If you're the average college student, you are probably taking out loans left and right (unaware what any of the loans mean) or even how to balance your finances on top of everything else you're responsible for.
First things first. I'm not telling you it's a shame if you're taking out loans of any kind - the sad reality these days is you have to take them out to pay for tuition, there's just no way around it for the average American seeking a college education.
Here are some tips and guidelines to make sure you can survive financially while you're in school and that you won't graduate completely drowning in loans and financial confusion.
#1. Know the basics of government loans/financial aid you're borrowing.
There are three basic types of loans that students usually recieve from the federal government: subsidized, unsubsidized, and the parent PLUS loan.
Subsidized Loan -This is a needs-based loan. A student may borrow up to $2,625 in the first year of undergraduate studies, $3,500 in year two, and $5,500 in years three through five. The loan must be repaid over ten years. Depending on what your parents make, you may or may not be eligible for this loan.
Unsubsidized Loan - This is a non-need-based federal loan and the borrower is responsible for the interest from the time the loan is disbursed. Paying the interest on the loan while in school will reduce the overall interest charge over the life of the loan.
Parent PLUS Loan- This is a non-need-based federal loan available to credit-worthy parents of dependent undergraduate students. The parent borrower is responsible for the interest from the time the loan is disbursed and may make monthly payments while the student is in school or can choose to defer repayment until the student graduates.
#2. Open a credit card.
Yes, that is what I said. Open a credit card not to rack up debt, but to build your credit. When used responsibly, credit cards help to establish credit you'll need later on in life to rent an apartment, buy a car, and many other things.Only charge something to a credit card when you have the money in hand, and pay it off immediately.
#3. If possible, fund your housing with your own money, not loans.
The less loans you have to take out, the better. If you can, try to make your rental/housing payments with money that you have earned or saved. Paying for your housing while you're living there, rather than taking out loans for it, is all the less debt you'll have to worry about down the road.
#4. Avoid full-price textbooks.
Textbooks can really eat away money if you aren't careful. Most professors will not require you to buy a textbook brand new. Utilize used books, especially from used bookstores or sites like chegg where you can rent textbooks for exceptional prices.
#5. Set a budget.
This is one thing that college students forget to do. Soon enough they're out of spending money and they don't know how. It's easy to get caught up in your studies and forget about having a budget planned in your back pocket. Be mindful of your spending budget, and always keep a savings as a cushion to fall back on. Set a limit to how much you want to spend on social things (i.e. food, drinks, concerts) and how much you think you'll need for groceries and other expenses.
#6. Utilize public transportation.
There's nothing that adds up in expense more than gas money, so if you can utilize public transportation or biking, do it.
#7. Get a job (but a flexible one).
I firmly believe it is beneficial for students to get a job during the school year. It ensures you still have a source of income and gives you that spending money you need. It is important, however, that is a flexible job that isn't burying you with stress on top of the school work you already have.
College and finances can be overwhelming, but even the smallest of things can do a lot for you in the long run.
