As students, we normally attend the school for getting the education about various subjects of life. But that doesn’t mean schools will teach us everything that we need to know for surviving in the outer world.
Practically, educational institutes are not so much interested in teaching young students about hardcore personal finance.
Even students, who are learning accountancy, taxation or economics, don’t have a clear idea about how to manage their personal finances to avoid debts. For that reason, they often make few common mistakes that they can easily avoid.
So, let’s discuss these clearly:
1. Choosing an expensive college
Several students can’t handle the impulse of joining a high-rank school. But, they must compare the cost of college against the value of the education they are getting.
Normally, a public college will cost you less, far less than a private one. In-state tuition fees are also less than the out-of-state tuition rate. Make sure to calculate the real cost of the education and not only the sticker price. Remember you may have been able to take out a $30,000 loan; but, the entire education may end up costing you $40,000 or more just because you have chosen a high-priced school.
2. Making wrong choices
Dropping or withdrawing from classes mean you’re practically ripping off money from your loan.
Before you withdraw from college, understand that you will have to reimburse that money in full with interest. Even not attending your classes is a damn mistake; as a result, if you fail in your exams or get low grades, it will affect your degree a lot.
3. Missing out the scholarships
Only 28% of college students have scholarships to fund their education. Don’t miss that free money to fund your studies. Apply for several scholarships at once. You can find scholarships through the school, college, and any types of organizations you or your family may have an affiliation with.
Apart from these, students also make some mistakes while in college, due to which they might fall into debt problems.
A. Using too much credit cards
Normally, students who stay alone in hostels or any other places make their purchases through their credit cards. As they use their cards for several purposes, like - shopping, food, entertainment, or even for paying tuition fees, the total bill amount on their cards may become too much to handle. It also takes quite a lot of time for the students to realize the impact of the credit card debt. High interest rates, monthly bills, and even extra charges, all of these can make their lives a total mess.
B. Overindulging in debt
Easy to obtain student loans is another option that students choose for accumulating huge debts on their shoulders. Just because they have that option, it doesn’t mean a student must misuse it totally. Low-interest rates and easily available money make them casual towards their future finances. They often start ignoring the fact that one day the loan must be repaid.
Some students don’t have the habit of budgeting. Therefore, when they enter school, they face problems to follow budgeting guidelines implied for managing their finances. Without a proper knowledge of income and expenses, a student can’t live under a certain budget, and he may pile up huge debts.
D. Not choosing proper cost cutting methods
There are a variety of options to lower costs at college; in turn, possibly lowering required debt as well. It can be a huge mistake if students don’t choose such opportunities. Options like a part-time job, student discounts on insurance, work-study, textbook trading, sharing room with a roommate, having campus freebies, and similar things may help students to keep their costs low.
E. Extended staying at school
Going to school longer than you’ve expected may increase your educational expenses as well as your total debts. And, if you want to get a master’s degree or some certification or internship, you might have to bear more costs.
F. Wasting the free time during vacation
Summer vacation can be a significant opportunity for students who want to take advantage of it. They can take extra classes and shorten the duration of getting a degree, or they work extra to earn extra money. It will be a costly mistake if you don’t utilize the idle time being a student.
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