For most people, college is their first shot at freedom. But this freedom can come with hefty financial responsibility.
For the first time, your parents won’t be looking over your shoulder to help you avoid common money mistakes. This can be a gift or a curse depending on how prepared you are to budget your money.
Take a look at these seven money mistakes to avoid while planning for college.
1. Signing a Promissory Note
Student loans aren’t a bad option for everyone. Federal loan programs make college possible for millions of Americans each year.
But before you sign that promissory note, make sure you understand what it means to borrow the amount you’ve accepted. Unlike other types of debt, federal student loans don’t go away simply because you’re having financial trouble.
You can stop paying certain debts, for example, after a bankruptcy. Student loans are here to stay for a lifetime.
Be sure you’re ready for that level of commitment by only borrowing what you absolutely need. Look for the most affordable college options in your area to cut back on expensive out of state tuition fees.
2. Procrastinating on Scholarship Hunt
The scholarship hunt isn’t always fast or easy, but it’s work that has a huge payoff for your financial future. A common money mistake college students make is waiting until the last minute to think about scholarships.
You can begin looking into scholarships as early as junior year of high school to get a leg up on the application process. Many applications do require essays, but they’re mostly about your personal experience which means no research or required reading.
These scholarships might seem small compared to your tuition, but these amounts are great for covering smaller expenses like books or fees to travel abroad.
3. Not Turning in FAFSA on Time
The easiest way to lose out on financial aid is to submit your FAFSA after the deadline. The Free Application for Federal Student Aid (FAFSA) is due every year to determine your eligibility for things like need-based grants, work-study, and other forms of aid.
You’ll need access to your parent’s financial information in order to complete the process unless you’re a graduate or independent student. Gathering all needed information can take time so be sure to connect with your parents well ahead of time to make sure you get access to all the money you need.
If you submit your application after the deadline, you get what’s left over after all other students receive funding. This amount may or may not be enough to cover your tuition which could mean you have to take time off school.
4. Choosing Wrong Classes
Even if you feel you have your life completely planned out down to the detail, make sure you meet with your advisor before declaring a major. A common money mistake college students make is choosing the wrong classes to fulfill a major.
You might be interested in seventeenth-century art history, but if this won’t count towards a political science degree, you might want to rethink the class until after you’ve fulfilled all your requirements. Classes cost money.
Since tuition is charged as a lump sum, many students don’t think of each class as an expense. But once you fall short on credit hours for your major, having to take another class over the summer will cost you.
Your advisor can help you make the right selections each semester or steer you toward the course outlines that’ll help you make the choice on your own.
5. Carrying Credit Card Balance
Credit cards give you more financial options. You can self-finance spring break trips, the cost of moving into your housing, or school swag from your campus store.
The main challenge with owning a credit card when you’re not working full time is being able to pay the balance off in full. Credit cards charge high-interest rates that cause your balance to snowball if it remains unpaid over more than one billing cycle.
Only charge what you can afford to pay off in a short period of time. There are interest calculators available to help you decide whether or not a charge is affordable.
If it’ll take you more than a few months to repay the debt, it’s probably not worth it.
6. Buying from School Bookstore
Buying textbooks from the school’s bookstore is a common money mistake made by first-year college students. School bookstores markup books far beyond what makes sense for the average college student’s budget.
You won’t use your books longer than a few months so renting or buying used is an acceptable option to help keep your expenses down. There are a few exceptions to this rule like when a professor requires a textbook that has a new edition once a year.
Buying an older book can mean getting the wrong information which hampers your success in the class.
7. Spending Refund Check
Some lucky students get more financial aid than they need for the semester. This can happen when you get scholarships and aid from the school and from the federal government.
When it happens, you’ll get a refund check for any money left over after all your expenses are paid. Is now the moment to splurge a new TV for your dorm room?
No, and there are few other expenses that make sense for a refund check. Use the money to start paying back your loans or save for a rainy day.
Avoiding Common Money Mistakes
It’s fairly easy to avoid a common money mistake when you can see them coming in advance. The good news is there are many resources available to help you start your first budget and learn money management.
The staff in your school’s financial aid department can be a great resource for understanding your aid package in greater detail. Learn ways you can minimize your loans and maximize scholarships and grants.
Spending your money wisely means having more money for meals and activities with friends. For more information on avoiding common money mistakes, visit our blog for updates.