Common Money Mistakes Made by College Freshmen
With classes underway at most colleges and universities throughout the U.S., we’ll share in this entry some of the most common money mistakes many students make during their freshman year.
- Taking out private loans before federal aid is maxed. Our lexicon is filled with acronyms, and one of the most important abbreviations for college students is the FAFSA.
Short for Free Application for Federal Student Aid, the FAFSA is the form students and their families complete to apply for federal grants, loans, and work-study funds. Through this program, the U.S. Dept. of Education allocates more than $150 billion in student aid yearly. Because federal loan interest rates are not based on a credit check, applicants receive the same interest rate that everyone else does. That’s a perk that most other borrowers cannot match.
- Putting off work-study until the second semester. While some schools may try to talk freshmen into putting off work-study until the second semester so they can more easily adjust to college life, doing so will most likely cut the student’s yearly work-study funds in half.
Those who wait until the second semester may also have a more difficult time in finding a job.
- Not keeping track of spending. For many, just the mention of the word “budget” can cause heart palpitations. But one doesn’t have to love numbers to be good with budgeting these days.
There is a host of free budgeting apps that can make things easy for on-the-go students to keep track of where their money’s going. A good budgeting idea is to follow the 50/30/20 rule: 50% of one’s funds go to necessities, 30% for wants and 20% for savings and debt repayment.
- Running up credit card debt. While it’s true that credit cards can and do play a crucial role in establishing a credit history, using one without establishing a set of ground rules first can easily put someone at risk for going into significant credit card debt.
One way to use credit cards responsibly is to commit to using them sparingly and paying off the balance in full each month. If the balance can’t be cleared monthly, the user is essentially taking out a high-interest personal loan.
- Give up the hunt for scholarships. Yes, the majority of scholarships are awarded to students while they’re high school seniors. But millions of dollars’ worth of scholarships earmarked for students already in college remain available.
- Failing classes. While it’s tempting to get caught up in the social aspects of college life, hanging out with friends rather than studying can lead to failing a class. That, in turn, can lead to hundreds or thousands of dollars in fees to retake the course.
Call The Oswalt Law Group if You’re Tired of Facing Crippling Debt
The constant worry that comes from living with seemingly insurmountable debt can lead to a host of problems – mentally and physically. No one should have to live that way. If you’re tired of worrying about debt, rest assured that a host of options are available for you. Call us here at The Oswalt Law Group to schedule a free consultation. Our number is (602) 225-2222.