Wondering how you can and should pay your way through college? Wonder no longer: financial guru Andrew Schrage, co-owner of Money Crashers Personal Finance, took the time to answer some of our top questions about paying for college and making smart financial decisions as a student.
Should I use loans to pay my tuition?
Yes, you should use loans to fill in the gaps in your tuition (as opposed to not going to college at all), but only after you’ve exhausted all other avenues for college cost assistance.
There are plenty of grants and scholarships available based on hobbies, ethnicity, gender, religion, association with professional organizations, and much, much more. Conduct an exhaustive search for scholarships to uncover all you may be eligible for. And don’t forget about financial aid from the school itself.
Make sure you file the FAFSA (early!), but be advised that your aid award may include federal loans anyway (considered “aid” because of deferred interest and possibly lower interest rates). If, after receiving your financial aid award and any scholarships, you find you still can’t make ends meet, contact the financial aid and admission directors at your intended college to see if there’s any way they can amend your award amount—perhaps something changed in your family’s financial situation since you applied or there’s something you missed. Leave no stone unturned!
Finally, remember you can save even more money by attending a cheaper school, such as a community college, to earn credits and then transfer to your four-year institution of choice.
I can’t afford textbooks; what should I do?
It’s a rookie mistake to buy brand-new textbooks at the on-campus bookstore. Don’t. Instead, buy them used and/or borrow them from the library as you need them. Amazon and eBay are two great options, and you’ll save even more by buying used books. You could also rent textbooks from a website like Chegg, and you may even be able to download some for free at the Project Gutenberg website. For any textbooks you purchase, be sure to sell them after the semester is over. Setting up a seller account on eBay or Amazon is rather simple.
What is a credit score?
A credit score is a number that usually ranges anywhere from 300–850, determined by the three main credit reporting agencies: TransUnion, Experian, and Equifax. It basically represents the risk you present to a creditor as far as being able to pay back loans and credit card balances. The higher your score, the lower your risk.
Do I need to have a credit card to build my credit score as a student?
You don’t necessarily need a credit card to build your credit score, but it certainly can help—if you pay your bill off in full each and every month. A solid banking history and paying all of your monthly bills on time will build your credit. You could also become an authorized user on someone else’s credit card (your parents’, for example) and improve your credit that way.
How do I make a student budget?
There are tons of budget websites out there (Mint is a popular option), plus you can always go old school with an Excel spreadsheet. Either way, just make it happen! Input income if you have it; if not, use whatever you have in a monthly allowance/savings or what you plan to get in aid, scholarships, loans, or grants. Then enter in amounts for all of your monthly bills, which will depend upon your personal situation. Be sure to include a line for emergency expenses, where you set aside a certain amount each month in a separate account in case your computer crashes or your car breaks down. Your goal should be to have less money going out than what is coming in.
I’m having trouble sticking to my student budget; any suggestions?
Textbooks are huge expense for college students, so start by saving money on them as previously mentioned. Stay on your parents’ health insurance and skip signing up for the campus plan. Instead of going out on the town, use your student ID card for free on-campus entertainment and always ask for a student discount whenever you’re out and about. You might also be able to save cash by opting out of the campus meal plan and preparing your own food. Remember that this is a time in your life where no one expects you to have a lot of cash. Train yourself to manage your money and develop good spending habits now—your future self will thank you.