A College Education: These days it's essentially a necessity when looking for a job. Also, a degree
usually results in a higher income. But that education does not come without a cost, and a very high cost. Private college
tuition is upwards of $35,000 per year and that does not include room and board. Luckily, there are several ways to finance
a college education no matter what the cost is:
1. Government Student Loans (such as Stafford Loans and PLUS Loans)—these are
generally smaller loans but benefits include: low interest rate, no payments during school and your credit score is irrelevant).
2. Private Student Loans – These loans are with private banks and may not be the best option. These loans usually have very high
interest rates and the companies can change the interest rate to whatever number they want.
3. Grants and Scholarships –
Grants and scholarships are a great option and usually are given out based on merit. If you play a sport, instrument, have exceptionally
high grades or standardized test scores, you’ll probably qualify for scholarships. There are also grants given out based on
income level, contests and simply by applying for them.
4. Pay Yourself – Or have your parents or relatives help
pay for your college education. This option is becoming more and more popular due to the credit crisis and how difficult it
is to receive a loan. This requires hefty savings and maybe even a few jobs while in college. If you and your family have
been saving up for college for many years and have been putting money away in 529 Plans (a plan that invests money for a college education),
then you’re most likely well on your way to paying for college. However, many stock portfolios, including 529 Plans are down
some 30% to 50% due to the volatile stock market, which wiped out many people’s college funds.
So how do you save and
pay for college when you can’t afford the $50,000 per year price tag? Well, one option is to go to a less expensive school. According to www.finaid.org the average student loan debt upon graduation was over $23,000! These statistics pose the following
question: Is a more expensive school more beneficial than a less expensive school considering the tough economy we’re in right
now? That’s for you to decide. A higher ranked school might result in a higher income upon graduation. But a higher
ranked and more expensive school might also result in more debt upon graduation. Again, you have to weigh all of the options. HelpSaveMyDollars.com is trying to provide you with the facts!
Remember that student loans usually cannot be absolved in bankruptcy!
Your
First Credit Card
But once you’re in college, the money issue does not go away!! This is because credit card companies
often set up tents on college campuses to try to entice students to sign up for credit cards. The credit card companies usually
assume that college students do not know how credit cards work, nor are they aware of the financial trouble that can occur if they
are not used properly. And the credit card companies are right! To all college students, BEWARE of signing up for credit
cards at your college campus. The cards that the companies are offering to you at these tents on the campuses have very high
interest rates and are usually littered with hidden fees! Understand that any purchases made on a credit card must be paid off
at the end of the month or else interest will be charged! Many college students, not all, charge up tons of credit card debt
on nonsense (coffee everyday, drinks, restaurants, unnecessary clothing and electronics). Think about this: Let’s say
you already have student loans to pay off after college, the last thing you want is to have to add credit card debt to that!! The bottom line is, don’t get into debt, be responsible and frugal.
Now if you are about to enter college and do not have
a credit card but you want one and want to develop good credit, a great option is to open up a secured credit card. This is
a bit different than the regular credit cards for a few reasons. Secured credit cards are for people who have no credit (young
adults in college for example) or for people who’ve had a bad credit history and want to start again and re-build their credit. All you do is add money to the card as collateral. If you add $750, then you can spend no more than $750, or if you add $1,000,
don’t try spending $1,001, because you can’t!! Use the secured credit card for small expenses and always pay on time. If you are responsible with a secured credit card, this will not only help you develop a good credit score, but it will teach you
proper credit and spending habits, which are essential in order to be financially sound. With a good credit score (750 and above),
you’ll most likely be able to open up a traditional credit card. The drawback to secured credit cards is that they do have yearly
fees and exorbitant interest rates (that’s another reason to always pay the balance off). Look around for a good secured credit
card online and watch out for fees.
One last point about your first credit card: Many department stores will try to convince
college students who’ve never had a credit card before to open up a credit card with them. Department store credit cards may
offer you a discount at that store, but the interest rates are usually very, very high. Beware of department store credit cards
as well!
Keep expenses as low as possible when in college. These frugal habits will hopefully continue once you get a job
and start to bring in income and then you’ll really be able to develop savings.
Sharing Expenses
If you’ll be living with
a roommate while in college, money must be discussed! Who will pay for all of the groceries? If it’s an apartment, how
do you divide up the bills? One person should not be responsible for paying for everything and one person shouldn’t be responsible
for keeping track of the expenses. It’s a collaborative effort. Once a month, when the bills start coming in (if it’s
a dorm, there may not be many direct bills, since the utilities are usually included in the tuition for room and board if you’re living
on campus) you and your roommates should discuss what expenses you have, how you all are going to pay them and more importantly, how
can you all lower those expenses. Use HelpSaveMyDollars.com’s Expense Calculator for help with this process. In
order to avoid conflict, be sure to initiate a financial plan between you and your roommate(s).
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