Students and their parents often pay more for college than they have to because they make simple mistakes with big financial consequences. Here are the three most common mistakes college applicants make and tips for avoiding them. Managing your finances without the close supervision of a parent can feel both exhilarating and intimidating. College applicants make a lot of financial mistakes.
Some common ones include not saving enough money, not investing enough, and not being smart about student loans. By doing these things, applicants can end up with debt that will take years to pay off. Here are some tips to help you avoid making these same mistakes; start saving early. Many students don’t start saving until they get into college, and it’s too late by then. Begin by setting aside $250 per month in your bank account and increase the amount as you can afford it.
The Biggest Financial Mistakes Made by College Applicants
1. Missing Out on Federal Financial Aid
Millions of dollars in financial aid go unclaimed every year because students make the mistake of not filling out the FAFSA (Free Application for Federal Student Aid) or missing the deadline to submit the FAFSA.
This form determines eligibility for grants, scholarships, work-study programs and federal loan programs. In addition, your school might use this form to decide if you are eligible for other forms of aid, such as state or private assistance. Most aid goes to students who demonstrate the most financial need, but money is available for almost everyone.
To avoid missing out on federal dollars, students should check with their schools to determine the deadlines for submitting the form. While the federal government requires that the FAFSA be submitted by June 30, your chances of getting funding are better if you present well before that deadline. In addition, some schools have deadlines earlier than the federal deadline. You’ll also need to be aware that you have to fill out the FAFSA every year that you are in school to continue to receive aid.
2. Overlooking Scholarship Opportunities
Scholarships are an excellent way to help pay for your education because these awards don’t need to be paid back. However, getting a scholarship requires some research and effort, and many people miss out on scholarship dollars because the process can be time-consuming. On the other hand, if you can get funding for your education through scholarships, you might be able to avoid taking out loans that you’ll need to pay back as soon as you graduate, so it’s worth taking the time to do the research and fill out the scholarship applications.
Online sites that show you where to find scholarships are plentiful and easy to use. Generally, these sites ask for your interests, academic background and activities. You’ll then get a list of available scholarships that match those interests. You can also check with your college’s financial aid office or local community organizations to see if they offer scholarships.
3. Accepting the Total Student Loan Amount Offered
When you get your award package, you’ll probably see a loan amount that the school is willing to offer you. You don’t have to accept the entire package, especially if the loan amount is high. You’ll want to accept the grant and scholarship money you’ve been awarded, but you’ll need to consider carefully if the loan amount you’ve been offered is more than you’re willing to pay back. Remember that your loan will have interest attached to it that you’ll be expected to repay.
If the loan amount feels like more than you want to pay, you might want to review your budget to see where you can cut costs or consider other financial aid options that don’t need to be paid back. When accepting your loans, choose the subsidized federal loans first over your different loan options. These loans won’t accrue interest until you graduate or leave college.
