Turning Pocket Change into Payoff: A College Guide

Heading off to college is an exciting prospect for many first-time students — but it can also come with some growing pains. For many college students venturing out on their own, figuring out how to pay for college and being responsible with money is easier said than done.

The good news? With a few practical tips in mind, you’ll be well on your way to greater financial independence in school. With a little discipline, you might even be able to graduate with minimal debt and some money in your savings account!

Paying for College 101: Sources of Financial Aid

According to the Education Data Initiative, the average cost of college in the United States is now more than $38,000 per year, which is no small chunk of change. Fortunately, there are plenty of college funding options to take some of the burden out of covering these costs.

Fill Out Your FAFSA

First, be sure to fill out your Free Application for Federal Student Aid (FAFSA), which is a requirement to be considered for any government grants, scholarships, and even work-study funds. Check the specific filing deadline for your school and give yourself plenty of time to complete the form ahead of that deadline — and remember that you will need to fill it out every year you attend.

Explore Additional Scholarships and Grants

In addition to federal aid, your school might also offer scholarships and other financial aid options for students. These may be merit- or need-based, so be sure to explore your options and see what you might qualify for.

Many private companies and organizations also offer scholarships for college students, so check out free resources like FastWeb to see which ones might be worth your time to apply for.

Be Wise About Student Loans

Grants and scholarships are the ideal type of financial aid because they don’t need to be paid back. However, if your grants and scholarships aren’t enough to cover all your college expenses, you might need to take out student loans to cover the remainder.

There are two main types of student loans:

• Subsidized – Interest doesn’t accrue until after you finish school.
• Unsubsidized – Interest begins to accrue as soon as the loan money is disbursed.

As you can imagine, subsidized loans are ideal because they can reduce the interest owed. If you need to take out unsubsidized loans for any reason, just be sure to understand your interest rate and repayment terms.

How to Live Within Your Means While in College

Even once you’ve figured out how to pay for college, there’s still the issue of living with minimal funds while you’re in school. Here are a few tips to keep in mind as you get ready to hit the books.

Create and Stick to a Budget

Use a free tool or app to create a realistic budget that accounts for any money you’ll use for your living expenses (whether from a part-time job, student loan funds, or a combination of both). In your budget, be sure to factor in monthly expenses such as food/groceries, rent (where applicable), your phone bill, and other similar costs. This will give you a better idea of how much you have left to spend after all your essentials are covered.

Budget-Friendly Tips for Student Life

Creating a budget is one thing — but actually sticking to it can be challenging. If you’re looking to stretch your dollar, here are some tips worth keeping in mind:

• Cancel monthly subscription services (or put them on hold) while in school.
• Take advantage of student discounts at local restaurants, movie theaters, etc.
• Plan your meals ahead of time to avoid unnecessary spending on food.
• Buy used versions of your textbooks and sell them back at the end of the term.

Is It Possible to Build Up Savings in College?

What if you’re looking to not just get by in college, but to save some money and build a foundation for long-term financial independence?

Explore Part-Time Work Opportunities

Many students work while attending school as a means of covering their living expenses and relying less on student loans. If you’re interested in finding a job while in college, consider exploring part-time options that accommodate your busy schedule. In some cases, freelance options (like tutoring) can give you more freedom to work around your schedule while still bringing in some extra spending money.

Set Up Automatic Transfers to Savings

If you have checking and savings accounts, see if your bank offers an automatic transfer option that will allow you to move money into your savings account on a recurring basis. Even moving $20 to savings every two weeks will result in an additional $480 saved over the course of a year!

Pay Down Student Loan Interest

Another money-smart tip to keep in mind while in school is to set aside money to pay down any student loan interest that accrues each year. If your loans are unsubsidized, they’ll be accruing interest even if you aren’t required to make payments on them yet. Unfortunately, this interest can compound each year, which essentially means that you could be paying interest on your interest by the time you graduate.

The simplest way to avoid this is to pay off the interest on any unsubsidized student loans on a regular basis. You won’t need to worry about this with subsidized loans, as they will not begin accruing interest until after you graduate or otherwise leave school.

The Bottom Line on College Finances

Making smart financial decisions while in college can set you up for greater financial success and freedom many years down the road — especially if you’re able to graduate with less debt. At the same time, learning how to budget and spend wisely while in school can transfer into better financial literacy later in life, so be sure to keep these tips in mind as you prepare for your first year in college.

Sources

https://educationdata.org/average-cost-of-college

https://www.forbes.com/advisor/l/best-budgeting-apps

https://studentaid.gov/h/apply-for-aid/fafsa

https://www.fastweb.com/

https://www.savingforcollege.com/article/how-does-student-loan-interest-work

https://studentaid.gov/understand-aid/types/loans/subsidized-unsubsidized

https://nces.ed.gov/programs/coe/indicator/ssa/college-student-employment