When I talk to people about their out of control student loan debt, one of the first reasons they give for why is this: they used their student loans to pay for living expenses.
The story usually starts with how excited they were to get into a private college, but they were bummed out that their family couldn’t afford to help them pay for school. So, they had to resort to student loans. The trouble was, tuition alone was already $20,000 per year, and they needed another $20,000 to live on – you know: rent, food, books, and fun. $40,000 per year turned into $160,000 at graduation – and now they have no idea how to pay this back.
To make matters worse, that $160,000 is really about $60,000 in Federal student loans, and $100,000 in private student loans – which are a lot harder to deal with.
So today, I want quickly remind you why you should never use your student loans to pay for living expenses in college and show you some alternatives.
Alternatives To Student Loans To Pay For Living Expenses
Just because you don’t have the money saved up to pay for your living expenses doesn’t mean should you borrow it with student loans. Yes, many times the financial aid office at school will make this sound like the way to go, but once you graduate, you’ll quickly realize it’s not.
If you’re thinking to yourself that you’ll have to borrow student loans to pay for your college living expenses, I strongly encourage you to rethink that. Here are a couple of alternatives.
Work In College
The number one thing that you can do to avoid taking out more student loans than you need is simply to work in college. Too many times I hear this idea dismissed – “there’s too much workload” or “you need to focus on your studies”. Honestly, that’s just plain bullshit.
Working in college is essential for all students, but more so if you need the money. Beyond the money, those who work in college develop awesome job skills that are obvious when you compare them to students who didn’t work – communication, problem solving, and time management. If you can’t handle working and school, you’re probably going to struggle in your first job with time management.
Plus, you don’t need to work a lot. You should work backwards from your target earnings – probably around $1,600 per month or so. That’s $400 per week. Find a job at $15 per hour, and it’s about 30 hours per week. Don’t forget that you can supplement a single job with side gigs, like tutoring or becoming a driver partner with Uber. Here’s a list of over 100 ways to make money in college.
Live At Home
The next easiest way to save on living expenses is to simply live at home. This can save you on your biggest expense – rent. While living in the dorms or an apartment can be fun, it’s also expensive. Not living on campus does have costs – such as transportation or a parking pass – but it’s almost always significantly cheaper to live at home than at school.
If you’re going away for school, this can be hard, but that’s why you might also want to rethink your college choice.
Rethink Your College
Finally, if you’re thinking your going to spend a small fortune on living expenses, it might be a good idea to rethink your college. Remember, the end goal is to reduce your student loan borrowing as a whole. If you have to borrow a little to live, it’s easier to do that if your tuition is only $7,000 or $10,000 per year, versus $20,000 or $30,000.
Be Smart With Your College Expenses
To avoid using student loans to pay for living expenses, it’s also essential that you’re mindful with your expenses. The top expenses for college fall into these buckets:
- Tuition and fees
- Room and board
- Books and supplies
- Personal expenses
- Transportation
Tuition and Fees
This all depends on where you go to college. It’s essential that you calculate the Return on Investment (ROI) of the college you choose. For many, going to a state school is a better investment of money than going to a private school. However, every person, every major, and every job after graduation will have their own unique ROI.
Room and Board
The key way to save here is by living at home with your parents. If that’s not an option, getting a lot of roommates is second best. If you can bunk up with several people, it can lower your rent substantially.
Books and Supplies
The costs of textbooks continue to rise every year, and they aren’t cheap. One of our favorite ways to save on the cost of textbooks is to rent the ones you really need, and simply checkout of the library the ones that you only sparingly need. We compare all of the major textbook rental sites so that you can know the best one for you.
Personal Expenses
Like any household budget, your personal expenses can make or break your college experience. Be mindful of what you spend on food and drinks with friends. The great thing about college is that there are a ton of free experiences you can partake in – simply hang out in your college dorm common areas or the quad. From free food and movies, to hanging out with friends, college doesn’t have to be expensive to have fun.
Transporation
The best way to avoid costs here is to not drive. Cars are expensive, and colleges charge outrageous amounts on money on parking permits. If you live at home with your parents, driving might be the only option, but hopefully you can setup an arrangement where you can take public transportation for much cheaper. Many colleges offer discounts on public transportation for students.
Don’t Use Your Student Loans To Pay For Living Expenses
As a final reminder, you really need to make an effort to avoid ballooning your student loan debt. Taking out loans for tuition and fees can make sense if you’re going to get a good ROI on your school costs, but there is no ROI for living expenses.
I strongly recommend that you get a job in school, and leverage that to offset living expenses as well as gain valuable life skills.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Financial Panther says
Very true about not using your student loans to pay for expenses. I see this some much with law students who choose to live in the new luxury apartments around campus. Unless their living expenses are being funded by their parents, it seems unlikely that they are funding them on their own. It’s easy to add on another 20k or 30k in student loans pear year if you aren’t careful.
Robert Farrington says
I think the scarier part is how fast it can add up. A little here, and a little there, and boom! So much debt…
Jeremy says
With a little work, one can save themselves from massive debt load … great points!
Robert Farrington says
It’s always about putting in the work.
Vickie says
Where the do you think a student can find a job that pays $15 an hour? And working 30 hours a week plus the standard 12 credit hours (assuming said student is going for the minimum hours to be full time) and the time for homework? You seem to think that this is a simple solution without any regard to what it really requires.
Robert Farrington says
It’s not just a solution – it’s my personal story. I worked full-time during college, as a supervisor in a big box retails store. I was making $14.50 as a freshman and was making $17.50 by the time I was graduating.
I worked full time – 32-40 hours per week. I also took a full load (my school was the quarter system, and it was 4-5 classes each quarter). I made it a point to arrange my classes and work schedule to make it happen. I would either try to bulk my classes out on Tuesday and Thursdays (leaving me open to work M-W-F-S-S), or if I had to take M-W-F classes, I would taken them in the morning and work nights.
Beyond just my experience, I know countless people doing the same thing (i.e. working retail as a supervisor, going to college full time as well). Wages have gone up since I went to school, and it’s not uncommon to see some of these people earning about $18/hr to start now.
Carl says
This just isn’t representative of a most college students can get. Very few stores are going to put a student into a supervisory position. Also, if you are studying to get real degree such as engineering or premed you don’t have extra time. One could also argue taking a higher course load per a semester is a better way to save money on living expenses by shortening total time in school. Honestly, did you get a liberal arts degree in blogging?
Robert Farrington says
Hi Carl, I think you under-estimate a lot of students and what they can get. 80% of college students work during school, earning an average annual income of $14,400, per the National Center for Education Statistics. Sadly, only about 18% of students are currently paying their way through college 100%. Another 16% combines working with scholarships to pay their way through school with no loans. Finally, 22% had parental help plus working to ensure no loans.
A have a little laugh at “real degree” because there isn’t much of that anymore. While I completely agree that some tracks, like pre-med, are more challenging, engineering is typically not one of them. I was a CSE (computer science and engineering) major for a long time, and still worked full time. I decided I didn’t want to code my whole life and switched to “liberal arts”, as graduated in Political Science with a minor in Economics. I also went and got my MBA after college – while also working full time.
You’re right, graduating early is a great way to save, and we just talking about it a few days ago: Should You Graduate College In Three Years
Working with college students for a long time, most don’t know where to look for jobs, don’t push themselves to earn more, and have a gap in the skills required to be successful outside of academia. I would tell you that almost all large box retailers rely on college students for supervisory positions. Most medium box places do as well.
Heck, a college student can drive for Uber in a major metro area and average $18/hour AFTER expenses.
The bottom line is there are countless ways to earn during college. Going back to the article, students need to avoid borrowing to pay for extras as much as possible The only way to boost the ROI on education is to lower costs and/or boost experiences (both of which working do). Dismissing the opportunities available are what drive more student loan borrowing than needed.
K. Russell says
Not true. My engineering kid worked part-time, lived at home and graduated with zero debt. My chemistry student worked full-time(12 days on two off, 5 on two off) and graduated with zero debt and is in grad school on their dime. The job even paid college expenses. So, yes it’s very doable.
Lee says
I worked full time while going to school full time. I graduated a few years ago.
My partner is finishing up his last year of college atm. He also has worked full time while going to school full time to avid taking any loans out whatsoever. It is very doable, most people are just to lazy because they were raised by parents who wanted to make their life easier, but it ends up hurting them.
My Dad as a dentist could have afforded to pay for my college, but coming from a hard working farm family he paid for his own collage, because of that experience he wanted me to work and pay for my own college as well. He said people won’t study as hard or appreciate school enough of they don’t pay for it.
R says
I am considering getting a student loan to go back to school, but working at the same tine would be almost impossible. I am a single parent, and it would only be for 1 year. I want to take welding. And a $15 dollar an hour job is really hard to get in small town, but welders can make $20 plus.
Robert Farrington says
You have to calculate the ROI and see if it’s worth it. Can you work, go to school, and take care of the kids? YOu might have to wear yourself out completely for a year but it could be worth it.
Tim says
I stopped reading as soon as I saw “get a job paying $15/hour and work 30 hours”. Okay….
Robert Farrington says
What’s holding your back from that? I was making $16/hr as a freshman in college and worked 32-40 hours per week. My last year of college, I was at $18.50.
I know mileage may vary, but it’s do-able.
Lee says
My partner and I both work/worked full time while attending school full time. It shocks me that alot of people don’t. Which is fine, just don’t whine about paying of the loans later when they could have been avoided. Btw I made about $16 an hour while in college between my two part time jobs. My partner who is still in college makes $30 and hour atm. His is not the norm for sure though haha.
Namey says
If I worked 30 hours per week I would fail my courses (that’s what happened to me during my first semester. Now I get straight As because I do nothing else), and I’ve never been able to find a job for more than $8 per hour. This advice is just not realistic for people like me. I can barely handle a full (that’s three) courseload let alone school and work at the same time. Good for you for being so high-functioning but not everyone can be effective with that pace/workload. I’ll take the debt because I have no other choice.
Robert Farrington says
I would challenge yourself to see what systems you can use to fix that. Employment post-graduation is only going to be tougher.
Rose says
I agree, plus it’s completely not practical for STEM degrees. Possibly for lower end liberal degrees, depending on the town. Many classes are 5 days a week, etc. Many careers post-graduation also take your GPA into account before hiring you.
Lee says
I was a Microbiology major, pre med and worked full time while attending full time.
My dad was going to school to be a dentist and worked full time.
My sister is a lawyer and worked full time while attending college.
My partner is finishing up his electrical engineering degree and is working full time.
Where there is a will there is a way. My dad and mom taught us( not my partner lol) to be hard workers and to be great students, people are capable of doing both. They just need to know it is possible.
Hannah says
I work full-time and I’m taking six classes at a community college–not even a university yet–just so I can graduate sooner. I’ve thought of working another job just so I can get my own place and have peace to study. It’s hard to find a job that pays $13 hourly, how much more $15? And I don’t even live in the city, neither am I trying to, but I do work in the city. How are you thinking a college student–possibly with no work experience in a work field that may actually offer $15 hourly–could find a job like that? My GPA is currently 3.7 and I’m killing myself working my butt off to pass my classes and move up in my job so I can get to $15, and this is all you could come up with as alternatives? What if the students are facing home issues and they desperately need to get out so they can be successful? What do you recommend for that? I highly suggest you do more research or work on inclusivity because this was the least helpful post I’ve ever read on the topic.
Also, when you commented how much you were making your freshman year of college, did you think that maybe the economy is very different than how it was when you were growing up? Because maybe you’re not that old, but you’re still significantly older than most of the kids who have to deal with this.
Robert Farrington says
The economy has gotten a LOT better since I was in college. I worked through the Great Recession… and find a job like that? I worked retail… it’s extremely common to find that working big-box retail. Starting pay now at many big box stores starts at $10-12.
Second, work was one alternative. Community college is relatively inexpensive (cheaper than university). In about half of the states, it’s free. In most of the others, you apply for FAFSA and if you really don’t have much or any income, you’ll get grants to cover the costs. That’s free money.
Third, I strongly recommend you self-reflect a bit. Six classes, but you can’t afford things you want/need? You’re “killing yourself” now when you know it only gets more challenging… there’s a lot here that is beyond the scope of an internet comment. But I get the vibe you have some tough choices to make, it’s not easy, and wish there was a better solution.
Jacob Johnson says
I’m sorry, what private school is $20k a year? I went to a public school that was $25k a year, and I considered that to be pretty cheap.
I respect people working through college and putting in the time, but as others have pointed out, it’s not that simple. To find a job that has enough flexibility to even get close to 30 hours a week while taking classes is difficult. Then to have to adjust your schedule every semester makes it hard to hold down that job, thus making it difficult to work up to higher wages. Again, all the power to people that make it work. But acknowledge that it takes a fair bit of luck to make it work, and don’t just assume people that don’t make it work are lazy.
Also, any major can be difficult if you make it that way. Liberal arts, mechanical engineering, whatever. It’s what you make of it. You’re spending thousands on the education. Why not get the most out of it possible?
Tiffany says
As someone who has employed hundreds of people in the last 16 years, I’m not entirely surprised at these responses. Hiring people who have graduated within the last 5 years is always dicey and some of these responses are representative of why. There are really two schools of thought on work: the tenacious, won’t-be-denied person and the “I can’t and it’s not my fault” person. Can you get which school of thought is found more often in the younger crowd? Not to say that there aren’t exceptions, of course.
Calculating ROI on your degree is solid advice. Having some form of income during college is solid advice (so what if it’s $10/hour. Maybe it doesn’t cover ALL your costs but it will cover some and any costs it covers won’t be accruing interest or nagging you as debt). Not spending money your don’t have on consumables is solid advice. Going to community college is good advice, as it’s going to trade school. Most people will make more as an electrician than with a liberal arts degree.
The bottom line is that there is a world of alternatives out there but “I can’t and it’s not my fault” isn’t going to get it done.
K Russell says
I see a lot of can’ts and it’s too hard. Guess what? Life is hard, you better get used to it. These are great suggestions. Some jobs even pay your tuition. You’d probably have to work full time and do school part-time, but graduating with no debt and money in the bank works for many people. Plus, it shows employers you have what it takes.