Finding the Right Financial Path: 7 Missteps to Avoid When You’re in College
Filed under: Animation & Effects
April 1, 2015
For many college students, managing money, credit cards, and loans can seem like learning a foreign language, and, with so much else going on, it can be easy to overlook some of the important details and information you really need to know.
At The Art Institutes, our Student Financial Aid Officers can help you to develop a plan for your educational expenses, identify ways to make your education more affordable, and walk you through the process of applying for financial aid. As a student, you’ll also have access to a site called iGrad in the Student Portal, which offers videos, articles, and interactive tools that can help you to take command of your financial future.
Still, it never hurts to do your financial research and preparation now to make sure you avoid some of the most common missteps—whether you’re already a student or just starting to think about school! Here are a few of the most frequent financial situations college students may find themselves in, and what you can do to prevent them from happening.
1. Selecting Private Loans over Public Loans
Many college students fail to take advantage of federal loans having better interest rates than private loans. Federal loans also have more flexible schedules regarding how long you need to pay them back, and, in a select few instances, can even be deferred or completely forgiven. Filling out the Free Application for Federal Student Aid (FAFSA) is the easiest way to find out what federal loans and other federal student aid for which you may be eligible (get our tips for filling out the FAFSA here). Financial Aid is available to those who qualify.
2. Taking More Loans Than Needed
Keep in mind that loans are not your sole option for paying for school. Don’t rule out grants, scholarships, or even the benefit of making small monthly payments. You may also have opportunities to transfer in college credit—which could save you thousands. Look for AP (Advanced Placement) classes in high school or try to test out of entry-level college courses through CLEP (the College-Level Examination Program). And, remember, regardless of the loans you may be eligible for, accept only the amount that you need for tuition and related expenses. After all, you’ll have to pay the loan back later, plus interest, so if you don’t really need it now, don’t accept it.
3. Missing Deadlines
Financial aid and scholarship applications have strict deadlines. Procrastination is not a habit limited to high school or college students, but procrastinating now can mean that you end up missing out on big financial opportunities. Funding is available from a variety of organizations (including scholarships and grants at The Art Institutes), and, by missing your deadline, you can miss your chances of qualifying for that aid.
4. Overlooking the Impact of Interest
Some loans don’t start accruing interest until you graduate, but other student loans may rack up interest while you’re still a student. If you can, you’ll want to pay off interest on these loans immediately. Otherwise, that interest simply accrues, and can quickly grow to large sums of debt that you weren't expecting.
5. Not Keeping Track of Credit Card Purchases
Just about everyone makes an occasional impromptu purchase, but try to avoid too many unplanned shopping sprees (for anything from clothes to video games), especially if you’re putting them on your credit card. If you can’t afford to pay for it in the next month, now may not be the best time to take a lengthy vacation, purchase new furniture, or spend a big night out on the town. There's nothing wrong with having some fun once in a while—or using your credit card to pay for it, but try to look for low cost alternatives, and keep track of your credit card balance and fees. On average, students leave college with $3,000 in credit card debt, but that doesn’t mean you have to do the same!
6. Going without a Budget
If you haven’t already, you should learn the basics of making a budget. Start by breaking your monthly spending into categories. Think about what expenses are necessary and decide on a realistic, affordable monthly number for each category. You can probably cut expenses in areas such as shopping, eating out, and entertainment. It’s important to stick to your budget to ensure you don’t need to take out more loans or rack up debt. As part of your budget, do your best to build up your savings, so that you have an emergency financial cushion should you be hit with a large unexpected expense.
7. Letting Your Grades Slip
Good grades aren’t just important for your resume; they can also help you to save money. Having to retake a class because of a failing grade can be a serious financial hit. Also, be sure you don’t drop a class after the drop date, or you’re unlikely to receive a full reimbursement.
Moving Forward with Smart Financial Decisions
Ultimately, a college degree is an asset that can pay dividends all your life. Make your college experience the right one, and be smart with your financial resources while you work toward graduation. If you do make a mistake, forgive yourself and work to get back on the right track. You can always ask for help and don’t hesitate to reach out to your financial aid team with any related questions that come up!
Ready to discuss your options for paying for college? Call us at 1.888.624.0300!
Learn more about our programs.Get Brochure