WORST COLLEGE MONEY MISTAKES FEATURING THE FRUGAL FELLOW
College life is complicated and with so many changes going on in our lives at the time we begin college we often feel lost and confused. We must choose a major, pay for college, learn to do many things on our own that we have never done before and finance it all with very little money and time. If only we had a magic wand or three wishes from a genie to help us through these many obstacles. Well I don't have a magic wand or wishes to grant, however I have something that can be beneficial to help you through this trying time.
I have asked a few great bloggers to help me create some posts to hopefully help you recognize and avoid some errors we all make. This series will provide you with some short stories of times where we made a financial mistake in college, and how we overcame them. I am hopeful that you may be able to learn from our mistakes and that we can help you potentially prevent some of the same mistakes. If you like us have already made some of these same mistakes, I am hopeful that this series may help you to realize that you are not alone. Even with mistakes like these, we can turn our financial situations around and begin to build a brighter future.
Today's featured blogger is Bob from http://www.thefrugalfellow.com
College can be pretty expensive - I think most of us know this. Be that as it may, there are a lot of steps you can take to make it a little less painful. Unfortunately for me, I did almost none of them. I’m honestly surprised that I was able to repay my loans entirely, given the circumstances.
A little backstory: I have three sisters, all of whom attended the same state school in our home state. Being the naive child that I was, I assumed that, because all of my siblings went to this school, that I would do the same.
So I applied and...guess what? My application was denied. Not even waitlisted. Just denied.
I was, however, accepted at a private school - Marquette University in Milwaukee, WI. Marquette is a medium-sized school in a medium-sized city, which was perfect for me.
The one problem? It’s a private school. So tuition, naturally, is not exactly cheap. But I went anyway, because it was the best option I had at the time.
Private schools are expensive
Don’t get me wrong - I really enjoyed Marquette and the culture there is pretty amazing. But being that it’s a private school, I could have done better from a strictly financial standpoint. So, what I would have done differently in hindsight is to apply to more state schools.There are a least four state schools I can think of now that never even saw an application from me. I should have at least applied!
Don’t neglect scholarships
The second mistake was that, despite knowing this school would be expensive, I didn’t do everything I could to look for scholarships. For example, there is the Evans Scholarship, which is a full scholarship given to golf caddies. Yes, this is a real thing if you’ve never heard of it. Again, it certainly would not be a guarantee, but I could have at least tried.In addition, I could have worked with the university to find any additional scholarships, assuming I wouldn’t have gotten the full scholarship even if I had tried. I strongly recommend that anyone applying for college takes every step to ensure they get as much relief/aid/scholarship money as possible. The university should have a line you can call to discuss this with someone directly.
Not all loans are created equal
And that’s not all! Even after all this, the loans that funded my education were less than ideal, to say the least. Technically, I was not the borrower - my parents were. We signed up for a Parent PLUS Loan. The loan was in my parents’ name, and was based on their income.Here’s the kicker - the interest rate was 7.9%, and the minimum payment was $975 per month! This is pretty insane, but was the reality.At the time I was pretty clueless, so I’m not sure if there were other, better options. I mean, there had to be. But I had no idea about any of that. Again, being naive, I had a very nonchalant attitude about it, and assumed everything would work out. Technically that’s true, but I feel like I could have done much, much better. If at all possible, don’t make the same mistake I did by signing up for a borderline predatory loan.If you do find yourself in that situation though, I recommend refinancing as soon as you possibly can. I did this, but in true form, I waited longer than I probably should have. Apparently, I just love shooting myself in the foot. I used SoFi, but there are many lenders who do refinance student loans. They got my interest rate down to about 5%, with payments of $275 a month. Much better than 7.9% and $975!
In conclusion...
In conclusion, these are my tips:
When applying for college, have several backup schools.
Come up with a plan that will allow you to keep tuition costs down. This could be a state school, community colleges, etc.When applying, work with the university to be sure you receive as much financial aid as possible. Don’t leave money on the table!If possible, don’t sign up for a loan that will be an enormous financial burden. Research what (if any) alternatives you may have.
About the author
The frugal fellow is a debt and travel hacker and personal finance blogger. Check out his website https://www.thefrugalfellow.com and here is another great post from him below:
