College finance 101

What you need to know about finance for college

WRITTEN BY: Janelle Vreeland
College finance 101

Getting accepted to a university is a feat, but discovering how to pay for your tuition brings an entirely new set of challenges. Our college finance 101 guide is an essential part in planning for the future. Financing your education is a challenge for some and it requires preparation. “Apply to schools, where there is likelihood for getting money. Also, you should evaluate the schools financially,” said Lynn O'Shaughnessy, author of “The College Solution,” an Amazon bestseller, and consulting director of college planning, K-12 Program, UCSD Academic Connections.

There are several aspects that need to be considered when planning for college. Our first piece of college finance 101 advice, according to O’Shaughnessy, is that “it’s important to look at how much of the average financial aid package is in grants rather than loans,” said O’Shaughnessy.

Also, try to scale back in areas that are unnecessarily extravagant. Students need their books—but they don’t have to buy them. Another rule of college finance 101 is that many universities offer a rental service for textbooks, either through the library or through the bookstore. The trick is to reserve the books early. However, if you have to buy your books, buy them used. Used books are sold for less and if you’re lucky, you can get a book with only few highlighter marks.

While most schools can’t come close to offering 100 percent of a student’s need, it’s best to find schools that meet the highest percentage of need. Our college finance 101 guide also suggests that it’s important to understand your financial aid packets and the difference between “free money” and loans. You should prepare questions to discuss with a financial aid counselor, according to “The College Solution,” created by O’Shaughnessy.

Another way to save is to be realistic, deciding between what you need verses what you want. On a smaller scale, if the choice is between a new graphing calculator for your calculus class and a new pair of shoes, then obviously the calculator should win. Planning will limit your temptation to spend money on needless items. This is also helpful when deciding on colleges. After crunching the numbers if the negatives outweigh the positives, a new strategy is needed.

Making a plan breaks down your budget. It accounts for every dime you use and shows the areas that need to cut back. Planning is the crucial advice of our college finance 101 guide. It is a way to establish limits and encourage savings. “Many schools will use loans in their packages, which is why you should pay close attention to the percentage of loans versus grants in your aid package. You can find all this information for individual schools on sites like College Board.com and COLLEGEdata.com,” said O’Shaughnessy.

A general rule of college finance is creating a budget that lists everything from your day-to-day expenses to monthly expenditures. This will help keep everything in order, while tracking the important financial areas of your life. In addition, students can research the schools that they are applying to at College Board.com to find out GPA requirements and activity profiles, which can aid tuition and other school expenses.

Our college finance 101 guide maps out a strategy for you that will lessen the economic blow. Federal loans offer lower interest rates then private loans, but there is a limit to the amount. Private loans can sometimes offer more, however they can charge different amounts to different students, and their interest rates are significantly higher. “The max Federal Stafford loans students can receive are: freshman $5,500, sophomores $6, 500, juniors and seniors $7, 500,” said O’Shaughnessy.

Having established a strategy and developing a budget for your expenses before hand, will eliminate the stress while you are in school and help ease the transition after graduation.

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