Very few students go through their college years without borrowing money to cover their school related costs and expenses. The rate of borrowing in the form of student loans has continued to soar over the years. Unfortunately, not all students and their families keep close track of how much is being borrowed over time. While it’s true that the loans don’t have to repaid until after graduation, unnecessary borrowing could cause the amount owed to balloon, posing a difficult financial obligation to meet in the years to come.
To avoid a staggering repayment amount it is crucial that students and their families understand how to borrow smart. Learning to find a balance between what should be taken out in the form of loans and what should be paid for out-of-pocket is an effective approach for money management during the college years.
Borrow for Priority Purposes
Student loans are meant to cover the costs related to college tuition and fees, supplies, textbooks and other expenses. Those factors are considered priorities. Taking on additional student debt to cover things like study abroad programs, Greek living and other activities are not.
There is nothing wrong with wanting to dive right into college life and all the experiences that come with it but in terms of money, students will save themselves a lot of grief by not borrowing money to pay for things that aren’t mandatory for their education.
Want to study abroad or join a fraternity/sorority? Get a job and/or start putting away a little bit of money each month into a special checking account that’s meant for those indulgences. School money should never be mixed with play money.
Get a Job
It is entirely possible to be in college full-time or part-time and hold down a job at the same time. Students on campuses all over the country do it everyday. Is it fun? Not always. Does it add more pressure and stress? Of course. Is it worth it? Definitely. Whenever possible, pay for things out of your own pocket. As long as you’re earning a steady paycheck, you’ve got funds to cover basic living expenses. Doing so means relying less on borrowing money via student loans or if taking out loans can’t be avoided, at least having a job means a student doesn’t have to take out as much as they normally would.
Set a Realistic Graduation Date
No one can predict the future but if a student has a general idea of what year they’d like to graduate, they can then use that information to create a road map towards reaching that goal. When taking out loans, factor in how long it might take to graduate. Not all degree programs can be completed within four years and if students need to stay in school longer, it could affect the estimated amount owed after graduation. Crunch numbers to find out if there is a way to cover the costs of out pocket for more than four years or how much additional debt would need to be taken on if that’s not a possibility.