Most students who enter college don't consider all the costs they will have to deal with once they graduate. They're thinking about their new-found independence, wondering if they're going to make good grades or about the next frat party. How to pay for school, a car, an apartment, and considering work opportunities gets pushed to the back burner. This is a bad habit to get into.
First off: college is expensive. You've heard the old saying, "It takes money to make money." This is certainly true of any business. It's especially true when it comes to college. You're investing in your future, and it aint cheap.
In 2012, the average cost for in-state public college was $22,261 a year according to the College Board. For private colleges, the average was $43,289. Imagine 2014. These costs can include tuition, housing, books, computer lab, gym, library and anything else your university will charge you for.
If you're fortunate enough to get a scholarship, you don't really have to worry. The costs are completely covered. A student loan will also cover costs, but you're going to have to start paying it back 6 months after you graduate.
That's fine, you say. Why worry?
You still have to get a job that will cover your cost of living — in a bad economy. Plus, you have to consider finding a place to live, rent money, car payments, furniture, utilities, cable, internet, cell phone. The list goes on. Don't wait until after you've graduated to start figuring this all out. Start now.
Let's take a look at your student loan. You can do something about reducing the amount you have to pay back later. One way is to use less of your loan. Here are a couple of ways:
Get a roommate: Housing can cost anywhere from $9,205 to $10,462. An easy way to save on living expenses: get a roommate. You'll probably need to establish some ground rules so that you maintain your sanity. But if you're saving hundreds of dollars, do you really care about your roommate's incessant humming habit?
Buy used textbooks: According to College Board, textbooks can range from $1200 to $1244. That's a pretty penny. You don't have to buy them brand new. When possible, buy your textbooks from used bookstores or online. Even your college book store sells used books. When you're done with the semester, you can always sell them back.
Take advantage of school meal plans: Many colleges offer meal plans to students, and these can be a great way to save money. If you're not much of a cook, then this can be really convenient. If you don't like cafeteria food, you're on your own dime. Ideally, you would have checked out the cafeteria before coming to university.
Alternative Transportation vs Car: Although not possible at every college campus, if you are able to use public transportation such as the bus or subway, doing so can save you some money. Owning your own car is much more fun, however. You can move around as you please. Go when you want to go. But there are costs to having a car: gas, car insurance, maintenance. You can spend anywhere from $2,527 to $3,201 yearly. So it's not surprising that students may steer clear until graduation. On the other hand, when you graduate, you're going to need a car to get to work. A car, while somewhat costly, would be worth saving up for while you're a student, even if it's used.
Turn in Unused Funds: This is probably the easiest way of saving money on your student loans. If you have money left over after paying all of your school expenses, turn it back in. That's less money you have to pay back. Most students will use it all. The wiser ones may use it to get a car or for moving expenses. Typically, the money is used on frivolous purchases. Therefore, it comes as a shock to many graduates that they have to deal both with a loan accruing interest as well as their newly acquired living expenses. Learn in advance how to prepare for things like this.
So how can you go about doing that?
Work: When possible, get a part-time job, even if it's just for 20 hours a week. You will definitely earn money, even if it's a small amount. You also learn to manage your school work, your work hours and how to become thrifty which is a valuable trait. These skills teach you to become resourceful and make the most of your time.
In most college towns, there are plenty of part-time jobs available. Waiting tables and food delivery might mean odd hours, but they often pay well. Working as a university librarian is a great way to make money without losing too much study time. Plus, you've established a good work ethic that would be impressive to future employers.
Save and Develop a Budget: When you have a job, the temptation to spend on whatever you want is very high. Establish a budget and stick with it. Get into the habit of saving a portion of your paycheck, perhaps 5% to 10%, for future expenses. By doing so, you learn patience and develop a keen eye for choosing quality products.
It seems like a lot of things to consider, but thinking long-term helps you to make sound financial judgments. As you practice making decisions and managing yourself as a student, you build life skills that will sustain you through the rest of your life.