It seems like we’ve got a student loan crisis on our hands. Although I generally don’t include student loans as part of the “Bad Debt” category since education is vital to getting ahead, student loans is still debt after all.
One of the best rule of thumb when deciding on how much debt to take is borrowing no more than the likely first year salary amount you expect to receive upon graduation. In other words, if you plan to be a starving artist making $18,000 a year, $18,000 is the max you should borrow. If you plan to work for Google, perhaps borrowing up to $75,000 is reasonable.
I graduated business school in 2006 with about $55,000 in student debt and paid it off in 2009 during the financial crisis. I figure it was better to eradicate debt than watch my money disappear into thin air and get nothing in return! Paying off debt feels so good that sometimes I think I should get into debt just to pay it off! You get the goodies that debt provides and the satisfaction of accomplishment once it disappears.
Here are some tips on how to save money as a student.
Shop Smart
Sales or bust! As a student, you should treat yourself like a poor student with little to no income. This means store brands and not name brands. Target and not Gucci. Sales and not full price. Safeway ice cream not Haagen-Daz!
Make Your Own Meals
With a full schedule, you may not always feel like cooking a complex meal, but suck it up and cook that tasty pasta, Ragu marinara sauce, and tap water like a champ! Eating out is terribly expensive. Save your eating out nights for that special someone you want to impress. Plus, making your own meals is almost always healthier. Who wants to put on the freshman 15?
Take Online Classes
Of course, most students want to experience everything that college has to offer, which includes all of the events and interactions that take place on campus. Taking courses online, however, can save a great deal of money on transportation and living costs, helping you to eliminate much of your debt as you finish your degree. When taking online courses, you will still have access to the same level of instruction that you would on campus and will still have the ability to connect with your professors and other students. The only real difference is that you will learn on your own time and save money in the process.
Special Student Rates
Many local shops and stores provide discounts to those who present their student ID at the time of purchase. This is a great way to save some money on both necessities and recreation. However, the perks don’t stop here. You may also be able to get special student rates on things like car insurance, gym memberships, and phone bills. My college had everything I needed, including entertainment so I kept spending to an absolute minimum. The only thing I wish I still had 14 years later was my student ID! I lost it 4 years ago, which meant no more savings on Apple products and life tickets.
Use Alternative Transportation
Besides being bad for the environment, a car is also bad for your wallet. Cars are money holes. Between insurance, gas and the costs of maintenance, repairs and plates, they can eat up a considerable amount of your budget. If possible, try taking public transportation or using a bicycle to get around. Carpooling is another good option. I biked everywhere on campus. Much quicker, much healthier, and much more convenient.
Live At Home
Dorm rooms are costly, and because you have to share them with another person, it’s not always worth the money. If you’re going to college nearby, consider living at home throughout your education. Even if you have to pay rent, it’s likely to be far cheaper than you’d pay for a tiny dorm room. But then again, living in a dorm is a blast! To be free from your parents after 18 is priceless.
Hang Out With The Right People
The right people could be frugal students who love to save money, poor people who don’t have any money to spend and therefore always finds free things to do, or loaded girlfriends or boyfriends who will take care of you! Peer pressure is often the number one reason why young people spend more than they have. Associate with people who have similar values.
Apply For Scholarships
There was a recent article in the news where one kid received over $500,000 in scholarships just by applying everywhere. There’s tons of scholarship money out there for various types of people, interests, and achievements. If everybody just spends a little bit of time looking and making an effort to apply, there’s a good chance you’ll be able to get scholarship money.
Go To A State School
Private schools regularly run $25,000-$45,000 a year in tuition alone vs. under $10,000 a year for state school tuition. There are a terrific amount of public schools such as UC Berkeley, Michigan, William & Mary, UVA, UCLA, UCSD, and Wisconsin to name a few. Graduating from college with minimal debt provides a big tailwind for your career.
Get A Job
When you’ve got no money, there’s no job beneath you! Just make sure you don’t work so much that it starts negatively affecting your studies.
Recommendations
Refinance Your Student Loans: Take a look at SoFi, one of the leading student lenders today. They look at you holistically in terms of where you went to school, what type of job you have, in addition to your basic credit history. They regularly offer 1-2% lower rates than their competitors.
Manage Your Money In One Place: One of the best tools I’ve used to help reach financial independence is Personal Capital. They provide great free financial tools for everybody to track their net worth! They allow you to also manage your cash flow and check for pesky investment fees.
Updated for 2017 and beyond.
I was able to pay for my tuition by working full time. Stayed home with my folks and they helped with most of the expenses, while I could put my salary towards my tuition. Didn’t live the ‘fun’ life, but it wasn’t bad either. Had a great job and not such a bad youth after all :)
Going to a state school and getting scholarships are big helps. I also worked during school to help pay for my expenses. I didn’t rent an apartment, I stayed on campus dorms with roommates so I saved a lot that way too. I wasted money having a big meal plan so I agree that cooking on your own is a great way to save if you can manage.
Going to state schools will normally cost you less, but not always. As an advisor, I always tell students to apply to one local school, one “reach” state school, one “safety” private school, and one “dream” school. A lot of times, we forget that private schools can offer greater amounts of scholarships when trying to vie for the best candidates. State schools (at least here in IL) can offer very minimum assistance so you will be asked to pay a great ratio of tuition.
Good point and good advice. There are HUGE private school endowments ready to provide academic or need based grants.
These are great tips! Don’t buy your books at the bookstore. Try to buy them from other students, amazon, chegg. And sell your textbooks back.
Another thing is to look for refurbished items when you need to buy electronics. They come with the exact same manufactuer warranty that new items have but cost significantly less.
I graduated with around 22k in debt combined between undergrad and grad school. Looking back that doesn’t seem like that much. With the rising cost of higher education this is really becoming an issue. I’ve read in more than one place that more students are dropping out of college now due to financial problems than are dropping out due to poor grades. That’s scary.
I think getting a job and making the right friends are key to success! I just wrote a similar article about how to graduate college debt free and another idea I talked about is military scholarships which other full tuition, like the ROTC scholarship. I did this and graduated debt free so it’s an option for high school juniors and seniors considering joining the military anyway.
ROTC, good idea! Very honorable and good for work ethic and discipline.
Great list! Getting a job and applying for a scholarship will certainly help, if you really want to save money and making full use of special student rates and discounts can save you money.
Agree on the scholarship. I was too lazy and only applied to two. Got one for $500 and that’s IT! I will force my kids to apply to at least 5 -10 :)
My whole thing when I was a student was to always to find any way possible to save money when it came to anything having to do with food. Remember Chi-Chi’s and Bill Knapps? There were always coupons for those places, and we always went there on the weekends. There were also a lot of buffets and dollar menu purchases.
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