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You’re in college and on your own, but you may still experience the occasional financial pitfall. Below are money mistakes many students make, and some tips on how to avoid them.

Financial Pitfall #1: Spending all your living expense money early in the semester.

You’ve probably set aside spending money for personal expenses if you live off campus. Or, you may have financial aid funds to use for room, board, or other educational expenses. That money needs to last through the entire semester, but many students spend it within the first few months. How can you avoid spending your money too early? Use these financial management tips and this budget worksheet to help develop a monthly spending plan.

Financial Pitfall #2: Not taking advantage of part-time employment opportunities.

Most schools offer part-time employment options for students through Federal Work-Study, and by posting on- and off-campus jobs. You might worry that a job will conflict with academic work, but studies show that students who work between 15 and 20 hours while in school are generally more confident and successful. Having a job helps bring in money regularly throughout the semester and can help build your resume. Your college financial aid office awards Federal Work-Study and generally posts related job opportunities. Work-Study is based on financial need and requires a Free Application for Federal Student Aid (FAFSA) . Other part-time jobs may be posted by the Career Office, Student Affairs, or other places on campus. Check your school website for more information.

Financial Pitfall #3: Accumulating credit card debt.

You’ve probably already received credit card offers in the mail. You may also notice giveaways and travel rewards that make the offers sound appealing. Be careful – as a new credit card holder, your interest rates will be high, and credit card offers tend to have many fees attached. Be sure to read the fine print and note that the initial low interest rate offered may expire in just a few months. You can quickly accumulate credit card balances that can swell out of control, especially if you’re only making minimum payments. Here’s an overview of credit card pros and cons, along with additional information about other matters to consider.

Financial Pitfall #4: Taking out student loans without understanding them.

Student loans are so common that students often see them as just another type of financial aid. There is an important difference; student loans must be paid back. While student loans can be a useful way to pay for your education, keep your borrowing to a minimum. Know what your monthly loan payment will be when you get out of school. Understand what you can realistically afford to borrow. It is also important to know the types of loans, the terms of those loans, and the options available. To get a general idea of what your monthly loan payment may be when you finish school, Federal Student Aid provides an easy-to-use repayment calculator.

The earlier you can learn the basics about managing your finances, the better off you’ll be in the long run. These simple steps should help you build the foundation you need for a successful financial future.

It may seem as though summer break just started, but with August comes the start of another school year is just around the corner. You’ve probably received your college bill and are starting to make plans to transition back into school. We’ve developed a financial checklist to help you get ready.

1. Save summer earnings for college expenses

Although it’s tempting to spend what you earn, save as much of your summer paycheck as possible for college expenses. If your college bill is covered, you can use your summer earning for books, supplies, and personal expenses while in school.

2. Be sure you have taken all required steps to secure your financial aid

Have you returned your award acceptance and responded to any information requests from your financial aid office? If you are a new federal borrower, you will need to complete federal entrance counseling and sign your loan promissory note. Your financial aid office would have reached out to you with directions and steps you need to take along with completion dates. If you haven’t already, locate that information now and make sure you have completed all the steps.

3. Pay your college bill in full and on time

Most colleges require students to pay bills for the semester in full before they arrive. If you are unable to cover the bill after financial aid is applied, you may still be able to obtain additional student loan funds. Check with your financial aid office for guidance on any additional federal loans you or your parents may be eligible to borrow. If needed, private student loans may also be available to bridge the gap. Just be sure to pay whatever you can before borrowing funds that you will need to pay back later, with interest. Information on private student loan programs can be located on your school website.

4. Look for discounts on books and supplies

Many instructors will provide a list of books and supplies online before school begins. Some schools will also provide links and resources for purchasing used books. You can save money by looking to those resources first before buying your books new. You can generally pick up general supplies like paper, notebooks, pens, etc. more reasonably at home than at school. Check your school’s website to see if discounts are available on equipment like computers and printers.

5. Set up an in-school budget

Whether you’re going to school with money you’ve saved for personal expenses, a family-provided bank account, or with financial aid designated for living costs, you probably have a lump sum which will need to last throughout the semester or even the entire year. Establishing a budget that considers your available funds and your expenses will help you stretch that money over an extended period instead of spending it all upfront. Budgets take self-discipline and planning but they are well worth the effort. You can find a helpful budget worksheet on the U-fi Student Loans website.

6. Try to arrange for a part-time job now

There are two different types of jobs during college. One is Federal Work-Study, which is included on your financial aid award letter. The other is a part-time job that you obtain on your own. Colleges often help students by posting opportunities on job boards which identify positions as one or the other. You can also look on local jobs websites for part-time jobs. If you apply for jobs now, you’ll be ahead of the rush. You’ll also demonstrate your initiative to prospective employers. When students return to campus, it will be more competitive as many students search for jobs at the same time.

Taking the time to prepare now will pay great dividends later. By taking care of financial matters in advance, you can focus more on your studies and enjoy your time in college.

Special Note: If you have not yet applied for financial aid, you can still complete the Free Application for Federal Student Aid (FAFSA). Don’t assume you won’t be eligible. If you need help for college, apply! Your time is getting short though, so file the FAFSA as soon as possible to be sure your financial aid eligibility has been assessed before school starts.

Whether entering college after high school or transitioning from full-time employment, your financial picture will change as a student. The summer is a good time to prepare for that change. College may be the first time you manage finances on your own. Or, you may be cutting back on your work hours and living on a lower income while attending school. Either way, these six tips for understanding education costs can help you develop a financial plan for the months ahead.

Create a Budget

Maybe you’re coming to school with money you’ve saved for personal expenses. Perhaps you have a family-provided bank account. Maybe you have financial aid designated for living costs. Either way, you probably have a lump sum which needs to last throughout the term. Establishing a budget that considers your available funds and expenses helps stretch that money instead of spending it upfront. Budgets take self-discipline and planning, but they are well worth the effort. They can play a big part in understanding education costs. Use this helpful budget worksheet to get started.

Don’t Borrow More Than You Need

Student loans come primarily from federal or private sources. After federal loan funds are exhausted, some students turn to private student loans to help cover expenses. Student loans provide money to help with college costs. But, you need to repay those funds with interest after you leave school. It’s sometimes easy for students to develop an, “I’ll worry about that tomorrow” attitude about borrowing. They often take out more than they need. While they are a good investment in your education, loans can add up. They can become a large financial commitment for years after you leave school. This is especially true if you start using student loans for living expenses. Our advice: only borrow what you need for college bills.

Work Part-Time While You’re in School

A big part of understanding education costs is realizing what you need. Getting a part-time job can bring money in on a regular basis while you’re in school. It can also keep you from using student loans or credit cards to cover personal expenses. There are two different types of jobs: Federal Work-Study, which would have been included on your financial aid award letter, or a part-time job that you obtain on your own. Colleges often have job boards that identify positions as one or the other. You can also look on local job websites for part-time employment. Businesses in college towns often rely on students as a part-time workforce. Concerned about work conflicting with your coursework? Studies show students who work less than 20 hours a week actually do better academically. They are also more likely to graduate.

Be Careful with Credit Cards

College students often receive credit card offers in the mail, online, and at concerts and events. Those free t-shirts and travel mile offers entice new banking customers, but they may not be worth it. While wise use of credit is a move toward financial independence, overuse of credit can cause financial pressure. It can compete with your academic and financial goals. Read the small print, take out the best rate with the lowest fees, and use credit sparingly, if at all. If you do decide to take out a credit card, the best way to use credit is to pay it off completely every month. That way, you can develop a positive credit history, but not accrue interest and fees that can take years to repay.

Understand Your Financial Aid

Students who go directly to college from high school often rely on parents to complete financial aid forms, review financial aid, and pay college bills. However, understanding education costs is an important part of knowing you are responsible for keeping that financial aid. You must make Satisfactory Academic Progress, get a job, if eligible, for Federal Work-Study, and repay the loan you have taken out. When you are in school, the financial aid office will reach out to you to take action or answer questions about your financial aid. It’s important for you to understand your financial aid and the corresponding responsibilities.

Protect Your Personal Information

As a student, you may be a primary target of identity theft. Students tend to be more trusting, have new and unblemished credit, and are unfamiliar with the ways their information can be compromised. Be sure to protect personal information like your Social Security number, date of birth, driver’s license number, bank account numbers, PIN numbers, and other related information. Avoid shopping online on public computers and keep personal documents and information in highly secure places. More helpful tips are located in this How to Avoid Identity Theft fact sheet.

Although your income will be lower when you are a college student, you’re certainly not alone. Your classmates are in the same situation, struggling with understanding education costs. As a general rule, think of the long run instead of just current wants or needs when making financial decisions. If you make smart financial decisions while attending school, you can use your college years to form a strong foundation for the future, both academically and financially.

You’ve made your decision. You are going to refinance your student loans. You have done the research. You’ve compared a number of student loan refinance programs. You have completed side-by-side calculations. You know which ones have the lowest interest rates, best repayment options, and the most generous borrower benefit programs. You’ve read the fine print and narrowed your choices down to your top three. But do you know your loan servicer?

Making the Choice

So which one is it going to be? Is it the lender who lists the lowest interest rate? Or perhaps the lender with the repayment plan that allows you to lower your monthly payment the most? How about the lender that offers those tantalizing borrower benefits? The ones that allow you to save hundreds of dollars more when you refinance with them?

Choosing which student loan lender to refinance with can be a difficult decision. While you should definitely consider the overall cost, monthly payment, and borrower benefits offered, there is another very important factor. You need to know who the lender and loan servicer will be after making your new refinance loan; the one you will start making your new monthly payments to.

Who are Loan Servicers?

You may be wondering why this is important. Once you refinance your student loans, many lenders have agreements to sell, or package their loans into financial securities. Thes often go to the highest bidder. The proceeds from the sale then make more refinance loans, which the lender subsequently sells. This happens over and over again. Rinse and repeat.

Lenders Decide

Ok, so the lender sells their loans, but the loan servicer the lender contracts with to manage your account and accept payments has a good reputation, which means you’re good to go, right? Maybe. That’s because the holder of your student loans (either the original lender or the buyer if the loans are sold) gets to decide where the loans are serviced. And once your refinance loan is made, the loan servicer is most important to you, since this is who you will be interacting with. It’s similar to when you buy a TV from a large retailer. The retailer sets the price and sells you the TV, but once you own it, you must contact the manufacturer with any questions or if you need customer support.

Tip: The lender and loan servicer information can usually be found on the lender’s website, in the Application and Solicitation Disclosure every lender is required to present you before you apply for a loan, or on the actual promissory note you must sign. If you don’t recognize the lender or loan servicer, you should call the financial aid office at your school to ask them if they are a reputable organization.

What if the lender doesn’t sell their loans, or package them into financial securities. Everything is fine then, right? If the lender doesn’t sell their loans, or sells them to a buyer that uses the same loan servicer, then you can feel pretty good about things. While there are no guarantees, if the lender uses a reputable loan servicer, then you can feel fairly confident your customer satisfaction is very important to them. The chances that they would jeopardize this by cutting corners with a low-cost, low-quality servicer just to save a few dollars is less likely.

Know Your Lender and Servicer

Knowing who the holder and loan servicer of refinanced student loans are after the loan is made is extremely important. If the lender sells their loans, be sure you know who the buyer is and which loan servicer they use. If you’ve ever had to deal with a company that provides poor customer service, chances are you wouldn’t buy from them again if you didn’t have to. With student loan refinancing it’s even more important, because if you’re unhappy with your loan servicer, the only way to switch is to refinance your loans again.

If you’re getting your first student loan or credit card, you’re likely seeing some terms you don’t recognize. A key component of being an informed consumer is understanding all those financial terms. You’ve probably heard an announcer at the end of a TV commercial speed-reading through a bunch of legal terms. We’re going to slow it down and lay out the most important terms you need to know.

Accrue

This is the act of interest accumulating on your principle balance.

Annual Percentage Rate (APR)

APR is a more accurate reflection of the total annual loan cost. It includes the actual interest rate, plus any other incurred charges or fees (such as upfront origination fees). You can find more information about interest rates and APRs on our website.

Capitalization

Capitalization means adding unpaid accrued interest to the principal balance of a loan. This increases the amount of your monthly payments and the total amount repaid over the life of the loan. You can choose to pay the interest as it accrues to reduce or completely avoid the cost of capitalization. The more frequently interest capitalizes, the more you wind up paying.

Cosigner

A cosigner or co-borrower is an individual who signs the loan promissory note with you. They are equally responsible for repaying the debt. Having a cosigner can often help you qualify for a better interest rate. This is especially true if you don’t have established credit or sufficient income. This article further outlines the potential benefits of having a cosigner.

Compound Interest

Compound interest is interest calculated on the principal loan amount, plus any interest accrued during previous periods. For example, if interest is compounded monthly, you would then pay interest on the interest that accrued in the previous month, as well as the outstanding principal. Compound interest can drive up your total cost of paying off debt.

Credit Bureau

A credit bureau is an agency that collects personal and financial information from various sources about consumers. The agency retains information about the types and amounts of credit you have obtained as well as your timeliness in making payments. Your credit card companies and the various lenders which have made loans to you report this information to the agency.

Credit Score

A credit score is a number, generally between 300 and 850, provided in a credit report and used by a lender as a predictive indicator of your likelihood to repay a loan. The credit score may be used by the lender to determine eligibility and set the terms of a loan, such as the interest rate and fees. The higher the credit score, the better. Higher scores will generally allow you to receive better interest rates. Check out our article on understanding your credit report for more detailed information.

Default

The failure of a borrower to repay a loan according to the terms of the promissory note is a default. For federal student loans, default occurs at 270 days delinquent and has a negative effect on your credit score.

Delinquency

Failure to make payments when they are due is referred to as delinquency. Delinquency begins with the first missed payment. Missed payments or delinquent payments will negatively impact your credit score, so make sure you stay current on all payments.

Finance Charge

The total amount of interest that will be paid over the life of a loan when the loan is repaid according to the payment schedule is the finance charge.

Fixed Interest Rate

A fixed interest rate is an interest rate that remains the same for the duration of the loan or credit obligation.

Interest

This is an amount, calculated as a percentage of the principal loan amount, that lenders charge for borrowed money.

Interest Rate

The interest rate is the rate at which interest is calculated on your loans or credit card balance.

Minimum Monthly Payment

The smallest monthly payment amount that can be made in order for a loan account to remain in a current repayment status is the minimum monthly payment. For a credit card bill, you’ll find that paying more than the minimum monthly payment will help you pay your balance faster and likely help you avoid potential rate increases on your credit card.

Origination Fee

The fee you pay and deduct from the principal of a loan prior to disbursement is the origination fee. For federal loans, you pay this fee to the federal government to offset the cost of your interest subsidy. For private loan programs, you pay the origination fee to the lender to cover the cost of administering and insuring the program.

Promissory Note

The promissory note is the binding legal document you sign for a loan, which lists the terms and conditions of the loan as well as your rights and responsibilities. For federal student loans, another name for the promissory note is the Master Promissory Note (MPN).

Simple Interest

Simple interest is interest only calculated based on the principal amount of the loan.

Truth in Lending Disclosure

This disclosure is a statement lenders provide to you prior to or at the time of disbursement of a private loan that lists the lender name and contact information, amount financed, annual percentage rate (APR), finance charge, payment amount and schedule, and total repayment amount.

Variable Interest Rate

The rate of interest charged on a loan changes periodically (monthly, quarterly, or annually) and fluctuates with a stated base index (such as the Prime Rate or a LIBOR index) is a variable interest rate. The variable interest rate fluctuates as the base index changes. So, your monthly payment amounts will increase or decrease depending on if interest rates rise or fall.

Now you have a basic understanding of some of the common financial terms and how they impact you as a consumer. Remember, always make sure that you understand all of the terms and conditions when you take out student loans, open a new credit card account, or take on a new loan of any kind. Reputable companies will be happy to answer any questions you have so that you have a clear understanding of your financial obligations.

Congratulations, you’ve graduated college! You’re ready to begin your new life in the real world with a real job! This step into adulthood is very exciting, but it can also be a time of confusion with new responsibilities. Set yourself up for financial success early by following these financial tips, including planning emergency savings.

Salary Expectations

Many college students graduate with an unrealistic expectation their salary earnings for the first years after college. Accenture conducted an online U.S. survey in March of 2015 consisting of 1,001 students graduating from college in 2015 and 1,002 participants who graduated college in 2013 or 2014. The survey found that 85 percent of 2015 graduates expected to earn more than $25,000 a year after graduation. While the reality is, 41 percent of working 2013 and 2014 graduates actually earn $25,000 or less a year. Even though you have a college degree, you will likely start your career at an entry level position. It will be important for you to make a budget aligned with your salary.

Budgeting

Once you land a job and start earning a steady income, it can be tempting to carelessly spend money. It’s time to make a budget. There are several worksheets, like this one (PDF), that can help you get started. Make sure that your monthly income minus your monthly expenses is a positive number. If not, you will need to cut back in areas or get a part time job in order to live within your means.

Now is a good time to start planning for the future. What are your short and long term goals? Are you currently living at home, but want to get your own place? Do you have an emergency savings account set up in case you lose your job? These are all things that you should budget for. Also keep in mind future expenses, like student loan repayment, that will be coming your way. Typically six months after graduation, your loans will exit their grace period and you will need to begin making payments. Make sure you’re prepared for repayment by following these four steps.

Savings

Ever heard of the term, “pay yourself first?” This is a phrase typically used for any type of savings or retirement plans. Pay yourself first means putting a specified portion of your paycheck to savings or retirement before spending anywhere else. The best way to do this is to set up a direct withdrawal from your account whenever you get paid. That way, the money is already in your savings or retirement account before you even see it. If you have money for savings, there are two areas you should focus on to set yourself up for financial success: retirement and emergency funds.

Saving for retirement as early as possible gives your money more time to grow before you retire. According to Bankrate.com, if you save $2,000 a year starting at age 25, you would have approximately $560,000 in retirement savings by age 65, assuming 8 percent annual growth. If you save that same $2,000 a year and have the same 8 percent growth rate, but don’t start until age 35, you will only have $245,000 by age 65. That is a loss of $315,000 just because you started 10 years later.

Emergency Savings

An emergency savings fund money you save for emergencies only, like a loss of a job. It is typically suggested that you have enough emergency funds to cover at least three to six months’ worth of living expenses. For example, if you have $2,000 in monthly living expenses, you should have anywhere from $6,000 to $12,000 saved in your emergency savings account. People that don’t have emergency funds and lose their job can often end up living off of credit cards with high interest rates. This can not only put you in debt that you may have a hard time getting out of, but it will also hurt your credit history, which can take a long time to rebuild.

It may be difficult at first, but saving early in life will benefit you in the long run. Accounting for a realistic salary and sticking to a budget that allows you to put a little money away lays the foundation for a fiscally responsible future. Be smart with your money and you’ll be on your way to a financially successful life.

Thinking about applying for a new private student loan, or refinancing your existing federal and private student loans? Expect the lender to check your credit history and credit score. They do this to ensure you are not a credit risk. You can proactively take steps to improve your credit health and raise your credit score. Start with understanding what’s in your credit report, and what student loan lenders are looking for.

What is Credit?

Have you ever taken out a student loan or credit card? If so, you entered into an agreement to receive funds that must be paid back later. Unlike credit cards, student loans are repaid in installments over a set number of payments. This term is usually 5 to 25 years.

When you take out a student loan, most lenders or servicers notify at least one of the three major credit reporting agencies. These are Equifax, Experian, or TransUnion. They do this so they can include the new account on your credit report as a trade line. Each trade line contains detailed information. This information includes account name and number, loan type, date opened, original and current balance, payment status, and monthly payment.

The lender or servicer notifies the credit agencies of all loan activity. This activity includes payment date, amount of payment applied to principal and interest, and timeliness of payments. The credit agency records this information, which makes up part of your credit history.

Understanding Your Credit Report

While each credit reporting agency’s reporting format may be slightly different, they essentially include the same information:

  • Personal Information, such as your name, address (current and previous), Social Security number, date of birth, and other information that identifies who you are.
  • Credit History, including your open and closed accounts, original loan amounts, current balances, and payment history.
  • Public Records, such as delinquent accounts, liens, and bankruptcies. Public records can remain on your credit report for many years, which will affect your ability to obtain future credit.
  • Credit Inquiries, which are placed on your credit report when you request credit. Credit inquiries remain on your file for two years.

Tip: Federal law entitles you to a free copy of your credit report each year from all three credit reporting agencies. Take advantage of this and check your report from each credit bureau annually. This ensures your personal information is accurate and up to date. To get a free credit report, visit www.AnnualCreditReport.com or call 877-FACTACT. If something on your report looks inaccurate, be sure to contact the credit agency immediately to have it addressed. Unfortunately, the credit reports will not include your credit score.

What Student Loan Lenders Look For When Checking Your Credit

When making a credit decision, private student loan lenders check your credit report and credit score. They do this to determine whether you are an acceptable risk, and what interest rate they should charge you. If you have a cosigner, lender checks their credit report and credit score too.  Most lenders, like U-fi, will want to see an adequate credit history, a track record of making on-time payments, how much debt you have outstanding, and a good credit score. Lenders also ask how much income you have to determine whether you, or your cosigner, have enough monthly income to make monthly payments.

To increase your chances of being approved and receiving a low interest rate for a new student loan or a student refinance loan, you and/or your cosigner will want to have at least two open trade lines, be no more than 30 days past due on more than one account, and have no public records for the past five years. Most lenders will also want to see a good credit score. While each lender is different, if you have a credit score above 700, you will generally be considered a good credit risk.

Tip: When shopping for a private student loan or student refinance loan you should complete all your applications within a short window (e.g. 30 days), since multiple credit inquiries within a brief time period will have little impact on your credit score.

How Does Your Credit History Affect Your Credit Score?

Your credit score is a number that summarizes your credit risk at any moment in time. While there are several types of credit scores, 90% of lending decisions use a FICO score. Fair Isaac Corporation creates the FICO score. FICO scores range from a low of 300 to a high of 850, with higher being better. FICO scores are made up of the following:

  • 35%: Payment History – have you made your past payments on time?
  • 30%: Amount Owed – how much debt do you owe and how much of your available credit has been used?
  • 15%: Length of Credit History – how long have you been using credit?
  • 10%: New Credit – how much of your debt has been opened recently?
  • 10%: Types of Credit Used – do you have different types of credit such as credit cards, installment loans, and mortgages?

Tip: FICO scores can change from month to month due to several factors. Not having too much debt, and making full payments on time, over a long period gives lenders more confidence you will repay them. That increases the likelihood they will extend you credit at a lower interest rate.

Understanding what’s on your credit report and how it impacts your ability to get a good credit rate is extremely important. If you notice something incorrect on your credit report, call the credit agency immediately. Work with them to correct any problems. A better credit history and higher credit score means a better shot at approval and a low interest rate. Your credit could save you a lot of money on your student loans. It can also ensure additional credit is there for you when you need it most.

Spring break is a time that college students look forward to all winter. It’s your chance to escape the rigors of the classroom and relax on a warm beach or other exciting destination. Although spring break can be fun, the costs associated can add up quickly. With a little planning and preparation, you can enjoy a week away from studying without emptying your bank account. Use these five planning tips for a successful spring break.

1. Set Your Budget

The best thing you can do is plan your spring break trip a few months in advance. This will not only give you ample time to get everything organized, but you’ll have more time to save and plan for your trip. Determine what your budget is and let that guide you’re planning. Then, take the time to research destinations and estimate the costs for each option. Transportation and lodging will likely make up the bulk of your cost, but don’t underestimate your other expenses during your trip. You may find that some trips are just too expensive based on your resources and budget.

2. Split the Bill

If you’re driving to your destination, ride with friends and split the cost of fuel. Additionally, you may be able to save on hotel costs by sharing a room with friends. Those extra savings can go a long way and will give you more funds for other activities during your trip.

3. Borrow – Don’t Buy

Create a packing list and figure out if there are items you don’t have but know you will need. It’s a pretty safe bet that buying something will be more expensive at your destination. Try to borrow anything you might need from friends or family, especially if it’s an item you’re unlikely to use after the trip. Try your best to anticipate everything you’ll need during your trip and pack accordingly.

4. Find Fun Closer to Home

Although it sounds great to take a big trip somewhere far away, you can have just as much fun trying new things closer to home. Remember, the entire purpose of spring break is to take a break from studying, relax, and enjoy yourself. Sometimes, that might simply be going home to see family and friends. And the best part of that kind of spring break is you won’t have to spend much money at all! Check out tourist destinations in your current city to explore new activities. You’d be surprised at how many things are nearby that you may have overlooked previously. Get creative and enjoy yourself.

5. Pay as You Go

Ideally, you want to be able to pay for your spring break trip with savings and not use high interest rate credit cards or even student loans to fund your adventure. Again, try to set a budget for your trip and then keep your spending within your budget. Don’t be tempted into spending more than you have or feel pressured into trying to keep up with someone else’s crazy spending sprees. Spring break can create memories that last a lifetime, but you don’t want create a financial burden that lasts a lifetime either!

Enjoy your spring break and the time away from your classes. Remember to be safe and protect yourself and your belongings while traveling. A little planning and budgeting will help you have a great time and feel good about your finances when you return.

Recent surveys and studies suggest that many young adults lack basic money management skills. Too often, students enter college at a loss for managing their personal finances. College may be the first opportunity you have to experience some independence, and may be the first time you are faced with budgeting and making financial decisions on your own.

One of the simplest, yet most important steps to controlling your finances is budgeting. To start the process, determine your take home income and total expenses. Then break it down to a simple formula:

Income – Expenses = Positive or Negative Outcome

As you can probably guess, you want to end up with a positive outcome. To accomplish this, you need to spend less than you earn. It may sound easy, but it can be difficult. In order to calculate this number, you’ll want to sit down with a list of your monthly expenses. Worksheets like this one can help ensure that you’re accounting for everything – even that daily latte.

Here are some steps to get you on track to creating a budget and taking control of your financial future.

Know your income sources.

This is usually pretty straight forward. It’s typically money you earn from a job, but if you’re a student it can also be money you’re receiving from financial aid sources (grants, scholarships, or loans), money from your parents or other family members. To ensure your funds last the entire semester, you may need to average out your financial aid to a monthly amount.

Identify your expenses by using a daily spending diary.

Fixed monthly expenses like rent, car payments, insurance, and any other expenses you pay every month are easy to identify. The daily spending diary can help you track your variable expenses like food, entertainment, and clothing. After tracking of all of your expenses for a month, you may be surprised at where your money is going.

Figure out needs vs. wants.

When looking at your expenses or potential purchases, it’s important to make a distinction between “needs” and “wants.” There are some things you absolutely need – like housing and food. However, some things may fall into the “wants” category, like frequently eating out.

Find room for improvement.

After you’ve identified all of your expenses, find areas that can be reduced or even eliminated. Remember, you want to spend less than you earn. That goes for credit cards, too. It’s easy to spend what feels like “free money” but that debt can catch up with you quickly with interest.

Stick to it.

The last step, and possibly the most difficult, is to stick to your budget and resist the temptation of unnecessary spending.

After you’ve crafted your budget, stick to it each month, then evaluate how you’re doing. Are you staying within your budget? Are there problem areas you need to address with some of your expenses? You can find more money saving tips here to keep your expenses under control.

After you’ve created your budget, you’ll start to experience the benefits.

  • Ensure you don’t spend money you don’t have
    • Far too many of us spend money we don’t have using credit cards or student loans. A good tip is to only use credit cards when you can pay the balance each month and only use student loans for what you need (not want).
  • Shed light on bad spending habits
    • Building a budget forces you to look at your spending habits. You may find areas where you are spending money on things you don’t really need.
  • Leads to a brighter future
    • Budgeting allows you to position yourself for a more successful future. It’s far easier to “live like a student” when you’re actually a college student as opposed to trying to climb out from under a mountain of debt later.

Budgeting doesn’t mean spending as little money as possible or feeling guilty about every purchase. It’s about knowing your limits and making sure you have control of your finances.

Considering paying off your student loan debt with your tax return or just a lump sum of money? There can be more to larger payments than meets the eye. Follow these steps to learn how to make the most of your lump sum payment.

1. Make a List

Knowing which loans you want to pay off first will help you get the most bang for your buck. Make a list of all of your federal and private student loans, the balances, and the interest rates. Then, based on your goals, weigh your options. You could put your lump sum payment toward your highest interest rate loans, or pay off your low-balance loans first. Paying off your highest interest rate loans reduces the amount of interest you pay. It also saves you money over the life of the loan. Paying off your lowest balance loans first could save you money on your monthly payment. Paying off your lower-balance loans allows you to put money saved from a lower payment toward your other student loans. This can help you to pay them off faster.

2. Talk to Your Loan Servicer

Check to make sure your loan servicer knows how you want your payments applied to your student loans. If you pay above the minimum payment and don’t specify how you want payments applied, your loan servicer decides for you.

Below is a sample letter put together by the Consumer Financial Protection Bureau (CFPB) that you can send to your loan servicer to ensure payments above your minimum monthly payment amount are being applied to the correct loan(s). For some loan servicers, this can be done online.

I am writing to provide you instructions on how to apply excess payments greater than the minimum amount due. Please apply payments as follows:

  1. After applying the minimum amount due for each loan, apply any additional amount to the loan accruing the highest interest rate.
  2. If there are multiple loans with the same interest rate, please apply the additional amount to the loan with the lowest outstanding principal balance.
  3. If any additional amount above the minimum amount due ends up paying off an individual loan, please then apply any remaining part of my payment to the loan with the next highest interest rate.

It is possible that I may find an option to refinance my loans to a lower rate with another lender. If this lender or any third party makes payments to my account on my behalf, use the instructions outlined above.

Retain these instructions. Please apply these instructions to all future overpayments. Please confirm these payments will be processed as specified. Otherwise, please provide an explanation as to why you are unable to follow these instructions.

3. Things to Keep In Mind

There are a few other things to be mindful of once you’ve decided where to apply your lump sum payment.

  1. Follow up with your loan servicer. Call or check your accounts online to make sure your payment was applied as specified.
  2. Making a payment larger than your minimum payment amount can sometimes advance your due date. This means another payment on your student loans won’t be due until your minimum payments catch up to your lump sum payment. While it can be nice to skip a few months of student loan payments, your loans still accrue interest and won’t save you any money. Even if your due date advances, continue to make your monthly payments to save yourself money in the long run.
  3. You can also save money on your student loans by refinancing. Refinancing allows you to combine both your federal and private student loans into a new loan with a new repayment term and interest rate, which can often save money over the life of the loan, or help lower your monthly payment.

Paying off your student loans is a great accomplishment. As you begin to make decisions around your personal finances, make sure to keep these tips in mind so that you can make the best choices for your financial future.