Living on a Student Budget
Students must reapply for financial aid every year. That means filling out a new FAFSA, too. But after the first time around, the application process seems much easier.
The greater challenge is surviving on a student’s budget and not racking up unnecessary debt. This is a dangerous time in the life of a borrower, and students truly need help.
Did you know that:
52% of student borrowers surveyed said they felt that student loans enabled them to live a “playful” lifestyle while in school
BUT
30% of borrowers in school did not know how much they had borrowed
63% didn’t know the interest rates of their loans
42% did not know when their repayment would begin
AND
50% of borrowers in repayment wish they had borrowed less*
Loans may seem “free” when students are in school. But soon enough, repayment will begin, and monthly bills will be due. Spending wisely when students are in college instead of taking out more loans to cover their expenses—or running up credit cards on frivolous purchases—will put students on the path to financial success.
Students need to make a budget and stick to it. ASA’s advice:
- – Students should avoid credit card misuse. They need to keep in mind that, with interest and fees, purchases end up costing at least 115% of the sticker price.
- – Rent is a good place for students to cut down their budgets. Students should consider living with roommates and compromising on location. After all, it’s all about the company, right?
- – Living at home is the best way to save money—and possibly get free laundry!
- – Students shouldn’t forget about eating in and filling coffee thermoses and water bottles at home. Hosting friends for a potluck or dinner party, making s’mores, or popping popcorn for a movie night are inexpensive ways to have fun. Students should definitely save the restaurants for special occasions.
- – Students should also shop around. All types of deals exist for those with a student ID, from gym memberships to checking accounts to cell phones.
Living sensibly while they’re in school will make students thankful when they reach the next phase—repayment.
* From “Students’ Perceptions of Their Education Debt and Its Impact on Life After Graduation,” Hira, Anderson and Peterson, 1996.
researching > applying > budgeting > repaying
