Minimizing College Loans-Budgeting for College Students

Many high school graduates will head off to college soon to live on their own for the first time. One of the biggest challenges they'll face - perhaps even more important than getting good grades and making good friends - is managing their money.

Here's why. These days most students begin college with some type of student loan to help pay the cost of tuition, fees and books. As has been increasingly publicized in recent months, the total student loan indebtedness is now over $1 trillion and may pose the risk of a new financial catastrophe.

That's why it is important for students to avoid using student loans to pay for routine living expenses or entertainment. I have personally counseled college students who have taken out the maximum student loans available and used the "extra" money to pay for meals and entertainment. One student even maxed out his student loans and purchased a video game console with a portion of the proceeds. What students don't seem to grasp is that this is the same as charging meals or entertainment on a credit card and letting the balance accumulate and accrue interest for four years or more.

That's why basic financial management skills are so important, and the first step is to create a monthly budget and stick to it. Not only will it help to manage finances throughout the college years, but it is an essential skill that will be needed throughout life and could be as important as anything you'll learn in the classroom. A budget, done properly, will have lasting benefits.

Keeping a barrier between pure education expenses and living expenses can keep student debt levels lower.
Often, it is the little everyday purchases that make the biggest impact on your budget. It's important to track your expenses and look for ways to keep costs down.  An internet search for "budgeting software" or
"budgeting worksheets" will bring up hundreds of results to choose from.   Find the one that works best for you.

As a college student you may feel like you're living hand-to-mouth but try to save some money and put it in a savings account. You'll find you'll need it, not only for emergencies, but for the unexpected expenses you know will come up, such as the last-minute extra book your college professor will assign or repairs for your car. Being prepared with savings will keep a minor financial setback from becoming a financial emergency.

As you prepare a college budget it may become clear that you might need another source of income to cover your expenses.  Instead of borrowing more money, consider getting a part-time job . Even a small paycheck each week can make it easier to keep your expenses and your loans to a minimum.