The majority of college students now graduate with student loan debt. But, keeping your borrowing to a minimum and setting a budget makes repayment easier when it comes time for repayment. Learn more about understanding your expenses and financial resources each semester to effectively determine your budget needs.
Understanding Education Costs
First, you need to understand what your direct education costs are going to be each semester. These are costs by your school that include tuition, fees, books, supplies, and room and board. Students living off campus also need to identify extra monthly expenses, such as rent, utilities, groceries, transportation, etc.
Sources of Income
Once you’ve identified your expenses, take note of what resources you have to pay those costs.
To find out if you’re eligible for federal and some state financial aid programs, you need to fill out the Free Application for Federal Student Aid (FAFSA). Remember—you need to complete the FAFSA every year starting in October for the following school year.
If you receive financial aid, the school applies the funds to your direct school costs, such as tuition and fees. If there are any financial aid funds left over, you receive that amount to use for other expenses. These funds are intended to cover the costs you incur during that entire semester—so don’t rush out and spend it all at once!
Check in on any other sources of income available to you. If you work while going to school, use that income as a resource for expenses. Perhaps you also have financial support from parents or other family members. Once you’ve identified all sources of income, you may realize that your expenses are greater than the income or resources you have to pay those expenses. At this point, it’s a good idea to see if there are ways to cut your expenses.
For some students, student loans help pay some of the expenses not covered by other income sources. Successfully identifying your expenses and available resources gives you a good idea of what you need to borrow. If you do need to take out a student loan, only borrow what you need and nothing more.
Student loans can be a great resource when used responsibly. Remember to use your federal student loans first before exploring private loan options.
College is difficult enough when you’re trying to get through classes and exams. Put yourself in a better position to focus on your studies by setting a budget so you don’t need to worry about your finances. Remember to continually revisit your budget and develop a solid plan for understanding your expenses each semester.