It can be hard for an 18-year-old high school grad to grasp the reality of that debt, and many freshman find themselves treating their loans as free money. That usually leads to unnecessary spending on living expenses.
But student loans are anything but free. Depending on when you took them out – and if you used a private or federal lender – you’ll pay at least 3% interest on anything you owe. Every dollar you borrow will cost more in the future, and prevent you from using that money on something you truly value.
How you use your student loans now can be the difference between owning a home or struggling to make rent at 30. It can be the reason you’re financially independent, or the shackles holding you back.
If you’re worried about paying for living expenses without dipping into your loans, read on for some suggestions.
Apply For Scholarships
Scholarships take time to apply for, and may seem annoying on top of schoolwork and extracurricular activities. Just think of it as a part-time job. Every scholarship you receive is money you don’t have to borrow and pay interest on later, and the hours you spend applying will likely pay off at a much higher rate than bussing tables at a burger joint.
Don’t stop looking once you arrive on campus. It’s easy to think you’ve missed the boat on finding scholarships after you start classes, but there are many grants and programs available for current college students – and few people aware of their existence.
Get A Part-Time Job
One of the best ways to avoid using student loans for expenses is to get a part-time job. You can find work-study options through your college or apply for outside gigs – including bartending, driving for Uber, or delivering groceries through Instacart.
The rise of the sharing economy has brought with it a rise in low-pressure gigs with lots of flexibility. In addition to the big apps like Uber and PostMates, there are plenty of startup services that allow you to make a quick buck on your own time.
Some colleges pay students to work as teaching assistants or TAs, while others hire students to participate in psychology experiments. If you have a professor you’re close to, consider asking them for ideas. A personal recommendation may help you land a coveted gig.
Keep A Budget
It’s easy to spend money like water when you have student loans covering your living expenses. But if you want to only use your loans for tuition, you need to track how much you’re earning and how much you’re spending.
In short, you need to keep a budget.
First, make a list of your income excluding student loans. This can include help from your parents, work, scholarships and more. Then, make a list of your regular expenses like rent, utilities, car insurance, gas, groceries and entertainment. You should also include irregular costs such as books, registration fees and travel expenses.
You can use apps like Mint or YNAB to track your budget, or use a cash-only system if you find that easier to track. Using a debit card instead of a credit card can also help you keep your spending in check.
What are some ways you were able to take out less student loans?
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