Student Loans: How to Spend the Money Wisely – Part 2
For many students, college is the first time they will be out living on their own and with that comes a lot of responsibility they may not have thought about. This can be overwhelming for students who’ve never had to manage their money. In this second half of our two-part article, we’ll give you some tips on how to manage your student loan money wisely.
Talk To Your Parents
College students are at a disadvantage when it comes to understanding what student loan debt will mean down the road. For many, student loans are the first debt they will owe and it’s hard for them to visualize what that will mean when the borrowing phase is over and the repayment phase kicks in. As parents, you should explain to your kids what a long-term debt would require in terms of budgeting the student loan payments and paying it back.
Another thing for parents to remember is, though you want to help your child pay for their college education you don’t want to put yourself in a bad financial spot. Many parents may even borrow from their own retirement funds in order to help their student make their way through college. This is not a good move for parents and students should not expect their parents to do this. The student has a much longer time to pay off loans than the parents have to rebuild their retirement funds.
Finance Your Education Not Your Lifestyle
A student loan, is money meant to help you pay for school. Student loans are not meant to help you pay for that road trip on spring break or that new outfit. Many students don’t realize that by using their student loans on things other than tuition and books, that they are actually hurting themselves in the long run. That’s because when you’re in college, unless someone else is footing your entire bill, every dollar you spend unnecessarily will be a dollar you’ll have to repay later with interest. So that road trip that costs you $1,000 now could be double or triple later on.
Our tip, control your living expenses, by minimizing expensive recreation, trips to the hair salon, designer clothes, electronic gadgets, concert tickets, expensive cars and “must-have” items. You don’t have to deprive yourself, but be practical and whenever possible use your own money, not student loan money. Consider getting a part-time job to help with your expenses.
As long as you always keep in mind that whatever you borrow, at some point along the line, you will have to pay it back then you should be in good shape. The best attitude to have is, the less you borrow, the less you owe.
To learn more about how Westface College Planning can help you navigate the financial aid process call us at 650-587-1559 or sign up for one of our Tackling the Runaway Costs of College Workshops or Webinars.
Photo Credit: miggslives
Ready for your own success story?
If you’re a typical parent with college-bound students, you’re probably overwhelmed. You want to help your sons and daughters make the right choices and prevent overpaying for their education. You’re not alone! We’re here to help. Schedule your free consultation today – click below to get started!
Catch our free, on-demand webinar:
How to Survive Paying for College
Join Beatrice Schultz, CFP® for our on-demand webinar, where she provides parents with the exact steps that often greatly lower the cost of college, even if there’s little time to prepare.