College is a time of freedom and independence. But with that freedom and independence also comes the sobering realization that for the first time in your life you might have some real financial obligations. The costs of getting an education can be daunting, but thinking strategically and making smart decisions can help make your college dream a reality. Below are a few guidelines to consider.
Picking the Right School
The very first financial decision that you make regarding college will be choosing which school to attend. Tuition costs can vary widely and it is important to keep these costs in mind when selecting a school. Tuition fees for four-year programs can range from a few thousand dollars a year for in-state tuition at a state school to over $50,000 a year for some private colleges and universities. The cost of housing, food and other activities will also vary depending on where your school is located. The U.S. Department of Education’s College Navigator allows for a convenient side-by-side comparison of schools and the average costs associated with each.
Paying for College
After you’ve decided which school you are going to attend, the next step is figuring out how to pay for it. Sallie Mae, the country’s top financial services company for student loans, found in a recent report that average spending on college in America for the 2012-2013 academic year was $21,178. The study also found that about 30% of costs on average were paid for by grants and scholarships, while parents paid about 36%. Students, meanwhile, paid 29% of college costs nationally, with 11% coming from savings and income and 18% being borrowed . Outside of family help, it will be up to you to secure funding, and here are a few good options:
- Scholarships– Colleges often offer scholarships for everything from academic merit to athletics performance and these offers should be considered when choosing which school to attend. Apply for all scholarships early, and ask your high school guidance counselor about which opportunities to apply for.
- Financial aid– Financial aid is given out on a need basis to pay for your education. Aid can come from several sources, including the federal government, the state you live in, the college you attend and nonprofit organizations. Click here to start, or ask your high school guidance counselor.
- Student loans– Today there are several options for student loans, including federal loans, loans administered by your college or university and private student loans. Private loans often don’t offer the same repayment or deferment options of the federal loans, but they can be an important option for students who don’t qualify for other government assistance.
One-Time Expenses vs. Weekly Budget
One important thing to remember about college expenses is that they usually take two forms: one-time expenses and regular weekly costs. Weekly costs include things like food, laundry and extra-curricular activities that are relatively consistent through the semester. You should create a weekly budget for these types of expenditures and stick to it. Other costs will be larger one-time expenses that generally occur at the beginning of each semester, like books and items for your dorm. These expenses can cost thousands of dollars, and it is important to have a plan to pay for them. One helpful way to pay these bulky costs is to dedicate money saved from your summer job or internship.
Work-Study or Part-Time Job
While your main focus should be class work, a part-time position can be very beneficial as long as you don’t spread yourself too thin. Federal work-study jobs employ students with financial need in part-time jobs that can either be on-campus positions or off-campus jobs working for a local nonprofit or public agency. Work-study jobs typically range from 10 to 20 hours per week. If you don’t qualify for a work-study job or are looking to go another route, a part-time job can be an excellent way to earn extra cash. Whether you want to deliver pizza, bartend or work at the mall, many employers around universities look for students to staff their businesses. Many schools also offer part-time jobs outside of the work-study program, so check with your college advisor.
Your First Credit Card
It can be a big responsibility, but getting a credit card for college can also be a great way to help manage big purchases and plan for emergencies. Freshman year is a good time to start building a credit history, which can help you in the future with things like getting a car loan or starting a business. Look for a student card with a low APR and a credit limit that you would feel comfortable owing to a bank. If you don’t qualify for a credit card, having your parents co-sign for a card is an option, but an option that also presents challenges.. A recommended alternative is for your parents to add you as an authorized user on an existing credit card with a low limit. This method can also help build your credit and can help you work towards a bright financial future.
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