Columnist and student-loan survivor Zina Kumok, 26, is back with some good insight about money and college.
College is one of the best times of your life. Everyone says it for a reason — it’s true. You’re independent, you’re making new friends and you have opportunities beyond belief. And it’s also the official start of your financial life. You will have access to debt, credit cards and loans – money conveniences that can make your college experience possible and even more fun, but derail your life afterwards for years. Trust me, I know. I had $28,000 in student loan debt when I graduated from college – and honestly, I had no idea what I was getting into.
Here are some useful tips to help you prepare — even before you buy that shower caddy for your dorm bathroom.
- Look at your loans.
Before you head off to college, make sure you know exactly how much that diploma will cost you. When students at Indiana University (where I graduated from in 2011) were told in a letter last year what their loan payments would look like after graduation, their borrowing went down 11%. That may not sound like a lot, but it amounted to $31 million less in federal Stafford loan disbursements in the nine months that ended March 31, 2014 from a year earlier, according to stats from the U.S. Education Department. Instead of borrowing the maximum amount you can ($31,000 to $57,000 in 2015), crunch some numbers and see if you can possibly take out less in student loans.
Write a list of how much you are receiving in grants, scholarships and parental aid. Maybe you don’t even need the loans! I know so many people who took out the max amount because it was available to them. You tend to spend how much you have. If you only have $1,000 to last all semester, then that is how much you will spend. If you have $5,000, then you will spend that much.
College loans average $29,400 per student. If you can take out 20% less each year, you’ll save yourself thousands of dollars in interest payments. If you dream about backpacking to Europe after graduation or taking a year to teach English in China, you don’t want your loans to drag you down. Those loans could haunt you for many years to come, even when you are getting married, buying your first house and starting a family. The less you take out up front, the faster you will pay them off. If you need more help understanding how interest works, check out the link to my interest column below.
- Write out a budget.
Whether you’re living in the dorms or getting an apartment off-campus, it’s easy to gauge how much money you’ll need. Tally up your rent, car, utilities, insurance, groceries and fun money. Set aside at least $100 for emergencies – you never know when your car will get towed or when you’ll need to pay for a ticket.
Most colleges offer resources that explain the average cost of housing, books and even campus life. Researching this will help you avoid the inevitable sticker shock that comes when you realize your biology textbook costs more than your rent — really.
Once you see how much college will cost you, you will be better prepared to see if you need to get a part-time job or if you can decline your student loans. Most students don’t know the price tag of college when they sign up. That’s crazy when you consider that no one buys a car without knowing the price. These are costly decisions and you should know what they mean to your bank account.
- Scope out campus jobs.
Before you arrive on campus, you can see what places are hiring. You might qualify for work-study or need to apply on your own. Some of the jobs I had in college included working at the front desk of my dorm, writing for the student newspaper and working at a call center outside of campus. A friend of mine worked at our college cinema and watched movies for free. I’ve known people who worked for professors and gave college tours for the admissions office. You can also sell plasma and participate in psych experiments, both of which accommodate flexible schedules.
Ask around if anyone knows someone who is hiring – most of the gigs I found came from personal referrals. The college also tends to post job openings. Some jobs allow you to study when you’re done with your tasks, which can be great if you spend that time reading Anna Karenina instead of Facebook stalking your classmates.
Jobs are great for the obvious reasons – they help you pay for living expenses and those inevitable college adventures and road trips. And it’s always good to have more experience before you enter the job market. Your bosses can act as references for future employers and it never hurts to have something to add to your résumé. It might help you to land prestigious internships and earn valuable scholarships.
Plus, it will help you manage your time and figure out what you really want to do. I worked at my student newspaper as an editor while also working the front desk of my dorm. The first job didn’t pay great, but I did it for the experience, since I was working toward a journalism degree. The second paid well and allowed me to save money for my summer in London on a study abroad trip.
You don’t need to have everything figured out before you go to school, or even after. But if you do your research, stay away from debt and build up a small savings, you’ll be even better prepared for what your future brings.
- Bloomberg Business: How Students at a U.S. University Borrowed $31 Million Less
- U.S. Department of Education Student Loan Information
- CNN Money: The Average Student Loan Debt
- Yahoo Finance: How a Mother and Son Got Locked in $115,000 Student Debt Trap
- KWHS: Two Young Women Share their Struggles and Success with Student Loan Debt
- KWHS: Zina Kumok on Interest
Read the Bloomberg Business article about Indiana University, which is linked below. Discuss what you learned about financial-aid literacy. Which student’s story did you relate to?
Would you add any money-wise tips to Zina Kumok’s column? Read the KWHS article Talking Money: Students Reflect on a Year of…Socking It Away for College for inspiration. What were some of the ways these students prepared for freshman year?