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Minimizing Your Debt in College

By Amber Hilton,
Staff Writer

Many students find themselves buried in debt during and after college.

College is generally a period of great personal and intellectual growth. It's also the first time that many young adults are faced with the challenge of managing their own finances. Following these five tips for managing your finances in college can make those years more bearable and limit the amount of debt you have at graduation.

1. Get a job. Even if you're lucky enough to have financial help from your parents, a steady source of income can make your college years more bearable. Your studies should be your top priority, so it doesn't necessarily need to be a full-time gig. A little extra money coming in creates more wiggle room in your budget. Many schools offer work-study programs that allow students to earn some extra money at jobs right on campus.

2. Apply for scholarships. Scholarships remain an untapped resource for many college students. Unlike student loans, which have to be paid back with interest, scholarships are free money that is being handing out to worthy students. Many students don't apply for scholarships because they think it's too much work, or they're intimidated by the competition. The truth is, so many students feel this way that the competition often isn't as stiff as you'd imagine. And once you've filled out a few scholarship applications, the process gets much easier. At that point, its just a matter of copying information you've tracked down, photocopying references and rehashing old essays. Taking several hours to do this each semester is well worth the opportunity to get free money for college.

3. Limit how much you borrow. Many college students expect a high-paying job after graduation, so they take out more student loans than they really need. Just because you're eligible to borrow a certain amount each semester doesn't mean that you have to take it. The job market is tough, and you might not get a job that pays well- or even any job-immediately after college. You can also limit the amount you borrow by following tips one and two. Your scholarship money can help pay for tuition, whereas your wages can help pay for room and board, books and other expenses like pizza night with the roomies.

4. Create a budget. A budget is a great tool for anyone who wants to keep his or her finances in check. It's particularly helpful for college students, who might be new to managing money and generally have more funds going out than coming in. Because you have little money with which to work, it's important that you make the most of it through a well-planned budget. Budgets are pretty simple to set up on your own, but if necessary, ask a parent for help. It's just a matter of setting limits on spending categories, especially when it comes to unnecessary expenses, and sticking to them.

5. Be careful with credit cards. Some students use credit cards as another way to borrow money during college. You definitely don't need a credit card to get through college, but some students feel more comfortable having one for emergencies such as an unexpected book or project or a car part that suddenly needs replacing. The key is to use your credit card for true emergencies only and then to pay the balance off as quickly as possible by adding the expense into your budget. Having some student loan debt after college is one thing, because it's tax deductible and generally at a low interest rate, but credit card debt can quickly destroy your finances and start you off in the work world on the wrong foot.

Last edited: October 27, 2011, 8:34 pm EST
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