College is a fun and exciting time when transitioning to the professional world, but can be a tad overwhelming for some who just aren't prepared to handle the new responsibilities. According to the Department of Education, for freshmen who enrolled in 2004, only 58% of them graduated by 2010. Of course, the reasoning behind each dropout is different for everyone, but money is obviously a huge factor with tuition rates rising the way they are. A publication by The Education Trust,
Priced Out: How the Wrong Financial-Aid Policies Hurt Low-Income Students, revealed that out of 1,200 four-year colleges and universities that have at least 30% low-income students enrolled, only five offer these students an affordable way to attain a bachelor's degree. Despite the grandeur of all the prestige and possibilities associated with attending college, it can be taken away prematurely if money isn't a high priority.
The importance of personal finance
Granted, poor grades, skipping class and just not meeting academic requirements all play into high dropout rates, but many low-income students trying to succeed need to take up a job or two to support themselves through college. This diverts attention from completing coursework to meeting job obligations which ultimately produces disparity if they notice grades are slipping because of the inability to handle both simultaneously. Eventually, you have to come to a point where you decide whether it's worth paying all this extra money for school amassing a ton of debt when you feel you can't give it your all. Personal finance is a huge issue when it comes to staying in school. Sometimes, though, when discussing matters like these, it's a good idea to go over the basics. If you're heading to college (or are already enrolled) and you don't have sound principles in place, then it could end up costing you a ton of time and money that you'll regret for a long time. This article is simply here to help lay the foundation when it comes to personal finance in college.
Pre-college planning
There are a few ways you can prepare for college financially, but some of the most effective ways are available way before it's time to go to college. Oftentimes, parents will set-up a tax advantaged 529 plan for their child which would definitely help stave-off the high tuition and fees associated with college. But if not, then you're sort of up the creek without a paddle so to speak. Actions that you can take include applying for a federal student loan or deciding to go to a community college then transferring to a 4-year college. If you don't qualify for a subsidized Stafford loan, an unsubsidized loan that allows you to pay interest while in school is preferred over private loans. Still, federal loans might not be enough so you might have to take out a private loan to cover the difference. Yet before you do that, there are more options available that can help you afford a higher education.
Find easy scholarships
Scholarships are always out there for those willing to search. This is essentially free money that simply requires a small amount of work to attain. Whether that be writing an essay, performing some community service or participating in sports, scholarships can cut down your cost of education considerably if you're actively searching and apply for them. Even more valuable are
easy scholarships that can consist of sweepstakes, have low GPA requirements or anything that calls for little to no work on your part. A few super easy scholarships include the Gen and Kelly Tanabe Scholarship which pays out $1,000 for those who write a 250 word essay. Another one comes from CourageToGrow.com which requires students have at least a 2.5 GPA and write a 250 word essay why they believe they deserve the $500 scholarship. Being on the lookout for time-saving scholarships like these are probably more valuable than traditional scholarships with greater award amounts as they free up time to do other things (like hunt for more scholarships).
Take your finances personal
Another way to afford a higher education is to simply steward your money the best way you can. This may seem a tad small compared to the huge financial burden of college, but if you do it right it can go a long way in saving some cash. Using coupons, finding student discounts and opting for anything with the "free" label on it is a no-brainer, but you can go a step further with free budgeting software like Mint and PearBudget to help rein in spending habits. Applying for student credit cards with great rewards programs is another option. The Citi Forward student card is one of the best out there right now plus it's recommended by NerdWallet, a popular credit card comparison site. The more you use the card the more points you gain to buy other equipment like laptops and other gadgets (buying is sort of a misnomer since points don't cost you a thing!). And if you pay your bill on time, you get an extra 100 points. Building a solid credit history while in college will help when it's time to purchase a car or buy a new home once graduated. Bottomline, student credit cards encourage responsible spending which is important when it comes to personal finance.
Take control of your destiny
Again, it sucks if your parents never set-up a 529 plan for you to go to college, but you're old enough now to plan for the next stage of your life. For instance, establishing an emergency fund in a high yield savings account as soon as possible will help immensely when you're out on your own. You can put a nice chunk of change in before college so that it can grow in interest while you pursue a degree. Generally, you'll want it to be at least three times the amount of your monthly expenses so be sure you deposit into a savings account with super high rates. Just don't take anything out in the four to six years you're pursuing your degree.
We can all use someone to lean on
There are countless other things that you can do to stay afloat in college and avoid being a statistic. Dropout rates are startling, but each person has a different reason for leaving because each person is confronted with a unique set circumstances. Only you know your situation the best which gives you the greatest power to make changes and adjustments. Still though, if you feel you could use a bit extra help, there are companies that offer executive style coaching to help improve graduation rates. Just visit InsideTrack.com, a leading student coaching service, to find out more about what's available to help you through college.