5 things every college freshman should know about money
2016-12-27
Classes are starting soon for the class of 2019, so we
dedicate this week's Money Minute to you guys. Here are 5 things every college
freshman should know about money:
Student
loans aren’t free. Many
students make the mistake of borrowing more than they need, so keep this in
mind: the less you borrow, the less you’ll have to pay back after you graduate.
Sure, you can use student loans to pay for your student fees, books, room and
board and meal plan, but there are ways to cut those costs and lower the amount
you need to borrow. For example, you could ditch the dorm and rent a place with
friends to save on housing. You could get a job as a resident assistant and
live in the dorm for free. To save on food, try skipping the meal plan and
learn to cook instead. Your books don’t
have to be brand new either. It
might make better financial sense to spend a year or two at a low-cost
community college and transfer to a more expensive four-year school to finish
your degree.
Don’t
give up on scholarships after your first year. Keep a list of scholarships
you’re interested and make it a point to keep applying.
To get
an idea of how much your student loan bill will be after you graduate, use this monthly payment calculator from Bankrate.com.
Credit
card companies aren’t your friend. A smart way to build credit in college is to
become an authorized user on a parent’s credit card. Yes, you can get a card of
your own, but be careful about interest and fees — the average credit card
interest rate today is nearly 15% (those awesome 0% APR introductory rates
sound good, but remember, they're only temporary!). If you carry a balance on
your card, those interest fees will just keep growing out of control.
Don’t
make the mistake of thinking that you’re building credit just by charging a
bunch of stuff on your card. You build credit by paying your balances off in
full each month. So try this: Use credit to pay for ONE small recurring
bill — like your
cellphone — then pay the
whole thing off each month. That means no shopping sprees, no study abroad
trips, no spring break getaways -- unless you can afford to pay them off
immediately. This will take serious self control but you’ll be rewarded for it
with a stellar credit history after you graduate, not to mention good saving
habits. Good credit will make it easier to qualify for low-interest car loans,
rental housing and it can even make you look better to potential employers.
Your
major does matter. College is a huge financial investment, and you want to go
in with some sense that what you study will get you a job that pays the bills
-- including those student loan bills. Check starting salaries using these
tools from the Hamilton Project or Payscale.com for your field. If your expected
earnings look a lot less than what you’ve borrowed, maybe it’s time to rethink
your major -- or your school of choice.
You
have to apply for financial aid every year. Lots of families don’t realize that the Free
Application for Federal Student Aid (FAFSA) isn’t a one and
done deal. You have to reapply for student aid every year to qualify for student
loans and work-study programs. If you miss the deadline, you’re out of luck.
Deadlines vary by state. Check out your state’s deadline here.
Internships
are vital. Forget
your GPA -- surveys have found that job experience is the most important thing employers are looking for in college
graduates. Choose your internships and part-time jobs carefully while in
school. Check in with your college’s career services department and ask for an
appointment with an advisor who can help you find internships that fit your
interests. Nobody wants to hire a graduate with an empty resume.
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