Written by Liz Word under the direction and review of Lorna Saboe-Wounded Head.
Attending college is a major life transition, as it may be the first time you have ever had to live on your own and make your own decisions. College will be one of the largest expenses you will have in your life, but it is an investment that will diversify you in the job market.
Ashley and David are two students who have taken out student loans to cover their expenses. Ashley is finishing her senior year and David graduated as a fifth-year student. Both Ashley and David are similar in their ambition to be successful, but they made different financial decisions in management of student loans.
David received scholarships towards his college education. The first scholarship was a onetime scholarship from his high school football team in the amount of $1,000 dollars. He also received an academic challenge scholarship if he kept a 2.5 G.P.A and his enrollment status as a full-time student ($20,000 over four years). Although David received scholarships, he still needed to take out student loans to cover college expenses. He took out federal subsidized and unsubsidized loans. David said, “I took out subsidized loans first because they do not accrue interest while I was attending school.” He thought that decision through, however, with the extra cash he often spent it on entertainment and going out with friends. Reflecting back to how he managed his student loans he realized he should have saved more instead of spending money just because he had it. “I was an ignorant eighteen-year old who was told that the only way to become successful is to attend college and get a college degree. I had no financial management skills and was never really taught how to manage money.” Now with over $30,000 dollars in student loan debt, David wishes he budgeted more while in college.
Ashley also received scholarships towards her college education. Like David she received an academic challenge scholarship as well as a scholarship specific to transferring students from a community college to a four-year institution with a high G.P.A. Ashley said, “I didn’t attend college right after high school because I didn’t think it was for me.” She grew up in a home where pursuing higher education was not stressed. Later, however, Ashley started taking college courses at her local community college and decided that college was for her. She says that she managed her scholarships and kept her entertainment budget low, so she would not have to take out student loans. Her last year in college was the first time she had to take out a small federal subsidized loan, but she acknowledges the importance of paying the loan back with as little interest as possible.
Ashley and David may have had different approaches to managing their student loans, David with some regret on spending less and saving more, but they both provide advice to incoming freshmen on the importance of budgeting and saving. You should not feel pressured to spend money that you have left over from your student loans. You can save that money for emergency purposes or use it to pay back what you took out. It is also important to talk to educational advisors and counselors about your options. They can provide you with resources to develop a plan of action. Take the initiative to ask questions and seek out scholarships and financial aid for college. Like Ashley and David, you are in charge of your finances; take the charge towards making the best financial decision for your future.
For more information on financial aid, scholarships, student loans, and budgeting visit the Federal Student Aid website.