Many students across America will be fresh out of high school this spring. Many of them are looking forward to a carefree summer, while others will be making the transition into college. With college also comes the issue of having to pay for it. The smartest option is to apply for scholarships, and then there’s signing dotted lines for a student loan.
Getting a student loan might seem like the easiest way to pay for classes, and it really is. That doesn’t mean it’s the smartest move, especially when it comes to repaying a lender after graduation.
Saving for college should be a priority in order to reach your educational goals. We’ll set you up on the right financial path for college.
Start Saving and Don’t Repeat Your Mistakes
Ask any college graduate about student loans and they’ll probably shudder at the thought. The truth of the matter is, when students are short on their college tuition funds, they think of loans as a quick financial remedy. Most hardly put a thought into what situations they’ll find themselves in after graduation.
Knowing the most common mistakes might help you avoid falling into debt. Opening up a savings account as a backup for emergencies or planning for a post-graduation scenario might save you a couple of headaches down the road. VFCU offers savings accounts with a great dividend and a competitive annual percentage rate. We also have all of the benefits and perks you’ll find at a bank but with a huge difference; profits go directly back to members in the form of better loan rates and lower fees.
The first mistake many high school graduates make is quite honestly the most common and might sound cliché. According to the Chronicle of Education, 60% of students each semester get a loan to cover their higher education costs. Some cost-saving options could be attending a more affordable school or paying with cash as you go. Community colleges are a great way to take some core classes since they’re relatively cheaper. Remember, before deciding on attending a community college, consider which field you’ll want to study.
Work on Campus
Try attending freshmen events most universities put together for first-year students. At first glance, you might be overwhelmed by all of the student organizations that will be vying for your attention. Keep in mind that there may also be university departments there as well. Many of these departments will be searching for students for work-study positions.
Don’t worry about overworking yourself during college. Most of these positions won’t allow students to work more than 19 hours since it could affect academic performance. While you might be thinking that a part-time job will do nothing to alleviate your student loan bills, a part-time job over time can actually help bring down absurd student loan balances.
Do Your Homework
Remember to estimate how much your monthly payments will be after graduation. Set up an Excel sheet with a list of loans you’ll most likely take out during a semester. This will help you get a good idea of how much you’ll owe. Speaking of loans, VFCU offers Share Secured Loans with low interest rates just in case you’re thinking of getting a loan to cover tuition, books or other expenses.
Start Paying it Off Now
One of the benefits of having a part-time job during college is starting to repay loans you might have taken out. For many loans, interest might start accruing as soon as you sign on the dotted line. The interest on the loan will capitalize and be added to the principal amount. Another option is to look at some private loans; most have higher interest rates but there’s a chance you can find one that doesn’t. A parent cosigning is another route most students take.
The Earlier, the Better
We know the word “retirement” is something most college students don’t even think of. Yet, when it comes to retirement planning, you may end up thinking that you should’ve started sooner rather than later. When most students are just starting to think about their future careers, there are some who are slowly planning ahead by adding to their savings account.
Forget about the “I earn very little money” or “I pay too many bills to save” situations. You’ll find that when approaching retirement, you’ll be glad to have started saving at a young age. We have some great options with our savings and IRA accounts.
Saving Smart is Book Smart
Remember to always spend less than what you make. It’s easy to sign for a student loan, but your habits may gradually become greedier throughout the semester leading up to graduation. The spending habits you implement now will dictate what kind of future you’ll have. Do you want to graduate with mountains of debt or do you want to hit the ground running stress-free?
Take Us to College with You
As a VFCU member, you’ll have access to great savings and checking accounts, and secured loan options. Make an appointment with one of our financial professionals before you head to college by visiting our Brownsville credit union today.