October 19, 2011

Saving Money in College

Over 2.5 million high school seniors will graduate in the U.S. this year, and if you’re one of them, you are most likely daydreaming about your scholastic future and wondering, “What will college life be like?” Given that, in 2009, seniors graduated with an average credit card debt of $4,1001 and $24,000 in student loan debt, it is also important to keep your finances top of mind.

No doubt the thought of leaving home, living on your own, making your own rules and meeting new friends is exciting, but it can also be scary and overwhelming, especially when it comes time to handling your finances. College students tend to get themselves in more than just student loan debt their freshman year of college so the financial decisions you make now are just as important to your future as what your major will be. 


To Dorm or Not To Dorm?

Bar none, if you’re one of the lucky students attending college in the town where you live, best advice is to live at home with your parents. Avoiding housing costs will greatly reduce the amount of debt that you graduate with.

If you can’t live at home, whether or not you live on campus or, say, an apartment depends on your particular situation.  Many college veterans highly recommend living on-campus for at least the first year or two. Most, even described doing so as “the quintessential college experience.”  


Financial benefits of doing so include:

No commute, so no car is necessary – major dollar savings here!
You don’t have to pay water, electricity and cable on your own
Housing plans can also help save you money

Dealing with Student Loans

Although many grads report not stressing over their student loans while in school, in retrospect, many wish they had given them some attention. Even making small payments while still in school would have put them in a better position. Although given the high costs of a college education, graduating with student debt is becoming the norm, do your best to keep your debt low and know when your repayment plan is slated to begin. A late payment will impact your credit score, which in turn will impact your ability to borrow in the future.

Veterans have lots of advice when it comes to student loans; here are some of the most frequently heard suggestions:

-Do your homework when seeking loans
-Get federal loans first – they have flexible repayment plans
-Send back that extra check after you’ve paid for classes – don’t keep it
-The less money you use, the less you have to pay back
-Think twice about loan reconsolidation.  Although a single payment with a lower interest rate over a longer repayment period may be enticing, you will likely pay more in the long run.

Saving (and Earning) Money

This may seem like a no-brainer, but if you want to be in less debt when you graduate, spend less than you earn.  It may be tempting to use your shiny new credit card to explore your newfound freedom but just keep in mind that you will eventually have to pay for the meals, clothing and electronics that you buy.  Some other tips include:

-Try to be conscientious of your spending

-Avoiding the freshman 15 is easier if you’re frugal with your meals

-A part-time job provides extra cash – if you apply for a position on-campus, sometimes those students get discounts around campus

-Consider applying for a paid internship – nothing beats getting paid to train in what might be your future career, plus employers like to read about your internships

-If you are an upperclassman, consider becoming an adjunct professor and get paid, while still in school

-If you go home for the weekends, ask your parent to cook your meals for the week and pack them up for you.  Save that money for other things.

-Use cash as much as possible.  If you can’t afford it with cash, don’t buy it.


Most Challenging

-Balancing studies, finances and fun is an important part of the college experience and doing so is a delicate balance that you’ll have to master yourself.  Here are a few pointers:

-Set an allowance for yourself and make sure you don’t spend more than what you allotted for yourself during the week

-Avoid the urge to go to every single concert in your area.  Do you really need that band t-shirt?

-Avoid tempting credit card offers that will be paraded in front of you.  You don’t want to go into more debt than you already are.

-Overall, enjoy your four years of college.  As you do it, just keep in mind that it can take years to pay back the debts you accrue during those years.  You don’t want to look back on the fond memories of your college career 10 years later and realize you are still paying for them.

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This is a guest post by Nuno Andrade of The Student Loan Corporation c/o SapientNitro.

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