Students heading off to college for the 2016-17 academic year should already have their financial aid package in place. But everyone needs to be aware that the FAFSA for the 2017-18 academic year will be available beginning October 1. This applies to current high school seniors who will be college freshmen next year, as well as those who will be returning to college for their next semester. As in previous years, it is still advisable to complete the FAFSA as soon as possible in order to be first in line for financial aid consideration.
Once financial aid decisions are made, students then have the choice of using federal and private student loans to pay any remaining difference between costs and available funds. Some opt to take larger student loans than they require so they have a little “spending cash” available during the school year. This can be a dangerous decision, as students can easily fall prey to poor spending decisions. It might not even feel like there is anything negative about this decision – that is, until the student graduates and starts receiving payment due notices from four years of rash spending.
Another way students get themselves into money trouble is by taking advantage of easy credit opportunities on campus. Credit companies might offer low-interest credit cards to attract customers. Students then spend erratically, make minimum payments, and are shocked to see the interest rate jump to unmanageable levels. Here are some simple steps to take to keep a lid on campus credit costs:
• Try to avoid credit altogether: Don’t sign up for these credit cards in the first place, even if they do make offers that seem attractive. Talk to your parents and ask about using an online banking account where they can deposit money you need. They might also be willing to give you a prepaid debit card where they can load on money, too.
• If you use credit, use it wisely: Before you sign on the dotted line for any type of credit, read the disclaimers carefully. Find out what happens to the interest rate after the introductory period and what happens if you are late for a payment. Use the card sparingly, only in times of true emergency or when you know you have the funds available to make a payment. When the bill comes, pay it in full before the due date.
• Set yourself up for a lifetime of smart money decisions: You’re learning many things in college, and one of them should be how to handle money. The smart use of credit is the first step in a lifetime of money choices.
Get more information on smart money decisions in my new book, Secrets of a Financial Aid Pro. It reviews the entire financial aid process, talks about good money habits, and educates readers on the positives and negatives of debt. Order it now, and start thinking ahead about how you are going to manage your college finances.