As college students, the two most important days are comprised of financial aid and graduation. From the moment we submit our applications to the first day of class, the two things we look forward to the most are the day we graduate and the day we receive financial aid. Although receiving financial aid might feel similar to winning the lottery, most of it is money you have to repay once you graduate. As a result, you have to be frugal and think twice about how you spend your money. Here are five ways not to spend your financial aid:
- Don’t use the debit card pre-loaded with your financial aid: Many colleges provide financial aid pre-loaded onto debit cards. In my opinion, this is one of the worst ways to gain access to financial aid because you’ll be tempted to swipe that debit card left and right, without thinking twice. Also, it will throw any budgets you might have created out the window. In other words, it will turn you into a “reckless spender.”
- Only use grants, not subsidized or unsubsidized loans: Yes, loans are considered as financial aid because they help you cover the costs of attending college. Although you won’t have to repay most loans while you’re in school, it is money you will have to repay nonetheless. As a result, you’ll be “burying” yourself in debt.
- Don’t use credit cards in hopes of repaying them with financial aid: Several students apply for credit cards and use them BEFORE receiving their financial aid, which is a disaster; need I say more? First of all, most schools, if not all, provide students with an estimate of the financial amount they’re eligible for, not actual. Your financial aid award is based on several factors, including the number of units you enroll in. Therefore, most students assume they’re going to receive the maximum financial aid award and spend “accordingly.” This leads to students burying themselves in credit card debt, which charge an arm and a leg of an interest rate.
College students graduating with large amounts of debt has become ubiquitous and shows no signs of slowing down, unfortunately. While this article might not help students completely eliminate debt, it can help reduce it. I cannot stress the importance of managing your financial aid wisely and I HIGHLY recommend working part-time if your costs exceed your grants, as opposed to using loans to cover the costs of attending college. It might seem difficult to balance school and work, it’s not as difficult as it may seem. How would I know? Currently, I’m in the same boat and believe me, it will pay off!