Well, step one would probably be to celebrate. Even if you disagree with the rationale for the forgiveness, the fact remains you've experienced a non-trivial financial windfall which you can leverage to help improve your future. Here are some options.
- Redirect the loan payment to other debts. If your cashflow situation has improved as a result of the forgiveness, consider directing those payments to other debts, such as credit cards, auto loans, or private student loans.
- Save. Increase your 401(k), IRA, or Roth contributions in proportion to any reduction in student loan payments. A 10 year student loan at 6% interest has a payment of a little over $100 per month. A $100 per month increase in savings now could have a large impact over time.
- Explore new opportunities. Debt to income ratios bear heavily on your ability to obtain mortgages and other loans. Now that your debt has been reduced, it may be possible to obtain a home loan or other loan (such as a loan for debt consolidation or for a vehicle) that you have been unable to obtain in the past. Be careful to make sure you can afford any new debt you take on, and don't go into debt to acquire depreciating assets unless you have no other option.
- Consolidate. If you have other student loans, use this time to take stock of them and consider consolidating them at a more favorable interest rate. As noted above, your reduced debt-to-income ratio may help you get a better rate on the consolidation.
This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this material.