Today’s post is from our regular Tuesday contributor, Sally.
It’s hard to admit this, but I honestly didn’t really take the time to think about how I was funding my college education until I was in my third year at school. I wasn’t taking out excessive amounts of loans or anything like that, but I hadn’t taken the time to really understand what I was doing when I agreed to my financial aid package, as well as taking out my private loans.
I knew I wanted to go to college, I knew I needed money, and I accepted all of the money they could offer, at least until my last three years (remember, I received my bachelors after six years of school).
With my first university, that included Federal and State help and a private loan I had to take out. I received a few scholarships as well as a one-time monetary award from a private benefactor. I also qualified for work study, which I did, but did not use that money towards school.
When I transferred to a community college after my freshman year, things changed drastically. I failed to fill out my FAFSA properly and ended up taking, what I now consider, the “easy way out” – I simply took out a private loan for the complete school year to the tune of $5,000 dollars. Same with my second year there. I knew I was going to have to pay the money back after college, but didn’t take the time to actually look at the picture as a whole – just at what I currently needed, and correcting that need. Going into my fourth year of college and at my final university, I was much more aware of all of the finance information that was placed in front of me, as well as my options.
Not filling out the FAFSA at all was no longer something I didn’t do – and I always tried to complete it as soon as I had all of the necessary paperwork for it. With being a transfer, the amount of scholarships offered drops dramatically compared to an incoming freshman, but due to maintaining good grades at my previous college, I was given the full transfer scholarship. I did research on outside scholarships and took the time to apply for them. When I received my financial aid package, again I was granted work study, which is how I was able to pay my sorority dues (I chose to become a Community Advisor for work study, which was the highest paid position on campus). I do realize that I didn’t have to join a sorority, it was an added expense I chose to do, but it is not one I regret (one of my sorority sisters is a big reason as to how I’m in the position I’m in today – I love networking!). By my last two years of university, I wasn’t taking out any private loans and was able to accept only a portion of my financial aid package.
I’m still in a ton of debt, but here are some big things that I wish I had known and done before attending college:
Taken the time to understand the finances
I watched my brother and sister go through school and never took the time to ask them how they were affording it – I knew they had taken on private loans and they both had part-time jobs, but had I asked them about how they were able to stay in school and afford gas for their cars, etc., I would have had a much clearer picture in the beginning about where the money comes from and where it goes. So do your research. Try to understand what goes into the creating of financial aid packages, where that money comes from, how you are awarded the way you are, how to avoid taking out private loans…
Apply for scholarships
Every single one you come across. If you qualify for it, apply for it. There are easily thousands of scholarships and each one offers you free money for school. If you’re in high school, your guidance counselor should be able to work with you on finding and applying for them. If you are out of high school, there are several legitimate websites you can join for free that work with scholarship organizations. If you’re currently in college, check with your department head if there are any scholarships for your major they have information for. You’ll thank yourself for it later.
Research private loan options
If your financial need is so great that you need to take a personal loan out, make sure you are comparing various options to find the one best suited for you. While my brother and sister went with the same loan company, I found one that I felt offered better interest rates as well as repayment options (woah, I might have done something a little bit right!). I also ended up being extremely satisfied with them and so used them every time – this means that when I need to look at all of my debt information, it’s only in two places – with my private loan company and on the federal debt repayment website (obviously not having to pay anything back would be best, but only having the two different places to work with makes me feel more in control).
Save!
If there is even the slightest chance you want to attend a trade school or university, etc after high school or return to school later on, save as much money as possible! Don’t make the same mistake I did.
Return loan money you don’t use
If you find at the end of the semester or year that you didn’t need all of the loan money you took out, return it! And adjust your package accordingly for the next semester (or keep it in mind for the next year). Also take a look as to why you didn’t use that money to begin with; perhaps you’ll find that you can decrease the amount even more on top of the amount you return.
Live on as little as possible
Use all of the extra money you have to help pay your college bills. Set a budget for yourself, stick by it, and while it might take a few years, you’ll see the benefit when you graduate and your debt amount isn’t astronomically high.
Next week I’ll be sharing just how much debt I’m in…anyone want to take any guesses?! Here are some hints: my first university total cost to attend was $18,000. You already know I took out two personal loans for the next two years for a combined $10,000, and my third university cost $25,500 to attend my first year, $26,500 my second, and $27,500 my third. I’m also above the national student debt average. Happy guessing!
How did you finance college? Is there anything you wish you had known before agreeing to an academic loan?
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I think most people are guilty of making a few mistakes in college regarding financing our education. I think 18 is just too young to really understand what you are getting yourself into. Not to mention that there was very little education on student loans. I hope some of this has changed since I graduated a few years ago.
BudgetforMore I completely agree! I know that I will definitely be having money conversations with my kids especially about college finances, in the hopes that they are able to make better decisions for themselves than I did.
I’ve been thinking of going back to school but I’m definitely scared to take out loans. I’m undecided at this point but if I did go back I would definitely try to keep loans to a minimum.
SingleMomIncome Oooo, what would you go back to school for? Loans can be scary definitely, but it helps when you have a good plan to combat them. Good luck!
Oh no! I graduated undergrad with $0 in debt because I sought out scholarships, was a Resident Advisor, and did work study. Law school was a different story though … The first year, I didn’t accept all the money offered to me, but then my living situation changed and the next year I took it all.
I graduated with $125k in debt, and then married someone with the same amount of debt. Doh! The things we do for love. ;)
StaplerConfessions That’s awesome you were able to complete your undergrad debt-free! I’m sorry to hear about your last year of grad school. Sounds like you won in the end though – love trumps all! Haha ;)
Great stuff here, Sally. I blew all of my loan money on tuition and stupid stuff. Luckily my loans weren’t too big, as I only went to tech school, but it still bugs me that I wasted so much of it.
Laurie TheFrugalFarmer Thank you! I think a lot of people use their loan money on things they later on think are stupid, but man, at that time, you absolutely thought you needed it! Hindsight always seems to be 20/20…at least we can try to educate others before it’s too late!
We were both fortunate that our parents paid for part of our schooling. Overall, we ended up with 20K of student loans when we got married. I am happy to report that we paid them off!
Holly at ClubThrifty Congratulations on paying them off! Such an amazing accomplishment and I’m sure it felt great to have that burden be gone!
I would second taking as little as possible. It’s tempting to take what is offered, but you can live very cheaply as a student if you choose to do so.
Eyesonthedollar It’s amazing how cheaply you can live as a student! And it’s well worth it to live cheaply because then, after you’ve graduated, you aren’t having to scrimp and save as much to pay off your loans, while now also paying for your housing and food.
My tuition was virtually all funded by loans and took at, and kept, all they gave me. I needed some of it as I was out of state, but certainly not all of it. I wish I could go back and shake some sense in to my younger self, but you live and learn. :)
FrugalRules Definitely! Hindsight is 20/20 :)
Ugh…two years private out of state, 2 years at local community college, 2 years at local state college. I wish I’d been taught more about loans, and not used the money to live on. At one point as a single mom it was necessary, but now I’m staring down $80k for a bachelors degree. I definitely won’t let my daughter do that!
katygoesboom I wish I had been taught more too as it can quickly get out of hand. I definitely am planning on teaching my kids monetary and finance values – I don’t want them to end up with my amount of loan debt either!
The private loans are really the worst ones. My husband had one at 13% interest. We got rid of that one quickly. I would say avoid those private loans and try to borrow the least amount if you can.
Raquel@Practical Cents Yikes! Definitely agree, those private ones can really get you! Congrats to you guys for paying off the loan though!
Great advice. When I was in school, I saw fellow students spending the extra student loan money that they didn’t actually need. They used it to buy cars, go on vacations and stuff like that. Not a good idea.
Andrew LivingRichCheaply Thank you! I’ve also seen fellow students do that; I try not to jump down their throats and tell them to stop, but I definitely do ask some probing questions that will hopefully get them to think about it a little more at least!
This is great advice to those who are about to take out loans. I especially love the point of living on as little as possible. A number of my clients saw their student loans balloon because they used too much of their student loan money on their lifestyle just thinking they could kick their debt down the road.
blonde_finance Thank you! I’ve seen so many of my colleagues do the same thing with using their student loan money to be able to live a certain lifestyle they want – in the end, it’s much easier to live frugally and not have that huge looming debt at the end.
I financed school with a million summer jobs and the help of my parents. It’s left me intending to create more scholarships and base-level funding for post-secondary institutions. ie funding keeping the lights on, so money can be used to do other, more beneficial things.
Ugifter That sounds awesome! So neat to hear from someone who has plans to create something so student-centered and beneficial!
Great post and tips, Sally. One common mistake I see in regards to student loans is that too many parents are hands-off. Wherever their child wants to go and get accepted is fine by them. They don’t consider whether the final cost of college is going to be an extreme hardship to the child … in other words they don’t do a ROI. Some careers simply do not pay much and while that doesn’t mean a child shouldn’t pursue a non-high paying career, it does need to be taken into consideration when you consider where you go to college and your final student loan bill. Kids don’t have a sense of the “real” world when it comes to loans and living expenses because they have never dealt with those things. So, of course, they assume they can easily pay off those loans. Of course they spend every penny offered because the bank (or whomever) wouldn’t have given them more than they needed, right? Parents need to crunch the numbers with their kids so the choice isn’t solely based on where their friends on going, etc.
ShannonRyan Thank you! That’s a great point, and great advice. As well as very true :) If I have kids, I definitely will be sitting down with them and having discussions about finances, especially regarding loans/college.
I remember that a big pain in filling out the FAFSA was getting the paper work together. I always wanted to get everything in asap because it increased the odds of getting some grant money. Unforately my dad usually waited until the deadline to file everything in. I don’t know if it was procrastination or if the time allowed him better figure out the numbers for the farm. It was a huge blessing the day when I was old enough where my parents income no longer counted and I didn’t need their info (also a longer than average student, 5 1/2 years was my length).
MicrosMissions It can definitely be a big pain! I would get back from winter break and so many of my friends would already have filled the FAFSA out and I was still waiting for my parents to file theirs and decide who was claiming me that year (my parents are divorced).
Good tips. I got a big scholarship at my undergraduate university and only ended up with a little debt (I worked summers and during the school year). Grad school is what “got” me. I still worked and only took out tuition money (paid for housing costs out of pocket), but I still ended up with $30k in loans (total undergrad and grad).
StudentDebtSurvivor Thank you! I definitely don’t know if I would be able to have gone back to school for my Masters if they weren’t paying for my housing, food, and tuition – my undergraduate loan debt is just too much at this point.