Summertime means freedom for students as they move into their final years of high school, prepare for college or embark for life after school. While the future stands open before them, these first steps can also be vital in establishing long-term financial health. Establishing a credit history provides benefits for future investments (house or car purchases). For that reason it’s important to use credit wisely so that students avoid creating negative credit histories that can make financial life even more difficult down the road.
New regulations have placed restrictions on access to credit cards by those younger than 21 and also put some limits on credit card marketing on campus. Nonetheless, students are still signing up for credit cards and using them. Often college freshmen are enticed into signing up for a card as they make the adjustment to social, and financial, life on campus. Here are some tips to bear in mind for high school or college students using credit cards.
Credit cards shouldn’t replace budgeting
There’s a reason so many people say “With freedom comes responsibility.” The first years out of high school offer many opportunities to make independent choices, often where money is concerned. But poor spending habits can cause long-term problems. It is all too common for students to exhaust all the funds allocated to them for the semester way before the semester ends because they fail to budget properly. Others have a reckless disregard for managing their money and spend like money grows on trees. By establishing a budget and looking for ways to save on everything from textbooks to groceries, students will learn how to stretch their dollars and not have to fall back on credit cards to make up for the difference.
Don’t fall in the minimum-payment trap
Those students who do use their credit card will often make minimum payments while continuing to spend with their credit card. Paying the minimum amount due might keep the amount from being past due, but students will end spending far because of interest applied to the balance each month, sometimes meaning that a credit card bill could take years to pay off. Read the information on monthly credit card statements to find out how long it would take to pay off the balance only paying the minimum amount due. It might shock students enough to adjust their approach to repayment.
Credit cards aren’t emergency loans
Many people get credit cards for use in “emergencies,” but a fashion emergency might not constitute the same need as a car crash. Being able to weigh the difference between “wants” and “needs” makes a big difference in creating a monthly budget. Placing restrictions on when and how to use credit cards within that balance makes students savvy about their credit
Don’t make credit cards an ATM
It may not seem like such a bad idea to use a cash advance from a credit card if things get a little tight. But cash advances come with a standard fee of as much as $35 or 3 percent to 5 percent of the total amount. Also, they often have higher interest rates than your card, and the interest starts accruing immediately, leaving you without a grace period to pay off the balance.
In the end, financial responsibility is a valuable part of freedom for students in high school or after. Few things can impact future finances than a poor credit score and burdensome credit card debt. Take the time to think about the long-term effects of using credit cards. Then make (and stick) to a plan for using them properly.
The snow coats are finally put away in place of the short-sleeve shirts. Spring is here, with summer right behind. For high school seniors, the end of years of hard work are within your grasp with the goal of a college education just beyond it. But rather than coasting to the finish line, students looking to save money and hit the ground running once they get to college will find the next few months important.
“Summer melt” is the term used in higher education to describe students that intend to go to college after high school graduation, but never make it to college in the fall. Their college plans have dripped away like an ice cream cone in the July heat. Here are some tips to stay on track and keep those college plans firm this summer, and even saving a few dollars once you get there:
- Don’t fall victim to “senioritis.” The end of high school is certainly in reach, but that doesn’t mean students should take their foot off the pedal when it comes to school. Completing AP or dual enrollment courses in high school can reduce the number of credits that need to be taken in college. Think of it as getting free classes that would otherwise be part of tuition costs.
- Plan ahead to avoid changing majors. It’s not out of the ordinary for students to get to college not knowing exactly what they want to do. But changing majors, even once, can add a year or more to a student’s time in college. Use this summer to explore areas of career interest as a volunteer or intern to get a taste of what the day-to-day life in a particular job will be like. It might lead to reconsidering a college major before too much time and money is committed.
- Consider summer courses. Just like taking the AP, any courses that can be taken before college will help later. General education, or underclass, units can be taken at local community colleges, often with smaller class sizes and for less money than when a student gets to a college or university. Math is math, no matter where you take it. Why not get a head start now?
- Take a part-time job. Working during college can help reduce the amount of money that needs to be borrowed, in addition to providing valuable job experience. Use the summer to help build a nest egg for college expenses.
- Research textbook and supply rentals. Course books can be one of the biggest expenses for students once they get to college. While many colleges allow students to rent textbooks instead of buying them, online sites such as chegg.com, eFollett.com, textbooks.com and others can provide other options and the opportunity to compare prices. Getting to know the options ahead of time in school can lead to saving hundreds of dollars come fall.
There’s no way around it: getting the degree or certificate that will connect you with your future costs money. No matter the type of education students pursue after high school, cost will often play a factor in not only determining where students go to school, but, in many cases, impact whether or not they complete their degree and find the career they’ve long sought.
Many students and families rely on private student loans which come with interest rates that can feel daunting not only during school but in the years after. However, thanks to the Free Application for Federal Student Aid (FAFSA), students are discovering many roads to free money that can help reduce their student debt and help them succeed.
Completing the FAFSA arms students with a tool, a baseline of financial information and need for aid that can be used for a variety of state and federal grants, as well as private scholarships. There are many ways for students to find free money that require nothing more than the time to research and apply in order to receive some financial help for their education. Here are few places to start:
State Grants and Scholarships
The state of Iowa provides funding for grant programs to help with higher education costs. Students who receive Iowa-funded grants and scholarships must be Iowa residents, attend an eligible Iowa college or university and meet other criteria specific to each program. Scholarships and grants do not have to be repaid and can significantly reduce college expenses. The chart below provides an overview of the application requirements for each scholarship and grant administered by Iowa College Aid. For specific criteria, go to IowaCollegeAid.gov.
Every year, MILLIONS of dollars in private scholarships go unclaimed; not because no qualified candidates applied, but because no candidates applied at all.
Scholarships are available from private sources including businesses, foundations, religious organizations, community groups and fraternal organizations. High school counselors are excellent resources for scholarship information, as are libraries and college financial aid administrators.
Web searches also allow students and families to explore scholarship possibilities. Reputable organizations will NOT charge fees for scholarship searches.
Think of finding scholarships like a part-time job. If you spend 5 hours researching and applying for scholarships that lead to a $1,000 scholarship, you’ve just made $200 per hour. That’s pretty good money for working part-time! Here are some ways to track down private scholarship opportunities:
- Work: Have your parents ask whether their employers offer college scholarships to children of employees.
- School networks: Many high schools offer scholarships for graduating students. Also check with the area alumni association of your college.
- Community organizations: Many community organizations sponsor local scholarships. Check your city’s website or call your local community center for lists of organizations in your area.
- Religious organizations: Find out if your place of worship offers scholarships. If not, it might partner with other organizations.
- Field of study: Your college might offer scholarships specific to your major. Contact your program department.
College and University Scholarships
Your college or university might provide scholarships or financial awards from its institutional funds. Often, institutional scholarships go to recipients who meet specific requirements related to particular areas of study, academic achievements, outstanding talent, leadership, athletic ability or other criteria. Contact the financial aid office and ask about institutional programs available through the college or through on-campus organizations.
Federal grants are awarded to both Iowa resident and non-resident students. Eligible students can receive these federal grants for attendance at any postsecondary education institution participating in the program. Federal grants include:
- Pell Grants
Pell Grants are funded by the federal government to assist the neediest undergraduate students. The maximum award is $5,920 for the 2017-18 award year.
- Supplemental Educational Opportunity Grants
Federal Supplemental Educational Opportunity Grants (SEOG) are based on financial need. Eligible recipients receive between $100 and $4,000 per year. Not all colleges participate.
- Teacher Education Assistance for College and Higher Education Grants (TEACH Grants)
The Teacher Education Assistance for College and Higher Education (TEACH) Grant program helps students in teaching preparation programs. In exchange for a TEACH Grant, recipients agree to serve as full-time teachers in high-need fields in public or private non-profit elementary or secondary schools that serve low-income students. These grants are available to eligible undergraduate, post-baccalaureate and graduate students for a maximum amount of $4,000 per year. Students must meet academic standards.
Taking the time to track down free money for school now may seem like hard work, but the impact it will make in saving students from debt as they start their careers will be an even greater reward as they start their careers.
Students have a lot to deal with as they prepare for college and figure out how to pay for their education. But what about once they get to school? Financial aid can help pay for the cost of school, but covering that distance between direct costs (tuition and school fees) and indirect costs (food, books… and just about everything else) is often the first chance for students to explore what it’s like to live with the same financial pressures as an adult.
Having a good game plan is important either planning for college or dealing with creating a budget and financial goals during (and after) college. Here are some tips to help students develop positive habits with money both now and throughout their life:
- Make a budget. Commit to creating a monthly budget AND live within your budget each month.
- Utilize a calendar. A calendar is not just for plotting your class schedule, campus organizational meetings, and social events. A calendar can be an effective tool for managing the due dates for your monthly bills—rent, cell phone bill, car payment, utility bill, etc. Making note of due dates helps to ensure that you will not miss a payment and potentially harm your credit history.
- Shop around for text books. Many bookstores, as well as online retailers, offer used textbooks for much cheaper than buying a “new” textbook. If you won’t want to keep your textbook for future reference after a class has concluded, consider renting a textbook for the semester.
- File the FAFSA on-time, every year. If you plan on attending college in the upcoming school year, be sure to file your Free Application for Federal Student Aid (FAFSA) prior to your college’s priority deadline. Doing so will ensure you are considered for all financial aid opportunities the school has to offer.
- Get a part-time job. A part-time job can allow you to meet your basic needs, as well as reducing the amount of student loans you need to borrow. Working 15 hours per week at a part-time job can dramatically reduce your need for student loans to cover living expenses. Additionally, most colleges have numerous on-campus employment opportunities for students.
- Plan early for a summer internship. During the first week of the spring semester, visit your college’s career placement office and discuss your desire for an internship during the upcoming summer with a career advisor. Career advisors can provide information about companies looking for interns, as well as information regarding career fairs on campus. Many internships pay a stipend or salary which can help pay for expenses while you’re in college and can lead to a job after graduation.
- Know your financial aid options. Visit the Financial Aid office on your campus during the first three weeks of the spring semester to discuss your current year’s financial aid and to check into scholarships and grants available for next year.
- Be a savvy shopper. At the grocery store, opt for the store-brand product. It is often significantly cheaper than its name-brand counterpart, and the money you save can be used to pay interest on your student loans or keep you from having to borrow more loans next year.
- Protect your Personal Information. If you aren’t already, start safeguarding your Social Security Number, credit card and bank account numbers, along with any other non-public personal information. Shredding sensitive information will ensure it doesn’t fall into the wrong hands and can help protect you from identity theft.
- Separate Needs from Wants. Although it may seem like you need that morning latte from the local coffee house to start your day; at $3.50 per day, that adds up to $1,277.50 per year! Make your financial choices based on what is necessary to meet your basic needs, and avoid wasting money and borrowing more to satisfy your wants.
Keeping these 10 tips in mind can be difficult. But by doing even a few of these, students set themselves up for a financially fit future.
After years of hard work and months of waiting, students are starting to receive acceptance letters from colleges. Those students accepted into more than one college might face some difficult decisions to make when weighing the pros and cons of one school against another.
“College fit” means finding the school that best meets at student’s needs for the future, but there is no such thing as a “perfect school.” Students shouldn’t stress themselves out thinking that if they pick the wrong school, their life will be ruined. After all, college is what you make of it. But with a little research and effort, students and families can feel more secure about the school they pick. Here are some tips :
Compare financial aid awards
While cost shouldn’t be the only thing considered when deciding between schools, the financial aid offered can go a long way to giving one school an edge over another. The financial aid award letter often comes after the acceptance letter, and has many things to consider when reviewing. Check out our videos on comparing financial aid award letters for more tips (here and here).
Dig deeper with schools
Students already researched schools before applying, but now is a chance to get more detailed information to get a more complete picture of what a school offers, not only in education, but day-to-day life. Such questions can include:
- What is the graduation rate? How many students return after their freshman year?
- Are there work or volunteer opportunities that reflect a student’s major or interests?
- What do students do for fun?
- What student support services does the school offer?
Students can talk to college admissions counselors, current students, recent grads or even the college’s official website to research these and other subjects. It’s important to use only trustworthy sources of information and to recognize the difference between fact and opinion. A college’s official website and its admission officers are often the best sources of factual information about that college.
Visit — or revisit — the campuses
Now that a student has been accepted to a school, a college visit becomes even more important. Even if a family has taken a campus visit previously, going back with a more focused approach will help students see if they truly see themselves as a student at that school. Can’t visit a campus? Call or email the admission office with questions, reach out to professors in your areas of interest or ask to connect current students and recent graduates. High school counselors and teachers may also be a good source to recent grads or current students.
Think about it
Research and asking questions can provide the information that students need to make a decision, but asking and answering the important questions can only be done by a student with their family. How did the student feel during their campus visit? Did the school offer both the academic and social aspects that will lead to success? Will they be happy there? These basic questions might lead to some further reflection about each school.
Make your decision
The good news is that schools don’t need to hear back immediately. Many colleges don’t expect a final decision until May 1, so students and families have some time to make up their mind. Lay out the pros and cons and find the school that fits best with financial, academic and career goals. Remember, though, that colleges are serious about reply deadlines. Not sending a deposit by the deadline can lose a student’s place in the incoming class.
Video: Identify, Separate Loans From Grants on Award Letters to Better Understand Out-Of-Pocket Costs
Getting accepted into college is an exciting moment for students and families who are ready to embark on the next part of their educational journey, but can often be offset by concerns about just how much school will cost both now and after graduation.
Financial aid award letters help students and families get a better understanding of what to expect both in terms of money being provided by the school and state, through scholarships and grants, and costs of attendance (COA) at the school.
In part two of our “Understanding Your Financial Aid Award Letter” video series, we discuss how to best identify repayable financial aid options and separate them from scholarships and grants to get a better picture of the actual financial responsibility that will be required to attend a school.
More often than not, there is a gap between the “free” money being offered to a student and the COA, leaving families to determine the best way to meet the financial requirements.
On many letters, both federal and private loans are included as possible options to bridge that gap. However, as there is currently no standard format for schools to consistently show financial aid options, loan amounts are often included in the same area as scholarships or grants. At a quick glance, families might not realize that loans, which must be repaid after graduation, are being included with the “free” money of grants and scholarships.
For more tips, advice and information for preparing for college, check out Iowa College Aid’s “Your Course to College,” a free downloadable guide for students, families and schools available at https://www.iowacollegeaid.gov/YourCourse
Getting accepted to the college or university of their dreams is the culmination of a years-long effort. But receiving an acceptance letter isn’t the end of the journey, just the start of the next one.
For many families, the excitement of being accepted into a school is often soon replaced by concerns of how to pay for that education. Even those families who have put together a strong financial plan for college may not have a clear picture of what school will cost when their student leaves home.
The financial aid award letter is a document sent to families by the school shortly after the acceptance letter, if not included as part of the acceptance package. The award letter includes cost of attendance and other estimated costs, as well as any scholarships, grants and other funds to help pay for a student’s education.
As there is no standard format for presenting information on the financial aid award letter, families might have a difficult time comparing the actual costs of one school versus another, let alone clearly understand their financial responsibility to their student’s education.
In our new two-part video, we look at the elements of a financial aid award letter and offer tips to families for understanding the true cost of a college education. By following these tips, families can better compare schools and ask the questions of financial aid officers to make the best financial decision for their student’s education.