What does your character say about you? What does it say about your finances? So often what we spend, what we save, and what we owe are reflections of who we are personally. When students receive financial aid refunds, how they proceed with large amounts of funds can lead to either long-term financial advantage or disadvantage.
Often, the refund includes grant, scholarship, and loan amounts after tuition and fees have been paid. While grant and scholarship funds do not require repayment, loans do. Subsidized loans withhold interest until after graduation, while unsubsidized loans begin compounding interest upon receiving funds. So what should students do with all of that refund money?
Students who think in short-term sense will feel like they have plenty of time to repay back loans, so spending a little (or a lot) on oneself now cannot be so bad. Students who think in the long-term sense will feel like they should prioritize spending habits. Maybe they should save some for potential hard times, or pay rent through the semester, or save for the next semester's expenses.
The latter option can lead to another choice that some students may not know. Just because a student is eligible for aid doesn't mean they have to accept it. Students get award letters or statements revealing the grants, scholarships, or loans they have applied for, or qualified for, and received. There is the option to accept portions as well as reject portions. So by saving some money, students may not need the money they are awarded, which means that if student loans are rejected in following semesters, students will have less to repay.
When it comes to money, moderation must be exercised. Students may need new clothes or professional attire for events, but that doesn't mean "overspend." Students may need a new computer, but maybe not the most expensive one. Some students may need a car, but necessity should say one needs a "work-school-home" car, not the absolute latest car with every amenity and bonus feature. Instead of pursuing lavishness, build emergency savings in the event that eligibility changes for one's scholarship or grant, grades slip below requirements, that student falls ill, etc. That's showing financial common sense, and great financial character.
I hope this post helps you in your academic pursuits. Be blessed!
I originally thought about writing two separate posts, but I found it easier to combine these two into one.
Some students live in cities containing many colleges and/or universities. Some of them are technical schools, offering diplomas, certificates, or Associate degrees. Some are four-year institutions. On the other hand, some students live in small towns and cities, and have no other option but to leave that area to attend a four-year college or university for their career goals. Still, there is the underlying need to choose the right school to attend, especially from a financial standpoint.
Careers like engineering, medicine, or even business require certain programs that may be only offered at a particular institution. But many liberal arts and sciences are offered at several institutions—both local and distant. Students should take time to evaluate what career they wish to pursue and find the least expensive way to do that. If a student is awarded scholarships, then the financial aspect looks easier to manage. But in regards to student loans, students must understand that majors such as Biology, Chemistry, Mathematics, English, are structurally the same at any institution. Even areas of education and health professions carry similar curricula. Students must become certified, registered, and/or licensed after graduation regardless of which college they attend.
For example, an aspiring Biology major sees that two prospective colleges have that field of study. One institution costs three times as much as the other. Why pay three times as much for practically the same subject matter and curriculum? Unless a scholarship is awarded, that student may need loans to pay for school. Even if the cheaper school required the use of student loans, the amount is still three times less that what would be needed for the other school in the example.
Another thing students should seriously evaluate is the average salary of their career choices. If I wanted to become a teacher in elementary school, and I researched the salary range of new graduates, that may give me some indication of how much student loan money would be appropriate for obtaining that particular degree. If one’s starting yearly salary is $35,000, then paying $35,000 for college is not cool, and neither is repaying that much in student loans.
My advice: look at the median salary for your career choice. Look at the history of the career salaries and how much they have changed over time. It is rare that a new graduate will make far above the average salary, so be mindful of this when you are convincing yourself that you can easily pay back student loan amounts. Rent, utilities, and other bills may take precedent over student loans as they are essential for day-to-day living. But you also want to be able to save for retirement, for emergency, and enjoy some of your money. So limit what you owe.
I hope this helped you in your academic endeavors. God Bless.
Happy New Year!! It is January, which means that it is time to return to class! The holiday break has ended and now it is back to the grind for the semester. But this is also an important time for financial reasons. Usually after Jan. 1, both returning college students and high school seniors applying to college are able to complete the Free Application for Federal Student Aid (FAFSA). This form allows students to view their eligibility for certain federal grants and loans. Recently, students and their parents are to fill out the application as early as October. (See www.fafsa.ed.gov, but we will talk about this more soon.
This month, I want to focus on why I am not fond of student loans. Scholarships and grants are wonderful sources of financial aid to pay for school costs. Student loans can be beneficial, too, but often they can be misused and lead to financial instability even after graduation. While unexpected expenses can arise throughout one's college years, it sometimes the lack of knowledge and immaturity about finances that lead to large amouts of debt. I feel that if more information--realistic, not-sugar-coated information about student loans is expressed while in high school and first year of college, then maybe students will have better undergraduate and post-graduate financial statuses.
In an effort to help decrease the need of student loans, I introduce my 4 Cs: cost, character, career goals, and curriculum. There is no set order to discussing these topics, so my order is random. Nevertheless, understanding these four areas will hopefully provide further information into not only the improper use of student loans, but how you can succeed around and/or without them. Stay tuned!