The Ultimate Guide to Student Finances

Many college students have trouble managing their money while they’re in school. But with a little bit of planning, thought, and organization, you can hold off debt. If you get creative and take charge of your finances now while you’re a student, you’ll stand a better chance of not living like a student years after graduation.

Understand Your Education’s Hidden Costs

Before you even attend your first college class, you should have seen your tuition statement. It includes the obvious costs associated with your education, like tuition and other operating fees. But it won’t include the hidden costs of pursuing your degree, and it’s crucial to understand them now so you can plan and budget your money around them.

  • School supplies. Figure out how much money you’ll need to study effectively. Besides books and other supplies, decide whether or not you’ll need a computer, a printer, and special equipment for class (like lab materials.)
  • Housing. Even if you decide to live in the dorms, you’ll still need to pick a dining plan that works for your eating habits. If you’re living off-campus, be sure to determine how much your rent will cost for the year, with allowances for utilities, Internet access and cable, and other costs.
  • Medical expenses. Does your school require evidence of immunizations prior to registration for classes? Are you prepared to pay for unexpected medical expenses and medication? If you aren’t covered under your parent’s medical insurance, do you plan on purchasing a plan out-of-pocket? Fortunately, more than half of all colleges and universities sponsor their own health insurance plans. These plans are relatively inexpensive ranging from as little as $30 up to $2,400, with the average premium costing around $850 per academic year. However, these plans are usually meant to prevent or contain diseases from spreading on-campus, so they primarily cover immunizations and occasional testing and treatment for sexually transmitted diseases. They are not typically designed to cover major health problems or chronic conditions.
  • Travel. Consider how much airfare, a train ticket, or gas will cost you to travel between your hometown and your school. Be aware that prices can fluctuate dramatically during holidays and the summer, and budget your trips for the next few years if you can.
  • Miscellaneous costs. This can include laundry, your cell phone plan, TV and Internet, parking, and anything else that you spend money on frequently.

Apply for Financial Aid

The sticker price for your education might seem scary, but don’t let it deter you from applying or attending the school that’s right for you. Financial aid is available to help students realize their goals in college and can come from a variety of sources.

Financial aid can be any kind of funding (like grants, scholarships, loans, and work-study arrangements) that helps you pay for college. Usually based on need, aid can come from:

  • The federal government
  • Your state government
  • The college or university you plan on attending, and
  • Private sources.

Colleges award aid by asking you and your parents for information about your finances. They’ll ask how much your family can contribute to your education, and then they’ll subtract that amount from the total cost of attendance. It can all seem like a bunch of confusing calculations, but colleges and universities all use the Free Application for Federal Student Aid (FAFSA) to determine your expected family contribution. When you file your FAFSA, the government will use a formula to estimate how much money you’ll need to make up the difference between your family’s contribution and your educational costs.

Federal financial aid will be awarded to you in three ways:

  • Grants, which are free money for college expenses. You don’t have to pay these back. You’ll qualify for these based on your financial need as demonstrated on the FAFSA.
  • Work-study employment, an arrangement that lets you work certain jobs to help pay for college costs.
  • Loans, money you can borrow. You have to pay these back once you graduate, and with interest.

Reduce Your Costs with Scholarships and Grants

Securing scholarships and grants will reduce the actual price of your education. Federal grants are awarded by demonstrating need on your FAFSA or through the college you’ll be attending. These include the Federal Pell Grant, the Federal Supplemental Educational Opportunity Grant (FSEOG,) and the TEACH Grant (offered to students under the condition that they teach low-income students after graduation.) Check their respective websites to see if you are eligible.

Scholarships help offset the cost of your tuition and other living expenses, giving you room to breathe financially and helping you avoid more loans. Most scholarships are awarded on the basis of your merit as a student, but often take into consideration who you are as an individual. Get creative, and think about your strengths as a student, an athlete, an artist or musician, and a member of your community.

You’ll have to compete for this money by writing essays, submitting your grade transcripts, and asking teachers and other mentors to write recommendations or evaluations on your behalf. Scholarship committees get plenty of applications every year from well-qualified candidates, so make sure that you have crafted the best possible application you can.

Shop around for the scholarships for which you’re eligible. Look for scholarship opportunities in three places: in an online directory service, in your community, and through your school.

  • Directories: Use Fastweb, Petersons, and the College Board to search for opportunities for free. You can also fill out a profile so that you can be notified as new opportunities that suit you become available. Never, under any circumstances, pay for a directory service. They’re usually designed to rip you off.
  • The community: If you’re in high school, speak to your guidance counselor or college counselor. Local businesses and philanthropists (people who wish to share their money with others) will turn to them first when advertising scholarships. Look into organizations like the Rotary Club, the Kiwanis, or cultural organizations that serve specific ethnic groups. Ask your parents if their employers offer family scholarships or other financial assistance opportunities. If they work at large companies, see if their workplaces have tuition reimbursement programs. Check in with religious organizations like churches, synagogues, and mosques. Even if you don’t attend religious services, you may still be eligible for scholarships that reward community service and volunteerism.
  • Your school: Colleges and universities of all sizes have offices dedicated to student finances. They maintain their own directories, maintain email lists that announce new postings, and are primed to give you individualized advice crafted to fit your situation. They’ll also have a list of scholarships offered exclusively to students of your school. Ask your librarians, who are trained to search databases, as they can help you find opportunities you may have missed.

The biggest way that students miss out on scholarship money is by missing deadlines. Give yourself plenty of time to write and edit a great essay, and ask your mentors to edit it. After all, they’ll know what makes you a deserving candidate and want you to have a convincing case, too.

Don’t be dissuaded by relatively small awards. A $500 scholarship can be enough to make a loan payment or keep you from working part-time during a semester.

Investigate the Federal Work-Study Program

The Federal Work-Study Program (FWS) gives undergraduate and graduate students with financial need the opportunity to work certain jobs to help pay their educational expenses while they’re in school. It encourages community service work, work related to the student’s fields of study, and work on college campuses. Some colleges and universities assign FWS students jobs, while others post positions and ask eligible students to apply. The only way to know for sure is to contact your college’s financial aid office and ask.

Borrowing 101: Lenders and You

Education is an opportunity that probably takes more money than you or your parents have available at any one time. While there are plenty of places that lend out money for college, you should be aware that the convenience of loans and credit always come at a price.

Lenders are in the business of making money. They want to give you money because you’ll eventually give it back to them, plus the interest you’ve accrued over time. Because they’re entrusting you to repay them, they’ll definitely consider how likely you are to default on a loan. Here are some reasons why you will be denied a loan:

  • You have a poor credit history. Your credit rating depends on how many times you’ve been issued credit, how often you’ve been late on your payments, and how many times you have missed payments completely.
  • You have too many open credit cards. In this case, you’re vulnerable to acquiring too much debt.
  • You have too much debt in the context of your annual income. Individuals in these situations are much less likely to repay their debt.
  • You have an inconsistent employment history. This makes your income less predictable, and thus makes you look like a less reliable candidate for assuming more debt.
  • You’ve requested more money than your income suggests you can repay.
  • You’ve had too many inquiries on your credit report. If too many people have looked into your credit, it may look like you’re trying to open too many accounts than you can actually manage.

Your credit score is the information banks, lenders, and other organizations will use to determine your worthiness as a borrower. Holding a lower score doesn’t mean that you can’t secure a loan to pay for your tuition and other school expenses. It does, however, mean that you’ll be paying at a higher interest rate. And at a higher interest rate, you’ll be paying your debts for longer than your friends with glowing credit scores. Be sure to pay on time and in full.

Choose the loans that are right for you

After you’ve filled out the FAFSA, and you still have a gap between your family’s expected contribution, grants, and scholarships, you may determine that you need to take out loans to pay for school. Consider federal loans first (these are offered to you based on the need indicated in your FAFSA filing.) Federal loans have less interest, and offer more lenient repayment plans.

Should you find that you’ve exhausted your federal loan options, check to see if you state offers an educational loan. If you still need more money, you can investigate options for private student loans. Be prepared to pay much higher interest rates for these privately-offered loans through banks and other credit organizations.

Hack your wallet and save money everywhere

  • Use cash and not credit cards when you’re buying disposable goods like food and entertainment. Carry less cash so that you aren’t tempted to buy frivolous things on impulse.
  • Break down your expenses into categories. For example, you might spend money on books and supplies for class, food, housing, clothes, entertainment, and transportation. Track how much you spend on each and how often. It won’t take long for you to figure out that you those lattes and movie rentals add up. Here’s some tips for cutting costs:
    • Housing: Get a roommate or even two. Besides being part of the quintessential college experience, living with others can split up the costs of rent, utilities, and appliances you all share. With some communication and planning, you can also buy groceries and household supplies in bulk and share the costs. Oftentimes, you’ll save hundreds of dollars a month.
    • Food: Avoid eating out. Now’s the perfect time to learn to cook for yourself, and plan your grocery trips so that you can use your ingredients for a variety of meals.
    • Cell phone: Cell phone companies will hit you with plenty of hidden charges if you aren’t careful when selecting your service plan. You’ll pay fees on early termination of service, for example. Keep track of your minutes and data usage so that you aren’t charged at a higher rate for them later. You can also decide to change to a more affordable plan if you aren’t using all your minutes or data.
    • Transportation: College campuses usually provide their students with passes for public transportation at a discounted rate. Take advantage of these subsidized transit programs and save money on gas, parking, and other vehicle fees like licensing. If you must drive, check your school’s student center’s bulletin board to see if fellow students in your neighborhood want to carpool and share costs or driving duty. Shop around for better deals on your insurance.
    • Entertainment: As a student, you’ve already paid fees that grant you access to the library’s collections. Check out books, movies, magazines, and CDs instead of buying or renting them.

Reorienting your daily purchasing decisions can have a major impact on your finances. Often interrupted by casual spending and impulse buying, student budgets reveal plenty of opportunities to save money.

Here are some other tips to keep you on top of your game:

  • Don’t be afraid to ask for a student discount. They’re available on everything from museums to movie theaters. You can find shops and restaurants around your college or university campus that offer discounts or specials if you present your student ID card.
  • Keep a piggy bank. Those coins will add up, and you can always raid your stores for the laundry machine or the vending machine.
  • Buy your textbooks second-hand. Online sites like or are a good resource to compare prices. When you’re done, sell them on the same sites or in a used bookshop.
  • Attend campus events. Your school will keep a calendar of concerts, barbecues, pizza nights, and other social activities you can drop into. Academic departments will sponsor lectures or conferences that are usually followed by receptions with wine and snacks. Not only will you stretch your food budget, but you’ll make friends and network, too.

Work a Campus Job

You can work part-time to supplement your income while you’re taking classes, but your college or university will have job opportunities that are flexible with student schedules and offer work-study arrangements. Get crafty and check for postings around campus and apply to work as a:

  • Tutor. If you’re knowledgeable about a subject, you can share your expertise at a campus tutoring program or writing center.
  • Teaching or Research Assistant. Academic departments are always looking for students to assist in the instruction of courses (as a grader, for example) or in a research project (like working in a lab.) Check the websites of various departments around campus and see if you’re qualified and eligible.
  • Student Employee. You will find work opportunities in the residence halls, dining facilities, fitness and health centers, and libraries. Some schools will offer these positions as part of the Federal Work-Study program.

Remember that there’s plenty of help available to students struggling with their finances. Colleges and universities provide student finance officers that seek to educate and counsel students about money management, loans, and debt. Introduce yourself to these folks, even if you think you’ve got your checkbook under control. They’ll give you advice specific to your own situation, including preparing for the years after you’ve graduated.