The best part about doing your taxes is to hopefully, be getting a large tax refund check when it’s all said and done. I recently gave 9 tips on what to do with your tax refund, like making home repairs, making an emergency fund in case of a lost job, and doing things to improve your resume like upgrade equipment or take a class.
But what if you’re still in college? It’s a whole new ballgame when you get a refund back while you’re still in school. Filing your taxes in college is different since your sources of income are different, and you may be getting money back for education tax credits. And it’s also different when you get a refund. So before you’re booking your plane tickets to a tropical beach for Spring Break, there are some financially smart ways to spend your tax refund while you’re in college.
Best Way to Spend Your Tax Refund in College
- Pay cash for your tuition.
Any amount you pay in cash for your tuition means you’re avoiding taking out student loans. It seems so much easier to pay with student loan money since you never see it. You just fill something out online or sign a piece of paper, and your tuition is paid. With that check you have in your hand or the refund that is automatically deducted in your account, it is rough to part with it. The loan you take out now, isn’t just going to be waiting to smack you when you’re done with school, it’s going to be getting bigger and bigger with interest.
- Start an “after graduation” fund.
Once you graduate and the loans stop coming, you’ll have to have a way to pay for things after you graduate if you don’t have a job yet. And to top that, if you’ve been working on campus or part of your school’s work-study program, that will stop as well. Set aside your refund to put towards bills and living expenses for after you graduate.
- Make a large student loan payment.
The best way to deal with your student loans is to start dealing with them while you’re still in school. Most of the time when you’re in college, you probably don’t have a lot of extra money to throw at your loans. That’s why it is a perfect thing to do with a tax refund. Make a payment now, and it will go towards the principal since the payments haven’t started kicking in yet. Even if you have a large amount of debt, and your refund check seems tiny compared to the total balance, paying a portion will help.
- Start a job search fund.
The quest to find a job your last semester of college and after you graduate can end up being a long and hectic one. Ironically enough, looking for a job can also be expensive. One thing for sure is you’re going to need gas in your car to get to interviews, money for parking, cash for taking a bus or train, and professional attire to wear to your interview. And if you are interviewing for jobs away from your home, you’ll need even more money to fly or drive there plus accommodations and food if you’re staying overnight. You may also need to print a portfolio and print business cards.
- Study abroad.
Taking a vacation and traveling in college is a great experience, and studying abroad is a productive, beneficial way to do it. You can take a course, a semester, or even study for a year in another country. Putting your refund towards your payment or saving it for expenses while you’re abroad makes you one step closer to doing it. It’s a great way to immerse yourself in another culture, meet people and see things you never thought you would, learn another language, and have unforgettable experiences. This is all while you are earning courses towards a diploma, and depending on what you’re studying, learning things that could benefit your future career. Plus, studying abroad looks great on a resume because it shows you are responsible and smart enough to have lived in a foreign country.
- Take extra classes.
Okay, I get that taking an additional class is the last thing that the majority of already overwhelmed college students would want to hear. But, consider putting your refund towards an extra class or two to beef up your resume, improve skills, and increase your chances of getting a job after graduation. Here’s a few options. First, consider taking additional classes that could give you a minor in a certain area or even a second major or certification. When I was studying journalism, a friend of mine majored in journalism, but minored in fashion merchandising since that is what she wanted to write about. She learned so much valuable information, got great connections in her fashion classes, and ended up with wonderful opportunities. Second, if you can’t take enough to get a minor or another major, just take any class that can teach you something that’s not required already. As a journalism major, I wish I would have taken more photography classes to be able to take great photos of my story as I’m reporting on them. If you’re majoring in business, maybe an additional communications class can help with public speaking skills. If you’re majoring in education, taking classes in sociology or psychology can be a great addition. Any class where you are literally taking something away like learning a new language, learning how to do a certain computer program, or learn a new skill is valuable after you graduate.
- Save for a car.
Many times when you’re in college, you might not have a car at all if you’re living on campus. Chances are if you do have a car, it may be older. By the time you graduate, there’s a good chance that you’re going to need a more reliable car. You’ll need a good, safe car to get you to interviews, and if all goes well, to your new job everyday.
What are some smart things college students could do with their tax refund?