20 million Americans are about to be student debt free — here are the 3 money moves they should make right now

President Joe Biden's announcement regarding widespread student loan forgiveness freed an estimated 20 million borrowers from student loan debt, allowing borrowers to breathe a sigh of relief and begin thinking about their other financial goals.

While political rhetoric has certainly picked up following the decision, there's still reason to rejoice for the millions of Americans who can finally move forward, focus on other financial priorities and start making major life decisions such as whether or not to get married, launch a business or start a family.

As the celebrating continues, it's also important to create a plan and take advantage of this sudden windfall. Select spoke with Lauren Anastasio, director of financial advice and certified financial planner at Stash, a popular investing app, about the next steps that would be best for those who are now without student loan debt.

Wednesday's announcement comes on the heels of nearly 2.5 years of a federal student loan repayment pause and allows for one final extension through Dec. 31, 2022. Those who qualify within certain income limits and have less than $10,000 in student debt — or less than $20,000 for Pell Grant recipients — will now be free of their federal student loans.

According to Anastasio, there is still one more important step needed to make it official: Make sure you get it in writing that your student loan debt has been paid in full.

"You should receive a congratulatory letter from your servicer confirming that your loans have been paid off. Save this letter. You may receive it electronically or be able to access it through the servicer's website, but you will want to have a copy for your records just in case," Anastasio says. "After 60-90 days, you'll also want to consult your credit report to see that all applicable loans have been updated to reflect that they have been paid and closed."

As you wait for your official documents to come in, it's a good time to start coming up with a plan for that additional money you would otherwise have been putting toward your loans.

"Take the time to think about what you want to make happen for yourself so you don't lose track of the money and wind up spending it on things that aren't meaningful to you," said Anastasio. For example, don't run out and lease a new car if you already have a vehicle that meets your needs. You'll just be signing up for another form of debt when taking out a car loan or leasing a vehicle — and cars are considered a an asset that loses value over time.

Here are three important things you should focus on doing next as your financial priorities shift beyond student debt.

Replenish your emergency fund

Anastasio recommends filling your emergency fund to the point where you'd have enough to cover three to six months worth of living expenses. This is a great first step since it helps to provide a financial safety net in case something unexpected arises, such as a job loss, costly car repair or housing fix.

Consider stashing your emergency dollars away in a high-yield savings account so your balance can earn more interest over time than it would in a standard savings account. Some of our favorite high-yield savings accounts are the LendingClub High-Yield Savings Account, American Express® High Yield Savings Account and the Marcus by Goldman Sachs High Yield Online Savings.

Pay off high-interest debts

Credit card debt has been on the rise as inflation continues to push consumer budgets even further. Now that your student loan debt is forgiven, you can prioritize paying down other high-interest debt instead.

If you happen to have multiple high-interest debts, consider consolidating them into one concise payment by taking out a personal loan through an issuer such as PenFed or SoFi, which Select ranked among the best options for personal loans.

If you want to focus on paying back your credit card debt with your newly freed up cash, consider transferring your balance to a card with an introductory 0% APR period which can be a good way to save even more money while paying back your balance. After you've opened the new card and transferred your balance, you won't be charged any interest for the introductory period, which can be as long as 21 months.

Select ranked the Wells Fargo Reflect® Card and the U.S. Bank Visa® Platinum Card as some of the best credit cards with intro 0% APR periods.

Start investing for your retirement

If you're one of the many Americans that haven't been able to invest for retirement because of student loan debt, start by taking the same amount of money you would have been paying toward your loans and allow those dollars to work for you and your financial future instead.

For example, let's say your monthly student loan payment was $400. If you take that same $400 a month, open a Roth IRA and invest in an S&P 500 index fund over 20 years, assuming a moderate 8% return, you'll end up earning more than $219,000 in tax-free money for retirement. If you bump that up to $500 a month over 30 years — which gives the power of compound interest more time to go to work — you'll end up earning a whopping $679,000 for your retirement.

It's easy to open a Roth IRA through a low-cost brokerage or robo-advisor, usually within minutes, and get started on investment journey today. Here's a look at some of our favorites:

While this week's student loan forgiveness announcement is going to help millions of borrowers get back on their feet, it's crucial to keep that financial momentum going forward.

"If you simply remove the line item from your budget, the money will likely be spent on other things," Anastasio says. "Instead of removing the monthly cost from your budget altogether, consider reallocating it toward a different debt or putting it in savings."

In other words, instead of using that portion of your money to pay off your student loans, you should now be using it to grow your net worth. Your future self will surely thank you for this.

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