1. Don’t leave financial aid on the table
Billions of dollars in scholarship money is up for grabs each year, but many students don’t even try to get it.
High schoolers who graduated in 2021 left an estimated $3.75 billion in Pell Grants on the table because they failed to fill out the Free Application for Federal Student Aid.
That was all free government money that doesn’t need to be repaid — up to $6,345 per person, based on need.
And there’s more than just federal funds at stake. An estimated $100 million in scholarships is abandoned each year, mostly due to a lack of applicants.
You might think you need straight As and to be living in extreme poverty to qualify for free money, but that’s not the case. Some scholarships are based on community involvement, special talents, physical characteristics, companies your family works for and even your last name.
Free money can come from the federal government, your state, your college or a private company or nonprofit. Look and ask around for what’s available. You can also run searches through portals like Fastweb.
Personal loans to get you one step ahead
2. Take finance-focused electives
Not only do many college grads leave school laden with debt, but they also leave clueless about money. They can recount 3,000 years of ancient Chinese history, but they don’t know how to create a budget, buy car insurance or file their taxes.
Don’t let this be you.
When choosing electives, it’s tempting to fill your schedule with easy blow-off classes. But when faced with the decision between Intro to Personal Finance and a tree-climbing class (yes, that’s an actual course at Cornell University), do yourself a favor and sharpen your money skills.
3. Take advantage of your student status
Your student ID doubles as a money-saving tool if you know how to take advantage of it.
Armed with your ID, you can score discounts on clothes, gyms, travel, restaurants, bars and loads of entertainment activities. If you need to buy a laptop or important software, Apple and Microsoft both have education pricing that can slash hundreds of dollars from your bill.
Apart from discounted purchases, many banks also waive fees and offer special accounts for students. While you’re there, open up a student-friendly credit card to start building your credit score in college.
Make a habit of carrying your ID with you at all times and asking about student discounts everywhere you go.
4. Avoid the big money-losing traps
It’s possible to be penny-wise but pound-foolish. Don’t pat yourself on the back for buying the cheaper brand of ramen if you’re burning through cash on major expenses you could cut or avoid.
Before you max out your student loans, make sure you’re avoiding common traps like:
- Taking excess classes. Due to poor planning or bad information, many students end up taking more classes than they need to graduate. Students who obtain a two-year associate’s degree complete an average of 22 excess credits, a 2017 report by Complete College America found. Depending on your situation, that can be a huge amount of wasted money and time.
- Owning a car. It’s possible a car is the only thing allowing you to live in an affordable location or get to work after class. If not, understand that even a fully paid-off car is a money-losing machine that will cost you several hundred dollars per month between insurance, gas and repairs. Take the bus.
- Buying new textbooks. The average student spent an estimated $1,240 to $1,460 on books and supplies in the 2021-22 academic year. Unless you’re being forced to buy new, you might save as much as 90% by checking online student groups and used-textbook marketplaces.
- Paying high phone bills. The average person under 25 years old spends $60 per month on cell phone services. If you dig into your options, you might be able to cut that in half. For example, Visible’s unlimited plan only costs $25 per month if you join up with other friends, family members or classmates.
5. Start investing what you can now
This might sound kind of crazy for a poor college student, but your youth is an incredibly potent investing tool. The more time your money stays invested, the longer it has to compound. Your earnings, if you reinvest them, start making their own earnings.
Even if you can only afford small amounts to begin with, it can grow substantially with enough time. For example, if you invest $1,200 at age 20 and achieve an average annual return of 7% (compounding monthly), it will grow to about $32,000 by the time you retire at age 67. If you wait until age 30 to make that same $1,200 investment, it will be worth half that much by retirement.
Of course, if you have student loans or other debt, you need to decide what to prioritize. While paying down debt quickly is a surefire way to save, investing can have more potential as long as your expected rate of return is higher than the interest rate you’re paying on your debt.
It depends on your financial situation and tolerance for risk. Either way, be sure to take all that money you save on student discounts, used textbooks and bumming rides off your friends and squirrel it away with purpose.
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Don’t let a lack of cash hold you back.