College is an exciting time of new experiences, learning, and figuring out the rest of your life. Unfortunately, many of the mistakes we make in college can shape our future more than we might realize.
If you rack up student loan debt or credit card debt, you’ll be dealing with student loans and other poor money decisions for much longer than the four years it took you to create them.
So before you take out that extra private loan, charge a trip to Cancun, or drop that class mid-semester, consider these common money mistakes college students make.
Choosing a Pricey School
Deciding on a college is an exciting, nerve-racking choice. For many, the impulse is to just go to the highest-ranked school they get into, but students should factor in the cost of the college and the value it offers when making this important decision.
Generally, a public college will cost less — often far, far less — than a private one, and in-state tuition is going to be lower than the out-of-state rate. Many state schools rank alongside the most prestigious private universities.
Also make sure to weigh the real cost of the education and not just the sticker price: A good aid package from an expensive school might bring down the price tag far enough to make it viable. Likewise, remember that you’ll be paying interest on the money you borrow — so a $30,000 loan may end up costing you $40,000 or more over the long run.
There are other financial factors to consider as well. Would attending a particular college mean that you could live at home? This could end up saving you thousands. Even if you live on campus, at the very least, a college closer to home will save you on travel expenses during breaks.
What about the cost of living where the college is located? Living in New York City for four years is going to cost a lot more than if you go to school upstate, for example. Would attending one college over another mean a greater possibility of getting a scholarship, or being able to work while in school?
Not Meeting With Academic Advisers
Your academic adviser is crucial to your success. They can help you sign up for the right classes at the right time so you’re not taking any extra courses that don’t count toward your degree. Not meeting with an adviser can lead to wasting thousands of dollars on unnecessary classes. What’s more, if you miss a required class one semester, it can throw off your entire track to graduate on time.
Making Poor Academic Decisions
Dropping classes after the “drop date” means you’re essentially ripping up money. Before you drop a class, understand when the deadline is for a full reimbursement. Not taking your classes seriously is also a mistake. If you fail a class, or even get under a certain grade, it may not count toward your degree.
Missing Out on Scholarships
Only 28% of college students say they’ll use scholarships to fund education, according to the Institute of College Access and Success. Don’t miss out on free money to fund your education. Apply for as many scholarships as you can. You can find scholarships through the school you’re planning to attend, college search engines, and any types of organizations you or your family are affiliated with. For example, as a prospective journalist or writer, you can scope out various professional associations – Association of Women Journalists, Society of Professional Journalists, National Association for Hispanic Journalists, and more.
Abusing Credit Cards
Don’t be surprised if you see booths or tables set up around your campus tempting you with a free T-shirt or water bottle to sign up for a credit card. The promotions work: The average college student will leave school with $3,000 in credit card debt, according to CNN. That’s a lot to pile up before you even have a real job, and it can realistically be a lot higher depending on your spending.
Credit cards can be helpful if managed properly. If you’re able to pay off the balance, it can help you build a good credit history, which can help you get better interest rates on loans later on or even qualify for an apartment.
However, if you’re making poor decisions – charging rounds of drinks at the bar, spring break trips, or clothes, you’re going to end up racking up credit card debt. With interest, you’ll be spending much more on these items than you think.
Not Filling Out the FAFSA
The FAFSA, or Free Application for Federal Student Aid, is what you fill out to qualify for federal aid. This can come in the form of grants (free money you don’t need to pay back), eligibility for work-study, and federal loans — which can come with lower interest rates, subsidization, flexible payment options down the road, and even the chance for loan forgiveness.
Unfortunately, many students fail to fill it out because they miss the deadline, forget, or they simply don’t think they’ll qualify for any aid. Sixty-five percent of students don’t think they’ll qualify for grants, according to the Institute of College Access and Success. But that’s no reason not to try. The standard deadline is June 30, but that can vary depending on the school — s fill out and submit your FAFSA as soon as possible after Jan. 1 for the following school year.
Disorganization can really cost you. As mentioned with the FAFSA, there are important deadlines to keep track of. There are deadlines to apply for scholarships, to drop a class, to register for classes, to apply for graduation, and so many other important events. Keep track of these dates.
Besides keeping your collegiate calendar organized, keep your finances in check, too. Like many college students, this may be the first time you’re on your own. Overdraft fees and late charges will cost you money and possibly hurt your credit.
Not Having a Budget
College students are notoriously broke. And it can be tricky to stick to a budget when you have very little money, but it’s essential to keep you from overspending.
Stick to a budget so you can avoid taking out additional loans or turning to credit cards to pay for essentials. If you’re using student loans to pay for living expenses, you’ll want to be sure you can stretch that money out for the entire year.
Skipping the Job
College is a balancing act. Between classes, homework, studying, and a social life, it can be quite difficult to maintain a job. But not working can be a mistake for two reasons.
First, it’s a good financial move to take on a part-time job during college. Any money you’re earning is money you don’t need to borrow, which will reduce your student loan debt. If you’re balancing a full, difficult course load, opt for a job on campus or affiliated with your college that can offer flexibility.
Second, it’s a great way to build your resume, get contacts and references, and learn essential workplace skills like time management, which will help you down the road.
Misusing Student Loans
With just a few simple clicks, you’ve taken out a student loan and received an infusion of cash. It can feel a bit like fun money, but the reality of dealing with that debt is going to hit you after graduation, so be careful with it. Here are some common loan mistakes:
- Going with private loans first: Private loans are generally going to have a higher interest rate than federal loans. Federal loans can also come with beneficial perks — subsidization, more flexible payment plans after graduation, and options to have the loans deferred or even forgiven entirely. Failing to fill out the FAFSA is your quickest way to forgo federal loans for costlier private ones.
- Not trying harder to avoid loans all together: Whether federal or private, that loan is going to be looming over your head and waiting for you after you graduate. Don’t make the mistake of at least trying to go loan-free. Attend an affordable school, apply for scholarships, work while in school, apply for grants, and live on a strict budget to see if you can realistically swing it.
- Taking out more than you need: Anytime you’re using loans to pay for something, ask yourself if this is without-a-doubt necessary. If you need loans to cover tuition, fees, and supplies, and you have exhausted all other ways to pay for this and save, that is a necessary use. If you’re taking out a student loan to cover a Spring Break trip you wanted to go on with your friends or using loan money to decorate your new apartment, this is a bad use of loan money.
- Not understanding the loans: Don’t blindly take out loans and deal with them later. Understand the interest, what you are going to owe when you graduate or leave college, what are your payment options when the loan is in repayment, and how long will it take you to pay it off.
- Not paying interest in school: If you receive any federally subsidized loans, the government will pay the interest on them while you’re in school. But for any other loans, that interest is accruing. Making small interest payments while in school can help alleviate some of that debt when you graduate. Plus, it will get you in the habit of factoring student loan payments into your monthly budget and serve as a reminder of the debt — which may help stop you from making the next mistake…
Misusing Student Loans
Don’t spend frivolously. Consider every purchase before making it. Here are some common money mishaps college students make with spending:
- Going out/entertainment: This is a time in your life where being cheap is pretty much the norm, so take advantage of it. You don’t have to give up your social life or forgo friendships to save money. Instead of heading to the bar, have friends over for drinks. Skip going out to dinner or ordering take-out to cook at home. There’s so much free entertainment on campus – concerts, sporting events, films, club and organization sponsored activities, and intramural sports, for example.
- Having a car on campus: Many college campuses are easily covered on foot or bicycle. Some even offer free bus service throughout campus and to hot spots such as the grocery store or downtown shops. A study by AAA estimates that owning a car will run you between $8,000 and $9,000 per year, and that doesn’t even include car payments or having to pay for a permit on campus.
- Overspending on housing: Many colleges require you to live in a dorm your first year, but after that you’ll usually have the option of venturing off-campus to an apartment. Compare the costs of living in a dorm to what you’d pay to rent an apartment — and remember to include utilities such as heat, electricity, and Internet, which were probably included in your dorm’s room and board fees. You might be better off staying put, although splitting those expenses with several roommates can lower the cost considerably. You can also apply to be a dorm RA (resident assistant) for the possibility of free housing.
Failing to Think Outside the Box
Traditionally, you graduate high school, head off to college that fall, and aim to graduate four years later. But there are an abundance of other options that could help you save a lot of money that most students don’t even consider. Here are a few ideas:
- Save before college: Consider working prior to starting your college track. While some say this will decrease your chances of actually going to college, if you’re determined to go, it can help you save up a good chunk of money that you won’t have to borrow.
- Try to graduate early: During a regular semester, if you’re paying full-time tuition, many times you can take up to 18 credit hours, instead of the traditional 15 credits, for the same price. By taking an extra class each semester, you could graduate a full semester early, saving thousands of dollars. Taking classes over summer or winter breaks at a cheaper community college can also help you shave off a semester — just be sure those credits will transfer.
- Test out of classes: Ask about testing out of a class so you don’t have to take it. If you took AP classes in high school, they could count toward your college credits, as well.
- Attend a community college first: Consider knocking out your general education courses at a community college, where tuition will generally be much cheaper than a four-year school. To ensure you’re not wasting any time or money, know which college you expect to transfer to later and be certain all of your courses will transfer over and count toward your degree there.
- Live at home during college: A huge part of the college experience is living in the dorms, being independent, and learning to live on your own. However, it’s going to be much more expensive than living at home. According to Twentysomething Inc., 85% of college graduates plan on moving back home anyway; why not do it while you’re in school and give yourself a better shot at financial freedom upon graduation?