheet comes in handy. Feel free to mock one up that makes sense to you, or download the one that accompanies this blog post by shooting [ben at] an email and asking.

The key takeaways from this spreadsheet are:

  • It’s flexible and you can make it work for you (add rows, columns, categorize).  This is just meant as a basic sheet to get you started.
  • I call it “money flow” rather than budget.  Money is a liquid asset.  It is fluid.  It flows from place to place.  It flows from the student loan company to you to Jimmy Johns for dinner.  It flows from your savings account to your checking account and vice versa.
  • You’re PLANNING AHEAD.  Notice that it’s January and I’m already planning for Spring break in March.  That is, I’ve already put together a tentative budget for March now.  It might change, but at least I’ve got a plan.
  • I’m treating my student loan refund like a monthly paycheck.  At the beginning of the semester, I dumped it into savings, and set up an automatic draft.  I can have it automatically put a portion in my checking account on any day of the month that I wish.
  • I prefer Google Docs because I can access it from anywhere (even my phone).

I use the money flow sheet as a forward looking and backward looking document.

What I recommend that you do, is revisit this spreadsheet a couple times a month to update the numbers both previous months and future months.  Update how much money you actually made in a month waiting tables or babysitting. Another update may be to put in the actual money you spent on gas in March…maybe it’s more because you drove to the beach for Spring Break.


Today we learned the importance of having a plan for college semesters.

I also provided you with a spreadsheet. You can use my handy spreadsheet as a starting point to allocate your student loan refund over each month of the semester, or even to see if you need to get a part-time job. Be sure to modify it for your needs. I still use a form of this same budget to this day but it’s on steroids with categories and subtotals. You can certainly do the same thing with this sheet to start.

The process of counting your money even when you don’t have very much will save you from being in bad situations like credit card death or ramen noodles every night for a whole semester. Plus you can plan for your beer money expense.

I want to hear from you!  

Let me know in the comments below how you currently handle your student loan money to pay for school. How did you do it when you were in college? Did you make a $4,000 blunder like I did?



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