Hi everyone, my mom called me to let me know her $70k student debt will be discharged under the Sweet v. McMahon Settlement Agreement. She has made payments since 2013 so I assume she will be getting that money refunded.
My question is that, my mom is 50. She has has accumilated some credit card debt (unsure of the exact amount) – so other than paying that off what would be the best course of action for her here especially since she's a bit closer to retirement? She has a 401k, but no retirement accounts.
Mom's student loans wiped + refunded – now what?
byu/califom inpersonalfinance
Posted by califom
3 Comments
Sounds like you are asking about a framework for what to do with money.
Start with reviewing the Prime Directive in the PF Wiki. It will answer your question and many other questions you didn’t realize you should be asking.
* https://www.reddit.com//r/personalfinance/wiki/commontopics
The discharge of the student debt might be taxable to her, like income.
It would be good to set aside about 25% of the money to pay tax, rather than be caught short.
A 401K is a retirement account.
Regarding whether she gets a refund or not, yes if her loans were federal, no if they were private.
Regarding what to do, clear all credit card debt, open an IRA. She can contribute $8600/yr.