When discussing, planning, and preparing for college, there is so much information out there regarding how to pick a major, choose an institution, and how to pack smart. However, there is not much information about financial planning and literacy for students.
The reality is that not every student who goes to college comes from a culture or a family that has knowledge about financial planning. This can have very negative consequences in the long run for students and their families. The more information a student can have, the more successful and less stressful the financial part of college will be for them.
So of course, the accounting major and business student in me thought not only freshmen but all college students could benefit from some helpful tips. I came up with these 7 tips with help of the women of financial aid office and Business office at Virginia Wesleyan College.
I also used both offices, personal experience, and the student aid government website to get my information regarding all my tips. I used the government website, studentaid.ed.gov, where all my links are redirected to. This is a wonderful website that is a great resource, easy to understand, and well organized. Good luck to all you incoming college freshmen!!
1. Take Entrance/Exit Counseling Seriously
Entrance and exit counseling are ways in which the Federal Government ensures that students understand their loans and what is expected of them when it comes to future payments. The best way to approach both of these meetings is to listen and ask questions when you have them. Another step in the right direction and something that I have found helpful is keeping all your financial records and important paper work organized in manila folders.
2. Understand Different Type of Loans
One of the easiest and the most costly mistakes a student can make is not knowing whether aid they are receiving is free or must be paid back. The women in the financial aid office say it's at the top of their list for students to know is how their financial aid award package is broken down.
A great tip I learned is that usually anything labeled grant or scholarship is free. Loans are to be paid back, but there are different types with varying interest rates and application. Knowing the lingo is the best way to start growing your loan literacy.
3. Do Not Let Your Parents Take Over
Making the transition from high school to college can be difficult. During this time, it is easy for us as college to students to stay in our comfort zone. For some of us, this means letting our parents take care of all of our financial aid needs and paperwork.
In the short-term. this feel like less is on your plate; however, it creates so many problems for you in the long run. You must remember loans are in your name so no matter what they are your responsibility. The best thing you can do is be aware of how much you are borrowing, who you are borrowing from, and make sure you keep records of your FAFSA and all other signed documents.
4. Attitude Can Make a Difference
Making good relationships with the people in the financial aid office and business office has served me well when I have been tight positions. Also having a good attitude has placed me in positions where have been able to get certain opportunities that helped me financially.
Just remember that the people in the financial aid and business office can only do so much and are not out to get you. Having a good attitude can get more help and make people want to help you.
5. Take Responsibility for Loans
This tip is similar to #3. The worst thing you can do is blame your parents because you were not involved in the process. Taking responsibility can mean paying your loans back or just being informed about your situation.
6. Have a Budget
It does not have to be something that people have to abhor or think negatively about. Budgeting helps you meet specific goals such as paying your bills on time, saving up for a laptop, and my personal favorite, never having zero in your bank account.
Budgeting is a type of planning that allows you more freedom. If you save and have money you can go on trips, study abroad, and have something for a rainy day. Life happens when we make plans and can do everything right. Think of budgeting as an insurance plan. It can be as simple as saving $5 to $10 from every paycheck. Lastly, if you start now you can create a habit that can alter your financial success in the long run.
7. Know types of Payment Plans
Paying your loans is the scariest part for many students. We make so many jokes about being in debt for life (I refuse) and some people unfortunately get emotionally upset. If feel like crying do so, but there are so many affordable ways to pay off debts. Below are the different type of repayment plans and starter info
- Standard Repayment Plan: Payments are a fixed amount. Up to 10 years (up to 30 years for Consolidation Loans).
- Graduated Repayment Plan: Payments are lower at first and then increase, usually every two years. Up to 10 years (up to 30 years for Consolidation Loans).
- Extended Repayment Plan: Payments may be fixed or graduated.
- Revised Pay as You Earn Repayment Plan (REPAYE): Your monthly payments will be 10 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. If you're married, both your and your spouse’s income and loan debt will be considered, whether taxes are filed jointly or separately (with limited exceptions). Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 or 25 years.
- Pay as You Earn Repayment Plan (PAYE): Your maximum monthly payments will be 10 percent of discretionary income. Payments are recalculated each year and are based on your updated income and family size. If you're married, your spouse's income or loan debt will be considered only if you file a joint tax return. Any outstanding balance on your loan will be forgiven if you haven't repaid your loan in full after 20 years.Up to 25 years.
