Starting a new chapter in life as a college student is both thrilling and daunting. But before getting lost in the maze of class schedules and extracurriculars, there’s one critical path every student must navigate – preparing for college financially.
Tuition fees have soared in recent years. Add to that the daily expenses, accommodation costs, and unforeseen expenditures, and you’ve got yourself a considerable sum to account for. Yet, the weight of these costs shouldn’t deter any aspiring student. With proper planning and a robust financial checklist, turning the dream of college education into a reality becomes much easier.
So, how does one gear up financially for college? It starts with awareness. Understand the costs involved, from tuition fees to daily living expenses. Next, come to terms with the fact that unforeseen expenses can and will arise. Finally, equip yourself with the right tools and knowledge, like the different ways to save money, grants available, and understanding student loans.
Many colleges have long to-do lists of things to complete to get your financial aid distributed. But there are some other things you’ll want to do before going to college, and your financial aid office may not have told you about them.
10 – Decide Who Pays for What
If you are a dependent, your parents might help you out with college costs. But make sure that you’re on the same page. For example, you might need to pay for textbooks or extras, like team uniforms or club fees. If so, you’ll need to figure out how to pay for these expenses.
09 – Consider Taking Out Private Student Loans
Your parents might not be able to pay for all your college expenses, so you might have to take out loans. Federal loans only cover so much, so you might want to look into private student loans to cover any remaining expenses.
08 – Don’t Forget About Deadlines
Meeting the deadlines for applying for financial aid will help you get as much money as you can. Keep track of them in a spreadsheet or notebook. Look at the deadlines for important scholarships or loans too.
07 – Look for a Job
Getting a part-time job can help you pay for textbooks or nights out with your friends. Look for a flexible job that will fit around your schedule. Many schools have offices that help you find work on or near campus.
06 – Make a Budget
Whether your money is coming from a job, a loan, or your parents, think about where that money will go. Make a list of your expenses, including things you don’t need but would like. Don’t forget to allocate a portion toward savings.
05 – Get a Checking Account
If you haven’t already, now is the time to open a checking account. Make sure you can get online access and that it’s FDIC insured. The best one won’t have a minimum balance and will have few to no fees since it’s hard for students to meet these requirements.
04 – Get a Credit Card
Credit cards are useful for emergency expenses and making purchases for college-related costs. You might use a debit card or a parent’s card for normal purchases, but this is a great time to start establishing your own credit.
03 – Challenge Yourself in High School
Getting good grades in high school will prepare you for college-level work. But a better GPA might also help with tuition. Some scholarships and grants are awarded based on academic performance, and you don’t have to pay this money back.
02 – Get the Right Financial Apps
Between work, a social life, and classes, there will be times when you need to manage your finances on the go. Many banks offer mobile apps that will let you handle basic needs, like transferring funds and cashing paper checks. Some apps also let you pay bills, open investment accounts, and manage credit cards.
01 – Estimate What College Will Cost
Look at the estimated net price of your degree. This is the total cost minus scholarships and grants. Some colleges have a net price calculator on their websites.
Navigating the World of Student Loans
College often introduces many to the realm of student loans. It’s a space that, although daunting, can be navigated smoothly with the right information.
For starters, there are two primary categories of student loans: federal and private. Federal loans, often seen as the more attractive option, come with benefits like lower interest rates and more flexible repayment plans. The eligibility for these loans primarily hinges on the Free Application for Federal Student Aid (FAFSA). This application evaluates factors like household income, enrollment status, and academic consistency.
On the other side, we have private loans. Originating from banks or financial institutions, these loans can be a bit trickier. Approval often depends on credit scores, income consistency, and sometimes even necessitates a co-signer. While these loans can be of great help, they often come with higher interest rates and stricter repayment terms. So, it’s essential to be well-informed and choose wisely.
The 50-30-20 Rule: A Modern Financial Compass
For many, managing finances can seem like navigating a dense forest. Yet, amidst the complexity, the 50-30-20 rule stands out as a clear compass guiding the way. So, what’s it all about?
This rule offers a straightforward approach to managing money. It suggests allocating 50% of your income to essential expenses like rent and groceries. The next 30% goes to your personal wants – be it that latest gadget or a weekend getaway. The remaining 20% is reserved for savings or debt repayments.
For college students, this rule can be gold. By ensuring essentials are covered, allowing some room for leisure, and prioritizing savings, they can strike a balance. Adopting this rule early on can pave the way for a lifetime of sound financial habits, ensuring security during college and beyond.