On Ramp 2 College

It’s just about that time of year again.

For the new college student heading off to college for the first time, or the returning Sophomore, Junior, or Senior, you know getting your finances in order is sometimes harder than the courses you’ll be taking.

Perhaps the problem starts with a struggle to pay registration bills in time for the first day of classes. For some students, crunch time comes when they find themselves a couple of bucks short for the text books they need to buy.

Maybe you’ll be one of the lucky students who have been able to meet all the expected and unexpected expenses of college. But, if you’ve been paying attention to the news, you know that we are all faced with a recession and skyrocketing costs which will require that we all tighten our belts.

Full time college attendance makes it difficult to work more hours or expand savings to pay for things we need, and figuring out how to deal with finances while handling coursework can be particularly stressful.

To help you out, here are some tips to keep you financially fit:

Arrange for Financial Aid Early

One of the first things that you should make sure you do is arrange all of your student financial aid as early as possible. This starts with submitting the FAFSA online in January. Many state grant programs have early Spring deadlines and applying late can keep you from qualifying for these monies.

Colleges have limited amounts of funding for scholarships and grants, college work study and Perkins loans. Submitting financial aid information late may prevent you from participating in these programs.

If you need a loan, shop around and find the best rates. Always first take advantage of federally guaranteed loans like the Stafford and PLUS. The Stafford provides loans to students and the PLUS loans are available for parents.

Eligibility for PLUS loans is dependent on credit ratings

The Stafford loans offer low interest rates, allow deferment of payments while the student is in school and do not require a credit check. Plus you can get additional monies in the form of a Stafford unsubsidized loan if your parents are turned down for a PLUS loan.

Everyone is eligible for Stafford Unsubsidized loans regardless of income.

In addition, starting in July, the government has increased the amount students can borrow for these loans.

• 1st year dependent undergrad can borrow up to $3,500 (last year - $2,625)
• 2nd year dependent undergrad can borrow up to $4,500 (last year - $3,500)
• 1st year independent undergrad can borrow up to $7,500 (last year - $6,625)
• 2nd year independent undergrad can borrow up to $8,500 (last year - $7,500)
• Graduate Professional students - $20,500 (last year – $18,500)

Speak with your Financial Aid Office early about this.

In any case, apply early because it takes a couple of weeks to process the loan, obtain school certification, and sign the promissory note. Don’t wait until Fall registration to do this or the chances are likely that you will not have sufficient funding to attend school. For incoming freshman who will probably register in person, review the costs and be expected to pay for your classes after registering.

While students already enrolled have probably completed registration online and been billed accordingly, late registration or in person registration has less preparation time, so be prepared to pay the bill.

Create a College Loan Repayment Plan

Don’t wait until senior year to think about repaying your college loans.

Limit your borrowing. Consider paying interest costs year to year rather than allowing them to “capitalize” within the loan. Compounded interest can increase the total amount of your loan quickly and thereby increase the amount you will ultimately have to repay.

Find other ways to reduce your college costs so you can borrow less.

Look at opportunities to be a resident or dorm advisor or work security in order to eliminate or reduce room and board costs. Maybe it is cheaper to rent off campus, sharing costs with other roommates, or arrange to stay with a relative or commute to school.

In any of these scenarios, you can save thousands of dollars. Preparing your own meals can also significantly reduce board fees. Research loan forgiveness programs, such as Teach America or Peace Corps. Find employers in the public and private sector that reimburse tuition or pay off loans. These companies should be on the top of your list once you begin your job hunting.

Also make sure that the career you are pursuing pays a salary that will allow you to pay off your debt.

Create a College Budget

Before you arrive on campus, you should have a realistic budget.

How much money will you need on a monthly basis? Don’t forget to factor in unforeseen expenses like car repairs, insurance, medical and dental emergencies. Don’t forget telephone charges, text books and entertainment. These expenses can get out of hand very quickly.

Have you budgeted savings and the flight home for the holidays?

To be continued…

In the next entry, we’ll look at tips like avoiding credit cards, free money options, and developing good spending habits!!