You may be using student loans or credit cards to help pay for school and living expenses. Considering your expenses can help you spend money wisely and avoid excess debt. If you don’t manage your money properly, you may be paying interest for years to come.
A budget allows you to track your spending, as well as see how much money you are going to need to borrow for school. There are many online tools to help you create a budget, such as MyMoney.gov and EducationCents.org. Below are some general guidelines in creating a budget.
Working part time (10-20 hours a week) while in school allows you to pay for expenses and reduce the need for a credit card. Although some students find it difficult to work while in school, it provides financial flexibility and allows you to avoid accruing interest on credit cards and unsubsidized loans. Information about the advantages of working while in school, as well as job postings and employment assistance, can be found on UCCS’s Student Employment website.
You must pay back your student loans. By keeping a log of your payments and accruing interest, you will be able to see your total indebtedness and budget repayments. The NSLDS (National Student Loan Data System) allows you to view all of your federal student loans and their current amounts. You will just need your Department of Education PIN (same as the one used on the FAFSA).
Unsubsidized Stafford loans accumulate interest while you are in school. If you do not pay it, the accumulated interest will be capitalized with the rest of your loan.
Example: If you pay a $20.00 per month towards your unsubsidized Stafford Loan during your four-year stay as an undergraduate, you would lower your loan balance by almost $1,000.00.
Avoid making tuition payments with your credit card. More often than not, student loans are available with better interest rates than your credit card company offers. If you absolutely must have a credit card, find one with the best terms available to you. It helps to look for features like no annual fees and low interest rates.
Avoid credit cards that charge interest from the date of purchase with no grace period as well as cards that charge interest immediately on a cash advance, plus charge a fee for each cash advance. Avoid cash advances.
Avoid applying for more than one or two credit cards at a time. Each inquiry about your credit is included in your credit report. A low, manageable credit limit will also help with this goal.
Consider your living arrangements, and if there might be a better or more affordable option available for you.
Living with parents may be cheaper, as you may not have to pay for rent, food, or utilities. This may not be realistic, depending on your parent’s circumstances.
Both on- and off-campus housing have their advantages. By getting additional roommates, you can split the costs of rent and utilities, further reducing your spending.
More information about managing debt while in college can be found all over the internet.