Many college students struggle with personal finance and have a hard time saving money. On top of that, many banks don’t offer a savings account that is conducive to a college student’s savings plan and budget. To get a decent interest rate, most banks require a large balance in the tens of thousands, which isn’t an easy feat for most students.
Decide on a Savings Plan
Most college students don’t think saving money is important. While it’s true you don’t necessarily have to start saving for retirement while in college (although it definitely helps), you do need a savings account. You need to plan for unexpected events and emergencies. It also helps to save money if something really incredible comes up – like a trip to Europe. Having the financial freedom to join your friends on a vacation is a much better choice than having to beg your parents for the funds.
If you’re saving up for something specific, like a $10,000 car, figure out how much you need to put away per month. If you’re just saving money, put away as much as you can per month. Even small savings can add up over time to large amounts of money. An extra $5 per month over a few years makes a huge difference, especially if you get a good interest rate.
Finding a Bank
The first step is finding a bank that offers what you need. You can start locally by visiting banks and credit unions in your area or you can start online by searching. Credit unions will be more friendly to smaller accounts, but you will be limited by their smaller network. While a large network is more important for checking accounts than savings accounts, this may still matter to you if you live far from home or plan on moving soon.
Choosing the Best Account
Once you find a bank that you think will work best for you, look carefully at their types of savings accounts. You want to find the best savings account for you. Look at minimum deposit amounts, monthly balances and any fees associated with the accounts. U.S. federal law only allows you to withdraw money a maximum of six times per month for an account to be considered a savings account. Most banks will turn your account into a checking account if you go over the withdraw limit, and sometimes they will charge you a fee.
It is always a good idea to be fully responsible with your finances when you are going to college. It helps you become a better person and allows you to become independent. Considering the current economic situation, it is important to consider all options and directly manage your money.
The process of applying for a scholarship is essentially similar to college application.
- Narrow down all potential choices into a list of grants that matches your needs and requirements
- Create appealing application supported by achievements and recommendations
Here are some steps to create a compelling scholarship application –
- Research early
- Read whether you are eligible for the scholarship grant
- Be well-organized with all your scholarship materials and have them ready prior to the application date
- Check your application and have it proofread
- Do not leave any items on the application blank
- Always follow instructions strictly
- Ensure your application is written legibly and clearly
- Keep a copy of the things you send out
- Submit your application early
It is considered a good idea to get in touch with the financial aid office of the universities or colleges that you want to attend to and inquire about their policies on scholarship grants outside their institutions.
There are various types of scholarships offered today and searching for the right one could be overwhelming for both students and parents. Before beginning the process of applying for any scholarship, it is important that you learn about the different types available and where to look for them.
Athletic scholarships are often awarded to high school athletes based on skill and performance. Unless you’re already a talented athlete, you should keep looking. Academic scholarships are based on your academic merit and financial scholarships are for those in financial need of assistance. Academic scholarships are hard to get because you’re being judged based on GPA, test scores, extracurricular activities and awards. Athletic and academic scholarships are very competitive and you need to start early to market your abilities to get noticed.
Places to look for private scholarships:
- High schools
- Religious organizations
- Chamber of commerce
- Philanthropic organizations
- Websites like CollegeScholarships.org
Your school can help you get scholarships, but unless you’re in the top of your class, you need to look for your own to get the best ones. Look into private scholarships, which are offered by foundations, organizations or companies that are working for the betterment of students.
Applying for private scholarships takes time and effort, but can be very beneficial. Apply for as many as you qualify for and even if you only get small ones, it will all add up to a bigger reward.
Have you filed your FAFSA yet? Don’t worry, I haven’t either. I’m still waiting on my mom to do her taxes. You’re allowed to file January 1 and it’s better to do it as close to then as possible so you can get everything squared away and have access to the most money. But if you can’t file until now or even the end of March, you’re still okay. It’s when you’re waiting until June or July that you should get worried.
Myth: If my parents make too much money, I can’t get any financial aid
Fact: You won’t qualify for nice things like Pell grants, but you can still qualify for federal loans. Depending on which year you’re in, you can get a nice chunk of tuition covered with a Stafford loan. I was able to get a subsidized loan, meaning the government pays the interest while in school. Unsubsidized you have to pay, but the interest rate is incredibly low.
Myth: I don’t have to worry about paying loan interest while in school.
Fact: Depends on your loan. If you get a loan with no accruing interest until after you graduate, then you don’t have to. But most loans do accrue interest. If you have a Parent PLUS loan, pay that interest right away. Better yet, don’t get another one of these loans unless you really really have to. They are a ripoff. The interest rate is incredibly high and if you let it build up while you’re in school, you’ll be amazed at the amount owed by graduation. Multiple that by four…ouch.
Myth: I don’t have to file scholarships and grants on my taxes.
Fact: Sometimes you do. It depends on what kind of scholarship. If you get mailed a 1099 form, you definitely do, if not, you still might. Always ask your financial aid office just in case.
I’m still four years away from having to repay my student loans, but I know I should start thinking about it now. Get Rich Slowly posted a great guide to repay student loans.
If you have federal loans, your options are much simpler. The interest rate is lower, so it’s usually best to just pay them as scheduled. Private loans are a whole different ball park and very confusing because terms usually vary from provider to provider, while government-backed loans are stuck with the federal terms given, no matter who your lender is.
One option is consolidation, which is not the best option unless you seriously can’t afford the monthly payments. Consolidation leads to a higher interest rate because you’re extending the life of the loan and there are more complications with private loans. Depending on your financial plan, consolidation can be a good or a bad option.
There are also options for loan forgiveness if you are going to be joining the Peace Corps or the military (or other programs that are listed on the FinAid website). I personally don’t qualify for any of this, so I hope I’ll get a high-paying job with my really expensive fancy degree so I can pay my loans off quickly.
Also, you can’t simply just declare bankruptcy anymore and be done with your loans. Certain federal loans will go away, but not private loans. The government decided on this a few years ago because too many students were coming out of college and declaring bankruptcy right off the bat. There are certain circumstances surrounding the issue, which are covered in more detail here.
The FinAid website also has a Loan Calculator that just made me feel very sad about the amount of interest I’m going to pay just on my freshman Stafford loan. Bring on the next three years worth of borrowed money.
Student loans are the answer to money problems these days, especially because you can defer payments until after graduation, unlike other loans. But if you aren’t careful, you can end up owing a lot more than you borrowed. I was able to get $4000 in scholarships, but the rest of my expenses are covered by loans. I was able to get a subsidized Stafford loan through Wells Fargo (the government pays the interest while I’m in school) for $3500, but all the rest is in a Parent PLUS loan, which has a high interest rate and although payments are differed, it accrues interest now. If you can get Stafford loans, even if it’s unsubsidized, I’d take advantage, even if you need another loan as well. Stafford loans are a great deal.
I didn’t have to get any private student loans, but for some people, this is what they choose to do for whatever reason. Think Financial offers student loans as well as financial advice and resources and a comparison chart. Think Financial is a well-known student loan provider in cooperation with Charter One Bank and their website is very helpful. They don’t require collateral, and you can apply and get an answer in fifteen minutes and you can use the money for all expenses, unlike some providers. Private loans also give you your money much faster than going through a university.
The biggest reason people choose to go this route is because the amount you can borrow is up to $40,000 for one year, which is a lot more than financial aid offices award students. There are other loan companies, such as Sallie Mae and My Rich Uncle, although I personally like Think Financial or Chase.
If you’re going to go this route, I definitely suggest doing a lot of research into the company and the rates. Be sure to read the fine print and make sure you’re getting a fixed rate. Some companies, such as Sallie Mae have allegations against them so beware of that. Also, private loans usually require good credit to be approved so it helps to have a parent or older family member that’s willing to help. But if they’re going to put their name on it, sometimes it’s better to take out a second mortgage or do a home equity loan with a better rate.
One of the greatest things about college is the free money people will throw at you. Yes, that’s right, scholarships and grants. Unfortunately, your income has to be pretty low to qualify for most grants, I’m talking low enough that it’s hard to even live on. So, scholarships are your best friend.
Most scholarship applications include an essay. And it may not seem like a big deal, unless you’re applying for multiple scholarships, in which case it’s an extremely big deal because that means multiple essays. Not true. Usually, the scholarship essays are pretty generic and you can use the same essay over an over again. A good idea is to write one about your life and any obstacles you’ve overcome that made you a better person. Those are killer. But a better one is something that will tell the reader about you and what you really care about (your dog, Thumper or how you live to play baseball.) Did you really volunteer with the elderly because you live to help people or to put it on your college application? If you’re a funny person, let them know that. If you are a bleeding heart, bleed all over that paper. An essay is about selling yourself and if you really have to embellish, then go ahead. You have bigger problems anyway.
Where to find them
Your school advisers have the best collection of local scholarships, which give you a better chance. Also, most colleges have their own scholarships, which I think are just discounts since they’re the ones giving it to you. Either way, it’s money you don’t have to pay back. Most undergraduates with decent grades and a half decent essay can get something out of their school if they apply. After you’ve tapped those resources, online is the next step. Here’s three websites that were crucial for me.
Be careful though, when giving out personal information. Make sure it’s a legitimate scholarship before you give too much info. Stay away if they want some of your money.
Because I have $50 in my bank account and my parents aren’t helping with paying for college, I naturally had to take out some student loans. After I got my refund check (two weeks after my school got my money from the bank) and then after another week of my bank holding the check, I will finally get my refund of a little under $5000 tomorrow. I’ve already budgeted myself out for this semester and this is just one part of my financial aid for the fall. I’ll be getting another $1750 at the end of September. After I take my cut for this month, I’m putting the rest into an online savings account with a high interest rate.
I’ve narrowed it down to WaMu and CapitalOne. Their interest rates are really good (WaMu 4.89%, CapitalOne 4.88%) and APY for both is 5%. Minimum to open an account is $1. No minimum balance, but for WaMu, you get charged monthly fee of $4 if balance goes below $300. Also, if I go through WaMu, in order to get those rates, I have to sign up for their free checking account, which I was considering doing anyway because Bank of America sucks. Downside to this is there aren’t any branches near me. The closest is two hours away. I am, however, allowed to transfer money online, which is what I’d do anyway. I also get free checks and a debit card so that’s what’s necessary anyway.