Many college-bound students and their families underestimate the cost of college. Indeed, 31 percent of students who left school without completing a degree reported they did so due to financial reasons, according to recent National Center for Education statistics.
Beyond rising tuition rates, there are many expenses to consider — books, class materials, room and board, cell phone plans, and incidentals — to name a few.
With nationwide student debt at $1.3 trillion and growing, according to the National Student Loan Debt Clock, the importance of financial planning and establishing good money habits can’t be overstated.
Students can more confidently take on college and beyond with these helpful tips from the “Get College Ready” experts at Wells Fargo:
Paying for College
The first step all students should take toward funding college is to complete the Free Application for Federal Student Aid (FAFSA).
Then, use free resources to investigate other funding. Some of the best scholarships can be found on sites like tuitionfundingsources.com, the largest database of scholarships in the US.
It’s also helpful to know how much money you’ll need. Most school websites offer a net price calculator that can help you arrive at a realistic estimate.
If necessary, look into Federal Direct PLUS loans, which can cover up to 100 percent of remaining education-related costs.
“College-bound students and their families should review grants, scholarships, and loans from a wide variety of sources,” says John Rasmussen, head of Wells Fargo’s Personal Lending Group, which is also the nation’s second largest private student lender among US banks. “After making careful comparisons, they should borrow only what they need.”
A handful of private student lenders defer loan repayments until after students leave school. In the case of Wells Fargo, this date begins a full six months later — and if new graduates need time to find a job — the bank can extend the repayment start date up to a year.
Cost-saving opportunities exist whereby students can consolidate loans or refinance into loans with a lower interest rate. These actions can help students significantly reduce costs associated with their debt.
With all funding sources, it’s critical to be aware of application deadlines and the terms associated with assistance, whether it’s GPA maintenance for scholarship eligibility or an interest rate.
Managing Money
For many students, college is an opportunity to manage money for the first time. Fortunately, students today have financial planning tools that previous generations did not enjoy.
Young people can leverage their technology confidence to manage money by signing up for mobile banking and then setting up account alerts to avoid over-drafting. Online budgeting and expenditure-tracking tools can help students form sound financial habits and monitor savings.
Building Credit
Good credit gives you more financial freedom and choices down the road. Start building good credit while you’re still in school. Pay bills on time, don’t open too many lines of credit and keep balances low. Whenever possible, pay more than the minimum each month. Check your credit history often.
Free resources that can help you plan for college can be found at wellsfargo.com/getcollegeready.
Are you ready for college? Preparation is about more than test-taking and achieving solid grades — it also means preparing financially for the next four years and beyond.
