Whether you’re in college or have kids in college, you probably realize the value of a dollar right about now. Tuition, food, housing, hobbies, car, insurance, gas, college comes with some intense wallet burning, purse destroying obligations.
Having had to borrow, beg, and steal my way through college, I have found some great ways to save a buck and stretch a penny. Here are some of the most important financial tips I have learned.
Educate yourself. You are in college to learn, but it’s surprising how little effort is put towards understanding the most important part of your education – your finances!
For starters, don’t just cash in your student loans on Day One, read the fine print. Compare lenders. Understand the interest charges and repayment methods. It’s not brain surgery, and I can’t stress this enough. Learn the difference between a Stafford and a Perkins Loan. One may save you thousands of dollars over the other depending on your situation.
Go to your school’s financial aid office, they will point you in the right direction. Be firm and ask a lot of questions until you understand the loans completely.
Borrow as little money as possible during college. This may be hard advice to some of you, but yes, you should struggle in college. If you have a $5,000 check that you don’t have to pay back for 2 years, you’re going to spend it. I don’t care how responsible you are. What you don’t realize is really how fast and easy $5,000 is to spend (I burned through that much in two terms) and how hard it is to repay (it took me over two years).
Here’s a scenario: say you quit your summer job to go to college. You get a $5,000 loan. With that money, in just one semester you’ll spend $600 on rent, $200 on food, $200 on car payments, $50 on car insurance, $50 on gas, and $200 for personal items. That $5,000 is gone in a semester. So you get another loan.
After you graduate college, you start paying it all back. With a decent job, you are able to spare $200 in payments a month. So, it took you a couple months to spend $5,000, but it will take you over 2 years to pay back!
By fhe wisest students get a part time job that helps them save a couple hundred dollars a month, or sacrifice their car for public transportation. If you take these two simple steps, this will save you years of repayment for the future.
In the previous scenario, say you could earn $200 a month with a part time job, and cut out your car, gas, and insurance payments by taking the bus. That is $500 less debt a month, which would mean you could take out a $2,500 loan instead of a $5,000 one. That would save you 1 full year’s worth of repayments when you graduate. And trust me, when you are finally working full time, you will have plenty of equally urgent expenses. You will not want to be giving your hard earned money away to college lenders.
Every college kid I knew went out to eat lunch on a daily basis. Even if you ate at a cheapo fast food restaurant for every meal, that’s still at $4 per meal 2-3 times a day, or $56 a week. If you keep eating like this, every month, you will be down almost $400! Not to mention how much you’ll most likely spend at the bar while you nibble on your fries, you can easily pile on thousands of dollars a year on food debt alone.
So, while in college, learn to cook! You can buy $25 worth of staple food items like cereal, bread, pasta, sauce, noodles, minced beef and fresh veg, and make an entire week’s worth of meals with just those items.
On that note, also learn to shop! If you’re a parent, take your pre-college-age kids out grocery shopping long before they leave home. Teach them how to look for deals and how to buy and prepare big food for small amounts of cash. It is a lot easier to cook a home-made burger than you think, and the cost will be less than 50% of the fast food joint’s prices, too. If you cook every main meal at home, you can save at least $1,200 in a year. That money can go straight into loan payments or even tuition.
This college financial tip is a huge one. So many kids are driving their cars to school when they live right across the street. Cars are expensive! The payments, plus maintenance, gas, school permit fees, apartment permit fees and insurance will set you back hundreds of dollars a month. Public transportation isn’t scary and means you get ‘extra’ free time each day as you can read or study on the bus. A bike or skateboard is also good and will mean you’ll burn off all those extra calories from the beer you drank at last Friday’s kegger. You can’t lose!
If you’re a parent, take the car away unless they study at USC – don’t let any kid them get the bus through LA’s South Central! If you live in a bad area, you may want to drive to and from school even if you live close to the college.
The long and short of it is that a bus pass is a couple bucks a month. Paying to run a car is so much more expensive and oftentimes not worth the hassle while in college.
Honestly, after my first year of college, I stopped buying books altogether. Although I don’t recommend this tip to everyone, one of the best ways to save thousands of dollars while at college is buy books online. Amazon.com is by far the best and easiest way to get college books at a discount.
Recognizing the plight of the increasingly debt-ridden student, a lot of websites are now starting to ‘rent’ college books. I think this is a great idea as most of us have no use for old text books and just waste time trying to resell them or stash them out of sight in the attic. What a waste of hard earned cash. These sites aren’t that big yet, but I see some great potential in the next couple of years.
One the best ways to save money on college textbook is to email your professor and ask him/ her if you can use the previous version text book. Most authors publish a new version of their book every year, so you have to keep paying top dollar for the latest edition. A $100 textbook one year is worth $10 the next. And most of the time the new versions just have a single updated chapter, where everything else is the same. So, send out an email to your professor to see if you can use the old textbook, and most of the time he’ll say yes (unless he’s the one that wrote the book).
There are so many more ways to save money during college, you just have to be a little street smart. By and far, I would suggest taking as little amount in college loans as possible. I’ve been paying back college debt for a while now, and let me tell you, that extra $3,500 check I got as a college freshman to buy a fancy Plasma TV that broke in my 2nd year of college was not worth spending almost a year to pay back.
So, if you are a college student, or a parent with a child in college, use these money saving college tips and find yourself struggling a lot less with student debt!